Multifamily Real Estate Investing

by Christopher Levarek

“Time is more valuable then Money, You can get more money, but you cannot get more time.”

- Jim Rohn

Investing can be simple. You set up some rules and you follow them. No matter what. The minute you move away from your rules, you enter unchartered waters. Much can happen in uncharted waters. The rewards can be great for the explorer traveling into the unknown but the risks too can be great.

I’ve always tried to set limits or boundaries to my investments. If the opportunity meets these limits or criteria, then I proceed on. If they don’t, well it makes the decision to invest or not invest quite an easy one. No wishy washy indecision, wavering between going in on a deal or not going in a deal. The dreaded “analysis paralysis” keeping you up at night.

Let me show you what I now look for in my investments and perhaps, this will help you form your own criteria or even use the ones listed in this article.

#1 Low Risk

As I get older into my upper 30’s, I am not willing to risk it all on red or black. I want to know my risk and no longer can afford to simply jump into any venture. Real estate markets go up and real estate markets go down.

At the time of this writing, the real estate market is up. It’s so up, that people have been talking about an impending future crash since 2018, which to date has still not happened.

Who will be left holding the bag when the market does crash however? What kind of real estate do you want to be in if the market crashes?

I consider these questions carefully when evaluating multifamily real estate investing deals or any investing opportunity. I like to focus on low risk or conservative investments in assets that will weather a correction and possibly even thrive in one.

#2 Cash Flow

Cash flow or positive income on a real estate property is in my opinion fundamentally necessary to justify a good real estate investment. When you invest into real estate that is cash flowing, you are limiting your downside risk. The property or business is generating income. Who wouldn’t want to buy a business doing well? Would it be better to buy a business doing poorly?

Here’s the thing, there are many real estate investments that actually don’t cash flow or will not be generating income for 1,2 and maybe even 3-4 years!

Perhaps these investments are development deals, real estate being built new, or perhaps they are truly distressed run-down properties needing renovations with no tenants to speak of at present. These deals work for some people, but not me.

I look for cash flowing positive income, day one, real estate investments. Everybody loves appreciation in a market, but let appreciation be the icing on the cake. Buy for cash flow.

#3 Time Commit

I am the proud father of a three year old son with another little one on the way. I live with my beautiful wife in a home in Arizona I maintain and improve on the weekly. I split my working hours with a full-time W-2 job and manage a real estate investment company with over 64 million in assets. I also try to balance all my hobbies, health and personal growth somewhere in the available space.

It is very apparent to me that time is a finite resource.

I am sure many of you have similar lifestyles juggling the many priorities and ambitions in your lives. The reason I bring this up is to show how time is a fundamental piece to an investing strategy. For me, I have to choose what I spend my time upon. To this end, I no longer invest into time sink projects that will require my constant attention or hands on active participation on my part. I simply do not have the time.

I invest into quality projects with thoroughly screened tenants, a well-though out business plan and very little required on my end. I do not want to be spending the late hours in the night calling plumbers, arguing with tenants or scheduling renovations. I would much rather invest into low effort deals with expert teams and go spend time with my three year old, when he comes to my desk asking “Dad, Can you play with me?”.

Time matters.

In Final

You might be at a different stage of life and perhaps the above criteria don’t necessarily apply to you. Maybe you are in your 20’s and able to drop a 30 hour weekend fixing up a distressed duplex to save cash on renovations or cold-calling 1000 leads to find a deal. And that’s awesome! These actions can be game-changers when getting started.

In my case, I invest in low risk, cash-flowing and low effort investments so I can spend my time with my family, build my business and explore my passions/hobbies. This is where I am at. These are the fundamentals I try never to break.

Here’s my recommendation, wherever you are at in life, ensure you create some investing rules. Make sure they matter and make sense to you. Then stick to them. It makes investing simple and allows you to invest with confidence. Happy Investing!