EP209: Million-Dollar Lessons We Wish We Knew Earlier

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Hey there…

Do you ever wish you knew things sooner? 

We’re talking about those major, life-changing lessons that set you on the path to where you are now…

We can think of several. 

So, we thought we’d share the million-dollar lessons that helped us get to where we are today as multifamily investors! 🤩

Everyone faces hiccups on the way to wealth, right? 

We just figured that you shouldn’t have to make the saaaame mistakes that we made – not when you can learn some major lessons directly from us! 

You know we love saving you as much time and energy as we can. 😉👌

We’ve gone from barely knowing a thing about real estate, to being the lead general partners on 9 huge multifamily complexes in just 5 years, managing a $300 portfolio!

It’s safe to say that we’ve learned a LOT in that time…

Here’s to learning from our million-dollar lessons to jumpstart your journey. 🥂

118 single-family townhomes. 

118 〰️ How is this even possible?

5 years ago, we had zero experience in 🏢 multifamily properties… 

We began as passive investors and now, we’re Lead General Partners in 9 large multifamily complexes with over $300M multifamily portfolio. 

⭐ 3 of those 9 have gone full cycle – AKA sold with an average of a 2X equity multiple return in just 25 months. ⭐

That’s doubling our investors’ money in about 2 years! 😵😵

Of course, past performances don’t guarantee future results… 

Now, with this project, we get to turn this dirt into 118 single-family townhomes in North of Dallas. 

We’re building the entire neighborhood with our tenants in mind, making it so desirable that they’ll pay a premium to live there.

We truly have to pinch ourselves reflecting back at our journey, the team we’ve assembled, and the million-dollar lessons we wish we knew earlier, it’s just surreal.  

Source:  The Kitti Sisters TV

➡️ 5 years have gone by so fast. 

And here’s the thing, people often overestimate what they can do in 1 year, and underestimate what they can do in 5 years!

You’ve heard the evolution of our business, you’ve been with us while we’ve navigated the black swan events – like COVID-19, War on Ukraine, and the insane Interest Rates Hike – 11 times since March 2022, and you’ve gotten to witness the growth of us.

We, the Kitti Sisters, would simply not be where we are today without you. From the bottom of our hearts: THANK YOU. ❤️❤️

If you’re new to apartment investing or a passive investor, or already our passive investor, this episode will help either kickstart or boost your success.

If you’re looking for more success and fewer headaches, here are the million-dollar lessons we wish we had known earlier.

You know, this initial lesson takes us back to our trip to Zion National Park, where we were absolutely stoked about tackling The Narrows.

Now, what’s The Narrows, you might wonder?  Well, my friends, it’s the crown jewel of Zion’s backcountry, and it’s renowned for good reason. Picture this: colossal thousand-foot walls of Navajo sandstone rise on both sides and over countless centuries, erosion has sculpted the rock into these mind-blowing fluted and whorled formations.

But here’s the kicker, and it’s a lot like crafting the perfect capital stack for a build-to-rent development: The beauty can mask the peril. 

You see, once you venture into The Narrows, there are just two ways out – at the trailhead or at the end of the line. If, heaven forbid, an unexpected flash flood crashes the party, you’re in a world of trouble. Enter at your own risk, folks.

The same principle applies when you’re piecing together that 💲 capital stack.

Here’s where the experience takes the stage.

If you jumble up the debt components, your investment might hemorrhage money faster than a high-rolling gambler in Vegas. 🎲🎰

What we mean is, that you’ve got to ensure that your loan terms, debt payments, and exit strategy all sync up with your construction timeline.

If you miss the mark on any of these three crucial points, you’re flirting with disaster for your investment. 

Now, let’s glide seamlessly into our second lesson.

Have you ever experienced dining at a top-tier Japanese 🍣 sushi restaurant?

Picture this: Our first encounter was at Nozawa in the heart of Beverly Hills.

It was a world apart from your run-of-the-mill strip mall sushi joint.

Here, the master of ceremonies welcomed you with a distinctive flair. The waitstaff displayed a level of hyper-attentiveness that seemed almost clairvoyant as if they could anticipate your needs before you even voiced them. The chef, a true maestro, unveiled the intricacies of sushi preparation and the origins of each ingredient. It was akin to stepping into an art gallery.

Our time there was nothing short of extraordinary.

But, as you might guess, such excellence came with a price tag that matched the quality and service.

This brings us to the crux of the matter in the world of multifamily build-to-rent – assembling the right team, the A-team, is paramount.

You see, we had to recruit team members who aligned perfectly with the type of property we were developing. You can’t expect individuals accustomed to managing C-class assets to fully grasp the level of service and excellence required for an A-class property, and vice versa.

Ensuring that your team’s skill sets and talents harmonize with the nature of your asset is absolutely critical.

It’s like selecting the perfect ingredients for a masterful sushi roll – each component needs to complement and enhance the overall experience.  😘😘

Now, let’s delve into our final lesson, where all the pieces of the puzzle come together.

In one memorable episode of “The Big Bang Theory,” Penny finds herself reluctantly chauffeuring Sheldon to the DMV. As they embark on this adventure, Sheldon, with his ever-watchful eye, spots that ominous check engine light.

Oops, indeed.

You see, while Penny might be living life on the edge, we simply can’t take such risks with our investors’ hard-earned money. 💰

That’s precisely why, for every deal, the property must boast a substantial capital reserve.

Think of it as your rainy day fund, there to cover those unforeseen expenses that inevitably crop up.

Imagine replacing water heaters, windows, roofs, and any other lurking deterrents.

It’s almost like Murphy’s Law has a special interest in real estate – the less you have in reserve, the more things tend to unravel.  😝😝

So, it’s imperative to ensure that your reserve is robust.

The exact amount you need in reserve will hinge on various factors such as the property’s age, condition, and quality.

For our build-to-rent – AKA ground-up development property, we had a construction reserve exceeding $2 million, along with an interest rate reserve topping $1 million. 

This not only provides peace of mind but also the confidence that the property can weather 🌪️⚡ any unforeseen storms that may come our way.

There you have it:  million-dollar lessons we wish we knew earlier.

We hope this episode gives you tips, strategies and secrets to grow your business, no matter what it is!

When we started all of this, we weren’t sure what it would become, but being on this land today, we’re so proud of the empire we’re creating, and what it’s been, and we can’t wait to see where it will go.  🙌

We feel so grateful to be celebrating our latest milestone with you! 

Now that you’ve learned the million-dollar lessons we wish we knew earlier, tune into this episode on how to get so rich and stay rich.