Education: Learn About Real Estate Investment

Whether you are brand new to this industry or have been buying and selling properties for decades, you should always want to learn more about real estate investments. This driven mindset has helped me since I quit my advertising job and began to work for myself, and it will continue to serve me well as long as I’m working.

The best real estate education is not easy to find, though. Locating a helpful and trustworthy mentor, for example, can take a lot of time. Experienced, intelligent advisors willing to take people under their wings don’t exactly grow on trees.

And there is no shortage of books, blogs, social media accounts, YouTube videos, and podcasts to sift through. At best, listening to those offering poor guidance will waste your time. At worst, it will lead to destructive financial decisions.

Without question, finding and applying the right knowledge is vital for any investor.

Over the years, as I have gained control of more than $400,000,000 worth of real estate, I have been fortunate to receive help from fantastic mentors and locate a wealth of information that has sent me down a successful path. And now, I want to pass some of that wisdom down to you.

In this section of my blog, you will be able to learn about real estate investments from some of the brightest minds in our industry today. You will figure out how to approach a potential mentor, how to receive free or paid educational services, how to systemize your education, and more.

And for an exhaustive collection of resources that I approve of, click here to view books, podcasts, and pieces of advice that I recommend.

Meet Best Ever Conference Co-founder Ben Lapidus

Meet Best Ever Conference Co-founder Ben Lapidus

We sat down with Ben Lapidus, co-founder and host of the Best Ever Conference, to find out what he’s looking forward to most at BEC2022.

First, a little about Ben: He is the Chief Financial Officer for Spartan Investment Group LLC, where he has applied his finance and business development skills to construct a portfolio of over $300M assets under management from scratch, build the corporate finance backbone for the organization, and organize over $100M of debt capital from the firm.

In addition to completing over 50 real estate transactions at and prior to Spartan, Ben is the managing partner of Indigo Ownerships LLC. Before Spartan, Ben founded and sold a multimillion-dollar study abroad company and worked with several start-ups through IPO or acquisition. He graduated from Rutgers University with dual degrees in finance and economics, where he founded the Rutgers Entrepreneurial Society.

We asked Ben some questions about what to expect at this year’s conference — here’s what he had to say:

 

What are you most excited about for the BEC2022?

“What I’m most excited about is the opportunity that has presented itself in the operating environment for commercial real estate investors. Since this conference began in 2016, we’ve been talking about a market correction from which syndicators can execute a scaling strategy. For all of its destruction, the silver lining of the global health crisis is that it has accelerated or formed new trends that will allow for new creative investing and operating strategies.

“To take advantage of this for BEC2022, we are marrying all of our learnings from the past five years and compounding them with new partnerships. We are incorporating the components of virtual programming that worked in 2021, the networking that worked in 2020, the location that worked in 2019, and the late-night networking that worked in 2018. We have our biggest production budget yet to make sure it’s high quality, peak energy, and massive impact.”

 

Tell us about the experience. What can attendees expect?

“From the moment you register, you’re going to feel like you’re coming home. This is not a conference for beginner investors or tire kickers. Ninety-six percent of our attendees have transacted or invested in one or more commercial real estate deals in the last six months. There is no other conference with this kind of concentration of high-quality networking, and those who have attended before know that, so they treat every new handshake as an opportunity to make a new friend or partner. It’s an incredibly inviting atmosphere.

“When you first enter the main stage, you’ll be drinking from a fire hose. We like to start off the conference with back-to-back economic updates from those with access to massive datasets who are fantastic presenters. We’ll keep you well-fed and intellectually stimulated throughout the day so that you have the energy to carry the relationship-building into the evening where the real connections are made.

“You won’t find yourself avoiding the gaze of our sponsor tables as we’ve filtered them in advance and they’re likely to be highly relevant to your business or investing needs. Two years ago, we had a deal funded by a lender two business days after the connection was made at the Best Ever Conference.

“Finally, this will all take place at the newly built Gaylord Rockies in the peak winter season, which means you’ll have access to indoor water parks and some of the best skiing in the world.”

 

In your opinion, what are the top three reasons to attend the Best Ever Conference?

“Learn. Network. Invest. People come to the conference attracted to the speakers and subjects presented on stage, and this year will be the best yet. Our lineup is next level and with such a volatile year, there are endless subject matters to touch on to support the professional investor navigating the year ahead.

