Tonga Nfor

Quick Facts:

• Profit Strategy: Buy & hold
• Number of Units: 3 building package (30 units total)
• Personal Money Invested: 20% down payment
• Prior Experience: Dr. Nfor, a cardiologist, had limited experience prior to Lance’s training. He had previously invested in 3 deals that worked out that he described as “okayish”.

Here’s his story:

As the father of four young children (three boys and one girl) ages 6 to 11, nothing matters more to Dr. Tonga Nfor than building a legacy for his family and amassing a substantial nest egg that includes a large college fund for the kids to draw from when the time comes. Over the past three years, even before reading Lance Edwards’ book “How To Make Big Money in Small Apartments” and enrolling in Lance’s boot camp, he began working on his goal by investing in real estate, with a focus on small apartments.

“I felt like that was an easier place to start accumulating wealth because I wouldn’t need a ton of capital to get going and in trying a new venture, it made sense to start small before working my way up to something bigger,” he says. I knew enough about investing in small family homes to realize that it wasn’t worth the amount of work I would have to put into it dealing with a single tenant at a time, especially compared to small apartments where you spread your risk over six, 10 or 15 tenants.”

As eager as he was to build a portfolio, Dr. Nfor’s extremely busy schedule as a cardiologist (specializing in cardiovascular disease and interventional cardiology) limited the amount of time the Milwaukee area physician could devote to this sideline passion. So his initial forays into small apartments were passive investing through other people and with a partner. He was part of a group that would pool their money to buy buildings, but was not directly involved in the purchases. Prior to discovering Lance’s book, he had invested in three deals that worked out, in his words, “okayish.”

Dr. Nfor was impressed by Lance’s way of breaking things down simply and the explaining the role of mindset in achieving one’s goals even before embarking on the math involved in doing a deal. He enrolled in a virtual boot camp during COVID – preferring the convenience and saving money and time compared to attending live – and, as a numbers person, took immediately to the crucial process of analyzing the figures  quickly via the Doable Deal Generator to determine whether a deal will work or not. He also liked the boot camp’s quick immersion into finding and analyzing deals.  

“It was also important to learn that I could generate and complete a deal all by myself,” he says. “Previously, I always assumed that I would have to go through an agent to be able to make an offer and close a deal. It was liberating also to know that I could negotiate directly with a seller, without any representation. By the time I left boot camp, I was already online looking for deals and analyzing them.”

In line with his desire to start investing in properties “in my own backyard,” the first deal Dr. Nfor closed on involved three small apartment complexes about 30 minutes from Milwaukee. Browsing realtor.com, he zeroed in on a 16-unit complex and reached out to the realtor. As they were discussing the numbers, the realtor revealed that the seller had two other buildings that he was considering selling that were not on the market yet. After some discussion, Dr. Nfor agreed to work on a package deal that would include smaller properties of six and eight units. All were “C class buildings,” meaning older structures that might need some upgrading, cosmetic work and repairs – but crunching the numbers, Dr. Nfor felt overall like the bundle was a solid deal that would generate good cash flow.  

He made his close to full price offer during a boom time in the market when there was a lot of competition and many others showed interest in the original 16-unit property. The numbers were $600,000 for the 16-unit (down from the original asking price of $650,000), $350,000 for the eight-unit, and $250,000 for the six unit – for a total of $1.2 million. During inspection and due diligence, Dr. Nfor was informed of some repair issues with the roof and also cracks in the exterior of the eight unit, which led him to go back to the seller and seek a $30,000 price concession, which led to a renegotiation on that building to $320,000.

“At that point, the seller was very invested in having the deal for his three properties go through so he didn’t object to changing the selling price,” says Dr. Nfor, who closed on the properties in January 2021. “I know Lance extols the value of seller financing but this seller was not interested in that. He wanted cash to roll into another deal he had going, so I personally put up the down payment from money I had and was able to secure 80 percent via bank loan. This was fine for me because my primary purpose in making this deal is to build equity and value over time.”

By mid-year 2021, he had mostly positive things to report. In line with Lance’s teachings, he has found an efficient and reliable property management company to take care of the buildings and help with marketing efforts to draw good tenants to consider living on the properties – which has resulted in a current 90 percent occupancy. However, the enduring effects of the pandemic on rentals have resulted in a major cash flow challenge, which Dr. Nfor says, “no training or prep could prepare anyone for.”

One of the biggest overall problems, he says, was that the market during the pandemic was crazy, and hot properties were overpriced. A second issue – and one that had a major impact on him and his properties, was that some buildings had tenants who lost their income due to COVID and couldn’t pay rent. Yet because of a state moratorium, they couldn’t be evicted. Dr. Nfor is hopeful that when the moratoriums end, the rent collection challenge will disappear and over the next few months, everything will bounce back to the numbers he envisioned when I bought the properties.

“For a first time small apartment owner,” Dr. Nfor says, “this kind of issue can be quite discouraging, and I freaked out a little bit because of the prospect that I might lose money. During this time, my goal was to simply stay afloat, pay the mortgages and other bills and not worry about profit. But I am optimistic this will pass and everything will settle down. The main thing I have learned through the ups and downs of this process is to trust my gut and trust the numbers that the deal analyzer gave me. You can lean on your feelings and intuition, but ultimately it’s the numbers that should guide your decisions.

“I would urge anyone thinking of getting involved in small apartment investing to educate themselves, formulate a plan and then execute it to the best of your ability – understanding of course, that unexpected setbacks are part of the learning process along the way to success,” he . adds. “Once you have the baseline knowledge, it’s all about taking action. I feel like I have a strong vision for what I want to achieve and am excited to start building on the foundation I have in place.”