Unlocking Multifamily Success: Tips from the Pros!
Yo, welcome to the Painless Wholesaling Podcast! Today, we’re chillin' with Anthony, the dude behind Red Knight Properties, and he's here to drop some serious knowledge about the real estate game. We're diving into how to make wholesaling less of a headache and more of a breeze, because let’s be real, it can get messy if you don’t know what you’re doing. Anthony's got the scoop on managing a thousand units and navigating the multifamily market like a pro. Whether you’re just starting out or looking to level up, this convo’s packed with tips and insights you don’t wanna miss! So, kick back, relax, and let’s get into it!
From 2 Units to 1000: Multifamily Secrets Revealed!
Visit https://www.paynelessflipping.com to learn how to do real estate deals the payneless way!
You know, sometimes real estate feels like a rollercoaster ride, right? Well, that's the vibe we got going on in this episode with Anthony Scandariato. We dove into the nitty-gritty of painless wholesaling - because let's be real, it can sting if you’re not careful! Anthony, who co-founded Red Knight Properties, shared his journey from a regular Joe to a multifamily property mogul. He’s got about a thousand units under his belt, which is pretty wild. We talked about how he started with small two-family homes and worked his way up to larger syndication deals. It’s all about the hustle, baby! So, if you’re looking to jump into real estate without the usual headaches, Anthony’s tips on finding good deals and building a solid team will definitely keep you awake at night— in a good way!
Takeaways:
- Anthony and Nathan are all about making real estate and wholesaling painless, like a chill day at the beach.
- Wholesaling can be a stepping stone to owning properties, so save those sweet profits for bigger investments.
- Networking is key in the multifamily space, so get out there and rub elbows with the right peeps.
- Starting small with a partner can save you from major headaches when jumping into multifamily deals.
- Always have a solid team in place; it’s like the secret sauce to managing a thousand units without losing your mind.
- Investing in real estate isn’t just about the cash flow; it’s about building equity too, so keep your eyes on both!
Companies mentioned in this episode:
- Red Knight Properties
Transcript
All right, we are live here with my man Anthony. And today guys, you are Anthony.
You are part of the Painless wholesaling podcast where we try to make doing real estate and wholesaling painless for people. Because it can be painful sometimes if you don't know what you're doing. Am I right? It can be.
Speaker B:Oh yeah, absolutely.
Speaker A:Well, hey man, thanks for coming on the podcast.
And you know, for people that don't know who you are, do you want to give like a quick 30 minute introduction so they can get to know you a little bit better?
Speaker B:Yeah, yeah, sure. And just to preface this this way, Nathan was on my podcast not too long ago, right?
Speaker A:Yeah, last week I think.
Speaker B:Yeah. Actually December 14th. If you want to check out his episode, look us up under discovering multifamily. I'm a host of multifamily podcast.
Nathan talked about wholesaling and we talked about how they could jumpstart a real estate career. So that's episode 218 on December 14th. So check us. Check them out there.
Speaker A:Is it already up by the way? I wanna.
Speaker B:Yeah, it's, it's up. If I didn't tag you in it, I apologize. You should have been tagged.
Speaker A:But I'm gonna check it out right, right after this. I'm checking it out. Awesome, thank you.
Speaker B:Excellent, excellent. Well, your episode has a quite a bit, quite a bit of listeners already, so let's definitely check them out.
But you know, make a long story short, my name is Anthony Scandariato.
As Nathan said, I'm the co founder of Red Knight Properties and we're a privately held boutique, multifamily and mixed use real estate investment and property management company. And we have about, as Nathan said, about a thousand units, give or take. We sold some so actually it would have been more.
So it's kind of, we keep hovering around the thousand unit mark when we sell and then we buy again, you know, a multi family, so garden style, typically apartment buildings, I would say, you know, one to two story walk up apartment buildings.
