Multifamily Real Estate Investing

Why My Worst Investment Decision Was My Best Lesson My first property investment was a disaster that left me reeling. I was young, eager, and naively jumped into what seemed like a fantastic deal - a new condo in Penang. I teamed up with a group of other investors, got a developer discount, and thought I was on my way to building wealth. Sounded great, right? But what happened next was a harsh reality check. ❌ The property never appreciated; in fact, its value dropped by more than 50% ❌ We couldn’t sell it or even rent it out for over five years. ❌ Meanwhile, I was bleeding out $6,000 every month in mortgage payments. To make things worse, I was grouped with total strangers in this so-called "joint investment," and if they refused to pay their share of the losses, I would be left footing the entire bill. It was a nightmare. I reached out to the people who had sold us on this investment, desperately asking what went wrong. Their response? A shrug and, "We also lost money." I was left with negative cash flow and a sinking feeling of uncertainty about my financial future. 💡 But that painful setback became the turning point for me. I could have given up on property investing right there, but instead, I turned it into my best lesson. Here’s how I changed my entire investing philosophy after that experience: 1. Do My Own Due Diligence. I learned to dig deep into market research, property value trends, and rental demand before committing to any deal. 2. No More Joint Ventures with Strangers: I decided to invest only in properties where I could have full control. 3. Positive Cash Flow Only: If the numbers don’t show a profit each month, it’s a no-go. 4. Avoid Overvalued New Builds: New doesn’t always mean better. I shifted my focus to properties with a proven track record rather than gambling on future appreciation. 5. Go Where the Opportunities Are Best: I realized that just because a property is closer to home doesn’t mean it’s a safer bet. That’s how I ended up discovering the potential of the UK property market and found they offered some of the best rental returns. The result? A portfolio of over 83 units across 25 properties that generate a cashflow for my family, allow us to travel the world, and retire at least 15 years earlier. If I had given up after my first failure, I would’ve missed out on this life-changing journey. The monthly rental incomes from these UK properties now fund my kids' education and create a safety net for my retirement. So, what's stopping you? Remember, mistakes aren't the end; they're just the beginning of building something better. P.S.: Have you ever experienced a setback that changed your approach for the better? Which of the 5 lessons you like the most? I’d love to hear your story in the comments! 👇 #InvestmentLessons #BounceBack #LearnFromFailure #BuildYourWealth

You won’t hear this often admitted from someone who’s raising capital for real estate…I made a poor investment. A MISTAKE..... It was a LP deal in my personal portfolio, invested with a multifamily sponsor I didn’t properly vet. I had some cash and wanted to put it to work quickly. They have 6,000 units, so I figured they had a “track record.” It was an assumable, fixed rate deal, so thought I was fine given the macro. But….they didn’t conduct adequate property level due diligence of their own, so their cap-ex & op-ex budget has exploded. They've had property management issues on top of that, with finger pointing. They didn't provide a K-1 until September, lol. They haven’t paid distributions in about 18 months, 2 years in. I’m hearing some their other assets are in foreclosure. Come to find out, they were volume-driven and with a fee-based focus. Pretty big variance from my typical approach and what I talk about on this platform. Well, I MADE A MISTAKE. I took a flyer and it may cost me. Maybe it won’t, but I'm pretty sure it will. I definitely regret it. To be clear, I would never be as flippant with investor capital. The due diligence level is very involved in that case. The commitment to stewardship of other people’s capital is more important that making money for myself. The latter isn’t why I do this, frankly. I realize I’ll probably lose some people here, but I think this topic is important enough that I don’t care. If someone you are considering investing with says they haven’t lost money before, they are either inexperienced, overconfident, or lying. There’s still time for this deal to work out, but here’s the lesson….always evaluate the deal as a passive investor, don’t just trust the sponsor. No matter who they are. I hear a lot of passive investors put a sponsor’s track record above all else. The deal metrics are barely a consideration. Careful of the track record….It might just be a track record of shooting fish in a barrel. I KNEW this, but sometimes a reminder through pain is the best teacher. Sponsor, deal, market, macro/micro…all very important factors in outcome. 

