MB 074: How I Did My First (69-Unit) Deal Without Experience or My Own Money – With Patrick Duffy

What gives a 27-year-old with no experience in apartment building investing the audacity to swing for the fence?

Patrick Duffy grew up in Southern California before heading east for college. After graduating from Harvard in 2013, he returned to SoCal to work as a commercial real estate banker and later for a hedge fund, buying non-performing mortgages. He grew up around real estate, his family owning a multi-family property since the 1950’s, and he had always intended to invest in apartments—as soon as he had the money to do so.

Before long, Patrick was unhappy at his job, so he started reaching out to investors he had lent to in order to get clarity on how to analyze deals. Despite his lack of experience on the principal side of real estate, Patrick started studying LoopNet and set the goal of securing 100 units in two years. Eventually, he discovered Michael’s Deal Desk resource, and used the Syndicated Deal Analyzer to get feedback on a 69-unit property in Memphis. The deal met Michael’s criteria, and the two forged a partnership.

Today Patrick explains the steps he took to research the Memphis market, how he made use of the act ‘as if’ approach to secure a letter of intent, and his best advice for working with investors. Listen in as he shares the mindset that helped him swing for the fence on a multi-family deal and how doing his first deal has changed the game for Patrick, as he aspires to reach 1,000 units in the next 12 months.  

Key Takeaways

[3:30] How Patrick landed on the partnering strategy to finance multi-family

• Briefly considered flipping single-family
• Preferred multi-family, but biggest block was capital
• Looked at creative financing options
• Partnering seemed like most feasible route
• Goal to secure 100 units in two years

[6:04] How Patrick found the Memphis deal

• Clarity re: how to analyze deals
• Practiced via LoopNet (comparing markets, packages from brokers)
• Underwriting to get feedback
• Memphis market seemed ideal (cap rates, unit sizes, price)
• Reached out to learn about Memphis market
• Found 69-unit deal on LoopNet
• Submitted to Syndicated Deal Analyzer
• Positive feedback from forum
• Called broker on New Year’s Eve

[9:23] Why Patrick continued to move forward

• Nothing to lose
• Deal met criteria for partnering via Deal Desk
• Act ‘as if’ approach to secure LOI

[11:13] Michael’s partnership with Patrick

• Impressed by Patrick’s thorough research
• Surprised by return (Memphis not one of published geographies)
• Got contract from seller, proposed changes
• Built team as went (property manager, lawyer)
• Patrick took initiative
• Under contract with seller
• Wire EMV
• Collect due diligence docs
• Financial due diligence process
• Create investor package
• Met in Memphis to look at property
• Michael sent sample deal package to investors
• Acquired financial commitments
• Hired SEC attorney
• Started appraisal process

[13:18] Patrick’s experience working with investors

• Michael’s network eager for deals that fit criteria
• Addressed questions about specifics of market
• SEC attorney had drafted necessary documents
• Used DocuSign to track eSignatures

[15:23] The closing process for the Memphis 69-unit deal

• Loan approved, investors wired funds
• Patrick received acquisition fee of $23,000
• Also reimbursed for expenses incurred during due diligence

[16:25] The impact of doing your first deal

• Only so much can be taught re: what to expect
• Once learn to partner, can scale quickly
• Feel more comfortable and taken more seriously
• Brings down barriers
• Patrick under contract on 196-unit deal two weeks later
• Expects to hit 1,000 units in next 12 months

[19:50] Why size isn’t a factor for Patrick

• It’s about process
• Anything under 500 units is viable
• Don’t worry about equity
• Finding deal is the issue (not money)

[21:35] Patrick’s advice for aspiring multi-family investors

• Take advantage of Deal Desk resources
• Does require high level of commitment
• Hard work is worth it

Connect with Patrick

Email: pduffy32@gmail.com

Resources

Deal Desk

Syndicated Deal Analyzer

Ultimate Apartment Investing Course

The Financial Freedom Summit Live

LoopNet

DocuSign

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building