“But the true value that our audience walks away with is the networking, which ultimately leads to a new investment of dollars, time, or energy. Countless companies have been formed out of Best Ever connections, and hundreds of millions of dollars in capital have been placed in our community’s deals.

“And of course, we can’t forget the partying. If you are active in the syndication space, you’ve likely corresponded with dozens of folks who you’ve never met in person; the Best Ever Conference is the place to finally connect in person over a beer — or three.”

 

Any other exciting tips or best practices for attendees?

“Don’t set out to peddle an investment offering at the Best Ever Conference. There are dedicated spaces where that’s appropriate, and you can reach out to the Best Ever team if you’d like to take advantage of that. Rather, set out to make a few deep, high-quality relationships without an endpoint in mind.

“The deeper you can make a single relationship, the further it will carry your business or portfolio to success. Take the blinders off your periphery and identify how adding value to someone else’s life could creatively compound an outcome in yours. The more you learn about someone under a non-transactional premise, the deeper the reward will ultimately be.”

 

How will this year be better than ever?

“This year, we are leaning into the mantra, ‘collaboration beats competition,’ and partnering with several other communities outside of Best Ever to create an audience composition that will surely be the ‘best ever.’

“In partnering with investment groups, we are increasing the amount of available capital searching for real estate syndications. By partnering with other sponsor-facing organizations, we are increasing the exposure of high-quality commercial real estate sponsors to the passive investor community.

“Our audience might show up for the marquee content, but they leave pointing to the networking opportunities as the most valuable component of the experience. By investing in getting the right people in the room, we know more deals will get done, more capital will be placed, and more lifelong partnerships will form.”

 

How can attendees plan to make the most out of the Best Ever Conference?

“Set an intention — one relationship or one nugget of wisdom that you’d like to walk away from the conference with.”

To learn more or purchase your BEC2022 ticket, visit us at besteverconference.com.

 

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How Mini Masterminds Set Investors Up for Success

How Mini Masterminds Set Investors Up for Success

In some of our previous blog posts about the Best Ever Conference, we’ve mentioned something called Mini Masterminds. These educational small-group sessions are a favorite among Best Ever Conference attendees, but how much do you actually know about them? Here, we’ve compiled everything you need to know about the Mini Masterminds experience and how it may be the key to reaching your business goals.

 

What Are Mini Masterminds?

Every year The Best Ever Conference welcomes the best-in-class real estate professionals who are looking to make an impact on their business. BEC2022 attendees have the exclusive opportunity to join our Mini Mastermind program once they register for the conference. These sessions are made up of small groups with 6–8 peers who meet virtually to connect prior to the conference. 

In these sessions, attendees will begin to learn from one another, share best practices, and continue to build relationships in an intimate setting. The groups meet monthly to discuss various real estate topics such as:

  • Business goals
  • Identifying opportunities
  • Marketing to the right audience
  • Networking and building connections
  • Preferred asset types
  • Strengths and weaknesses
  • Vulnerabilities and risk mitigation 

 

Who You’ll Meet

Mini Mastermind members enjoy the immediate benefit of networking with other BEC attendees, generating ideas to build their businesses, and receiving feedback and support. The sessions provide the rare opportunity to connect with other professionals in a way that fosters education and growth. What do you want to learn? Who do you want to meet? It’s a group that you will continue to grow with leading up to the conference.

Below are testimonials from just a few Mini Masterminds participants:

 

Andrea Weule of AC Investment Group

Andrea said, “I love being able to meet with a group of investors with different backgrounds from across the country. I’ve gained new insight into our investments. It’s great to be able to contribute to others’ success and pick their brains for ideas as well. Looking forward to continuing our relationships for years to come.”

Frank Rush of East West Property Management 

After completing his first meetup, Frank said,It seemed like a diverse group of entrepreneurs, and I am excited about the upcoming sessions and to eventually meet in person at the conference. I am sure there will be some great benefits that come from it all with the possibility of working directly with a member of the group on a future deal in some shape or form!”

 

Kris Kohlstedt

“The Mastermind has been a great networking tool allowing me to build deeper relationships than what I’d get in person in one meeting,” Kris said of his experience. “I get to ask questions and share in a group that I feel can provide great experience and knowledge to my obstacles in business.”

