Why Multifamily Real Estate and Where Does it Fit in My Portfolio?

Flywheel Equity Investor Newsletter, June 2020



This month's newsletter contains some exciting announcements, many of which focus around the new educational resources we've created. I am very proud of these projects and I hope you will find them valuable.

As always, this issue will also delve into how current Flywheel investments are being managed, performance indicators I use to monitor the success of my investments, and the general state of multifamily. Enjoy!

A Real (Estate) Education

Passive Investor Series

I am happy to announce that the first part of this educational series is now available, and you can download it via the link below!

One of the goals here at Flywheel is to make learning about real estate free and accessible. I decided to create this series because being a passive investor in multifamily real estate isn’t as simple as opening an E*Trade account and choosing a few index funds. It involves a level of sophistication that is both legally required and ensures your funds are placed with operators that take their fiduciary responsibility seriously.

I wanted to create a clear and informative resource to help lay out the path to becoming an informed and capable investor in a multifamily investment partnership.

The first part of the Passive Investor Series establishes the foundation for real estate as an asset class when compared to the other places you could be putting your money (stock market, REITs, etc...) and is called "Why Multifamily":


This is what I cover in this first installment:

  • Properties of real estate as an asset class
  • Real estate returns vs. stock market
  • The different types of investable commercial real estate
  • What is multifamily commercial real estate
  • How multifamily fits into a diversified portfolio
  • Which investment goals is multifamily appropriate for

Flywheel Equity on YouTube

Looking for more real estate investing resources? There is now a Flywheel Equity YouTube channel! This is another step in keeping with the mission to bring an open-source approach to real estate investing.

The first few videos we’ve posted have focused on peeling back the curtain on how to underwrite for a small multifamily deal, which is most relevant for those looking to be active investors. In the future, the goal will be to post interviews, topics, webinars, and other long form content for both active and passive investors.

Our Property Performance Dashboard

In all business, not just apartment investing, it's useful to have a consolidated view into the your most critical metrics that will define success or failure. Often known as KPIs (key performance indicators), they will differ for every company and industry.

Ideally, you will identify around three KPIs (any less and you're being too myopic on only one area of the business; much more and you're losing focus on what's truly important).

In the small multifamily we're currently managing, I like to keep track of the following KPIs:

  • Income: Collected rents
  • Occupancies: Physical and economic (collected rent as % of expected rents)
  • Marketing: Days on market for ready to rent units

Monitoring these KPIs will quickly give you insight into which the areas of the business are performing to expectation, and which are not. But more importantly they provide a historical reference and can help identify trends and correlations.

For each of our properties, we establish a performance tracking dashboard that visualizes these monthly KPIs as trends across the full history of the property. The goal is to not get too fixated on any one month or one data point, but to ensure the long term trend is headed in the right direction.

In the Flywheel

Another Successful Closing!

It was smoothing sailing bringing the 12-unit in Mebane, NC to a successful close.

The process was different from other deals I've been involved with due to the lack of records provided by the seller and, thus, the need to go with private money financing.

When I'm looking for properties, I look for the story. What are the circumstances surrounding the sale, and how can we provide a solution and create value for all involved? With this deal we will professionalize a poorly documented and mom and pop managed property and reposition it for a new buyer. By being flexible with our financing we were able to add 12 more units to the Flywheel portfolio in an off-market deal.

Saddlebrook Update

Our 16-unit in Fayetteville continues to do well even in these challenging times. Rent collection has stayed true to historical norms and physical occupancy remains at 100%. There are definitely tenants that are delayed in their payments, but we've been able to mitigate a lot of the risk by aggressively pursuing lease-extensions and flexible payment plans.

We recently conducted a Saddlebrook Q&A webinar to keep our existing investors informed during this period of increased risk and received the following feedback:

"I just wanted to let you know we attended the Saddlebrook call last night and thought you did a great job. Really appreciate the clarity in the information presented and I think you and the Valkere team have done a great job managing the investment in this whole crazy world. With all the COVID stuff we were prepared for some unpleasant numbers, but looks like everything’s going well 🎉.  Also, we were in the area and drove by the property last week and it looks great."

Thank you to all our current investors who have been nothing but supportive during this truly unique time!

On the Socials

Here's a look into what's happening over on our social media accounts. We cover multifamily news, share the real estate lessons learned, and update our followers on Flywheel Equity happenings.

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