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SHOW NOTES FOR EPISODE 559: THE MULTIFAMILY MILLIONAIRE
Can one property make you a millionaire? It can if it’s a multifamily property. Brian Murray, real estate mogul and author of the best selling book Crushing It in Apartments and Commercial Real Estate and now, co-author with BiggerPockets’ Brandon Turner, of a new two-volume book set entitled The Multifamily Millionaire, returns to our podcast to share how easy multifamily investing is and how it is one of the best recession-proof investments available.
What You Will Learn
- What it’s like writing a real estate book with the bestselling real estate author in the world
- The power of relationships in real estate, especially masterminds
- Why he and Brandon Turner decided to write a two-volume book set on small (volume 1) and large (volume 2) multifamily investing
- How you can become financially independent in just 5 years investing in small multifamily
- Why syndications are for real estate investors with limited resources
- What it’s like pouring everything you know about real estate into a 368 page book
- Why large multifamily properties are less work than smaller properties
- Why Covid had minimum effect on multifamily investors
About Our Guest
Brian Murray
Brian Murray is the Co-Founder and Key Principal for Open Door Capital, a real estate investment firm founded by Brandon Turner that helps clients achieve superior returns through the acquisition of value-add mobile home parks and apartment communities. Brian is also the founder and CEO of Washington Street Properties, a commercial real estate investment company that has been ranked on the Inc. 500|5000 list of the nation’s fastest-growing private companies for five years.
In 2015, Brian’s achievements were recognized nationally when he was presented with a Gold Stevie Award for Executive of the Year in the Real Estate Industry. He is author of the bestselling and award-winning book Crushing It in Apartments and Commercial Real Estate. He is also the co-author of The Multifamily Millionaire, a two-volume set which is now available for pre-order on BiggerPockets.com and Amazon.com.
Links to Brian’s other Old Dawg Podcast interviews:
- 107: My First Real Estate Investment Was an Office Building
- 327: Creative Financing Strategies for Commercial Real Estate
More About Brian
- A little over 2 years ago, he got invited to a mastermind in Maui that was organized by Brandon Turner from BiggerPockets
- Brian was on BiggerPockets for the first time in 2015 and again in 2017, when his book Crushing It came out
- He stayed in contact with Brandon since then
- At the mastermind, Bryan shared his interest in getting into syndications for apartments
- Brandon, at the same time was planning a launch for a syndication company for mobile home parks called Open Door Capital
- The more they talked, the more they realized that they were on similar paths
- They decided to form a partnership and to both focus on mobile home parks
- They now have over 2,000 pads/spaces in mobile home parks
- They expect to have 3,000 pads by the end of the year
- They also decided to write a book that would be an A to Z description on how to get into multifamily investing
- Because there were many details involved, especially since they addressed both small and large multifamily, that it ended up being two volumes
Working Together on the Book – The Multifamily Millionaire
- The two-volume book set are entitled The Multifamily Millionaire
- The first book is focused on small multifamily
- Brandon did the first draft on volume one
- The second book is on large multifamily
- Brian did the first draft on volume two
- Then, the swapped and helped each others’ books out
- He has enjoyed working with Brandon
- He gifted in many different ways
- Their skillsets are very complimentary
- They share a lot of the same viewpoints and values
- They are also both teachers at heart
- They are highly motivated to try to help other people achieve what they have achieved or better
- That was Brian’s goal when he wrote “Crushing It”
- However, it took him 2 years to write Crushing It and it is about half as long as one volume of the new books
- The goal of “Crushing It” was to share…
- “I’ve learned a lot of difficult lessons along the way”
- “I’ve figured out what works and what doesn’t work”
- “Let me share everything that I’ve learned so that youe can benefit”
- “Hopefully, with this information, you will make less mistakes then I did”
- The goal of The Multifamily Millionaire is pretty much the same
- That was Brian’s goal when he wrote “Crushing It”
- They are highly motivated to try to help other people achieve what they have achieved or better
- The writing for The Multifamily Millionaire was an interesting experience
- Brandon is a big believer in tracking things and having very clear goals – and stretching for those goals
- Brandon said, “Let’s put together a spreadsheet, and have both of us commit to doing 1,000 words a day and logging it in to the spreadsheet to hold each other accountable.”