 

How You Can Get Involved

The Mini Mastermind program is included with the purchase of each BEC2022 ticket, and once you sign up, you will have the opportunity to start connecting with other attendees immediately. 

Participants who sign up now will have the opportunity to begin connecting early in the year and to continue to build these relationships well before finally meeting in person at the conference. The BEC team will coordinate your Mini Mastermind group with you and send out the invitation details.

Purchase your ticket to the Best Ever Conference today to see for yourself what you can gain from Mini Masterminds.

 

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The First Timer’s Guide to the Best Ever Conference

The First Timer’s Guide to the Best Ever Conference

With a name like “Best Ever,” it’s easy to get excited, and maybe even a little intimidated, about attending your first Best Ever Conference. You might be wondering what makes it the best ever, and how you can get the most out of this conference. And we want to help!

That’s why we’ve developed our First Timer’s Guide for your first Best Ever Conference to ease your mind and help you get the most value out of your time.

 

How the Best Ever Conference Is Designed

The Best Ever Conference, known throughout the commercial real estate industry as the BEC2022, is designed specifically for commercial real estate professionals to focus on relationships and education that will directly impact growth for both you and your portfolio.

 

Our Speakers

Our speaker selection process isn’t about who we know, it’s about what YOU want to know!

Our team listens to and actively engages with commercial real estate investors like you all year round to ensure we stay at the forefront of the commercial real estate investing industry, choosing speakers with expertise and topics that you want to learn about most.

Past speakers have included industry giants such as:

And more importantly, past topics have included:

  • How to Scale Your Syndication Business
  • Lessons in Becoming a Better Leader
  • How to Build a Powerhouse Investing Team, and
  • Multiplying Your Real Estate Portfolio

 

Here are some tips for getting the most out of your time at the BEC2022:

 

Before the Conference

In the weeks leading up to the conference, take some time to create a game plan for your experience. Consider who you want to meet, which services and vendors you might be interested in learning more about, and what topics and insight will be most valuable to you and your goals.

 

Set Your Speaker Session Lineup

First, we encourage you to check out the BEC2022 speaker lineup on our website at besteverconference.com. We will update the conference website regularly as new speakers are confirmed.

Research each of the BEC2022 speakers before the conference. Get to know who they are, what they bring to your table, and the type of information that will be presented. Consider how this information can help you grow your business and portfolio.

It is also a good idea to make note of any questions that come up during your research that you would like to ask the presenters.

Now, break the different speaker sessions into three categories to set your custom speaker session schedule:

  • Must attend
  • Would like to attend
  • Don’t need to attend

 

Shortlist Your Exhibitor Interests

Another good way to make the most of your time at your first Best Ever Conference is to take a look at the exhibitors that will be present. Which exhibitors do you want to learn more about?

Next, go ahead and make a shortlist of the exhibitors you’re most interested in and keep this in your back pocket to make the most of your downtime between sessions at the conference.

 

At the Conference

Balance Your Time

As with most conferences, the top three things you’ll do at the BEC are learn from speakers, network with speakers and other attendees, and browse the exhibitor booths. To get the most out of the Best Ever Conference, you’ll want to strike a balance for the way you spend your time.

Set your speaker schedule into your calendar with locations and reminders so you’re never late to your “must attend” speaker sessions.

During your “don’t need to attend” sessions, try to make your rounds to the exhibitors based on your preparations. Spread these visits out to allow for plenty of time to take care of your basic needs and stay comfortable, fresh, and energized throughout the conference.

And last but certainly not least, plan to spend the rest of your time networking with speakers and other conference attendees.

Most likely, you’ll have questions for the “must attend” speakers — either prepared questions from your pre-conference recon or questions that came up during the presentation. Here is an insider tip: Don’t try to talk to the speaker immediately after their presentation. That’s when everyone is going to want to talk to them and you’ll spend a lot of time waiting in line or look like a weirdo running up to them to get to the front of the line. Instead, talk to them between sessions, at private events, and in the additional group events and parties that will take place at night.

All Work and No Play — Not Us!

Lastly, we’re excited to announce that the BEC2022 will be held at the Gaylord Rockies Resort in Denver, Colorado.

Many BEC attendees use the conference as an opportunity to vacation in Colorado either before or after the conference — skiing and snowboarding are the most popular activities. If this is the case for you, don’t forget to pack your snowboard, skiing, or sledding gear!