I've underwritten over a thousand real estate deals over my career, here are the 2 biggest mistakes I see passive investors make when evaluating multifamily investments: #1 They fully trust sponsor numbers #2 They focus on returns without considering the risks Until they realize the deal isn't performing as promised and they get a capital call. Here's how to analyze properties like an experienced investor: 𝗦𝘁𝗲𝗽 𝟭: 𝗟𝗼𝗼𝗸 𝗮𝘁 𝘁𝗵𝗲 𝗜𝗥𝗥 IRR is your most important return metric. It factors in the time value of money. If sponsors only show average annual rate of return ("AAR") instead of IRR, that's a red flag. Always ask for it. Value-add deals typically present 15%-17% IRR. ___ 𝗦𝘁𝗲𝗽 𝟮: 𝗣𝗮𝘆 𝗮𝘁𝘁𝗲𝗻𝘁𝗶𝗼𝗻 𝘁𝗼 𝗬𝗲𝗮𝗿 𝟭 𝗚𝗣𝗥 This single factor impacts IRR more than anything else. Some deals assume 100% of units hit post-renovation rents on day one. Completely unrealistic. Red flag: If sponsors assume >3% rent growth in year one based on recent growth numbers, they're being aggressive. __ 𝗦𝘁𝗲𝗽 𝟯: 𝗖𝗵𝗲𝗰𝗸 𝘁𝗵𝗲 𝗘𝘅𝗶𝘁 𝗖𝗮𝗽 𝗥𝗮𝘁𝗲 This determines your resale value and is the #2 factor impacting IRR the most. Many deals assume cap rates compress by 50+ basis points after 5 years. That's aggressive. Compare their assumptions to long-term market trends and historical data. __ 𝗦𝘁𝗲𝗽 𝟰: 𝗦𝘁𝗿𝗲𝘀𝘀 𝗧𝗲𝘀𝘁 𝗥𝗲𝗻𝘁 𝗣𝗿𝗼𝗷𝗲𝗰𝘁𝗶𝗼𝗻𝘀 Every deal assumes rent increases after renovations. But can people actually afford them? Compare proforma monthly rents to 30% of monthly median household income. If higher, leasing will be difficult. Also check: Population growth + job growth = future rent support. __ 𝗦𝘁𝗲𝗽 𝟱: 𝗘𝘃𝗮𝗹𝘂𝗮𝘁𝗲 𝗥𝗶𝘀𝗸 Don't chase high returns without understanding the risks. Check: - Market conditions (new supply, historical and current submarket occupancy, diversity of employers) - Type of debt - Exit assumptions - Reserves collected for unexpected expenses or drop in occupancy Ask sponsors for stress test scenarios. __ 𝗦𝘁𝗲𝗽 𝟲: 𝗞𝗻𝗼𝘄 𝗪𝗵𝗼'𝘀 𝗠𝗮𝗻𝗮𝗴𝗶𝗻𝗴 The property management company is as important as the deal itself. Ask: - How long have they been in business? - Do they have experience with this property type? A company that only manages single-family homes won't know how to run a 100-unit building. __ Did I miss anything? What would you add?

I've lived in Atlanta for 24 years. And I see investors repeating the same mistakes. Here are 6 things you must know before investing in apartments in Atlanta. 1) Bad debt is everywhere: Delinquencies? Super high. I've seen a group buy a 400-unit property here, only to realize later that 50% of tenants weren’t paying rent. It wasn’t misrepresented. They just didn’t dig deep enough. 2) Labor costs are high: If you want high-quality people to work at your properties, you have to pay more. Site salaries, admin, and overall labor costs are a lot higher than most people underwrite for. 3) Fraud is rampant: People misrepresent who they are. They fake credit scores and pay stubs. It’s common in Atlanta (even in class-A apartments). 4) Rent growth has slowed: A lot of investors are still betting on yesterday’s rent growth. The market has shifted. If your pro forma assumes aggressive rent increases, you’re in trouble. 5) Property taxes will hit you hard: Assessors in Atlanta are aggressive. If you’re not prepared to fight assessments, you’ll be hit with unexpected costs that destroy your NOI. 6) Micromarkets change everything: The city changes a lot from street to street. A quarter-mile can completely change the renter demographic, demand, and pricing power. ☝🏻 Pretty much sums up everything. These are the problems I'm currently seeing in the market. I hope this helps operators who're expanding their portfolios in Atlanta.