I would say, you know, in terms of class, class C, class B, we like to call them workforce housing, which you know, typically we're an hour or so, maybe an hour, hour to two hours within a major metropolitan area. So we like to invest in secondary slash tertiary markets that are more suburban, maybe a little bit of infill urban.
But you know, we're in six different states right now. I'm currently based in New Jersey. To put it in perspective. It's where I live is about 45 minutes west of midtown Manhattan.
So yeah, east coast sponsor. But you know I started out acquiring two family properties which are more buy and hold situations.
Actually still own a couple of them to this day and wanted to scale up from that. I used to work for another real estate operator buying, doing similar deals to what we're doing now.
We're usually going into properties that have been mismanaged or have just been owned by a long term owner. Hasn't kept up with the market, hasn't really kept up with the improvements. We go in there, clean it up, get better tenants in, improve the property.
Whether that's through interior or exterior renovations.
We're talking kitchens, bathrooms, floors, monument signage, landscaping etc and you know, get the rents up and then depends upon, you know, the business plan and the vintage of the asset. But sometimes we'll do a cash out refinance or we'll, you know, we'll just hold it or we'll sell so.
Well, there's many different scenarios and each, each deal is different. Yeah, so that's, that's kind of how I started. So I started with the twos buy and holds.
I did a couple of two family flips which went well with partners. So kind of took that experience and then bought you know a 10 unit with my business partner, he's my business partner now.
And then together we bought about 70 units together and then we did a couple of cash out refis and a couple sales.
So we were able to use that experience and we brought on additional partners, slash investors into know 50 plus unit, you know, 50 to 200 units, 5 million to 20 million dollar apartment complexes and it's via syndication model, I'm sure you heard that term.
Speaker A:Of course.
Speaker B:Yeah, basically means, you know, putting together resources to do bigger deals. And obviously you had a lead sponsor and that's what we are. So. So yeah, so it's been a great ride.
We've gone full cycle like I was mentioning, from acquiring to you know, rehabbing to refinancing and then selling on probably a dozen deals. I've been doing this for almost 10 years now part time. I was doing it 4 years and then really the full time has been, you know, the past few years.
So yeah, it's been a wild ride.
Speaker A:What did you do before you were, you said you worked for an investor. Was that what you were doing? And then you went full time into doing your own thing?
Speaker B:Correct.
So I worked for another real estate operator and sponsor but they were buying office buildings so I helped grow their company and then on the side I, you know, bought the two families and I bought, you know, the 10 units. I bought the 70 units with my partner. So that was all kind of leading up to doing the syndications, doing the bigger deals.
And then, yes, early: Speaker A:Yeah. So, wow, sounds like you're crushing it, man. I mean, that's a lot of units. So you, you went from seven. When did you get your first 71? When was that?
Speaker B: That was between: Speaker A:So it's taken you a couple years to get all to a thousand, but that's pretty impressive. That's amazing, actually. I, I believe, like, I mean, I'm assuming, I think that's fast, right?
Speaker B: n. So I didn't buy that until: Speaker A:Did you have experience in real estate before working for that company for the three years?
Speaker B:No, I had other business experience. I was in a different industry altogether.
Speaker A:What did you, what was that? Just curious.
Speaker B:It was consumer products and retail. We were selling sunglasses and sweaters.
Speaker A:Oh, cool.
Speaker B:It's very entrepreneurial, but it was totally different.
Speaker A:You feel like that helps you with where you're at right now?
Speaker B:Absolutely. You learn a lot, a lot of skills from business transfer into real estate. What I've been realizing. So it's been great.
Speaker A:That's freaking, that's freaking awesome, man. So tell me. I don't, I don't.
I can't imagine owning a thousand units right now because I'm, I'm a wholesaler in, in the sense where I'm just churning and burning and selling deals and, and making money that way. And obviously I want to get to that point. But what, what is that like to own that many properties? Is, are you making like crazy amounts of cash flow?
Is it like, is it hard to sleep because you got a thousand units and you're not sure, like what will happen? Like, tell me how you, how that, how that goes.