 

After the Conference

The value from the BEC doesn’t stop at the end of the conference, it only continues. The relationships you will develop and the knowledge that you take away can be implemented immediately and last a lifetime.

If you haven’t already, check out www.besteverconference.com to learn more about the Best Ever Conference and reserve your ticket today. Check back often for updates, and we’ll see you at the Best Ever Conference in February 2022!

 

 

 

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What Your Financial Advisor Doesn’t Want You to Know

Financial advisors have historically played an important role in the financial planning industry. In the United States alone, there are hundreds of thousands of financial planners and advisors, each with varying specializations, experience, and portfolio preferences.

Many people like to work with financial advisors because, at least on the surface, these individuals seem to know quite a bit about finance. They offer you advice, help you pick assets to invest in, and answer the many questions you might have.

Unfortunately, however, many financial advisors will recommend investments that are in their best interests rather than your best interests. They may even discourage you from investing in lucrative, sound investments such as private placements because investing in such vehicles would yield them zero commissions.

Understanding how your financial advisor gets paid can help you recognize any biases that may be at play. If you met your financial advisor through a life insurance agency, for example, there is no doubt that they will sway you into investing in life insurance. This is not to say that all life insurance policies are necessarily bad, rather, that the recommendation was simply made with a strong degree of self-interest.

These direct conflicts of interest can create problems for unknowing investors. Below, we’ll discuss some of the things financial advisors don’t want you to know and explain why lucrative private placement opportunities are often overlooked and avoided.

 

Follow the Money

In the world of finance, nothing is free. Even if someone is offering you free information or a free consultation, they are likely only doing so to potentially sell you a product or service someday in the future. If you are working with a financial advisor, be sure to ask them how they get paid.

If you aren’t inclined to ask, I’ll just tell you. Financial advisors get paid in many different ways. Some get paid hourly, others get paid by commission, and some even get paid for the specific products they sell. They still get paid, even if you don’t. Think about that. If someone’s livelihood depends on their ability to recommend one product over an alternative, it’s pretty easy to guess what they are most likely to recommend. If their interests aren’t aligned with yours, then self-interest creeps in.

We’re certainly not suggesting that traditional financial advisors are malicious in any way, however, when interests are not aligned, things tend to go awry. This misalignment of interests is an industry-wide problem and is not something that should readily be dismissed or overlooked.

 

Yours or Mine

It’s obvious that many financial advisors, particularly those that work for a specific company within some facet of the financial industry can be easily pressured to push specific financial products even when it’s not the best investment for you.

But what many people don’t realize is that there may also be active forces preventing them from making specific recommendations. For example, investment vehicles that are often kept out of sight and out of mind are private placements. These assets can offer extraordinary returns for you, so what’s the problem? The problem is financial advisors make no commissions if you invest in private placements, so where is their incentive to encourage you to invest in these types of investments?

In fact, many financial advisors will actively speak out against private placement investments without ever clearly stating why. They might say they prefer more traditional ways to access global equity markets or blame illiquidity, but those reasons alone are insufficient to dissuade you from investing in some of the most lucrative and consistent investments available.

What they aren’t telling you is the main reason they make their specific recommendations: it is good for them, personally.

 

Financial Illiteracy

When you ask a financial advisor, “Why do you recommend this specific investment?” they’ll probably say something about expected returns, or diversification, or various other factors that can make a prospective investment appealing.

All of these things may be true. After all, they are well-aware of the game that they need to meet your baseline expectations if they want to continue working as your advisor into the future. However, more times than not, financial advisors are financially illiterate. Let me explain.

They may know their products because it’s their job to know, and it’s how they get paid. But how many financial advisors are well-versed in real estate investing? Not REITs, but actually owning real estate directly. How many know about private equity, real estate syndications, cryptocurrencies, or running a business? Not many.

It is still okay to listen to your financial advisor and they probably have some decent advice. But, at the end of the day, take the advice with a grain of salt, because you now know that they have underlying self-interests. Know that you are ultimately the one who has control over your portfolio and will be responsible for the outcome of your investing decisions. You will always be free to move your capital elsewhere if your advisor prohibits you from exploring a particular asset class you are interested in. Take control, your future depends on it.

Here are some additional insights from actual financial experts.

