LUR Antoine | Turnkey And Multifamily Investments

 

Born in Toronto and raised in San Francisco, Antoine Martel started investing in real estate while he was still in college. Since then, he has been investing in residential and commercial turnkey real estate in key markets across the United States. In this episode, Antoine joins Lisa Hylton to talk about his journey of getting started in real estate investing, going into detail about the decision-making process in choosing a property management company and some of the quality controls that he put in place to make sure that contractors were doing their work. He also shares the lessons he learned in the business over the years, as well as how to go about building a business with family. When Antoine’s not out managing his investments, he hosts a podcast entitled A Millennial’s Guide to Real Estate Investing and writes books like A Millennial’s Guide to Investing in Cash Flowing Rental Properties.

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Turnkey And Multifamily Investments With Antoine Martel

I’m excited again to bring another amazing guest. I have with me, Antoine Martel. He was born in Toronto and raised in San Francisco. He started investing in real estate while he was still in college. Since then, he has been investing in residential and commercial real estate in key markets across the country. He has built a rental portfolio with over $10 million in assets and has completed over 150 rehab projects. I’m super excited to have him on the show. Welcome to the show, Antoine.

Thank you for having me. I’m excited to be here.

I met you through your brother. Your brother had a shirt that says, “Cashflow Is Greater Than Paycheck.” That shirt started the conversation as his brother was wearing the shirt at an eatery here in LA that I was there visiting. I learned that they were doing this amazing business, turnkey rentals, etc. I’m excited to have him on the show to talk about his journey of getting started in real estate investing. To kick us off, can you share with our audiences how you got started investing in real estate?

This was my brother as well. My brother took me and my dad to a real estate investing seminar back in 2015. We learned about flipping houses, wholesaling, apartment buildings and all the different ways to invest in real estate. It got us excited. I was in college. My brother was going to college as well. My dad had a job full-time. He had some money saved up in the stock market kind of thing. After going to the seminar, it opened our eyes to real estate investing. It was something that our family always enjoyed, which was real estate, but we never really know how to make any money with it or what the numbers should look like, etc. Going to that seminar taught us those things. For the next two years, from 2015 to 2017, we kept trying to implement those strategies in California but one after the other kept not working.

Whether it was like, “We didn’t have enough money. We didn’t know enough people or our financing was too expensive.” Whatever the case was, there wasn’t enough skin in the game for us to make any money. We only had $40,000 saved up like and it was much sweat equity that we had to put into these deals because $40,000 in the California market is nothing. You can’t do anything with $40,000. After two years of failing and trying a bunch of different strategies, I moved to LA for college and I started networking around LA with people on BiggerPockets. I was saying, “How are you investing in real estate? Where are you investing? What are you doing?”

Through all those conversations, I learned that 90% of the people that I was talking to were investing out of state, whether it was passively or actively. They were doing stuff out of state because their dollar went further. The light bulb clicked. I was like, “That’s perfect,” because we only have $40,000 saved up. We can buy a house out of state for $20,000, renovate it for $20,000 and have a cashflowing property for $40,000 cash. That’s what I did in my last semester at university. I went to Memphis, Tennessee. I bought a house. I rehabbed it. I rented it out and then did a cash-out refinance on it. I gave my dad the money back and I was like, “I can keep doing this after I graduate. If you just pay for my expenses, let me try to figure this thing out, give me six months or whatever.” I graduated in May and by December, we had ten single-family homes in Memphis.

In May, you graduated from college and then you went out to Memphis, Tennessee. Did you move there or did you execute that first transaction while living in LA?

When I say went to Memphis, I don’t physically mean I went to Memphis. I graduated in May. The summer before that, I started doing research on out-of-state markets. Through that research I found Memphis, Cleveland, Birmingham, etc. and then I started calling those places for a couple of months and saying, “I’m a real estate investor.” I would call property managers and realtors, “I’m looking to invest in your market. Can you help me? I’m looking to buy properties, rehab them, rent them out and refinance them,” or what’s called the BRRRR strategy.

LUR Antoine | Turnkey And Multifamily Investments

Turnkey And Multifamily Investments: When you’re 3,000 miles away from the places you have, managing a contractor from where you are is impossible.