Many real estate investors think they are buying cash flow. Then the roof sends the invoice. A property does not stop needing capital just because your spreadsheet calls it cash-flowing. These are 13 of the most common CapEx offenders I have found, along with rough planning ranges for how long they may last: 1. Roof: 25-30 years 2. Water heater: 7-10 years 3. Appliances: 7-10 years 4. Driveway or parking lot: around 50 years 5. HVAC: around 20 years 6. Flooring: 5-15 years 7. Plumbing: around 30 years 8. Windows: around 50 years 9. Paint: around 10 years 10. Cabinets and counters: around 20 years 11. Structure: around 75 years 12. Components: around 15 years 13. Landscaping: around 10 years These are rough screening ranges, not replacement guarantees. Climate, materials, use, installation quality, and maintenance can change the timeline. But the principle does not change: CapEx will kill your cash flow if you are not preparing for it before the bill arrives. Say the roof on your next deal has about 20 years left in it, and a new one will cost $15,000. That is $750 per year, or $62.50 per month, that belongs in your budget from the month you close. Nothing is leaking. Everything looks fine. The expense is still there. The mistake is treating rent minus the obvious monthly expenses as pure cash flow while ignoring the slow, expensive items already wearing out behind the walls, under the floors, and over your head. If CapEx is missing from your underwriting, your cash flow number is not conservative. It is fictional. Which replacement has surprised you most as an owner?

Want to know the fastest way to ruin your real estate deal?... Attempting to fund renovations with future cash flow. It sounds harmless, but it's not. This is one of the biggest mistakes I see newer investors make and it’s completely avoidable. Here’s how it usually goes: you buy a value-add property, but instead of raising or reserving capital for improvements, you tell yourself you’ll handle renovations “as the property cash flows.” You plan to upgrade things gradually over months, maybe years, using the income the property generates. That’s not a strategy. It’s a liability. What actually happens? Cash flow never materializes the way you hoped. Your capital ends up tied up in a half-renovated asset. You lose valuable time, momentum, and often, credibility—with partners, lenders, or even your own spouse watching things go sideways. I’ve seen this scenario play out on large 100-unit projects. I’ve seen it happen on small duplexes. The scale doesn’t matter. The outcome is the same: stalled progress, mounting frustration, and missed opportunity. So here’s the lesson: Budget for capex up front. If you can’t afford the full deal, then partner or go smaller. Never assume future income will fix today’s problem. Build a margin of safety into everything. Investing without one isn’t investing… it’s gambling.

