Thread by @taylorawelch

🏡 A MASTERCLASS IN REI ACQUISITION

I don’t “teach” real estate.

You cannot pay me for a course or for mentorship.

I *buy* real estate.

Quite a lot of it… and every now & then feel compelled to share what’s working and what’s not. Lessons from my last $20mm 👇

When you’re buying stocks & companies you’re betting on the management team & the R&D… you’re making this bet:

“This company will out-innovate and out-hustle everyone else…”

It’s a fool’s errand unless you know how hedging works… with REAL ESTATE — you’re betting on this:

🏆 20 years from now, people will like to sleep with a roof over their heads.

Generally speaking, ppl don’t LIKE being homeless. Although EVERYTHING incurs a measure of risk, the ‘risks’ in real estate come from almost exclusively from VALUE/PRICE.

In a nutshell: DON’T OVERPAY.

The better you ‘buy’ the less capital you’ll have locked up in the deal if it goes sour. Here are some examples and for the rest, I’ll answer Q&A at the end of the thread. Let’s begin.

1️⃣ Earn your equity.

If you want to learn something, do it for cheap OR free…

In 2012 I worked for a company in Memphis and learned on the job. We bought 50+ houses per month. I entered with zero RE education and exited knowing everything I needed to know to build portfolio.

2️⃣ Create spread.

Once you know the basics of the game, you can CREATE spreads inside of your deals a hundred different ways:

-value add
-forced appreciation
-development & build

Pick one and master it fully… we do value add & forced appreciation.

3️⃣ Treat your lenders like clients.

They are going to be instrumental to getting your chips off the table and clearing out your capital. Great lenders = unlimited scale. Bad lenders = a nightmare and you’ll get stuck at 1 deal per year while they “season” you.

4️⃣ Stick to B-class (at worst) neighborhoods.

If you want a portfolio to be proud of, there’s one simple rule: BE PROUD OF IT. We aren’t building cardboard boxes & calling them “housing.”

We provide amazing places to live that people are proud to invite their families.

5️⃣ Learn finance.

Accrual VS cash. P&L VS Balance sheet. You need to be able to read numbers the same way you’re reading this thread… a good book on this would be Karen Berman’s “Financial Intelligence.”

Numbers tell as story nothing else can.

6️⃣ Math, not emotions.

Once you learn finance, just read the numbers — we’re about to pull out of a “great” deal because the numbers are showing different things in different places. There’s no emotion… just math.

If you buy emotionally you will get ruined.

7️⃣ Take care of your renters.

During the pandemic, there were several families we reached out to and offered delays in rent. Our renters are a huge part of the equation. We try to make sure the homes are amazing, and the experience THEY have is also amazing.

8️⃣ Boost the NOI (or add value to the property), then re-collect the capital

After 120 days for single family and 24 months for multi family we are collecting capital BACK out of the deal, using #3 LENDING PARTNERS. Banks want to lend money, if your assets are good.

BTW your lending partners include PRIVATE money…

And private money allows you to “float” the original acquisitions capital until the permanent lender finances… you return the money to private lender for a fee, then you have the deal with $0 capital and ♾ return 💯

Happy to help any way I can… be around for a few hours.
Happy investing 🤝

PS… to hit $100mm

You do the right thing (follow the steps) on 100 deals worth $1mm each…

Or 10 deals worth $10mm each.

The math is the math.
The process keeps you safe 💪