 

After 300 phone calls, I finally landed on somebody who understood what I was talking about and understood the numbers and all that kind of stuff. He was an investor himself and I was like, “This is a gold mine. This is too good to be true,” and that was in February. He had a deal that he wanted to sell. We ended up buying that house using his contractors. He had a property management company he referred us to and that’s how we did that first deal. We bought it for $30,000, renovate it for $10,000 and then that renovation took probably two weeks or a week and we rented it out two weeks later. We were able to do a cash-out refinance and the thing was worth $55,000 or $60,000 after.

You’ve scaled up into like way more at this point. I have a couple of questions. The first, is a two-week renovation the typical, or is that cognizant of buying a certain type of property?

The way that I look at it for my out of state market is a good spend is $10,000 per week for a contractor. If you have a $20,000 bid, that should be a two-week project if they don’t have a million other projects going on. Most of our projects, the average length of construction was probably 3 to 4 weeks. We do significant work in the houses that we’re buying because you can then buy them at a much higher discount. I would say that a 1 or 2-week renovation is probably few and far between to get the value. The issue is that, for example, if you buy a house for $50,000 and spend $5,000 or $10,000 and you think the house is going to be worth $80,000 after. The issue is with the appraisers are going to look at that $80,000 house and be like, “What the hell? This guy bought it a month ago for $50,000. What did he do? He fixed the roof that costs $5,000. Why is it worth $80,000 now?” There needs to be some justification for the appraisers to understand and realize why it’s worth $80,000.

As you continue to build out your portfolio, did you decide to do a property management company as well in-house or have you created partnerships with that first one or even additional ones in the market that you play in now?

We haven’t gotten into that at all. Our property management companies are still all third-party property management companies. We haven’t gotten into business with them. I think it’s a good and a bad thing. It would be a good way to make additional income, but with our turnkey clients, it’s also good to say like, “We’re on your side. This is just a third-party property manager. If you don’t like them, you have issues with them, we don’t care. We can move you to whatever property management company you’d like. It also gives us leverage with the property manager too and be like, “We’re giving you ten new clients,” because this year, we’ll do 120 homes or 10 houses a month. “We’re giving you ten new clients every single month. You better treat these people right if you want that flow to keep coming.” Because they’re a third party, then we can say those things. If it was all in-house, then it gets, “We have to buy your property and use your property management company and use your lender.” It’s like you’re making more money in multiple ways here instead of one or being transparent about it.

To be clear, what markets are you focused on these days?

The single-family homes or the turnkey business is all Cleveland. We do multifamily as well. We bought 71 units of apartments and those were all in Memphis, Tennessee.

We want to talk about the multifamily as well, but I want to start with the single-family first. As someone reading this, they’re thinking, “This is amazing.” They might be thinking one of two things. They might start by thinking, “I’d like to do this myself. I’d like to go into another market and execute that strategy of the BRRRR.” What were some of the quality controls that maybe you put in place to make sure that contractors were doing the work that you wanted them to do?

You have much more control with the apartment buildings over doing twenty single-family homes. Click To Tweet

My thing is when you’re 3,000 miles away or whatever miles away you are from these places, you managing a contractor from here is impossible. First of all, you can’t even probably manage a contractor that would be doing work at your own house. For me, I have no construction knowledge at all. I haven’t touched any or seen 90% of the projects that I have done. It’s putting the right people in place and having them have the same mentality or having everybody have the same goal of completing the project.

The way that you do that is by building the right team on the ground. For me, it all depends. Since I’m doing rentals and if you’re doing the BRRRR strategy, finding a property management company is going to be the number one important thing. Leverage the property management company as much as you can because they’ve been in the business for 10, 20, 30 years. They know the market well. They manage 1,000 houses, they have a ton of data about rentals. Leveraging them and also their contractors and their maintenance crew that they do have.

For example, you buy a house that’s in a good area, but it’s a crappy-looking house or the rent’s only $500 and it should be $900. You buy that property, give the tenant a 30-day, notice, give them Cash for Keys or get them out of there somehow, renovate that property and increase the rent to $900. The property management company can help you get it there. They’re incentivized by helping you get it there because the way that they’re paid is by the amount of income they produce. They get 10% of the collected rent.

