When starting out in rental housing, lean on someone who has been there before.
Joe Bryson, Founding Partner of Stellar Equity Management in Houston, syndicated his first apartment deal, a 52 unit community in Spring Branch, Texas. It turns out the project was a success. In 2015, Bryson secured the NAA Excel Independent Rental Owner of the Year in the 100-unit or less category.
Bryson did not do it alone. He credits mentors, such as Lifestyles Unlimited, for his success.
“Stepping into an industry without much background and then winning an Independent Rental Owner (IRO) of the Year award, it is because you found people who have done it before and they give you a roadmap,” Bryson says.
On the operations side, mentors with many years of experience can help newcomers avoid the usual hurdles that test new rental owners.
Stephanie Bryson says success comes to IROs who surround themselves with people “who can help you, provide you with education and guide you. You have to find people who have been there and have done what you are trying to do.”
Curtis Hains, Owner of Vende Capital in Houston, says the biggest rookie mistake owners can make “is to try to reinvent the wheel. [And even worse is], when they have a roadmap, but they are not following it.”
Those in Hains’ network helped him with the financial side of the business.
“I cannot stress enough the importance of having a good mentor,” he says. “There were folks within my network who told me about loans and what to look for. It is a very complicated business. There is no way to pick up on nuances of it without help.”
Hains suggests attending events, such as Apartmentalize and local apartment conferences, where newcomers can meet established owners and operators.
“Owners should not try to go it alone,” Hains says.
John Ridgway, President of Celtic Realty Advisors in Spring, Texas, met mentors in an educational group in Houston called Lifestyles Unlimited. He also eventually secured equity through the group. He has been involved in the organization for almost a decade and now serves as its Vice President of Mentoring.
Even for Ridgway, who previously served as a Regional Vice President when he was working for Lincoln Property Company, this type of network was crucial.
“While I had a ton of experience in operations, I had zero exposure to the financial aspects of the business, such as how to get a loan and giving the lenders what they want to see in the process.”
Regardless of which networking group an upstart rental owner plans to join, it is important to find something.
Says Hains, “If you are someone from a non-real restate background, it is very important to immerse yourself in your business so that you can hire good people.”
Legacy Community Housing Corp.’s Brent Sobol says mentors can help owners avoid trouble.
He learned from a mentor to never get overleveraged and to have enough [financial] cushion to ride out rainy periods, he says.
“I’ve never had a bankruptcy or foreclosure,” Sobol says.