- Brandon would lay-out the subjects and sequence of chapters and use 3X5 cards to go with each section in a chapter in a very structured way
- Brandon is the most prolific content generator Brian has ever encountered
- Content can include:
- Video
- Social media content
- Coursework
- Seminars
- And books
- Brian has a whole new level of appreciation of Brandon as an author
- When he wrote Crushing It! he just dumped everything out and then figure out where it should go and how it would flow
- He had a developmental editor that helped him move the content around in a way that would flow smoothly
- This time they had the structure developed ahead of time and they pretty much stuck to it
- They separated content from small multifamily vs. large multifamily
- And he is amazed at how quickly he can put out quality content
- Content can include:
- Brandon would put out 2,000 words in 2 hours
- Brian would take 10 hours to generate half of what Brandon did
- They both are pretty competitive, so the spreadsheet actually turned out to be a good idea
- Between them, they produced about 250,000 words after about 3 months
- The book was a ton of work
- But what it allowed them to do was to take their collective knowledge and get it all memorialized in these two books
- It’s been 4 years since Crushing It! came out
- He’s grown a lot in his investing
- He’s working at a different level than he was 4 years ago
- He is just about to close on the largest project he has ever been involved with to-date
- A 530-unit apartment complex in Houston
- When he had Washington Street Properties 2 years ago
- He thought he was doing things on a big scale
- Today he doing things on an even bigger scale
Content
- The first book in the set was laid out with the beginner multifamily investor in mind
- The second book is for the experienced multifamily investor
- There’s so much knowledge out there that is shared but not captured or written down
- Experience through trial and error
- Topics include:
- Getting your first property
- Strategies for growth
- Lending Processes
- It’s very different for smaller multifamily properties then for larger properties
- For example, in Volume 2 (larger multifamily properties), Brian wrote 3-4 chapters just on debt alone
- In goes through all the sources of debt
- Pros and cons:
- CMBS debt vs. Agency debt – and what are these terms and what do they mean
- For example, in Volume 2 (larger multifamily properties), Brian wrote 3-4 chapters just on debt alone
- A step-by-step lending process for large multifamily
- How those loans are reviewed
- How you can put together your documentation
- All the different lending sources
- What considerations do you need to have
- It’s very different for smaller multifamily properties then for larger properties
- Property dispositions
- How to manage risk
- All the ways you can structure deal
- For small and large acquisitions
- Topics not covered in other books on multifamily are included
- In Volume 2, Brian has a chapter just on Value Add
- When he wrote Crushing It!, readers wrote back saying they wanted very specific ways to add value – specific tips
- Because of that, he was committed in this book to include those tips to the nth degree
- And where they were limited because of space, book buyers can get a special link to 3 supplements on value add tips:
- Rental income
- Ancillary income
- Lowering expenses
- Each has 7 sections on ways to add value
- And within those sections, are dozens and dozens of very specific tips on how to boost the value of a multifamily
- When he wrote Crushing It!, readers wrote back saying they wanted very specific ways to add value – specific tips
- Brandon leveraged the BiggerPockets community to get special tools and templates
- One tool will help you estimate typical expenses for a property
- Others that are also pretty awesome
- In Volume 2, they reference 6-8 valuable tools for larger multifamily analysis
- For Passive Investors in syndications
- Even if you don’t want to sponsor your own project, there is a ton of great information in Volume 2 that will help make you a better passive investor or LP (limited partner) in other people’s projects/syndications
- It helps you better evaluate where you are going to put your money
- Volume 2 also teaches you how to grow generational wealth and a legacy that can be handed down to your children and grandchildren
The Stack Method – 5 Years to Financial Freedom
- It’s a simple method, explained in Volume 1, developed by Brandon Turner, to help you rapidly grow your multifamily portfolio to financial freedom in 5 years
- It starts with purchasing a small multifamily (duplex)
- You set a goal where you purchase double the size property for each successive year
- Year 1 – purchase 2 units
- Year 2 – purchase 4 units
- Year 3 – purchase 8 units
- Year 4 – purchase 16 units
- Year 5 – purchase 32 units
- You set a goal where you purchase double the size property for each successive year
- It shows you how, using leverage and compounding, you can invest to build a rental portfolio that that will provide enough cash flow for financial independence
- Here is a spreadsheet on how the Stack Method Works
- It starts with purchasing a small multifamily (duplex)
| YEARS | UNITS | TOTAL | CASHFLOW | TOTAL |
| BOUGHT | UNITS | PER UNIT | CASHFLOW | |
| ONE | 2 | 2 | $ 150.00 | $ 300.00 |
| TWO | 4 | 6 | $ 150.00 | $ 900.00 |
| THREE | 8 | 14 | $ 150.00 | $ 2,100.00 |
| FOUR | 16 | 30 | $ 150.00 | $ 4,500.00 |
| FIVE | 32 | 62 | $ 150.00 | $ 9,300.00 |
- You can see that as you grow your portfolio, 3,5,7 years on. you can see phenomenal financial returns
Brian’s Real Estate Journey
- Brian is in his 50s now