If you’re saying, “This is $500 but I want to make it $1,000.” They’re going to see dollar signs like, “We’re up for helping you get there. Here are some contractors that we would recommend or whatever the case may be.” That’s why for your first couple of projects, like my first project, a $10,000 rehab was paint and carpet and fixing some tile flooring in the kitchen. Tiny little things here and there, but it wasn’t a huge renovation. Any kind of handyman could have completed that thing in a couple of weeks. Get started with there so you know the majority of the process and get the process down and then you can slowly increase the renovation size over time. Up until we were 50 or 60 projects in, we didn’t do anything huge, like a $60,000 job or anything like that. Most of our projects are in the $20,000 range still.

I noticed that you said one thing about the property management’s being compensated by 10% of the collected rent or a percentage of the collected rent. I think that’s very key because there are property managers out there that have a flat fee that gets paid regardless of whether rent gets picked up or not. It sounds like you recommend going with property managers that are compensated based on their performance.

It’s the smarter way to go. We’ve had other property management companies that have a flat fee, but I don’t like it because they’re not incentivized to turn the units over to get them occupied. There’s no pressure. The more pressure you can apply to the number of units that you have outstanding, the better. In their system, the easiest way for them to make money is to fill the vacant units. That’s going to be number one on their list to increase their top line and that’s exactly what you want. If they’re incentivized by maintaining, they’re going to wait until you blow them up and complain about them and they’re like, “We’ll rent it out.” They’ll do it very quickly, but they should be doing it on their own.

The other audience is someone who’s reading and thinking, “I know that I don’t want to go into a market and execute the BRRRR strategy, but I’m interested in buying a property that the work has already been done and that is cashflowing.” Can you talk to the audience about how they can go about making sure that they’re working with a turnkey company that’s delivering quality houses?

With our turnkey company, to give you the lay of the land. The process for a turnkey company is to legal out buy properties, renovate them, rent them out, put the property management company in place and then resell them to our clients. The property comes fully renovated with tenants in place already. We help you get financing insurance and then you get the property management company who is a third party on the ground. It’s a great way to get started if you don’t want to manage the construction process or even spend the money on the construction process. It’s only $20,000 to get started with those. You buy a house for $80,000. You put 20% down which is $16,000 then you have $3,000 in closing costs. You’re all in for $19,000 to buy one of these properties and they’ll make you $250 a month in positive cashflow. It’s a good and stable return.

LUR Antoine | Turnkey And Multifamily Investments

Turnkey And Multifamily Investments: An asset-based lender means they’re going to give you a loan based on the asset, not on you personally.

 

That’s the process of how that works. There are a couple of things to look out for in the turnkey space. There are a couple of companies that ask for deposits in order for them to go and find you a property like, “Give us $5,000 or $10,000 so we can go and look for properties for you.” There’s no need to do that. For companies like me and there are a couple of other people like us that are first-come, first-served basis. Everything we have goes up on the website and whoever buys it first, buys it. There’s no “Get in line and give us $10,000,” and “You’re holding my $10,000 so that you can go and find me a house.” It doesn’t make any sense. A couple of other companies out there sell their houses for way over the appraised value. What that means is all of our houses, we sell them for the appraised value. Other companies will sell that same house for $80,000, for $100,000. Let’s say it appraises for $80,000, which it will because that’s what it’s worth. They’ll come to you as a buyer and be like, “Sorry the house didn’t appraise, but you’re going to have to come up with the extra money.”

You’re putting the $19,000 down plus now $20,000 because your house didn’t appraise. You’re paying over the market value. Now, you have close to $40,000 in the house. Your return got cut in half from 15% down to 8% or 7% because you had to put up the extra money. Please do not do that. You are way overpaying for a property that you shouldn’t be over. A lot of amateur investors are doing that because they think that’s the way that you have to do it and if you’re working with a big brand name turnkey company, that’s what has to happen.

What’s going to happen is that let’s say there’s an emergency and you need to get out of that property. You can only ever sell it for $80,000. There’s no way you could ever sell it for $100,000 again so there goes your $20,000 that you put down to buy. The last thing would be a watch out for turnkey companies that have house property management. I don’t think it’s an alignment of interest because many of them force you to use their property management company so they can make a recurring revenue from you. I don’t think that’s a great alignment of interest between you and the turnkey company.

We are moving on to multifamily. I know that you guys got into your first deal. Can you talk about how that process of finding that 71 unit went about and the strategy?

