What to Look for in a Multifamily Investment Company

By: Max Sharkansky, Managing Partner
What to Look for in a Multifamily Investment Company - feature image

The Perfect Match

The strength and stability of real estate’s multifamily sector have attracted a plethora of investors, and with that, a high number of investment companies eager to raise capital and match those investors with their assets and visions.

The question is, with so many multifamily investment companies out there, how can investors choose the right one for their specific needs and goals?

It takes some time and effort to ‘vet’ investment firms and find the perfect match. In fact, shopping for a multifamily investment company can feel a lot like interviewing candidates for a job. Like hiring an employee, the decision should be made after careful thought and rigor.

Here are some of the qualities to consider when vetting multifamily investment companies:

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5 Key Criteria

Experience: Real estate investment professionals learn by doing. They should have at least a reasonable depth of experience in purchasing assets and increasing ROI for investors. This typically means fine-tuning a strategy to generate strong returns. Sometimes, this involves adding value to a property through renovations or repositioning in order to maximize rental income. This process takes place over several years, through up and down-market cycles, and yields many lessons along the way—it can’t be rushed.

Knowledge: With experience comes knowledge—about real estate, the multifamily sector, specific property types and geographic markets, and how the industry works. This knowledge gives real estate professionals a familiarity with the market and its ebbs and flows. This further fosters an ability to manage investments properly and advise investors on the best opportunities for them, as well as which opportunities to avoid.

People and Communications Skills: Real estate is a people business more than a building business. Investment companies whose professionals understand people and have strong communications skills will always perform better for their clients than firms whose staff lacks those skills. From the company’s website to that first phone call or email, how a firm interacts with potential clients is very telling.

Relationships: Similarly, whom you know in real estate can be just as important as what you know. Investment companies with strong connections are often privy to off-market deals that allow them to acquire assets for less money because the competition is limited. By saving money on the purchase, they can then invest in improving the property, in turn raising investors’ ROI upon disposition. Companies who nurture their relationships with others in the industry are also more likely to nurture their relationships with clients.

Troubleshooting Skills: Businesses don’t always run smoothly, no matter how organized or well-planned their strategy is. Real estate—especially multifamily real estate—can offer strong risk-adjusted returns, but the unexpected (fires, floods, unforeseen remediation) does happen. How does the company handle those unexpected events, and how successful are they are mitigating risk for investors when those events occur?

Achieving Your Goals

Knowing what to look for in a multifamily investment company is an investor’s first step toward realizing wealth management goals. By taking the time to find a company they can trust and grow with, they can set the stage to achieve their goals on a much shorter timeline and with greater precision than going into the relationship blindly.

It’s worth the effort to perform this due diligence early on, before deciding on any particular firm, to reap the most benefits from that relationship.

Max Sharkansky, Managing Partner
Posted By Max Sharkansky, Managing Partner

Max is co-founder of Trion Properties and oversees all aspects of acquisition, disposition, and property analysis for the company. Since founding Trion he has led the acquisition, renovation and disposition of over $300,000,000 in mismanaged and distressed assets, primarily in multifamily, yielding an average IRR in excess of 30%.

Max's driving objectives in investing are to deliver outsized returns without taking outsized risks and the words he lives by are that "real estate doesn't kill people, debt does."