Multifamily Investing: Control More Important Than Ownership

Posted on Dec 18 2014 - 12:00am by Lance Edwards
Apartment High Rise Building

The sky is the limit when you exercise control in a multifamily property or small apartments. (Credit: Michael & Christa Richert/SXC.hu)

When you decide to invest in multifamily properties, do not be swayed by the misconception many investors new and old alike have that you must own the properties. Nothing could be further from the truth.

In all actuality, real estate entrepreneurs benefit from the two areas of control they are afforded with multifamily investments. Control, as you will soon find, can be more important than ownership.

Control Area No. 1: The Money

First, you can control the access to private money. Access is everything in this business, and in multifamily investments, you can control your own deals by controlling the access to private money.

You can, for example, become an “angel agent” to other entrepreneur’s deals. As an angel agent, you won’t have to go and find any of the deals yourself, but rather let the other investors and players go and find the deals for you. Only after the others have tied up these properties will you show up to match these deals with dollars.

Using the “Own Nothing, Control Everything” technique, you will arrive and say, “Alright, I’ll buy your deal from you.” The deal flow will come toward you. Too many people think that money in the key, so you will want to take advantage of those beliefs and position yourself as the money person.

Learning how to find the money will put you in a position of control, allowing you to handpick the deals. Of course, you will need to network and build the trust and relationships with other real estate entrepreneurs to position yourself as having the money for these deals. Make sure to join your local real estate clubs, and then work to build rapport with other members. Then, you can sit back and watch them come to you with deals again and again.

As you can see, you do not have to buy these properties.

Control Area No. 2: The Property

Another thing you can control in multifamily is the property itself. While sellers will be turned off if you appear to be nothing more than a vulture buyer, positioning yourself as a “turnaround specialist” carries a much palatable connotation.

You will approach the seller and state, “I’m here to turn this thing around. I will get you out of the jam, and I’ll tell you what, once we’ve turned around this property, I’ll even allow you a part of the action.” These words are gold, turning the seller into a happy and willing participant eager to do anything you ask.

As a turnaround specialist, you gain control of the property. You are then able to sell your Option to Buy, or you can buy the property if you wish. The choice is completely yours.

If you control the access, or if you control the property, you can unbridle your own innovation.


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