Here are 7 hard lessons I learned from the most challenging deal of my career: (Sharing with the hopes that it’ll help someone avoid the same mistakes.) Quick notes: • This is a deal I bought in PHX in 2022. • We overpaid and put the wrong loan in place. • I've waived all fees and am working for free on it now. • I've put $500,000 of my own money in for our loan principal pay down. And now, the lessons... 𝟭. 𝗜𝗻-𝗽𝗹𝗮𝗰𝗲 𝗰𝗮𝗽 𝗿𝗮𝘁𝗲 𝗺𝗮𝘁𝘁𝗲𝗿𝘀 I know this seems almost laughable to type out. But you won’t always be able to increase your rental rates to the same market rates you see at the time of your purchase. This deal was a value-add deal where we saw the exact same unit next door renovated renting for $550/mo more. So we thought, “Great, we’ll just charge $550/mo more and get it, too.” Well, I learned you won’t always be able to do that. If the market drops between now and when you deliver those units — you won’t hit those rents. 𝟮. 𝗦𝘂𝗻 𝗕𝗲𝗹𝘁 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 𝗶𝘀 𝗲𝘅𝘁𝗿𝗲𝗺𝗲. From 2005-2021, I had only invested in the Midwest. At most, rents moved a few percent a year. The Sun Belt (and Phoenix in particular) has had rent swings upwards of 8%+/yr to now declines of 8%+/yr. I didn’t anticipate how much things could move down. 𝟯. 𝗔𝘃𝗼𝗶𝗱 𝗳𝗹𝗼𝗮𝘁𝗶𝗻𝗴 𝗿𝗮𝘁𝗲 𝗱𝗲𝗯𝘁. I know there can be nuance here, but there is value in sleeping well at night and locking your rate in. 𝟰. 𝗢𝗻𝗰𝗲 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝗶𝗲𝘀 𝘀𝘁𝗮𝗿𝘁 𝘁𝗿𝗮𝗱𝗶𝗻𝗴 𝗻𝗲𝗮𝗿 𝗼𝗿 𝗮𝘁 𝗿𝗲𝗽𝗹𝗮𝗰𝗲𝗺𝗲𝗻𝘁 𝗰𝗼𝘀𝘁, 𝘆𝗼𝘂 𝗻𝗲𝗲𝗱 𝘁𝗼 𝗺𝗼𝘃𝗲 𝘁𝗼 𝘁𝗵𝗲 𝘀𝗶𝗱𝗲𝗹𝗶𝗻𝗲𝘀. Phoenix had appreciated in value so much leading up to 2022 that deals were trading above replacement cost. Once properties start trading near or at replacement cost, you need to move to the sidelines. (Take it from me, I wish we did.) When deals start trading at or above replacement cost, new developments become easy to pencil with how high stabilized asset prices have become and a wave of new development will hit the market which will crush future rent growth. 𝟱. 𝗧𝗵𝗲 𝗹𝗼𝗻𝗴𝗲𝗿 𝘁𝗵𝗲 𝗯𝗲𝘁𝘁𝗲𝗿 𝘄𝗶𝘁𝗵 𝗹𝗼𝗮𝗻 𝘁𝗲𝗿𝗺. On this deal, we did a 3-year term loan — the shortest we had done in quite some time. We’ve now extended it, but take the 10-year fixed or the 5-year fixed with the floating rate term if you can get it. 𝟲. 𝗛𝗼𝘄 𝘆𝗼𝘂 𝗿𝗲𝘀𝗽𝗼𝗻𝗱 𝗮𝗻𝗱 𝗰𝗼𝗺𝗺𝘂𝗻𝗶𝗰𝗮𝘁𝗲 𝗺𝗮𝘁𝘁𝗲𝗿𝘀. It’s easy to be a GP when all your deals are crushing it. But when you have a tough deal, you need to stand by it and not quit. 𝟳. 𝗡𝗼 𝗲𝘅𝗰𝘂𝘀𝗲𝘀. 𝗬𝗼𝘂 𝗮𝗿𝗲 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗹𝗲. I found this deal. I pitched it. I thought it was a good idea at the time. I’m responsible. I was wrong. I own that. There's no sugarcoating it or making light of the situation. It was a major misstep. -- Not fun to be a part of and not fun to talk about, but I hope this is helpful for someone. Feel free to message me with questions.

The $200K Lesson: When a "Good Deal" Goes Wrong Let me tell you about a time when one of my business partners thought he had struck gold, only to end up losing $200K on a deal that seemed like a no-brainer. It was a 30+ unit apartment building he picked up for just $15K per door back in 2006. At first glance, that price seemed like a steal. But there was a catch—and it was a big one. The building sat in an “F” neighborhood. Think about it: a place where 90% of the city's violent crimes happen. Even before signing the deal, there was a glaring red flag: no property management company in Cincinnati wanted to touch it. He called every single one. Not one said yes. Still, he went ahead. Cheap property, right? But cheap doesn’t always mean profitable. The tenants he brought in? A nightmare. They’d move in, pay the first month’s rent, and then skip out on payments while trashing the units. It spiraled downhill fast. Rent wasn’t coming in. Repairs piled up. And before he knew it, the property was in foreclosure. That $200K of his money—and his investors’—was gone. Here’s the lesson: Real estate isn’t just about getting a “good deal” on paper. You’ve got to look deeper: 1. Location matters. A bad neighborhood can sabotage everything. 2. Property management isn’t optional. If no one will manage it, ask why. 3. Your team is your backbone. You need the right people to execute your plan and meet your proforma goals. Without these, even the best deal can turn into a financial disaster. So, before you jump into your next investment, remember: It’s not just about the numbers—it’s about the foundation you build around them. #RealEstateInvestment #PropertyManagement #InvestmentStrategies #RealEstateAdvice #BusinessLessons

