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Manage episode 198141650 series 79213
Wouldn’t it be great if your first multifamily deal just fell into your lap? If someone would just walk into your office and offer you an 18-unit property? If a bank would provide you with 100% financing and 100% renovation?
Sounds great, right?
But the problem with things being too easy is that you don’t learn. Just ask Nathan Tabor. He got lucky on his first multifamily deal—and that led to a lot of misery, stress, and unanticipated setbacks with his second and third investments.
Nathan is an entrepreneur, business consultant, executive coach and speaker. In the last 18 years, he has successfully founded and operated dozens of businesses, grossing over $150M in sales. His experience spans the areas of real estate, auto sales, web-based marketing and direct product sales. Nathan has been a featured guest on Fox News, Laura Ingraham and C-Span, among others, and his parent company was ranked as one of the fastest-growing small businesses in the US by Inc. magazine in 2012, 2013 and 2014.
Nathan has done 26 multifamily deals in the last 11 years, and his current portfolio includes three apartment buildings with a total of 168 units. Today he joins me to share his story, discussing how that easy first deal led to big mistakes with his second and third investments. Nathan walks us through the lessons he learned around financials and zoning and explains why aspiring investors should focus on the first deal. Listen in to understand how his multifamily strategy has changed over time, and get Nathan’s insight on serving others first to achieve lasting happiness.
Nathan’s stress-free first deal
- Opportunity to buy 18-unit complex
- 100% financing from small community bank
- Added 12-unit complex nearby
- Flipped after eight months, made $250K
Nathan’s disaster of a second deal
- Purchased 24 units for $225K
- Couldn’t get building permits
- Lost grandfathering, had to bring up to code
- Cost $150K more than budgeted
- 18 months of misery and stress
- Good investment in long run
Nathan’s multifamily strategy
- Class C, value-add opportunities
- Flip OR refinance into nonrecourse debt
- Current portfolio of three complexes, 168 units
Nathan’s third multifamily deal
- Rent-roll advertised $28K, only $7K coming in
- Forced to rework numbers, renegotiate with bank
- Learned to verify financial via bank statements
- Eventually sold property, made $800K
The lessons Nathan learned from his mistakes
- Don’t wait to resolve problems
- Follow instincts if something feels wrong
- Seek the advice of mentor/coach
- Do foundational work to get educated
How Nathan’s multifamily strategy changed over time
- Started out flipping properties
- Learned about nonrecourse debt
- Look for properties that meet nonrecourse criteria
- Banks started asking for more money down
- Uses income from flips to finance next deal
Why multifamily appeals to Nathan
- Monthly income not dependent on working 40 hours/week
- Opportunity to help people in difficult situation (C class buildings)
- 90% of tenants just want safe, well-maintained place to live
Nathan’s advice for aspiring multifamily investors
- Define your niche
- Develop business plan
- Start somewhere, build up
- Work with partner if necessary
- Focus on the first deal
Nathan’s insight on work-life balance
- Moments of joy based on money don’t last
- Take care of health, relationships and faith first
Connect with Nathan