How Passive Investors Can Crush It In Tertiary Markets With David Kamara

Passive Real Estate Strategies

How do you scale in real estate investing from single family to multifamily? In this episode, David Kamara discusses the importance of having a mentor, researching competing properties, and understanding what people are looking for to make successful deals in towns. By investing in areas with cash flow and taking economic diversity into account when evaluating real estate investments, investors can have a buffer should their projections not match up to reality and still benefit from some degree of return. David emphasizes the need to understand a town’s demographics, lifestyle, and population centers within a 20-mile radius. He also suggests considering the operator's risk management strategies, their investment amount, and other investors' recommendations before investing passively. Tune in to hear more of David’s advice on how to succeed as a passive investor in small markets!

Key Highlights:

[00:00 - 07:23] David Kamara: From Single Family Houses to Multi-Family Syndication and Mentoring in Small Town American Markets

• David Kumara has been a real estate investor since 2006

• He has transformed his portfolio from residential, single family, and duplex units to focus on larger multi-family investing, including apartment buildings and town home communities

• He was Justin's first mentor in the multi-family investing space

• David started out as an active investor before transitioning to passive investing

• His most successful properties are in smaller markets and towns

[07:23 - 14:44] Investing in Smaller Markets: How We Found Wildly Successful Deals in Farm and Country America

• Invested in smaller markets, not by design

• Looked at key metrics like price per door and rent per door to determine deals

• Deal was located near two large population centers and a college

• Deal showed well and didn't require much work

• People are moving to certain states for employment and connectivity

[14:54 - 21:41] Avoiding the Risk of Tertiary Markets

• Investors may shy away from investing in tertiary markets due to fear of economic downturns

• Cash flow is an important element of the deals that David invests in, and he personally invests cash in each deal

• The cash flow distributions are typically in the four to five to six to 7% range, sometimes even three in the first year, depending on the strategy

[21:42 - 28:12] Investing in Smaller Markets: What Investors Should Know About Supply and Demand

• Smaller markets often don't have competition for developers

• Investors should look for economic diversity when considering a tertiary market

• Factors to consider include population centers, commute times, and the operator's financial commitment

Key Quotes:

"So you want diverse industries. You don't want just manufacturing or just tourism or just schools and government." - David Kamara

“I think more than anything, frankly, you wanna look at the operator that you're investing with.” - David Kamara

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