EP227: If You Want To Become A Millionaire in 2024, Avoid This!

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Ever thought your journey into multifamily apartment investing was like stepping into a scene from “Lord of the Rings”? Yeah, you heard us right. 

Let us explain…

We were kicking it back with a buddy over lunch the other day when I (Palmy) dropped a bomb that could make any Tolkien fanatic’s heart stop—I stated that “I’m not all that impressed with each movie in the trilogy.”

You should’ve seen his face—total shock. He’s like, “Why on earth would you say that?”

Here’s the deal: Imagine if Gandalf had just handed the ring over to Sam the Wise. Bam! Problem solved, easy peasy, come on, Wise is in his name, that should have been the clue, Gandalf!

But no, he gives it to Frodo, who goes all “my precious” on us. Just like in investing, sometimes the simplest solutions are overlooked for the most complicated ones.

Why make it a saga when you can cut straight to the victory?  Sometimes, our human nature is a real head-scratcher. We have a knack for turning simple tasks into complex puzzles, all in the name of overthinking. 👀

And when it comes to multifamily apartment investing, overthinking can be the difference between you standing on the sideline or hoping into your next lucrative investment opportunity.

Now as many who have followed us for a while know that we started out this game 5 years ago when we were just newly minted multifamily apartment investors.

We remember attending a real estate conference and were in awe of all the accomplishments of those that stood before us.  All we were wondering was, what would it take to get to partner with these rockstar multifamily apartment teams.

Splashing about in the proverbial sea of greatness, we wondered how in the world you’re supposed to make a splash, so we can become seen, noticed, and desired by these rockstars?

We had a mindset similar to how NBA star Clyde Drexler felt when he joined the Rockets mid-season.

These legends didn’t just show up; they transformed their teams, against all odds, leading them to championships. So, we took a page out of their playbook.  📖

Right from the start, we thought joining forces with an experienced team and getting into the capital-raising game would be our big break.

We wouldn’t dream of taking on a multi-million dollar apartment complex by ourselves, at least not for our first project!

But here’s the kicker, and listen up because this is crucial: just playing the part of a capital raiser without the right license is a no-go, legally speaking. You’ve gotta bring more to the table, wear another hat that adds real value. It’s not just about rounding up the cash; it’s about playing a key role that really moves the needle.

Don’t get us wrong, success didn’t come easiest, at least at the beginning.

We had to conquer our tendency to overthink, and we want to share with you the lessons we learned while building our multifamily apartment portfolio to over $300 million.

Overthinking Number One. No Huge Investor List.

Let’s break down the game of raising capital for multi-family apartments, and trust me, it’s a game-changer.

👉 You hear numbers like $50,000, $75,000, or even $100,000 minimum, and your heart starts racing, right? But here’s where the magic happens: those big numbers are actually your best friends in this arena.

Think about it. When we’re talking about hauling in serious cash, like millions, you don’t need an army of investors.

Do the math with us here. Need to raise a cool million? Find 10 power players ready to drop $100,000 each. Boom, you’ve hit your mark. 

What if the goal’s $10 million? You might think you need a small city of investors, but nope, just 100 of the right ones. In the grand scheme, 100 folks isn’t a crowd; it’s a select gathering.

It’s not about how many are on your list; it’s about the firepower those names bring to the table. Remember, in this world, it’s quality over quantity every single time.

Overthinking Number Two: You are New

Here’s the raw truth—our leap from obscurity to crushing it in the real estate game in no time flat?

That tale should pump you full of belief. Solid evidence that everyone kicks off from square one.

The giants of multi-family apartments? They didn’t spring up knowing it all. 

But here’s the game-changer, the real deal we grasped early on: the power move was teaming up with the rockstars of the industry. Wasting time with second or third-tier players?

Not on our watch. That was never going to catapult us to where we aimed to be.

So, if you’re feeling like the new kid on the block in the multi-family scene, shift your focus.

It’s not about your newbie status; it’s about who you’re in the trenches with. 

Those seasoned pros with the savvy, the know-how to cross the finish line, manage properties like a boss—that’s your golden ticket. We’re talking about the dream team here: co-general partners, lenders, legal eagles, property management crews, and your build squad.

Forget the jitters about being a newcomer. Being green today doesn’t mean you’ll be green tomorrow. It’s all about soaking up the knowledge, and more crucially, assembling your own Avengers—people equipped to tackle every curveball this journey throws at you. 