 

Financial Advisors Fear Losing Control

Most financial advisors have worked hard to be where they are and, like anyone, they do not want to be made obsolete. However, you can find profitable investment opportunities on your own. You can make investments and generate sizable returns without the need to pay someone a commission every time you want to make a trade or move funds.

Financial advisors are often hesitant to make that clear – that is, that they fear the veil will be lifted and that their profit-generating services will no longer be needed. The clout they’ve worked hard to establish can easily go away. You can take control of your own future and do a good job at it.

These financial advisors may be experienced, but they don’t know anything you can’t learn (rather quickly) on your own. For instance, if you find a private placement, such as a real estate syndication, that on a risk-adjusted basis appears to be an incredible opportunity, educate yourself and take action. Invest as the ultra-wealthy have for decades.

While financial advisors are not going away any time soon, their roles will continue to change. Today, the consumer investor are the ones who rightly have the power to control their own destiny. If this means investing in private placements or other alternative wealth-building vehicles, now more than ever, you are empowered to do it.

 

About the Author

Seth Bradley is a real estate entrepreneur and expert at creating passive income while still working as a highly paid professional. He’s the managing partner of Law Capital Partners, a private equity firm focused on multifamily and opportunistic acquisitions, and the host of the Passive Income Attorney Podcast. Get started building a future full of freedom by snagging The Billables to Abundance Bible at www.escapethebillable.com.

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Top Takeaways From Every BEC2021 Day 2 Speaker

The Top 10 Things to Ask Before Investing

Ryan Gibson, Spartan Investment Group

How to find great operators

  • Online:(506 investor group, forms D)
  • Networking
  • Funds: fund of funds
  • Syndication groups: meetups groups
  • Projects: something you see in your area because most are syndicated
  • Referrals: from other operators

Your interview with the operator

  • Ask open ended questions: When interviewing operators, see if they are interested in what you have to say
  • Write down notes
  • Keep a log of operator Q&A
  • Portfolio projects
  • Referrals
  • Property location

Are they an operator or syndicator? Determine what role the company plays. How are they compensated, how are they aligned with you? Are they aligned with the success of the project?

Tell me about a deal gone bad? This is Ryan’s favorite question. Having no deals that have gone bad indicates low experience or a lie while having deals that have gone bad helps you judge the grit of the syndicator. 

What is their mission, vision, and values? Does their mission, vision, values, align with yours? Ask them to give an example of how they’ve used their values recently.

Who is on the team? Are they a one-man band or do they have a deep bench? Are they vertically integrated? Are they using the fees they charge to hire a great team or to pay themselves?

What is their core business model? Selling education? Working elsewhere? Focused on deals? Gurus?

What is your investor communication plan? Ask for last three communications to get a better understanding of their communication style. Is the plan in writing? Can you verify property performance against projections?

What is the performance of their portfolio?

  • Historical performance (proforma vs actual): comparison is more important than absolute return since it gives you the right context
  • Was it project level IRR or investor IRR: total project may look better than investor level
  • Consistent metrics: Ryan likes to use equity multiple and how long it took gives true time tested return, IRR might be misleading or not the best metric

Obtain reference and conduct a background check

  • Don’t ask for a reference, find your own, because no one gives bad references
  • Find others that have invested in the company
  • BBB, Google reviews, 506 Group, etc. – search for the company name and name of the principles

Insurance

  • Does SEC attorney provide E&O insurance to cover for lawsuits
  • What exclusions are included on their title insurance?
  • Is there property insurance at least from an A rated Carrier?

Decision to exit

  • What would make an operator exit early? What is their justification for selling?
  • Have they sold early in the past? How many time and, how did the actual returns compare to projections?
  • How do they brief investors?

Market-Driven Strategies for Investment and Operations

Greg Willett, Real Page Inc.

Where we are at right now

  • We suffered sizable job losses which have impacted real estate market. However, occupancy rates are at healthy level and we’ve experienced rent growth in some places. Overall, there is huge variability in results in one part of the country and product niche to another – the highest I have ever seen.
  • Best rent growth is about 8% – Inland Empire, Sacramento, Virginia Beach, Memphis, Midwest
  • Gateway metros are really struggling – Bay area and metro New York: rents cut 15% to 20%

