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SHOW NOTES FOR EPISODE 081 – APARTMENT BUILDING INVESTING WITH CHRIS URSO
Chris Urso was living in his parents basement trying to figure out what to do with his life when he read a book that transformed his life. The book was Rich Dad Poor Dad by Robert Kiyosaki and it motivated Chris to jump into real estate investing with a fury. In this episode, Chris shares how he jumped in from the wrong direction but was able to turn things around, ultimately resulting in a $100 million investment business.
What you Will Learn
- The value of finding a good coach or mentor
- The major difference between investing in single family homes and multifamily
- The value of investing based on “the fundamentals”
- What is the difference between being a real estate investor and ryunning an investment business?
- How successfully transforming an asset can not only result in significant profits but can result in you becoming a community hero of sorts as well
About Our Guest
Chris Urso
Christopher Urso is managing partner of URS Capital Partners, a private multifamily real estate firm, based in Long Island, NY. URS Capital Partners has acquired over $100M worth of multifamily properties throughout the Midwest and southeast and services over 150 active investors. Chris has raised over $33M in private capital for his real estate projects.
Real estate has been his true passion since purchasing his first property more than 15 years ago; Chris started out leading a multi-state team to acquire, renovate and sell over 60 single family homes. In 2010, he directed the firms’ efforts towards multifamily with the purchase of a vacant 40 unit building and has since taken a very systematic path to acquiring over 1,800 units.
What makes Chris’ firm different is: extreme diligence at the deal level, high level of execution at the property level, and the integration of technology and personal service for an exceptional investor experience. Working mostly with accredited investors, Chris’ core focus is value-add deals, where, through physical or economic improvements to the property, he can generate and pass that increased value on to his investors.
More About Chris
- Graduated college in 200
- Living in his parents basement
- Started working at a document management company
- Read Rich Dad Poor Dad – totally changed his life
- Had friends that were buying old places, fixing them up and renting them to section 8 tenants
- Started doing the same – buying on fundamentals
- Ask parents to help him get started (they were going to pay $25 in student loans for him and he asked for those funds)
- 2001-2006 continued to buy more rental houses
- Got married in 2007
- Decided to sell all their properties (6 properties) in 2007
- 2008 left old job and started real estate company
- Didn’t have the funds to invest in NY, so started investing in Cincinnati and other more affordable markets
- Bought, renovated $15-20K houses and rented the house out, flipped, wholesaled
- Had about 60 houses
Getting a Coach/Mentor
- They realized they were not going to make a lot of money with these cheap houses and sought out someone to help them
- Found a great coach
- The coach ask Chris his goals – he said to build a $100 million dollar real estate company
- He told them to take out a pen and paper and told them to calculate out how much they make per house and how many houses they had to turn to make that kind of money and it worked out to be 2,000 houses
- If you want to reach that goal you need to scale up and play a bigger game
- He said they had to sell everything they have and buy apartments
First Multifamily Purchases
- Dec 27, 2009 bought their first property – a 40-unit vacant apartment
- There was no financing at the time so they had to raise the full amount for the next three apartments in cash from investors
- Raised $480,000, $780,000 and $1.3 million from friends and family to purchase and renovate 3 apartments
Building Your Investor Base
- He puts a lot of weight in how he works with and treats his investors
- He studied every professional offering he saw and he tried to emulate the best of them
- He believes every deal should be treated like it’s a $50 million deal
- All professionalism and great communication
Being a Real Estate Investor vs. Having an Investment Business
- As an investor, you can partner with someone and agree to hold a building for 20 years
- As the CEO of an investment business, you serve your private investors that have various needs and wants. You want to drive returns, show performance and take a deal full-cycle (buy it, operate it and sell it)
- 3-7 year timeline on most deals. Rarely more than that
- Most investors don’t want to tie up their capital for long periods of time
- He’s up to his 14th acquisition, sold 6
- Investors want 7-10% cash yield per year once stabilized
- 100% return of capital with a 15% annualized return. Have reached 55% before
Biggest Mistake
- Starting too small
- He should have gone straight into multifamily
- If you had $500K to invest
- Better to invest in 10 deals at $50K each with people who have a track record of success then buying 10 $50k houses
Biggest Success
- Making the jump from 100 and under units to 280 units
- Took a year trying to understand the market
- Opportunity came up and bought 280 units
- Highly distressed property
- Sub 80% occupancy
- Tremendous amounts of deferred maintenance
- Drug activity
- Criminal activity
- 25 down, unrentable units
- It was the place where tenants rejected elsewhere were accepted
- Bought 280 unit in August 2013
- Invested $2 million in rehab
- Brought in new management, new team
- Worked on it every day for 3 years
- Replaced 100% of the tenants
- Brought up to 90% occupancy in 4 months
- Bought it for $7.2million, $10 million with repairs, upgrades, etc.
- Sold it 3 years later for $14.5 million
- Investors made 80% on their equity
- It proved that they could do it for themselves and in the marketplace – led to 3 more transactions in the next 18 months that were very successful as well
Advice to People Getting Started
- Capital preservation is important in this phase of your lives
- How can this investment fit in with your portfolio and you short and long term goals?
- Being a passive investor in a deal purchased and managed by someone else who has a proven record can be a good way to diversify your investment portfolio
- Don’t go after every shiny object
- Invest in and with experienced people who are executing a proven strategy that aligns with your goals
Where Does Chris See His Business Going
- They’ll keep trading up
- Have reached $100 million in acquisitions
- The new goal is $500 million
- Elevating the quality of the deals
- Focus on investors to give them a great experience
- Bring Wall Street to Main Street
- Launching his own crowdfunding funnel
Where Chris Sees the Market Going
- All real estate is cyclical
- Looking purely at fundamentals, multifamily has never done better
- What that means is we are in a supply and demand game
- Millennials, Baby Boomers and Gen Zers are looking to rent and that demand will grow
- Every deal he buys, he asks “If this is a deal we’ll have to held for 10 years, do we want to hold this deal?” Is it in a location, market and asset profile we want to be in? Answer has to be “Yes!” to all those questions
- Things will normalize but will still be healthy
- We’ll see steady interest rate increases over the next 12 months or longer
- He’s fundamentally-based – not speculative
Rap-It-Up
- Favorite real estate book: Powerhouse Principles by Jorge Perez
- Favorite business book: The One Thing by Gary Keller
- Most valuable web site for success (other than your own): Entrepreneur.com
- Favorite app: Evernote
- Favorite quote: “Work like there’s somebody on the other side working 24-hours a day trying to take it away from you.” Mark Cuban
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? “Master a niche. Become extremely obsessed with one niche, one strategy and stay the course. Because one you’ve become the expert on that niche, the money will come. Don’t be a shiny object chaser.”
How to Reach Chris
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