Speaker B:So yeah, we're in different states too, so we have management teams. I have property management company, so I have, I have a staff.
I have a property manager who works for us who kind of oversees our on site staff, which is our on site property manager. And then we have a typically on site leasing agent. So for every hundred units, we usually have a staff of probably Three people.
So on site super maintenance technician and then a leasing agent. Maybe the maintenance tech has an assistant. Depends on the deal. So I have, I, I sleep at night.
Speaker A:Yeah.
Speaker B:At the beginning I don't think I did much because just very nervous starting out taking when you have other people's money.
Speaker A:Right. Okay.
So that's kind of what I was wondering like if it was, it was nerve wracking to, to have all that but if, and if you're buying at the right price, I guess it's not that nerve wracking. Right?
Speaker B:No.
If you feel really confident in your business plan and like, like the first deal that I did with other partners outside of myself and my partner and we invest too. Right. So our money's going to work at the same time was pretty local.
Like I can't, like we were actually managing the property just him and I for the first like four months together. So we, we could just drive half an hour we were there.
So I actually wasn't that, it wasn't that nerve wracking because we started quickly having success and getting rents higher than we thought and you know we had to maneuver around a lot of the tenants but that's a long story and we were able to do it pretty quickly. I try to work as quickly as possible. But to answer your question, it comes down to feeling confident that you have the right team in place.
I mean I had to, I've had to fire people. I've had to fire more people than we hire. So yes, you know particularly like maintenance and contractors.
You know thankfully I've had the same property management team. I have a bookkeeper as well. I've had that going on, you know 100 retention there. But yeah it's the contracting and the maintenance could be.
There's a high, it's a high turnover employment. So which I try to do everything I can to minimize that is, is.
Speaker A:Your goal when you buy apartments, Is it cash flow? Is it equity? Is it an equity play? Is it, does it differ depending in the state?
Speaker B:Depends on the deal and it depends on the market cycle. You know it depends on the motivation comes down to motivation of the seller.
Like we just picked up another 104 units in a different state and you know had, was from a long term seller. Like he, he, he actually developed the property built in like 88 and he's kept the rents the same like hasn't touched it for I mean 30 years.
Speaker A:So that's nice.
Speaker B:So you know, so like there's those types of loss to lease plays we're going after now might not really be cash flowing that much going in, but I mean, you know you're going to get a pop with those. So. So there's some of those types of deals. A lot of the deals we did in the past few years have been more value heavy.
It's kind of been a mix between cash flow and equity. We like to see both quite honestly, but depends on the market cycle too. It's, it's, it's usually, it's usually a combination.
Speaker A:Is it hard raising the funds for those deals? Like Syndicate syndicating those deals?
Speaker B:I'd say it comes down to having, I mean you have to have a good network. Right. You know you have to, it comes down to performance. Right.
So I mean a lot of the deals that we've sold or refinanced, I usually have an investment lined up after that for my partners and a lot of them come back in and then I have a bunch of new people that want to come in. So it's kind of a nice mix every time we do a new deal.
So as long as you're performing and you're doing what you said you're going to do, it's it, it gets easier. It's not, I don't say it's easy, but it's, it does get a little bit easier. So right now I have more equity than deals. That's just the reality.
Speaker A:Yeah. Yeah, for sure. Well, how did you find that 104 unit? That sounds like a great deal. How did you find that?
Speaker B: of:So I, I kind of just networked my ass off with different brokerage communities in different states and came across this opportunity just actually happen stance through one of the brokers of a property that we sold in Florida. Put us in touch with this one and it kind of right, kind of right place, right time situation.
Speaker A:Yeah, I feel like that's how it works a lot in the multi family space is like just being out there and networking because I don't, I heard there's not like a MLS for, for multi family. It's, it's LoopNet. Right. And it's just, it's just like a lot of working with brokers. Is that how it works?
Speaker B:Yeah. Looking at a lot of it's garbage. So it's, you know, you're not going to see the off market deals on there. You just, it comes down to relationships.
