Gabe Bowling went from zero to 55 units of multifamily real estate in a single transaction. It was a $10 million dollar deal. And he’s only 25 years old. Pretty sure, at 25, alls I owned was a busted up Nissan Sentra and a Groupon for teeth whitening. But um, here’s Gabe’s process for scooping up apartments. He generally just goes to Crexi.com, searches up multifamily properties, and sees what he can find. Anything that looks interesting, he runs the numbers.
Gabe actually built a Back of Napkin Underwriting Tool to help him analyze deals 10 times faster and easier than doing it manually. He sells it for $7 if you wanna check it out. He’s also got a free course you can sign up for at GabeBowling.com. Cool, so he plugs in the number of units and purchase price that they’re asking (doesn’t mean you’re gonna buy it at that price, but you just wanna see if it makes sense, even in the worst case scenario, right?). Then snag the average rent, occupancy, and expense ratio.
Throw those in. Next, what’s the rent premium? Like, say you made some minor improvements, how much could you bump the average rent by? Maybe $150 a month? Or $200 or so? All of that can be found on Crexi. But now we need to make some assumptions. This is why it’s important to be in the trenches, daily, living and breathing this stuff. Okay, so, you need to estimate the type of loan you could get for the property. Say it’s 65% of the purchase price. You’ll need to come up with the remaining 35%.
Now you can enter in the current interest rate in Gabe’s little Google Sheets thingamajig. And voila, it’ll spit out a projected return summary. So you can see, plain as day, assuming your numbers and estimations are right, whether or not you should even attempt to do that deal. Like, if you had an 80/20 split with investors and you held the apartment building for five years, here’s your cash flow and here’s your average annualized return. Oh, and here’s the equity multiple your investors could expect.
“So all I’m gonna do at this point,” Gabe explains, “is I’m gonna look at the deal, I’m gonna ask myself, do I wanna spend more time pursuing this based on the return I’m seeing? If so, if the return sounded good to me, now I gotta reach out to the broker and start verifying all of the information, and then move into a much more detailed underwriting model to help me make a confident decision whether or not to buy the property. Either way, build relationships with these brokers. Ask them to send you deals.”
“You have to be looking at deals every single day,” he emphasizes. “Then, just to recap, you wanna look at each deal at a high level. Call it back-of-the-napkin math. What does this deal look like? Are you even interested? I’ll teach you how to set your buying criteria so you’ll instantly know whether to pass on it, or pursue it. Once you have one that checks all your boxes, you reach out to the broker, start verifying the information, the numbers, and just make sure everything checks out.”
Okay, but what about talking ’em down on price? And then the whole getting a loan part? And rounding up investors who’re gonna take you serious? And not getting bullied into taking a teeny tiny slice of the overall deal? Gabe covers all that and much more in his How To Buy Multifamily course. He certainly seems wise beyond his years. But I think he needs to do more deals himself, so we don’t have to wonder if he got lucky or if he’s a one-hit wonder. Ya know? Other ‘n’ that, good stuff, but waaay too complicated for me.