How To Go From Part-Time To Full-Time Investing with Mark Walker
About Mark Walker
- Mark quit his day job on 2015 to invest full time.
- He invests across Florida, Colorado, Texas and Illinois.
- He was inspired to start investing after reading Rich Dad Poor Dad.
Mark was inspired to start investing in real estate in 2004 after reading Rich Dad Poor Dad, however it wasn’t until 2015 when he quite his day job and went full time. In 2004 Mark started his investment journey by buying a duplex which yielded a 36.5% cash on cash return in the first year. In 2010, by networking, he teamed up with a general contractor based in Denver and because enthused about real estate again and moved into single family homes. These homes were in a trendy area of town and he built a three story duplex on each lot and sold of each unit separately by executing a party-well agreement. It was through these deals that Mark leant the difficulty of buying single family homes because his money was tied up for 15 months, unlike with a multifamily where you can still collect rent while renovating. For the next year Mark invested in several single family deals until he built a reasonable portfolio with a 20% cash on cash return on each unit.
Leaving the day job
In 2014 Mark bought his first multifamily and it was through this investment that he built the courage and saved the money to quit his day job. The final straw was seeing how quickly decisions can be made when you’re the boss compared to the slow decision making process in a large company. In this episode Mark notes how scary it can be to leave a job where you’ve had a dependable pay check every 2 weeks for 14 years however he reminds us that leaving a job doesn’t mean you can’t go back into the workforce at a later date. When Mark first left work he found he had a lot of free time to spend scaling up the business and in this time he bought a 12unit complex and turned it into a 64 unit multifamily deal.
Finding a mentor
Mark recommends finding a mentor when you start up your own business that has experience in the market, with whom you can trade notes and trust. Mark’s mentor is his cousin who owns a business which has brokerage and property management divisions. The main difference between Mark and his cousin was in the size of deals they worked on and so his cousin would let him sit in and watch the larger deals being made. It was by watching this being done that Mark found the courage to approach a 64 unit deal in his first year. He sold the 12 unit property and did a 1031 exchange and syndicated to buy the 64 units. After purchase Mark did a 6 month renovation which covered 75% of the units and the entire exterior and so he could raise the rents and new leases by $125-$175 each.
Leveraging other people’s skills
You can grow your business organically by using money from the last deal to invest in the next deal and you will slowly become larger. Alternatively you can get a sponsor and leverage their financial strength and experience. By having someone on your team who has financial experience the banks will give you a longer and larger loan. For example when you get a non-recourse loan with Fannie Mae they have three tiers of loans; 5-50 units, 51-100 units and 100+ units. If you chose to grow by only using money from previous deals then it could take a very long time to reach the upper tiers and borrow larger sums of money. However, by having a sponsor their track record has already been proven and their net worth is already large enough to cover the loan amount. In order to reach the net worth and liquidity levels for tier 3 loans you don’t have to attach yourself to a single sponsor, you can form a group and pool your net worth.
Top 5 Investing Tips
- Most successful habit – Never stop learning because learning leads to action and action leads to success.
- Most influential tool in your RE business – Underwriting tool for analysing every deal
- Most exciting project right now – Just wrapped up renovation on a 64 unit multifamily
- Who is your most influential person – Mark’s cousin who inspired him to think bigger called Mark Philips
- Best US deal to date – The 64 unit deal that he has just completed
Contact – website http://www.luxmana.com/
Mark Walker on LinkedIn
Mark is offering a free guide to all listeners;
10 Not So Obvious Ways To Boost Your Multifamily Property NOI
Visit www.luxmana.com and find this interview in the Interview section and grab the guide there.