Just like real estate is a relationship business. I'd say, I say every single deal we bought I don't think has been on the vet.
I don't think any, any of them have actually one, one that me and my partner just bought together. But that, to answer your question before that one was more for cash flow. So. But yeah, it comes down to relationships.
Speaker A:Have any deals gone sideways like where it's like you've, you've gotten completely destroyed, you did your numbers wrong or, you know. Yeah, anything like that?
Speaker B:No, thank God.
Speaker A:Yeah.
Speaker B:You know, I think things like this one deal we bought in September in Ohio, to put in perspective, we're in New Jersey, Pennsylvania, Ohio, now we're in Alabama, Florida. We were in New York State. We got out of there, did well there. Yeah.
Like the one in Ohio we just bought actually we're getting higher rents than we thought. But like it's taking longer to lease them up. I don't know if it's seasonality or, or what, but we're still getting them, it's just taking longer.
So I think that's bothering me right now. But I think we're going to get through it. It's probably just seasonality thing.
Speaker A:Yeah, yeah.
Speaker B:So, yeah, no, no, nothing has gone bad. Knock on wood. It comes down to debt structure too.
Like, you know, if you put on short term debt and I'm talking like I see a lot of these guys put, you know, 12 to 24 month debt on the property that's floating rate and obviously as you're aware of, you know, you and your audience were in a rising rate environment and if you don't hit your business plan and it comes down, it comes time to pay the note back, you're going to be in trouble.
Speaker A:Right.
Speaker B:We're seeing a lot of potential opportunities with that specific situation come up.
Speaker A:Are those, I'm not very familiar with the space but are those bridge loans? Is that like those people were. Did short term and then they're refinancing into. Needing to refinance into potentially a higher rate.
Speaker B:Yeah. And listen, you could take. I've taken bridge loans out before, I have. So I have bridge loads on my books. Not that much.
The stuff that we have is very low leverage. So low ltv. And the business plan is like already done, which is now we kind of figure out, all right, we're going to sell.
We're going to refi out of this loan. I know a lot of guys who just put bridge loans on the property.
They levered up 80% and they didn't, they didn't raise any rents or if they did, only a small portion of them and their notes coming due in the next three months.
Speaker A:Are they going to get rocked?
Speaker B:They're going to get rocked. My opinion that's.
Speaker A:So what, what opportunities do you think are going to be available for you and other investors with all these bridge loans that are out there of over leveraged people?
Speaker B: alled TRAP that they reported:I don't think we'll see them yet early on in the year. I think it'll be middle towards the end of 23. So I like to find some of those.
I'd like to still find opportunities where very similar to the one we just acquired. Long term owner. I mean I actually prefer that over a failed sponsor to be honest with you.
Speaker A:Right. What do you do to incentivize the people to lend money to you? Do you give a good rate? I don't know much about raising funds.
So how do you incentivize people to like.
Speaker B:Yeah, well, hopefully I don't need to incentivize them at this point. If they want to do it, they want to come in if not. But you know, we usually offer, you know, it's an alternative investment. Right.
So we're look, it's a little bit longer. It's not as liquid as the stock market. You could buy and sell anytime. You can't do that in real estate.
There are ways to finagle it, but really you need to look at this as a longer term investment. And we target, you know, three to five years per each deal. Usually it's usually five. I've gotten out of deals within 18 months. But we project five.
Right. So over that five year period we're looking at a target return of 15%. Okay. So that's. I don't promise that. I don't guarantee it.
Speaker A:Yeah, you can't guarantee anything. Right. Because then it gets a bad spot.
Speaker B:Yeah. So we, that's reasonable. You know, for that time period you.
Speaker A:Said a 15 return.
Speaker B:Is that what 50 internal rate of return? Yep, yep.
Speaker A:Great.
