MB 106: Getting in the Multifamily Game, With or Without Syndication – With Mario Ortiz

Mario Ortiz’s first multifamily deal wasn’t a homerun. Would he do things differently, knowing what he knows now? Maybe wait for a better deal to come along? Mario says no, arguing that ‘getting in the game’ is more important than the size or quality of the first deal. In fact, he lives by the adage that the ‘opportunity of a lifetime’ comes about once a month. The thing is, you have to be looking for it.

Mario is a mechanical engineer from El Paso, Texas. He has managed to build a thriving real estate business while working full-time in the oil industry—without employing syndication. A self-made, resourceful entrepreneur, Mario finds a creative way to finance each new multifamily property, and he made a cool $4M on the refi of his most recent investment!

Mario sits down with me to explain how the unpredictable nature of the oil and gas industry inspired him to pursue real estate. He shares his initial plan to invest in single-family properties and the overwhelm he experienced self-managing 10 homes on top of his full-time job. Mario walks us through his first multifamily deal, describing his luck in establishing rapport with a local bank and what he learned by self-managing the 17-unit property. He discusses the creative ways he financed his second and third multifamily deals, a 90-unit in Houston and a 180-unit in Fort Worth. Listen in for Mario’s insight around ‘getting in the game’ and learn how the refinance of his 180-unit is allowing him to quit his engineering job and travel with his family 

Key Takeaways

Mario’s background

• Mechanical engineer in oil industry
• Concerns about stability of job
• Started with single-family homes
• ‘Graduated’ to multifamily

Mario’s initial real estate plan

• 25-30 single-family rentals
• Replace income in case of layoff

Why Mario’s plan changed

• Overwhelmed by management of 10
• Comfortable in full-time job

Mario’s first multifamily deal

• Found 17-unit in La Marque on Loopnet
• Established relationship with local bank
• Hired part-time onsite office manager

Why Mario chose to self-manage

• ‘Hands-on guy’
• Cognizant of bottom line
• Learned leases, eviction processes
• Gained understanding of multifamily law

Mario’s second multifamily deal

• 90-unit deal in receivership in Texas City for $1.2M
• Put 17-unit on Loopnet as owner finance
• Borrowed from 401(k)
• Hired manager to help get rid of bad element
• Sold 18 months later for $2.4M

Mario’s third multifamily deal

• 180-unit deal in Fort Worth for $3.65
• Enamored by deal, ignored warning signs
• Lost $20K/month for first eight months
• Economic occupancy 65%, physical occupancy 85%

How Mario made the 180-unit profitable

• $400K in cash reserves
• Got rid of tenants not paying (65%)
• Rehab took three years

The refinance of Mario’s 180-unit property

• Valuation at $10.9M (75% LTV)

Mario’s plan moving forward

• Actively looking for properties in $10-15M range
• Invest proceeds from refi in another property

Mario’s plans to leave his full-time job

• Challenge to give up perceived benefits
• Looking forward to running real estate business
• Opportunity to travel with family

Mario’s parting advice

• Starting more important than size/quality of deal
• ‘Get in the game’

Connect with Mario

Email mortiz9991@yahoo.com

Resources

Loopnet

Financial Freedom Summit

Partner with Michael

Invest with Michael

Michael’s Course

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

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