JF2346: 6 Tips For Scaling Your Multifamily Business | Syndication School With Theo Hicks
In today’s Syndication School episode, Theo Hicks shares 6 insightful tips on how to scale your multifamily real estate business in the best way possible. The paths you can take will vary depending on your personal goals and business objectives, but Theo’s advice will be helpful no matter if you work all by yourself, have partners, or employees. It will help you utilize your best skills and preserve your vision as you scale.
To listen to other Syndication School series about the “How To’s” of apartment syndications and to download your FREE document, visit SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.
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Theo Hicks: Hello Best Ever listeners, and welcome back to another episode of The Syndication School series, a free resource focused on the how-to’s of apartment syndications. As always, I’m your host Theo Hicks. So each week we will air a podcast episode that focuses on a specific aspect of the apartment syndication investment strategy. And for a lot of these episodes, we have released a free resource. There are PowerPoint presentation templates, Excel calculator templates, PDF how-to guides, something that will help you along your apartment syndication journey. All of these previous episodes, as well as free documents, are available at syndicationschool.com.
In this episode, we are going to talk about scaling. So how do you scale your apartment syndication business? So you’ve done a few deals, maybe two deals, and you want to create a full-fledged syndication business. You want to do it full-time, you want to grow it to a large size. What are some tips? How do you do this?
I remember when a large operator gave a presentation at one of the Best Ever conferences. He mentioned some of the differences between having a single deal or a handful of deals, as opposed to having a massive portfolio. So that inspired this podcast, as well as a conversation I had with an interview guest recently about very quickly scaling his business to over 600 units, I believe in a year. 600 units in one year. So, again, these are some things to think about when you’re ready to make that jump to a larger scale.
And the first one is going to come down to your vision, your “why”. So your vision is not only going to include “I want to be a big-time apartment syndicator”, but more specifically, what is it exactly that you want to be? Where do you see yourself in five years from now? Are you going to be the only person working in your business, or are you going to have employees? Are you going to have five apartment communities, 10 apartment communities? Is it going to be based off of a number of units? How large do you want to be in five years, 10 years, whatever number you want to be? Because the type of business you’re going to have, if you have let’s say $50 million worth of real estate, it’s going to be a lot different than a billion dollars worth of real estate. Maybe you’re going to have an in-house property management company versus a third-party property management company. Maybe it’s going to be you and a business partner, maybe an assistant, or maybe you’re going to have a director of acquisitions, a director of asset management, a director of investor relations… So the bigger you are, the more people you’re going to need.
But it’s also not only a vision of the number of units you want to have and the role you’re going to play, but you also want to think about the type of culture you want to create. Thinking about this ahead of time is very important, because as you’re bringing on employees, you want to make sure that they not only fit the culture and the vision of today – so maybe you only have one property – but they also are on board with your long term vision of owning $100 million, $500 million, a billion dollars in real estate.
Again, just like your business is going to be set up differently if you have a billion versus $50 million in real estate, the type of people you’re going to attract are also going to be different if you are wanting to scale to a billion dollars. $50 million is a lot, but compared to billions it’s not a lot. So making sure that you have the correct understanding of what you want the culture to be like, as well as understanding how big you want to be, and the role you want to play is going to also be important when you are attracting other people.
This comes to the next step of how to scale, which is to focus on what you’re good at. So obviously, when you first start in apartment syndications, you and your business partners are going to be wearing a lot the hats. You’re going to be doing a lot of the boots on the groundwork, touring properties, doing phone calls with investors, writing on the blogs, hosting the podcast, things of that nature. All the different things you need to do in order to be a successful apartment syndicator. But you’re likely good at a handful of those things, and either are not good at or don’t like doing those other things. So if you want to scale, you’re going to need to focus your time on these scaling activities by having more people on your team, so that you can divide and conquer. You only have so many hours in the day, in the week that you can spend on things, and you’re not going to be able to scale to a billion-dollar company if it’s just you and your business partner doing everything. It’s going to be impossible. And even if you are able to do everything, you’re going to burn out eventually. So the goal would be while you’re doing your first couple of deals, identify what you are good at and what you like, and then identify what your business partner is good at and what your business partner likes. And then from there, you can divide and conquer. But then, eventually, you might like something that you either aren’t good at or you are good at something that you don’t like, or good at something that is kind of a low dollar per hour activity. At that point, you want to start outsourcing those duties to other people so that you can spend more time on the high dollar per hour activities. And over time, you’ll slowly chip away until you are only doing what you are good at, what you like, and it’s a high dollar per hour activity, and you’ve got people that work for you who are doing the things that you don’t like, that you aren’t good at, or are those lower-dollar, yet still important activities.
Now, when you are beginning to hire people when you’re scaling, something else to think about would be an addition to them being a good fit with your culture and your vision, is going to be do they have the two characteristics that are very difficult or arguably impossible to teach? And those are going to be number one, ethics and integrity, and number two, drive. So someone who is not a good person and is lazy is probably not going to be a good fit when you’re ready to scale your company. Okay, that’s why it’s important to have an understanding of your overall vision, because maybe some people might be able to get away with having someone like that in the beginning. But eventually, when you’re working in the 10s, the hundreds, and the billion-dollar range, you’re going to need someone who is not going to lie, cheat, and also who’s going to have a strong work ethic. And according to this person that I spoke with, and I guess from my experience too, these things are not teachable. So making sure when you are beginning to chip away at the things that you aren’t good at, you don’t like and are those low dollar per hour activities, make sure you’re finding someone who based off of their track record and their background, have evidence that they have good ethics and have to have the drive. So just making sure you’re asking them the right questions, maybe bringing someone on for a little bit for a test drive. There are lots of different ways to figure that out outside the scope of this conversation. But just making sure that you understand that these are the types of characteristics you want in your team members as you begin to scale.