Speaker B:Yeah, but that Takes time. And that's the time value money calculation.
ock market's taking a dive in:But just when you compare historical averages, this is higher than, you know, the, the stock market, S P or Dow, you know, return for 10 years or whatever, it is a little bit higher. So a little bit more risk. But now you got this. There's bonds and you know, there's other things you can invest in.
But we still think that it's a good target return.
Speaker A:Okay, what do you take? I mean, are you able to tell me, like, what percentage do you take? Like 30% of, you know, the earnings? Like, I'm just curious because I've talked.
Speaker B:Yeah, every deal is different. We have the management company, so obviously we, you know, charge management fees, but honestly a lot of it goes towards overhead. So. Right.
You know, it is what it is. We have, we have to pay a manager anyway, so there's that. And then really, really where we make our money is on a refinance or a sale.
So you have to perform.
Speaker A:So not really too much on the cash flow just because you're rehabbing it. You're not making too much money because you're having to put the money into it.
Speaker B:Well, if it's cash flowing, then yeah, you do make money right away. But typically the way it works is, you know, we pay out a quarterly distribution. I try to target at least an 8%. We, we pay an 8%.
It's called a preferred return. So I have to give you 8% basically every single year of your investment dollars at a minimum. And then your money back, return of capital.
And then you mentioned the 30 number. So after you get your money back, depending upon what the profit split is, it's usually a 70% to my partner got a 30 to us. Yeah.
So that's typically how it works.
Speaker A:That's typically okay. That's what I, that's what I thought.
Now, when you're raising money, is there a certain amount where you're like, hey, I'm not interested in working with people that don't like least bring a hundred, 200,000 to the table.
Speaker B:Yeah, my minimum is usually 50,000. I have some younger folks, like I had like a 20 year old, I had a 21 year old. I let them in at 25. I mean just certain situations.
But a couple of those guys who came in at 25 are now putting in 100,000, 150,000. It's like. Yeah, so it's, it's deal by deal. I mean I have some people, 500.
I mean I have some larger people, but those have been with us from the beginning. So yeah, usually it's 50,000. I think that's a good number. It also depends how large the deal is.
Usually we're bringing in 3 to 5 million each time we're doing a deal. So I'll have maybe 20, 30 people typically.
Speaker A:Okay, so. So in your business, what would you say is like the thing that you need the most? Is it, is it more money, is it more deals?
More better employees that can manage your deals? What do you need?
Speaker B: ven know what's out there for:Trying to close the year out. Yeah, sure, but we'll see what's out there. But yeah, obviously more deals, the better moving forward.
Speaker A:So not, not so much the money aspect because you, it sounds like you said you have more equity than deals, right? You have more.
Speaker B:Yeah, right. Right now, yes.
Speaker A:It's good. That's a good spot to be in, right?
Speaker B:Be cash heavy going into a recession. Yeah, absolutely.
Speaker A:That's awesome. Well, is there anything that you want to kind of talk about specifically in your business or let my, my people know?
I meant my people that are in this are mainly new, newer to the industry. But I think multifamily is super important to like get into. I don't think you want to stay in the wholesale game forever.
I think it's a good strategy to have, but you definitely want to level up and start acquiring property. So anything you want to say about that?
Speaker B:I know people who still wholesale that are multi family owners or whatever. It's a good business. You know, it could be a volume business depending on, you know, what you're looking for, what markets you're in.
I would say, you know, if you're trying to wholesale and you get really good wholesale fees.
If you want to buy multi family, try to save up from your wholesale fees, learn as much as you can and then use that as, you know, investment or down payment on a small multi family property or you know, you can invest with someone like us, you know, to see how it works or whatever. So I, I've heard of people doing that. I have real estate brokers who like invest with us and they're commission Based.
So every time they do a deal they're usually like, all right, what else you got going on? So I wouldn't say all your money, but I would, you know, say good Porsche, you know, definitely want to get invested in something.
Speaker A:Do you think for someone that's new, they would try to do the, the strategy of raising the funds and then doing a refinance or do you feel like they should just go straight to the bank and get a loan at the beginning?