- Brian bought his first property in his late 30s with his retirement savings
- He would add value and do refis to pull out cash and grow
- He bought his second property in his 40s
- He was able to leave his day job and achieve financial freedom
- It wasn’t until a couple of years ago that he decided to do syndications
- Syndication is basically raising capital from investors
- Investing using other people’s money
- You don’t have to have a nest egg or touch your nest egg
- You can purchase large properties without spending any money out-of-pocket
- You can also find partners to syndicate with
- At first, he was intimidated by syndication
- Once he did it, he realized it wasn’t that complicated
- It’s actually a good way to get into multifamily when you don’t have a lot of resources of your own
- His focus now is not so much on financial freedom but more on building generational wealth
- He wants to leave a lasting impact
- He wants to insure a better life for his children and grandchildren
- And he wants to leave a legacy
Syndication
- Syndication is basically raising capital from investors
- Investing using other people’s money
- You don’t have to have a nest egg or touch your nest egg
- You can purchase large properties without spending any money out-of-pocket
- You can also find partners to syndicate with
- At first, he was intimidated by syndication
- Once he did it, he realized it wasn’t all that complicated
- Syndication is a good way to get into multifamily when you don’t have a lot of resources of your own
- Larger Properties
- Are actually less work
- Because of the size, almost everything is outsourced
- It doesn’t mean that it’s no work involved
- Once you close on the property, you hand it off to someone with a team that has experience managing larger properties
- Are actually less work
- Your investors are also part of your team
- There’s something very fulfilling and rewarding about bringing all these people on your journey and creating wealth for them
- Many people are uncomfortable about asking people to invest in your deals but, once you get into it, you realize you are bringing them an opportunity where you are creating wealth for other people
- Sure, there is pressure because you don’t want to let anyone down but Brian has been doing this for a while and he sees the benefit for both sides
- Besides dividends at a good return, you can also share the depreciation and tax advantages of the deal with your investors as well
- Skin in the game
- Brian invests as an LP in all of his deals that he syndicates on principle
- He wants to put in money at the same terms as the investors
- Other people’s deals
- Brian likes and believes enough in syndication that in invests in a lot of other people’s syndication as an LP as well
- He’s never done well in the stock market but loves the returns he gets in multifamily
Covid’s Impact on Multifamily
- Brain has always been a fan of workforce housing (B & C class apartments and mobile home park properties)
- Covid had a disproportionate impact on workforce housing tenants (blue color workers, hospitality sector workers, etc.)
- These were the people who lost their jobs
- Previous financial downturns usually hit the white collar workers
- That was not the group hit the hardest by Covid
- Many of them just worked from home
- Across his portfolio, on both the apartment and mobile home park side
- On average, collections dropped only 3%
- Did it mean they couldn’t service their debt? No
- Did it mean they couldn’t make payouts to his investors? No
- They even had some mobile home parks that had 100% collections
- Looking at how his workforce housing properties fended during Covid, showed him that multifamily is even more recession-resistant that he earlier had thought – it was better than he had expected
Favorite Parts of the Book
- Every secret he has had on adding value is in these books
- He loved the sections in Volume 2 on debt
- He’s never read a book with the same insights on debt
- On top of his own knowledge, he recruited feedback from peer advisors he respects in the lending community
- Chapter 5 is an introduction to multifamily debt
- Chapter 6 is a lenders perspective
- Chapter 7 is the entire lending process
- He also especially liked the underwriting sections in Chapter 2
- Chaper 11 has 6 key components of good underwriting
- Other chapters on income, underwriting expenses and then financial analysis
- There’s also a chapter just on recession resistance
- With lots of hard to find information
- There is an entire process you can go through to assess your own personal holdings to determine the level of recession resistance and the specific steps you can take to make sure your holdings are going to survive if there is going to be an economic downturn
- He gets a lot of questions on this area
- He recommends that people do a schedule of their debt
- Look at when it comes due
- Terms
- Not just properties but your entire investment portfolio to assess if you are ready if things take a turn for the worse
- Other chapters include:
- Syndication
- Deal Structuring
- How to Make Offers
- Negotiating Deals
- Due Diligence
- Closing
- Asset Management
- Legal and Accounting
How to Get The Multifamily Millionaire
- Volume 1: The Multifamily Millionaire, Volume I: Achieve Financial Freedom by Investing in Small Multifamily Real Estate
- Volume 2: The Multifamily Millionaire, Volume II: Create Generational Wealth by Investing in Large Multifamily Real Estate
How to Reach Brian
- Website (syndication opportunities): ODCFund.com
- Website (Brian’s Property Management company): Washington Street Properties
- Instagram: @CrushingItBrian
- LinkedIn: https://www.linkedin.com/in/bmurray/
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