Why multifamily is the “Holy Grail” of Real Estate investing
Today’s guest, Chris Larsen is the founder and Managing Partner of Next-Level Income. Chris has been investing in and managing real estate for over 20 years. While still a college student, he bought his first rental property at age 21. From there, Chris expanded into development, private-lending, buying distressed debt as well as commercial offices, and ultimately syndicating multifamily properties. He began syndicating deals in 2016, has raised more than $15 million, and has been actively involved in over $150 million of real estate acquisitions. Chris is passionate about helping investors become financially independent.
In addition to real estate, Chris has invested in equities, oil & gas, and small business lending, as well as being active in Venture South, one of the nation’s Top 10 Angel Investing groups. Chris lives with his wife and two boys in Asheville, NC where he loves spending time with them in the outdoors and enjoying the food and culture that the region has to offer.
In this episode, we’re discussing…
[1:39] His beginning as a biomechanical engineer and sales
[3:25] The mission now, is providing investors a shortcut and opportunities towards financial independence
[4:18] How to diversify and why multifamily properties option, the “holy grail” of real estate
[5:39] The market in this industry and demographic point of view to invest and diversify
[7:53] The cap rate return in multifamily vs. product type in the industry and risk
[10:55] Some highlights to maintain multifamily cap rate 4.5% in other different markets
[14:01] The tax advantages and the benefits for investors
[16:25] Family bank through infinite banking concept, how it works and the advantage of this investing option
[25:50] Type of syndications Chris is looking at
[27:12] Get the free book, go to his website: www.nextlevelincome.com, and pick your copy
Chris’s Top Tip’s
“Thought process of an engineer, and if you are an engineer, you know, the methodology of looking at assumptions, breaking it down iterating through the process, and making it better, really served me well throughout my career. And my investment career specifically over the past 20 years”
“And today we do about 80% of what we do is multifamily real estate. We also do self-storage. We have some other one-off opportunities. We're doing a mobile home park deal right now, which I really like for affordable housing”
“I talked about in my book, why multifamily because it allows you to decrease the risk in your portfolio while increasing or even if you decrease the risk and maintain your return, that provides a nice benefit. And the reason the southeast rose up is because of higher quality of life, lower cost of living in the southeast, we moved to North Carolina specifically for those reasons”
“We're talking about a luxury products, so we're looking at that, as you go up the chain, here's the interesting thing, you're not seeing massive differences in C plus and B, you're seeing maybe 100 basis points difference. I think it's all relative, you have a lot of newer investors that are coming into the market looking for these older values add deals, and they're paying, in my opinion, a premium”
“And there's not a lot of yields if you look around the world. So, it's like, where do you put your money? Do you put it in bonds? No yield? Do you put it you know, in international markets, no yield, cap rates around the world in developed countries are even lower? I think there's still an opportunity. And I think you have to be very conscious about that”
“And almost all these topics in my book, whether it's, you know, how we select markets, or what you would call the Sharpe ratio, what the Sharpe ratio is that that measurement of risk versus reward, that risk-adjusted return, and what multifamily high quality, multifamily assets provide a bond like risk with a stock like return”
“That's one of the reasons real estate is great, people can't move on a dime, either. The reason people have to have somewhere to live, the reason people can sell their house immediately. All these things help the stability of this asset class, which you know, I've loved it for 20 years”
“That's risky to keep your money in the stock market in between real estate deals. My preferred place is in cash value life insurance. And there's a concept called infinite banking, becoming your own banker that Nelson Nash wrote talks about how to use whole life insurance”
“However, I learned, one thing the ultra-rich do is they invest 20% to 30% of income-producing real estate, just like big pension funds. The other thing they do is they buy a lot of high cash value life insurance. It has so many tax benefits at one point that Congress went and they enacted new tax laws in the 80s to restrict some of those because people were sheltering so much money”
“Work with a professional that understands how to structure one of these policies, and then you use that cash value to invest. And that's what I call your Opportunity Fund. What you can do is you can put the money into the life insurance, while it's in the life insurance, you're getting the value of the life insurance, you're also if it's properly structured with the right company, you're getting a dividend”
Mike’s Top Tips
“I don't like the retirement either. You don't have to retire because it's just it works. That is our goal for passive investors, it's something that it's fun, instead of just waking up in the morning going to your paper and say okay, well how much did my stocks loser make? Now it's like, wow! I own a piece of these, this multifamily and this self-storage and it to me, it's just a little more exciting than just seeing your stocks went up or down”
Resources from Chris
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ABOUT CHRIS LARSEN
Chris Larsen is the founder and Managing Partner of Next-Level Income, through which he helps investors become financially independent through education and investment opportunities. Chris has been investing in and managing real estate for over 20 years. While completing his degree in Biomechanical Engineering and M.B.A. in Finance at Virginia Tech, he bought his first single-family rental at age 21. During his subsequent career in the medical device industry, Chris expanded into development, private lending, buying distressed debt as well as commercial offices, and ultimately syndicating multifamily properties. He began syndicating deals in 2016, has raised more than $15 million, and has been actively involved in over $150 million of real estate acquisitions. In addition to real estate, Chris has invested in equities, oil & gas, and small business lending, as well as being active in Venture South, one of the nation’s Top 10 Angel Investing groups. Chris lives with his wife and two boys in Asheville, NC where he loves spending time with them in the outdoors and enjoying the food and culture that the region has to offer.