It’s a bunch of smaller buildings. It’s 71 units total, but it all started with five buildings. The first building was a twenty-unit building. We bought it in December 2018. My parents sold their house in the Bay Area. They had some cash leftover. The turnkey business was doing great so we had some cash from that. We had sold off our residential portfolio as well through the turnkey business, which is those ten houses that we started with. Slowly as those units would go vacant, we would renovate them nicely and sell them to another client. It got rid of our personal portfolio. My parents sold their house and we were like, “Let’s go into multifamily. Let’s slowly level up.” The only thing stopping us from getting into multifamily was the cash. With $40,000 to buy a twenty-unit apartment building anywhere in the US, good luck. You’re going to have to raise a lot of money and it’s going to be all sweat equity, which won’t be fun.

We had some cash. I knew my parents were going to sell the house because they were talking about it. They were about to list it then I was like, “What are we going to do with this money? We can put it in the turnkey business, but I think we should also buy some stable assets so that you guys can have some cashflow coming in.” I started networking with brokers on the ground in Memphis going on LoopNet. I’m not looking at the deals, but looking at the brokers who are listing the deals and creating a spreadsheet of those people and calling them. I’m like, “I’m an investor in Memphis, Tennessee. I buy five houses a month. I’m looking to scale up and buy some apartment buildings. Do you have anything in Midtown or whatever areas I would name?” “Not right now, but what are you looking for?”

Have that conversation with these people over and over again. I would follow up every 2 to 3 weeks with these people and I did that for nine months straight. Every couple of weeks, I would follow up with these people. After nine months, somebody sent me a crappy photo of an apartment building with text up numbers asking $1 million. The rents are $500 a unit and the operating expenses are $30,000 a year. It was a text. There were no financials or anything and I’m like, “Can you give me some information like a rent roll at least?” “No. We will only disclose the financials when you place an LOI.” I’m like, “Alright.”

I went and plugged in the numbers into my spreadsheet and I’m like, “The numbers work at this price. I’ll submit an LOI. There’s no risk to me. I need to get more information.” I submitted an LOI for $1 million for the twenty-unit building and then we finally got some information back and the numbers lined up and worked and made sense. That’s the first building that we ended up buying. We bought it for $1 million. We used an asset-based lender to fund it since it wouldn’t fit the agency debt guidelines. We spent around $10 to $15,000 a unit and then a $100,000 on the exterior with paint, new doors, new lighting, concrete work and all that stuff. We then increase the rents from $500 a unit to $850 per unit.

The only thing that stops a lot of people from getting into multifamily is the amount of money that it takes. Click To Tweet

There are a couple of things to dive into here. First, is your CapEx on this guy roughly $100,000-ish?

No, $100,000 just on the exterior.

A $100,000-ish for the exterior and then interior units.

It’s $15,000 times twenty. It’s $400,000 in CapEx. We bought it from $1 million then we’re all-in for $1.4 million, but the building is worth $2 million right now.

Is this in Memphis, Tennessee?

Yes.

A couple more things you said, you mentioned an asset-based lender to fund. Can you talk a little bit about how that is different? I’m thinking it’s different from going with an agency like Fannie Mae and Freddie Mac? What are some of the implications of using an asset-based lender as opposed to Freddie Mac and Fannie?

I’m doing my first Freddie Mac loan right now. The Freddie Mac, I would much rather do that every single time. The one issue with Freddie Mac is that they have a loan minimum of $1 million. I bought the building for $1 million and my loan was $650,000 or $700,000, etc. It was impossible to get Freddie Mac. You’re in this kind of gray area because anything from a loan amount of dollars to $1 million is a gray zone that you can’t get like conventional financing. You’re in this gray area and you have two options. If you have W-2 and a stable income or a stable job, then you can go to any bank in the US and if they have a multifamily or commercial loan division, you can get a loan through them.

LUR Antoine | Turnkey And Multifamily Investments

Turnkey And Multifamily Investments: If you’re a business owner and want to get to the next level, you have to push the needle. If you’re uncomfortable doing something a little scary, you’re never going to level up.

 

If you’re like me and you don’t and you have your own business, everything goes into the business and you pay yourself a shitty amount of money because you don’t want to pay taxes, then you’re not able to go to Wells Fargo and get a loan for a multifamily property. You then have to go to these asset-based lenders which are pretty much like the hard money lenders of the multifamily or commercial world. What asset-based lender means is they’re going to give you a loan based on the asset, not based on you personally. They don’t ask for my W-2, my 1099, my personal tax returns.