Three Investing Strategies

  1. Throttle up your Sun Belt assets. Simply getting in front of renter demand can help fuel performance successReally solid demand results across state of Texas, Carolinas, Tennessee, Atlanta, Phoenix, and Denver. Be careful in Florida markets, because there are a lot of tourism centers. Places like Tampa, Jacksonville are doing well. Don’t rule out the Midwest. Demand is not as strong as it is in the Sunbelt but low supply will drive demand.
  2. Don’t bank on a flight-to-quality. Rent discounts at top-tier product are not delivering move-up renters to the extent experienced during previous economic stumbles: Renters have had the tendency to move down and downgrade to class B and C to save money.
  3. Explore a low capital value add strategy. Lower price points are boosting occupancy and supporting resident retention at lease expiration: Focus on maintenance issues and appearance but hold off on bells and whistles to keep property more affordable for bigger group of renters. Turn around on a vacant unit is faster for lower quality upgrade and leaves money on table for a future buyer.

Three Operational Strategies

  1. It’s the right time to adjust the recipe for your operational “secret sauce.” Measure what’s working now: You don’t want to be doing what worked well in the past, you want to be doing what works well now. Pay attention to what young adults are doing and how it impacts the types of units that are in demand. Then determine how this impacts your marketing needs, because certain strategies are better and worse. The bottom line is to measure everything to see what is different now compared to two years ago
  2. Focus on renewals. Resident retention at initial lease expiration has gotten harder to achieve in some locations and product segments, so make it a priority to hang onto today’s best residents: There is large variability in renewal rates across the country. But the goal is to hang on to the good residents who are making payments. Taking a hit on rents on a renewal lease might be a good thing. Pay attention to the type of units with lower and higher renewal rates and ask yourself, why aren’t they renewing? Pay attention to the non-pricing factors, like maintenance and customer service.
  3. Take back control of your brand. Know what you are selling and who the target for your product and message is in this marketplace: The overall message should focus on service, appearance, ease of living a the property, the location – don’t focus on price.

The Devastating Impact of Climate Change on Your Real Estate Investments in the Next 10 Years

Neal Bawa, Grocapitus

Impact of climate change in 2020 and questions to think about

  • 2020 had $95B in damage from climate disasters
  • What will happen to your investments when taxes increase to pay for massive sea walls?
  • Where will the money come from to fix Texas’s power grid?
  • In California, the six greatest wildfires happened in 2020, and will double in five years. How will this impact California cap rates?
  • Cities with sea level rise exposure are already priced at a 7% discount

Many climate risks may become uninsurable: Insurance companies are starting to buy climate data from Moody’s and creating city-by-city insurance plans.

Climate data is being used to downgrade entire cities: When a city is downgraded, their ability to borrow goes down, making it harder to fund re-construction projects. As a result, people move out, and it continues to spiral.

The end of the 30-year mortgage: Full cities may change to 20 year or 15 year mortgages options

The cities with no climate risk will be the next gold rush.

Overall, the people who set ratings, cap rates, insurance rates, mortgage terms, as well as cities are taking climate risk into account, and so should you.

The State of Fundraising in 2021: Key Risk Areas for Capital Raisers in Today’s Regulatory Environment

H. Gregory Baker, Lowenstein Sandler LLP

Capital raising regulations have been relaxed over the past presidential administrations, but that is changing.

Section 5 of Securities Act: One of the most important rules in the federals securities laws. In 2020, 1/3rd of all SEC enforcement cases concerned offering of securities. The SEC does not need to prove that you intended to violate the rule: they just need to show that you violated the rule,

A security must be registered or have an exemption. The common exemptions are:

  • section 4(a)(2) of securities act, private placement exemption
  • Rule 506(b) of Reg D, private placement safe harbor
  • Rule 506(c) of Reg D, general solicitation
  • Reg. Crowdfunding, 
  • Intrastate offerings

The consequences for violating Section 5 can be severe. The investors can get their money back from you. The SEC can fine you. And your reputation will be harmed.

How people or companies get tripped up on Section 5

  • Relying on 506(c) but failing to ensure that your investors are accredited
  • Relying on 506(b) but you advertise
  • Relying on intrastate exemption but selling to investors in multiple states

Expect to see more of these cases under new leadership. Gregory’s advice is to work with your attorney to ensure you follow rules, and document how you followed rules.

How to Scale Your Syndication Business

Michael Blank, Nighthawk Equity

Who should consider building a thought leadership platform? Anyone raising money for real estate. Anyone who has already raised some money 1 to 1. Anyone who is ready to scale capital raising ability. Anyone who wants to raise millions of dollars in a few days.

