The 5 Things You Need to Build a $1,000,000+ Rental Portfolio (Ep: 483) | BiggerPockets Real Estate Podcast with David Greene & Brandon Turner

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Key Takeaways

  • “Divided 5-ed” strategy – To grow your rental property portfolio you need five team members: a lead generator, underwriter, money raiser, asset manager, and a bookkeeper
    • If you can’t be a team leader, be a team member
    • “If you’re going to start your own Apple, you probably need to work for an IBM first” – David Greene
    • Don’t assume people hate the same tasks that you do
  • LAPS funnel – leads, analyze, pursuit, success
    • Lead generation is the most important as growth can’t happen without new deals
  • Underwriters match opportunities to your portfolio’s growth and investment strategies
    • “Take chaos and create order” – David Greene
  • Relationships between bookkeepers and asset managers can be vital to connect the numbers to action items
  • An asset manager is different from a property manager. An asset focuses on maintaining the wealth of the property rather than the daily operations

Intro

Initial Strategy

  • Start with your end goal in mind: apartment complex, mobile home parks, vacation rentals, etc.
  • You have to buy a product big enough to support your “divided 5-ed” team
    • Scaling is hard when dealing with individual properties. Multi-unit deals are necessary for scaling.
  • Bigger deals help you get more leverage in all areas of business operations
  • Scaling allows you to focus on the aspects of real estate that you enjoy and outsource the rest
    • Don’t assume people hate the same tasks that you do
    • Some people love working with numbers (bookkeeper), while some people like working with people (lead generator and money raiser)

Lead Generator

  • LAPS funnel – leads, analyze, pursuit, success
    • The top of the funnel is very important
  • Deal with commercial brokers rather than real estate agents for large scale opportunities
    • Reputation matters a lot more with these deals, money doesn’t talk as much
  • Lead generator characteristics:
    • Highly motivated and extroverted
    • Good understanding of human nature. They know what makes people respond and adjust to personalities
    • Person of influence, large network
      • “most popular person in high school”
    • Process-oriented- ensures completion of the grunt-work and action oriented tasks

Underwriter

  • Underwriters analyze the numbers to see how much you can pay on a property
  • Functions as a filter: eliminate properties that don’t work and highlight the details of the properties that could work
    • “Take chaos and create order” – David Greene
  • Have a system on how to identify a good deal for your portfolio
  • Due diligence person – reviews all documents, leases, taxes

Money Raiser

  • Also known as Investor Relations
    • Needs to be comfortable with phone calls and stay in constant contact with investors
    • A large amount of capital is necessary to obtain a commercial rental portfolio of scale
  • Bank person: someone who has the patience and knowledge to deal with the slow and technical processes involved with banks

Bookkeeper

  • Handles the finance and accounting of properties
  • Protects the investment and investors. Checks and balances are important for consistent communication and thorough investment updates

Asset Manager

  • Maintains the asset after the deal is closed
  • Thinks more bigger picture than a property management: makes sure growth and returns are maintained on property
    • Calls for action: advertising campaign, find new property managers, etc.
    • Partners with bookkeeper to compares numbers to market trends
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Notes By Drew Waterstreet

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