They’re going to underwrite the deal and make sure the deal pays for them. They’re going to make sure their money is tied in every possible way to that deal so that if you screw up as the investor, they’re going to be able to take that property or take the rents and they’re going to be happy and safe with their return. That’s why we had to use the asset-based lender, which is very expensive, like 6% or 7% interest. Whereas Freddie Mac is going to be like 4.25% interest. Our goal is as we bought the building for $1 million, we spent $400,000 on the renovation. Now it’s worth $2 million. Once the building is done, which is going to be in two months, I’m going to go to Freddie Mac and do a cash-out refinance with agency debt, pull that money out, pay off the old loan, decrease my interest rate from 7% to 4.2, 5% interest and then I can hold it for the next ten years and have cashflow.

I have one more question regarding this particular transaction. When you went into it, what I like to ask investors who play in the multifamily space is how their initial underwriting has compared to reality? How they maneuvered themselves through the changes that inevitably come when you’d go to execute your business plan.

There are two things. One good and one bad. I’ll start with the bad news first. One of the things that needed to be done at this property was all the catwalks around the property because it was a two-story building. All the second story landings and stuff like that needed to be replaced. The handrails were not up to code. It was completely falling to the ground. At any time, some tenants could have walked and fall into and hurt themselves very bad. That was the first thing on my list. While we were under contract, I had a contractor go there and do some bid for all the ironwork and it came back at $25,000 and I was like, “We’ll budget for it and see if the numbers make sense.” After we closed, he started doing work and after three months, I was like, “What the hell? Did you start? Is it done or what?” I’m way out here so I was talking to the property manager like, “How’s it going with the ironwork? Is there any update?” The guy hadn’t done anything in three months and now I was like, “I’m going to start pestering him now going, “We need this done.”

I wanted it done in the first month. I don’t have the liability. It turns out after like six months later, it is still not done. We ended up firing him. We ended up hiring a legit, big company to do the job because I wanted it done at this point. The bid came back at $85,000 to do the work. That was a big boo-boo or mistake where the bid came back and instead of $25,000, now it was $85,000. That was a big thing that came up. That’s the bad news. The good news for the underwriting was we estimated we would rent out the units for $725 when they were done. We ended up renting them up for $850 per month. At the end of the day, we ended up in a better position than a worse and because we’ve got the higher rents, the building was there for worth more which was able to save us money.

What would you say are some of the lessons you’ve learned from this transaction? Since you bought the twenty, you’ve leveled up to buy even more units. Clearly, you’ve learned a lot and have used that to execute more transactions.

The power of multifamily and the ease of multifamily compared to single-family homes. Let’s say you buy twenty units and you’re buying them at $500 a month rent. You renovate one unit to test it out and you can get $850 per month. Now, you know that all the other nineteen units, you can get that same amount with the same square footage. It makes it easy to look at your numbers and if you’re good with numbers, can play with the numbers, and you spend $10,000 on the renovation to get this increase, then your return is 70%. Now, we can do it for all the other units. The difference between that and with single-family is that you can’t do that. Even if you have twenty houses along the same road, they all may be different square footage, different dimensions. One may have a parking garage, one may not. One may have a longer driveway, a smaller yard, smaller, etc. The prices may be similar, but they’re going to vary between every house.

Ten houses may need a new roof which is going to cost $5,000 and the other may not. The numbers are different for every single house, whereas for apartments, it’s one roof. I don’t have to deal with that. It’s one exterior so I don’t have to deal with that. It’s way easier for the math for the apartment buildings to gauge how much you should spend per unit and what the numbers can look like so you have much more control with the apartment buildings over doing twenty single-family homes versus one apartment building.

Networking is still powerful. You can pick up some golden nuggets if you go and try to meet with people that are doing more than you. Click To Tweet

Any specific lessons learned when moving from turnkey to multifamily?