No one expects you to master every inch of this game right out of the gate. But they do expect you to know the “who”—the lineup that’ll help you navigate through the stormy seas of multi-family investing.

Overthinking Number Three. The fear of stepping into the spotlight on social media, YouTube, or speaking out about raising funds.

Let’s get real—feeling shy or uneasy about discussing finances, whether it’s one-on-one or broadcasting to a crowd, is something we deeply relate to.

Before diving into the multi-family realm, the thought of talking money was way outside our comfort zone, and we’re pretty sure we’re not alone. Society’s hush-hush attitude towards money talks has made it a taboo topic for many.

But, here’s the deal: communication is non-negotiable in the business of raising capital. It’s all about personal connections, human-to-human interactions. 

If you want people to invest — whether it’s $50,000, $75,000, $100,000, $1,000,000, or even more — into your deals, AKA building trust, you simply can’t avoid having conversations.

But here’s some truth for you: In our early years, we mostly steered clear from social media. We built our connections through other channels that didn’t involve require facing a sea of strangers. 

So, yes, while engaging on platforms like YouTube or Instagram might seem daunting, remember, it’s a skill that you can develop over time. Starting out, you don’t have to leap into the deep end of public speaking or social media to find success. It’s all about playing to your strengths and gradually expanding your comfort zone.

Overthinking Number Four.  I don’t have anything to add to the conversation.

Just like a fine wine or an exquisite cheese, developing a distinctive perspective in the multi-family apartment investing world is something that comes with time. In the early days, as you’re soaking up information, it’s natural to feel like you’re swimming in a sea of knowledge without much of your own insight to contribute. Initially, our take on things was, frankly, pretty generic—we were echoing what we’d learned without adding our own flavor to the conversation.

But here’s the thing: as you get more involved, whether by dipping your toes in as a passive investor or diving in headfirst as a general partner (GP), you start forming opinions on everything, big and small. 

These experiences begin to shape your unique viewpoint, enabling you to offer something special to the discourse.

The real nugget of wisdom here is recognizing that your voice matters. Often, we hold back because we think, “I don’t have anything to say,” but really what we actually mean is “Who cares what I have to say?”

But that’s missing the point. When you address your specific audience—the people whose challenges you know inside out and backward—you’re not just speaking; you’re resonating. Your perspective, your insights, they’re like a beacon for those navigating similar waters. So, never underestimate the power of sharing your unique viewpoint; to someone out there, it’s exactly what they need to hear.

Overthinking number five.  I don’t want to be a rock star in the apartment industry. 

I just want to raise money here and there from my close connections.

While you may not aim to be a rock star in the apartment industry at the moment; however, over time, you’ll need to expand beyond family and friends like Uncle Sam, Charles, and Chuck to raise millions and scale your business. To do this, you’ll need to embrace a new mindset and step into the role of a leader to attract more investors. Reflect on whether you have what it takes to implement these strategies effectively, or if you need to develop the necessary identity, know-how, skills and capability.

Overthinking number six.  It takes years to become rock stars in this business.

Success, like everything else in life, unfolds over time. Yet, the pace at which you reach your goals hinges on your knack for seizing the moment. This brings us to the power of leverage, a favorite topic of ours, especially the five levels of it. 

In the world of multi-family apartments, harnessing the might of the right team can skyrocket your progress, making your journey to success not just possible but faster.

Here’s a reminder for the newcomers: your fresh perspective is invaluable. Recognizing your unique talents and the value you bring to the table is crucial. This isn’t a one-sided affair where you’re merely being done a favor. We’ve heard some GPs – General Partners frame it that way, which is a disservice to everyone involved. When a co-GP joins our ranks, we’re fully aware of the value they bring—it’s a mutual win-win.

Aligning with a team that not only boasts experience but also the financial backbone to support properties through thick and thin is key. This kind of partnership can propel you forward, far outpacing those who talk a big game without the substance to back it up in terms of real-world experience or a solid track record.

As we wrap up this discussion on the fifth point of overthinking, remember this: clearing these mental hurdles can transform your venture into multi-family apartments into an extraordinary journey. With these obstacles out of the way, you’re set to achieve remarkable success much quicker than you ever imagined.

Now, to dive deeper into the 5 levels of leverage, go tune into this episode.