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  • Writer's pictureMack Benson

Know your market, get the reps, success & failure

MIH Mastermind Social Media Workout Challenge #5

Similar to working out, starting out in a new industry requires repetition.

In 2019 I chose a market and then abandoned that market to start over in a new market. The repetitions were the analysis of deals in these markets. I needed to become familiar with the operating expenses and potential income streams for properties not only in the market but also the sub-markets within that market. I would even say the sub-sub-market has it's own nuances.

Take for example Minneapolis and Saint Paul, MN. If one were to look from the outside you would see Saint Paul on the map directly adjacent to Minneapolis and think they are the same but these two cities are very different from a real estate perspective. They are technically the same market but each has it's own sub-market. Within both of these cities the neighborhoods are quite different from one another as well. In Saint Paul for example, the Summit Hills neighborhood has many large mansions built by the timber and railroad barons of the late 1800 and early 1900s while the Dayton's Bluff neighborhood contains swaths of poverty. These two neighborhoods in the same city but have vastly different demographics.

In 2020, after I made my first offer and got called back to best and final I was chomping at the bit. I had the proof of concept and was ready to hit the ground running. 2020 wasn't ready to cooperate though. It took until the middle of the year for deals to start coming back and every one I ran across I analyzed. I didn't yet have the experience to know, at first glance, which ones I should immediately discard so I looked at them all, analyzing the rent rolls, T-12, and P&L. I ran them through my analyzer which could take a few hours per deal but I needed to get more experienced.

I was getting my reps.

Every deal that looked promising, and even some that didn't, I walked with the broker so I could start building new relationships gain more experience. I submitted letters of intent on many of these deals and made it to best on final on a few but couldn't quite get the number 1 spot. That never deterred me and I kept pushing. My eyes were on my goal and I knew I would get there if I kept pushing.

In December we welcomed our third child to the world. This would come with its own challenges and blessings. Obviously welcoming a child is a blessing unto itself but from the perspective of my real estate career I would have some time off from my W2 which allowed me to more freely tour properties and meet with brokers which I did. A number of offers came out of that month.

One offer in particular I really liked. The area was decent, the buildings weren't in horrible shape but did need some TLC, and they were not being managed well. This would leave me quite a bit of room to add value to both the income and the expenses. At this time sleep was difficult but I knew I needed to do what I needed to do and I was analyzing the deal when I could late at night.

I submitted my offer, got a call back for best and final, revised my initial offer and submitted, got a call back for an interview with the seller, and finally got a call back that my offer was accepted! This was my first accepted offer! I had been trying to get an apartment deal for close to 2.5 years but the excitement was short lived.

I screwed up.

I had a miss on my underwriting that stood little to no chance of managing through. I realized this within minutes of hanging up after the seller interview but I didn't know what to do other than hope the other buyer would win.

I knew I couldn't close on this deal so I backed out.

I was crushed, I felt defeated, and I felt humiliated. I always took pride in my underwriting and felt it was one of my strongest things to offer but that was where the mistake happened. It was a simple mistake but it was big.

Up to this point I was trying to do everything myself and I failed. I learned a ton but I knew I needed help, I needed a partner.

But where do you find a partner?

During a local meet up I talked about the deal I backed out of. This struck up a follow up conversation with an old contact who was also in Jake & Gino's Wheel Barrow Profits Academy and we agreed to start looking at deals together.

Would this partnership bear fruit? I know, but to find out you'll have to read on Wednesday, October 20

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