The Best Investors Buy and Hold! ~Kyle Malnati

Wait, did a real estate broker just say that?! You might have expected a broker to highlight clients that “flip” properties as they create multiple sales in short period of time. I realize that I might be “shooting myself in the proverbial foot,” but I have to speak the truth.

The price/unit of multifamily property continues to appreciate rapidly, and a common question that I hear is, “how can it make any sense to buy an apartment building now?” In this frenetic market, its important to step back and use a long term point of view.

Working in Denver’s multifamily market has given me an amazing opportunity to interact with wealthy families; I call these families: Multifamily Magnates. Different from the word “magnet,” the dictionary defines a Magnate as “a wealthy and influential person, especially in business.” For the most part, these families created their wealth by owning a small business and investing in real estate. I have noticed that the Multifamily Magnates buy and hold their real estate investments for a long period of time. They may sell an asset every now and again to trade up, but generally they hold onto their core buildings.

In 2015, I have noticed that my Multifamily Magnate clients have continued to buy apartment buildings in Denver. Naturally, I had to ask: WHY? Why are they buying real estate when everyone else is concerned that the market is over-heating? The answer is simple. They don’t look at the market speculatively; they invest for the long term. They are focused on building their family legacy, and they buy when they see a building that would fit perfectly into their portfolio.

My last podcast featured Josh Mullins from Laramar. During our interview, Josh mentioned that his favorite non-fiction book is called, “Margin of Safety” written by investor, Seth A. Klarman. The basic thesis of Margin of Safety is that the majority of individuals speculate and don’t have a long term commitment to the market… very few are considered true investors.

My real estate mentor taught me a long time ago that a real estate investor makes all of their money on the buy (not the sale). If you’re still struggling to believe how you can make sense of the market in 2015, the video below is from one of my real estate investing seminars. In this lesson, I explain that you can ALWAYS find a deal regardless of where the market is trading. There are a handful of transactions that occur every year that are a “good deal” relative to the average price/unit in the market.