Turning Around a Multifamily Deal Gone Wrong & Passive Investing Tips with Hans Box

What can passive real estate investors learn from a deal gone wrong?

In this episode, experienced passive real estate investor Hans Box shares the story of an early real estate deal that went south and how he and other passive investors took control to turn it around. He provides his expertise in vetting sponsors, reviewing legal documents, asset classes, markets, and more.

Hans is Co-Founder of Box Wilson Equity, a firm that focuses on cash flow and value-add investments and is a Senior Director at Old Capital Lending, a top provider of commercial capital solutions in the Texas market. His background is in the accounting, business strategy consulting, and real estate industries. Hans has personally been directly involved in the acquisition, investment, and management of over $350MM in multifamily and self-storage assets, has asset managed ~3,700 multifamily units, and has been the GP in ~4,300 multifamily units and ~2,000 units of self-storage. He specializes in structuring, creating, and managing partnerships to acquire multi-million dollar cash-flowing assets.

(00:00 - 7:00) Opening Segment

• Hans got his start in real estate investing by partnering with someone who turned out to be a poor operator.
• He and another passive investor led the charge to remove the sponsor and take control of a 208-unit apartment deal.
• By diving in to manage the property, Hans gained invaluable hands-on experience in multifamily.

(7:01 - 15:00) Evaluating Operators as a Passive Investor

• The most important factor is finding a great operator, not just a great salesperson.
• Look for transparency, articulation of the business plan, and track record over 5+ years.
• Get references and talk to their current investors before committing capital.

(15:01 - 22:00) Reviewing Legal Documents and Due Diligence

• Take diligent time to review PPMs and operating agreements, even if investing a relatively small amount.
• Consider having an attorney help walk through key clauses at first.
• It takes repetition to become comfortable reading and analyzing real estate legal documents.

(22:01 - 27:40) Switching Asset Classes and Markets

• No problem expanding geographically if the operator has done their homework and due diligence.
• More concerned about asset class change, prefer to see domain experts on the team.
• But comes down to vetting the operator's overall investing philosophy and track record.

(27:41 - 30:00) Closing Segment

• Best deal: 152-unit apartment complex in Dallas
• Worst deal: A hotel in Belize
• Top lesson learned: Take action, but start conservatively and avoid FOMO - there will always be another deal.

Quotes:

"A bad operator can turn a home run into a strikeout." - Hans Box

"The best way to get rich is hit singles and doubles and don't lose money" - Hans Box

Connect with Hans:

Website: www.boxwilson.com

Apply to Invest with Taylor at www.investwithtaylor.com

Track your wealth for free with Personal Capital, go to www.escapingwallstreet.com

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