Speaker B:Yeah. To get to do multi family right away.
Speaker A:Yeah. Like if you're new. Right. If you're brand new to it.
Speaker B:Yeah, I wouldn't recommend that.
I would, you know, like you said, get your feet wet the wholesaling, maybe buy a couple smaller multi families or you know, invest with the sponsor, figure out how that process works.
Speaker A:Got it.
Speaker B:Learn from them and then do it. You know, you could probably do your own. I, I've encountered actually very recently some first time multi family owners and I don't.
And now that they have so much problems, like they were walking me through their issues and I was like, I don't even know how you put this together in the first place. Yeah, yeah. So I wouldn't recommend it. And those people I'm referring to had no experience.
Speaker A:Got you. Gotcha.
So you would recommend maybe if someone's to get into a multi unit that's like 8 Plex or bigger, you'd say, hey, go get with a sponsor, get with a partner instead of just trying to do it yourself.
Speaker B:Yeah, get with the partner. Like in any situation it's only going to help you grow. That's. That's what I did. Yeah.
I mean if you have all the money in the world, then you don't, you know, you don't really need a partner, but.
Speaker A:True.
Speaker B:Well, I mean, I still think you do because you still, there's going to be rules that you can't fill that someone else can fill. So I wouldn't be afraid to partner.
Speaker A:So is there any, any other gold nuggets you'd like to drop or is there any way. Yeah, any golden nuggets, anything else you'd like to drop for the people, for the painless wholesaling nation?
Speaker B:Yeah, I think, you know, wholesaling is a great way to, you know, like you said, get started. It's a great way to, you know, you could, you know, you could really scale that business as well. So you know, it take.
I know Nathan has mentorship programs and courses that are really good. So definitely take advantage of those and learn as much as you can, just keep learning and learning and you're making good money wholesaling.
Maybe start buying some apartments on your own, see how that goes, if that's what you want to do. But don't stop the wholesaling. You know, you could always continue that.
And you know, so I would say, you know, there's different revenue channels to a real estate business and if you have multiple, you know, in my opinion, the more successful you're going to become.
Speaker A:I agree with you. So let me ask you this. How can people reach out to you if they want to start or what? What would you like people to reach out to you for?
Like, you know, someone saw this and they're like, I like, I like this guy. I like what he does.
Speaker B:Sure.
Speaker A:What would you want them to reach out to you about?
Speaker B:Yeah, so we have a, I have a book that's called like, it's an ebook. It's like how to leave your 9 to 5 through financial independence. So on our website, redknightproperties.com and that's red Knight with the K.
Go there, download that, read. That has a lot of points I just mentioned here. Once you get that book, you'll also get my email and basically all my social media.
So if you want to talk about anything in real estate, you know, reach out to me.
If you liked what you, you know, heard today or anything, feel free to reach out and, but definitely get that book because at least you know, gives you more in depth of what we do and kind of my story. And then you can find me on Facebook, LinkedIn, LinkedIn, Instagram, Twitter.
Only thing I don't have is TikTok and I, I have a feeling it might be banned soon.
Speaker A:So, yeah, man, that thing might be gone soon.
Speaker B:I was skeptical from the beginning. I said, oh, China's involved in this.
Speaker A:Yeah, I hear you, man. I was kind of like, I don't know where it's gonna go. I'm not very heavy in tick tock. I do have it. But we'll see. I guess we'll see, right?
Speaker B:For sure.
Speaker A:Well, hey, I appreciate your time.
I think it's been awesome to learn from you and I think we'll be continue to like network with each other and, you know, provide value to each other's groups. I mean, I'd love to, love to have you back and see what you're up to in the next year to see, you know, what business is looking like.
But thanks for coming on and, you know, I guess we'll catch you again next time.
Speaker B:Absolutely. Keep up the great work.
Speaker A:I appreciate it. I'll talk to you later, brother.
Speaker B:Take care.