The only thing that’s stopping a lot of people from getting into multifamily is the amount of money that it takes. Look at that example, $400,000 on the renovation plus $300,000 down payment. I’m all in for $700,000 for twenty units. A lot of people want to break into the space of multifamily and I’m like, “How much money do you have?” “I have $50,000.” I’m like, “You can probably buy a duplex, but you can’t buy much more than that for it to be a safe investment.” If you have $500,000, $250,000, then maybe you want to start buying with an eight or ten-unit building. The issue with those smaller buildings, less than 20 units or less than 16 units. Anything from 5 to 16 units, let’s say you don’t have much scalability and the financing is horrible. It would be much better to buy four-unit buildings and buy 2 or 3 of them because now you can go and get conventional financing, which is going to be way lower interest rate and way better terms, a 30-year term. If you go right over to the other mark, which is 5 to 16 units, now you’re in that gray area. It’s a five-year term. The interest rate goes up. You have to pay for the points. You have to pay for all this other crap.

If you’re going to make the jump, you’ve got to make a huge jump into multifamily for it to make sense and that’s why a lot of people don’t ever get into it. It’s because it is a lot of money to get into. I prefer when people would do a couple of single-families, duplexes, fourplexes and they’re comfortable. They do that over a couple of years, two years or whatever and then they want to liquidate all of those to level up. That’s a great way to do it or they sell their single-family home and now they have the cash to be able to do it. You want to also test out your team on the smaller stuff before you do level up to the multifamily. If you don’t have the right team on the ground that can’t manage three single-family homes, how are they going to manage a twenty-unit building for you? Now you’re going to spiral out.

I know that you play a lot in the space of networking still. You were invited as a guest for a meetup and stuff like that. You host your show. As you continue to play in this space, what is the importance of continuing to network and do these meetups?

You never know who you’re going to meet which is good and bad. For me, it’s good because it’s also good clients. Clients for the turnkey business, which is good. I started a wholesaling business, so going out there in LA and networking. It’s like, “Do you want to buy turnkey? We can help you out.” Meeting people face-to-face is very powerful. Also, with the turnkey business, you don’t want to turnkey. That’s fine. Do you want some off-market deals in some markets? We have those deals as well. Our team can send you those.

Going and networking are still very powerful. You can still pick up some golden nuggets if you go and try to meet with people that are doing more than you. You can learn a lot from those people and then also building that network and those connections. When I first started, the way I was able to scale the business so fast was through networking and raising money from other people’s money and showing and proving to people. I was sitting down at a coffee table face-to-face like this and them asking all the same questions, for example, “How did you do this?” A week later, I’ll email you and be like, “Do you want to invest in my project? I completed 2 or 3, but do you want to partner up on project number four?” You’re going to be like, “Absolutely. He knows his stuff. He answered all my questions.” Building that trust face-to-face allowed me to go and raise money and raise capital. Starting with just $40,000, it’s very hard to scale unless you have other people’s money.

For the multifamily investing, did you raise any capital for that or was your raise on other types of investing?

We first started raising money for the single-family homes after we had done a couple of projects. People then would come in, fund the deal and get a percentage of the profits. They would fund 90% of the deal, we would put in 10% and then we would split the profits 50/50 or split the cashflow. Now with my $40,000, I could split it up into ten houses, $4,000 in each house. I can do ten projects instead of doing one project. That’s how you can scale that quickly. The multifamily, the first couple of buildings, we bought it with our own money because we didn’t know what we were doing. I feel like if you’re going to raise $500,000 from other people, you better know what you are doing. We did the first couple of projects with our own money. Once we had a nailed down system and pattern and unit style and the unit type and knew what the market rents were. I’m like, “If I can buy another property in this sweet spot in the zone, then I’ll be able to go and raise money and feel good about taking other people’s money for this project,” because right now we have a system and a model in place.

LUR Antoine | Turnkey And Multifamily Investments

Turnkey And Multifamily Investments: Match your resources to the strategy that makes the most amount of sense for you to start today.

 

This is so much good information. I’m getting a lot of good information talking to you about all this stuff. This has been amazing. I know that you work with your family, you’re building this business with your family. Can you talk a little bit about building a business with your family and how to navigate that as other people are probably thinking about doing the same?

It’s good and bad. It depends on your family. With us, we’re all hustlers and driven and very entrepreneurial. We’ve always been that way. We came from Toronto. We immigrated here in 2000. My dad had to keep his job in order for us to, first of all, live in the Bay area, which was ridiculous. Also, to get his citizenship, he had to have a job or be maintaining something. He was stuck in this world that he didn’t want to be in. My mom was an entrepreneur starting different businesses. Me and my brother growing up, my dad was traveling around the country for work. We were with mom a lot of those years and she was the entrepreneurial one.

