Well, I didn’t use those exact words. In fact, I was much more reticent at the time. Had I known back then what I know now, I would have declared my intentions much more resolutely.
Much to my surprise, my wife was all for it!
After all, we had never purchased an apartment building, let alone several. This is what I mean when I say I wanted to be a polygamist – I wanted to be an apartment polygamist. It wasn’t about having multiple families, but instead having multifamily real estate investments.
You see, owning multifamily apartments can be like marriage.
Just as married men tend to live longer than single men, smart commercial multifamily investors tend to have more money, more time, and more freedom than do those who work only for earned-income and only invest in paper assets (If you doubt that statement, then you should read This Report – Evidence Based Investing).
Even the process of acquiring apartments can be likened to relationships. First you develop your criteria for what you are looking for and then you start evaluating properties for possible acquisition (dating). It is not uncommon to have to look at several pretenders before finding that one contender that is worth marrying.
The proposal (Letter of Intent – LOI) is a non-binding offer to purchase an apartment building. Typically, these spell out such items as offer price, earnest money terms, timing for both due diligence and financing, as well as contingencies and extensions.
You certainly can add more items to your LOI, but I like to keep mine brief as this is a non-binding letter that merely expresses the intent to buy. Remember that an LOI is not a contract, and it does not obligate you to buy.
While you don’t have to get down on one knee to propose or make an offer on a commercial multifamily property, you do have to present something equivalent to a ring (earnest money). This shows good faith in the transaction and that you are serious about your intentions).
If you get a “yes” then you are engaged. Shortly after getting engaged, you will likely start negotiating the details of the wedding – the location, guest count, attire, etc., etc. (purchase and sale agreement). The engagement period is the time you want to discover any problems as you can still walk away without penalties.
For this reason, many couples will move in together and really get to know each other before walking down the aisle (due diligence). The couple will also work out the details of paying for their wedding prior to the actual date (financing).
And when the day finally comes, they close the deal with an “I do.” Congratulations, you’ve just married your spouse or purchased an apartment building.
This is the point in which the analogy diverges, however. You see, once you have successfully purchased an apartment building that produces cash-flow and grows your net worth, you will want to do it again. That’s right, you will want to get another multifamily apartment building and then another and another.
While attempting polygamy in your marriage is likely to make your poor (divorce), becoming a multifamily polygamist is a proven path to wealth.
To Your Wealth!
Dennis Bethel, M.D.
P.S. I have been blessed to be married for many years to an amazing woman that I love very much. Something tells me that her real estate analogy would be very different from mine. Nevertheless, she and I have both benefited tremendously from our investments in commercial multifamily reaI estate.
Before getting married to a property, make sure you find the right ones. If you haven’t developed your skills for finding and managing apartments, that doesn’t mean you are destined to be single for the rest of your life. Send me an email to learn more about this asset class. I pride myself on being the Match.com of the commercial multifamily real estate world.