Why partnering with the right operators is more important now than ever
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When it comes to real estate investing, there’s one mistake I see too many passive investors making: focusing solely on the deal rather than the person running the show.
You see, real estate isn’t just about brick-and-mortar properties or the potential ROI on paper. It’s about who’s behind the curtain, managing the property, handling your investment, and communicating with you.
And if you’re serious about building wealth, partnering with the right operator is the single most important decision you can make. In today’s article, I’ll cover key elements for success, steps to find and vet operators, and I’ll share real-life examples.
I lost $300K by Being too Focused on the Numbers
It’s not enough to find a good deal.
Anyone can find a good deal if they know how to analyze a building. But a good deal can head south fast if the operator doesn’t know how to manage it. And before you know it, you’ll be on a capital call with the operators.
I learned this the hard way. Years ago, I lost $300,000 in a deal with a developer in Northern Virginia.
I knew the guy from the local Real Estate Investing Association (REIA), so I trusted him without doing my due diligence. He didn’t have a track record, but I didn’t ask the tough questions. I was more focused on the numbers and less on the person who was supposed to make those numbers a reality. That mistake cost me big time.
After getting burned like that, I vowed never to make the same mistake again.
Characteristics of a True Multifamily Operator
So, what makes a true operator? What separates a good one from the rest? Here’s what I’ve learned after years of experience and countless deals.
| True operators have a track record of success, do smart deals TODAY, constantly communicate, and work with the same team across deals |
Experience and Track Record Matter More Than the Deal Itself
First off, experience matters. But not just any experience – experience with the same team over multiple deals. You want to work with operators who have a proven track record of success, especially in challenging markets.
For example, our properties are over 90% occupied. Our team has over 40 years of experience managing multifamily properties. That’s not by accident. It’s because we’ve built a strong, cohesive team that knows how to navigate these waters.
True Operators Keep You in the Loop
Another trait of a true operator is communication. The best operators keep you in the loop every step of the way. They don’t just send you an email when things are going well – they’re transparent even when there’s a bump in the road.
When we did the Overlook Apartments deal, our investors knew exactly where we were in the process at all times. We communicated consistently and transparently, so our investors were confident that we would deliver on our promises. And we did.
Always Ask Lots of Questions
But it’s not just about what the operator has done in the past. You also need to pay attention to what they’re doing today.
- Are they still active in the market?
- Are they adapting to current challenges?
- Are they still producing results?
- Do they have a track record of success?
- How have they handled similar deals in the past?
- What’s their occupancy rate?
- How do they communicate with investors?
- How do they underwrite deals?
- What’s their exit strategy?
This is your money on the line, so you have every right to grill your potential operators.
Operators who aren’t adapting to today’s market conditions are a risk to your investment. You need to partner with someone who’s not only experienced but also still hungry and engaged.
Don’t be afraid to ask questions.
Why is this important? Because now is a great time to invest in multifamily real estate. Despite the market’s challenges, the fundamentals are strong. There’s a high demand for affordable housing, rents are continuing to rise, and prices are down from the highs of early 2022. Plus, cap rates are expected to decrease over the next few years as the market stabilizes and interest rates go down.
At the end of the day, investing in real estate is about more than just making money. It’s about securing your financial future.
And the best way to do that is by partnering with the right people, the true operators who know how to protect and grow your investment, conservative in your assumptions, and always be prepared for new opportunities. With these strategies, you can thrive even in the most uncertain of markets.
For more information on our deals or to join the investment group, click here to schedule a call. https://nighthawkequity.com/join.