She was doing business while managing us as kids. We saw her hustle and drive in what she was doing and we would be a part of all those businesses that she had. Because of that and the family that we are, we can do this business together because everybody works hard and everybody wants to go along the same goal. For some families, it could work. For other families, maybe it doesn’t work all that well. As long as everybody’s driven and has the same goal and everybody feels like that things are fair, then I think it could work for other families, for sure.

My last three questions are the level-up questions that I ask all my guests that come on. First, what are you grateful for in your life right now?

Probably my parents raising me the way that they did and making me who I am now. By making me entrepreneurial and allowing me to be entrepreneurial.

What would you say is key to your continuous success and growth?

It’s always trying to push the needle forward. A lot of people are task handlers. They’ll do their to-do list and they will watch Netflix. If you’re a business owner and you want to get to the next level, you always have to push the needle. If you’re not uncomfortable or doing something a little scary, then you’re never going to level up. I think that that’s something every single day. If I handle my tasks or my emails, I’m like, “What can I do next?” I’m thinking about different ways to market or do whatever I need to do.

What do you wish you had known at the beginning of your journey that you now know?

As long as everybody's driven, has the same goal, and feels that things are fair, building business with family could work. Click To Tweet

My big recommendation is to match your resources to the strategy that makes the most amount of sense for you to start now. Getting started as the most important thing and a lot of people are getting started in something they’re not going to be successful at just by having a five-minute conversation with somebody about what they’re trying to do. What they know or how much money they have or who they know. It’s going to work out. If you have a full-time job, have two kids at home and have two dogs and two cats and a wife. You have $20,000 in the bank and you’re trying to do a ground-up development in LA, it’s not going to work.

People need to be realistic about what strategy they’re trying to go down and don’t worry about the numbers or don’t worry about whatever’s sexy or whatever your friends are doing. Write down all your resources that you have time, money, etc. Write down the different strategies of how much time money and people that you think you’re going to need to get there. A lot of people with full-time jobs in California want to do the BRRRR out of state. My first question is, how are you going to build the team on the ground? When are you going to do it because you’re working from 9:00 to 5:00? They’re two hours ahead of you so you’re going to have to wake up at 6:00 or 7:00 in the morning and maybe we’ll have an hour to call people, but most people don’t want to get on the phone right at 9:00 in the morning.

You’re screwed. You have one hour to build your team every day. It’s going to take you three years to find the right person, to build that team on the ground to make it a success. I’m like, “I think you need to start with something else that you can do from 5:00 to 10:00 PM to make some extra money so that you can eventually move into the BRRRR strategy later on but maybe it’s investing in syndication passively. Maybe it’s buying turnkey rentals. Things that you can do with the time that you have allotted but people are trying to fit a square into a circle and it’s not going to work out.

Thanks so much for coming on the show. There are so much good nuggets here. If my audience would love to learn more about you and your business and your offerings, what is the best place that they can go?

I’d recommend following me on Instagram. I post a lot of good content there. It’s @MartelAntoine. The website for my company, for the turnkey business, if you’re interested in that is MartelTurnkey.com. I wrote a book and it’s on Amazon if you search my name, Antoine Martel. If you want to do the BRRRR strategy or want to go and do deals yourself, I would recommend reading that. If you want some off-market wholesale deals in markets across the country, I would go to RocketOffer.com. I do have my show called A Millennial’s Guide To Real Estate Investing.

Thank you so much for coming on again. I appreciate it, Antoine.

Thanks for having me.

This was such an amazing show. I am so lucky to be able to do this stuff and be able to speak to these amazing real estate investors who are doing such amazing things in this market, in the real estate industry in general. Thank you so much, Antoine, for coming on. I appreciate it. There are so many good nuggets. A couple of my insights are so much determination from his story. He talks about spending two years trying to invest in California and before getting the deal in Memphis, Tennessee, the summer before doing so much research. Calling 300 people until they found someone that wanted to do the deal and be able to get things off the ground.

 

LUR Antoine | Turnkey And Multifamily Investments

A Millennial’s Guide to Investing in Cash Flowing Rental Properties

He has lots of determination, unwillingness to give up and then when he spoke about quality management, looking at turnkey providers and being able to execute the BRRRR strategy in markets that you don’t live in. He talked about making sure you align yourself with a good property management company that you can leverage them, your contractors, and their experience in the market. He also mentioned that it was important to make sure that they’re aligned in their compensation. Ten percent of the rent collected is ultimately sort of the situation, the deal with them. However, making sure it’s a percentage of the rent collected and not a flat fee, because that keeps the alignments in the same path.