Something else that will be helpful when you are beginning to scale – and this will be easier as you begin to carve out of things you aren’t good at, and don’t like, and are a low-dollar per hour activities, and give those to other people – it’s making sure you’re spending at least a few hours a day in deep work. So when you first begin, you’re probably going to be multitasking, an email will be open while you’re working on something else on your computer, as emails come in from investors or wherever, you reply right away… When you do your property tour, you get your phone out at the same time while you’re checking your emails… But when you begin to scale and if you want to continue to scale, you’re going to need to stop multitasking and allocate your time more efficiently. And this is where deep work comes in. So make sure that whatever you want to accomplish for that day, you sit down at your computer in your office, in front of that person, on the phone, and you turn everything off. Silence your phone, even turn your phone off if you’re on your computer, turn your computer off if you’re on your phone and focus all your attention on that one thing. It could be for 15 minutes, it can be for half an hour, it can be for an hour, it can be for a few hours. But you can get more done in let’s say, 15 minutes of deep work or half an hour of deep work than you can get done while multitasking for three, four, or five times that amount of time. That’s something you need to start practicing now, so that when you do get to that point where multitasking is becoming super-inefficient, you’ve already got practice doing that deep work.
Next is going to be mentorship. So obviously, it’s possible to scale a large multi-family business in a vacuum. I’m sure it’s happened before, but it’s very unlikely that you’re going to be able to scale a large multi-family business all by yourself. You’re going to need some sort of mentor or guide to take you from where you’re at to where you want to be. And so three tips that we’ll talk about today for finding a mentor… We’ve done a few episodes in the past on mentorship, so make sure you check those out at syndicationschool.com. Number one is going to be that they also align with your vision. So you have a vision of wanting to be a certain size and have a certain culture. So a good mentor will be someone who also has a similar vision, to the same type of culture, the same type of values, and at least the same size of company that you want to be, and type of company you want to be as well. So it’s kind of exactly where you see yourself in five, 10 years from now. That’s who you want your mentor to be. That way, they can show you the fastest way to get there. So same size, similar industry, value… Pretty obvious.
But maybe you didn’t think about that, or maybe your mentor right now isn’t exactly where you want to be. Or maybe your vision was a lot smaller when you had your mentor and now you’re at the same level, but you’re still using them, because they have more experience in you. So it is possible to hop from mentor to mentor as you scale. But making sure they have the same vision as you.
You’re also going to want to find the doers. So you’re going to want someone who is still actively investing. Just because someone created a business… Let’s say your vision is a $500 million business, and they created a $500 million business as well. It’s better to find someone that still has that $500 million business, is still the manager of that company, as opposed to someone who’s no longer actively involved. So how do you find these people? Again, just talk around, get referrals, make sure that they’re actively involved still.
And then the last thing you want to think about – and this is less about them and more about you – is that you want to make sure you’re adding value to these mentors. So one way to add value will be to simply pay them money, but another example would be to do something for them that is priceless. And something that no one else is or can do for them, based off of your unique background, and then adding this value for free. This is going to be different for everyone, but I can’t tell you how many times I’ve talked to investors who will give away their secret sauce, what makes them successful, they give up their contact information on the show, or wherever, they have people will reach out to them, and people don’t really take advantage of that, they don’t act on that. So at this point, simply reaching out to them is adding more value, because these people really like to share their knowledge and teach people. But to stand out, even more, you want to go above and beyond that.
Let’s say you’re listening to an interview on a podcast and they’re an active multi-family investor, $500 million business, and, “Okay, I want to have a $500 million multi-family business. And they’re actively doing it, and it sounds like we’d get along, and they have the same vision and culture as me. So I’m going to reach out to them and send an email.” So rather than just saying like, “Hey, I want to be like you. Can you be my mentor?” It might work, but do some background research on them, either from simply listening to the show, or going on their websites, and figuring out based off of your unique talents and where they’re at in their business, what you can do for them. It doesn’t have to be something to have to be something that’s real estate related. Maybe — I don’t know, this might be a silly example, but it’s what’s coming to my head… We always ask what people’s Best Ever book is. And let’s say they say their favorite book is a Robert Kiyosaki book, or something. Maybe send them an e-book, another Robert Kiyosaki book, or a book that’s similar to the book that they talked about, or something else. My example was all the value I added for Joe when I first started working for him. Completely unnecessarily, I didn’t have to do that, and look what it grew into. So thinking of a way to add value that’s priceless and unique to what you can do.
And then the last tip — so the first tip was vision, the second tip was to focus on what you’re good at. The third tip was making sure that the people you find to do what you aren’t good at and don’t like, and are low dollar per hour activities, making sure they have good ethics and a strong drive. And number four was focus on deep work activities. Number five was mentorship. This last one is to make sure that you do not get overwhelmed when you are in this scaling process. It’s going to be hard, there’s going to be a lot of obstacles you have to overcome, but at the end of the day, there are lots of different ways to scale a business. If you don’t follow every single thing I said today does not mean that you’re not going to scale your business. So just making sure that you are aware of what I just mentioned, and to make sure that you do not let the obstacles that you are going to face stop you from scaling. I think all the tips we talked about, especially having that strong vision, will help.
So there you have it, those are six or so tips on how to scale your multifamily business. Make sure you check out some of the other Syndication School episodes that we have, as well as those free documents, at syndicationschool.com. Thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.
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