Here’s the reality: most investors think they’re thorough. They’re not. They do a surface-level scan, miss key details, and get blindsided by problems they ‘couldn’t have foreseen.’ In reality? They just weren’t obsessive enough. The best real estate deals aren’t made when you sign the contract. They’re made in the trenches, digging through financials, property histories, and lease agreements. This is where the detail-obsessed thrive. Here's how it works: 1. Numbers never lie - unless you don't check them Most investors look at rent rolls, nod approvingly, and move on. That’s amateur hour. The obsessive investor verifies every lease, cross-checks payment histories, and calls past tenants. Hidden delinquencies? Misrepresented rents? Lease clauses that can screw you later? Catch them before they catch you. 2. Walking the property? Crawl it instead. Most investors do a walkthrough. The smart ones crawl. Get under the house. Check for moisture, rot, foundation issues. Climb into the attic. Look for leaks, bad wiring, and insulation problems. Behind walls and under floors is where the real surprises hide. Miss these, and your ‘great deal’ becomes a financial sinkhole. 3. The people factor; read between the lines A seller who’s too eager? A property manager who won’t stop talking? These are signals. Dig deeper. Are they hiding a problem? Is the local market about to shift? The devil isn’t just in the details, it’s in the body language, the offhand comments, the inconsistencies in their story. Your obsession with detail will serve you well. 4. Worst-case scenario planning Most investors run numbers based on best-case projections. Big mistake. The obsessive investor runs best, worst, and most likely scenarios. They don’t just hope it works out. They underwrite to ensure it does. 5. Their proforma is a sales pitch - yours is the truth Never trust a seller’s spreadsheet. Their numbers are designed to sell you, not protect you. Build your own proforma from scratch. Verify every expense and crosscheck and stress test every assumption. If the deal still holds up? It’s real. If not? You just dodged a bullet. How to leverage OCD-level detail in due diligence ↳ Double-check everything - then check again. ↳ Verify sources independently - don’t just trust the broker or seller. ↳ Trust, but verify - assume everyone has a bias and act accordingly. ↳ Be ‘that guy’ - ask the dumb questions, insist on seeing original documents. The bottom line? What some call 'overanalyzing' is actually protecting your investment. In real estate, the obsessive win. The careless pay their tuition in losses. Which are you? *** Want to get access to some properly underwritten opportunities? Subscribe to my newsletter and be among the first to know. Link at the top of my profile Adam Gower Ph.D.

Every budget disaster I’ve seen in multifamily has at least 3 of these 10 mistakes behind it: 1) Assume your rent assumptions are fine (because you made them). Projecting rent by using a flat increase across the board might get you to a total, but it won’t hold up. 2) Ignore the payroll burden. You forgot to get updated taxes and benefit rates from payroll. Now you’re 10% off on wages every month. Good luck!! 3) Not training your staff. Half your managers are new. Most of them don’t know what loss-to-lease means. But sure, you can hand them a template and expect them to fill it out with perfect accuracy. What could go wrong? 4) Skip the part where you talk to the team on the ground. You made all the right guesses. Too bad nobody else knows. If you don’t run your assumptions by the people running the property, nothing's going to work out. 5) No debrief after the budget’s done. Most onsite teams won’t intuitively know what each number represents, how it was built, or what trade-offs were made. So when actuals start rolling in, they default to habit instead of aligning to budget strategy. 6) Pick the wrong marketing mix. You budgeted for the bronze package. But the property needs gold. Now you’re under-spent, under-leased, and spending all month explaining the same $1,000 variance over and over again. 7) Not shopping your vendors. Rolling forward last year’s numbers might seem efficient until you realize the scope changed and pricing went up. 8) Assume everyone knows the numbers. They had one good meeting. And then forgot everything. Unless you’re showing up, staying visible, and helping the team connect the dots, the budget dies on paper. 9) Think details don't matter. It does. Missing line items, vague contract notes, half-baked assumptions. These don’t just slow you down. They multiply into 100+ hours of avoidable rework later. 10) Missing out on known, one-time expenses. You knew it was coming. But it didn’t make it into the file. Now, you’ve got a capital project with no capital. Did I miss anything? PSA: If you're doing any of these, just know you're already setting your budget up to blow up in your face.