He noted a couple of things when looking at turnkey providers. One was some turnkey providers are asking for deposits to find properties. He noted that that is not needed. If you’re seeing that, it’s an indication of someone that you don’t want to work with. Some turnkey providers are selling houses for over the appraised value. When you have situations like that, you then are going to have to put additional money because the bank is going land-based on the appraisal. He noted that that can in then in turn impact your returns and if you were to sell that property, you could potentially lose that money because no one’s going to want to pay for a property that’s not worth that much.

The last item he mentioned was to watch out for turnkeys with in-house property management, not to say that that is something to not to use them, but be wary and understand and make sure that you understand that to make sure that the interests are aligned. He then talks about the way in which he executed the multifamily deal in Tennessee. He was networking with brokers in Memphis, Tennessee, and the way he did that was going onto LoopNet and looking for the brokers that were posting properties in the Tennessee market.

He wasn’t looking at the properties that were on LoopNet, but instead of looking for those brokers and then reaching out to them to start conversations and start relationships. It was nine months of continuing to reach out to brokers and watering and nurturing those relationships. Weekly and bi-weekly following up with them, checking with them and having conversations with them is when this particular deal came about and then the twenty units. Since then they’ve been able to level up 71 units is what he said.

It’s great information on this show and a lot of good stuff. My last item is he does turnkey and he’s now doing multifamily and he talked about the power of multifamily. He went into that in the show and essentially, the economies have scaled by making one change on. You have one roof, one building and all the different units are in there. By doing one proof of concept that the rent increases, you then have, “I could do the others and potentially get the same result as well.”

He noted how that would be a little bit more challenging to do on single-family homes, because each single-family home might be different square footage size, etc. He also noted that for many people getting into large multifamily, which is what he said essentially if you’re dealing with small multifamily four units, you’re still covered by conventional loans. If you’re a W-2 employee, you can use that W-2 income to help you get qualified along with the income that’s coming off of the properties.

Once you move into the 5 to 16 to even 20-unit range, he mentioned that a lot of those properties are going to fall. They’re not going to qualify for Fannie Mae if their value is not over $1 million. If the purchase price is not over $1 million. You then have difficulties to get the financing that you need to then acquire the property. Ultimately, taking that bigger step to get into the bigger deals is most ideal and from the sounds of this, definitely working with other people, which then brings me to the last point, which he said, “Match your resources to the strategy that best would work for you.”

He mentioned listing out all of your resources. Some of your resources could be your time, your money, your relationships and the people that you know. The markets that you know, your knowledge of different markets and understanding. The relationships that you’ve had in these different markets as well. An unlimited number of things that you could consider resources, but you list down all the different things that you know are resources, your money and how much money you have to spend. You then think about all the different strategies that are out there.

One of the great things about this show is I’m seeking, especially with this particular series, to highlight all the different strategies that are available to invest in play in the real estate space. Through reading, you can get a feel for how much time it’s taking to execute on some of these different strategies. You can also do further research, reading books, as well as going to meetups and networking with people and understanding. From that, you can then get an understanding of, “What are my resources? I’ve now got an understanding of all the different strategies, which strategy best works for me to then partner or execute,” based on what it is that you’re dealing with.

Through that, you then approach real estate investing from a more informed and empowered space, because you understand why you’re doing it and why it works for you. At the end of the day, it’s all about personally customizing your real estate experience and your real estate investing in your current situation and what the realities are for your life. I hope that you found that this episode was informative and lots of good nuggets, knowledge and information shared. As well as action points and things that you can do to the extent that some of these strategies are things that you want to execute on BRRRR, multifamily and turnkey investing. There are lots of good types of strategies here. He even talked about wholesaling as well. Until next time. Keep leveling up. Take care.

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About Antoine Martel

LUR Antoine | Turnkey And Multifamily InvestmentsBorn in Toronto and raised in San Francisco, Antoine started investing in real estate while he was still in college.

Since then, Antoine has been investing in residential & commercial real estate in key markets across the country. He has built a rental property portfolio with over $10M in assets and has completed over 150 rehab projects.

 

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