What will a thought leadership platform achieve? Automatically attracts the right investor, raise more money so you can do bigger deals, create more revenue, invest revenue back into market to do more deals, effortlessly scale and serve your investors

Three pillars of a thought leadership platform

Attract:

Identify your ideal avatar: in order to attract the “right” audience who is interested in what you have to offer, you have to identify your ideal potential investor

Capture leads: when you attract the attention of your ideal avatar you need to know who they are. The best way to do that is to offer them a “Lead Magnet” in return for their email addresses

Develop:

Serve and lead: Serve your audience and earn their trust with valuable free content that educates them about investing in syndications. Serving = content = trust

Lead them on their investing journey with continuous content

Scale: Make a compelling offer that generates revenue and reinvest a portion of your revenue to attract more leads

How to automatically attract more passive investors

Create a lead magnet: When someone downloads a lead magnet, they get tagged in system as “downloaded”, and put on email list to receive educational emails

Join the club: After downloading the lead magnet, they are invited to fill out a detailed questionnaire, and get tagged as “joined”.

Schedule a call: Included is the option to schedule a call after filling out the questionnaire. After the call, they get tagged as “deal ready” and are now prepared to receive upcoming opportunities

Follow up automation: Automatically send follow-up emails to people tagged with “downloaded” and “joined” until they move forward in the process and set up a phone call or unsubscribe.

Multiplying Your Real Estate Portfolio

Deborah Razo, Women’s Real Estate Network

The secret success system blueprint: find success habits, cultivate habits through repetition, achieve mastery. This is a system that deals with growing systems and expanding your mindset.

The success cycle: potential, action, results, belief. The more we believe in our potential, the more action we will take and the more results we will achieve. The more results we achieve, the more we believe in our potential.

How to cultivate resourcefulness: Write down a problem and come up with three effective, intelligent, and viable solutions. Because one choice is no choice. Two choices is a dilemma. But three options and you are in the space of choices

Accelerate Your Returns Through Construction Management

Ashley Wilson, Bar Down Investments

A team member with construction knowledge is critical to maximizing the investment’s returns

Get creative: There is more than one way to solve a problem, so your focus and end goal should drive your solutions

Balance between evaluation & equity: Your focus should be on increasing equity, not the evaluation.

Time is money: Figuring out ways to decrease the time construction takes will maximize your return on investment

Building a Social Media Content Engine

David Toupin, Obsidian Capital & Real Estate Lab

Social media = attention = influence = income

Where to start

  • Focus on 1-3 platforms at first to get traction
  • Create Facebook, Instagram, and YouTube account to start, or pick one or two that you like and want to go with
  • Block out one day every week to record a few hours of content to stock pile content and post throughout the week
  • Block out 2 hours every day to post and interact with followers: respond to every comment and direct message 

How to create a social media content engine

Create lots of content one or two times per month: Either by yourself of hire a videographer for one or two sessions each month, and upload all the content to a DropBox folder

Hire an editor to create a content database: Use month’s worth of content to create longer videos, shorter videos, and pictures with caption. The goal is to create at least 10 social media posts per one hour of video content

Hire a content manager: The content manager will use the content database to compile one month’s worth of social media posts.

Determine what the focus of your content is going to be: All posts should be directed towards achieving your end goal

You approve the posts: Once the content manager has compiled a month’s worth of posts, you review and approve

Schedule the posts: After you’ve approved the posts, the content manger schedules them throughout the next month.

Rinse and repeat

Top social media tips

  • The number one secret to social media is consistency
  • The number two secret is focusing your niche
  • Be yourself, people will recognize if you’re not being real
  • Interact with your audience
  • Tell your story
  • You will automatically attract people that like the same things you like. That’s how the algorithm works
  • You do not need a fancy camera or equipment. Any modern cell phone is sufficient
  • Don’t worry about your current audience. Create your desired audience over time – either create a new account or start on your personal account
  • Don’t worry about what people might think about you. Have fund with it and be yourself
  • Comment on posts of other big influencers

UTH Workforce Housing: Pairing Private Capital with New Construction Workforce Housing

Scott Choppin, Urban Pacific group of Companies

What is workforce housing?

  • Built-to-rent, non-standard MF in historical terms – SF and attached townhome rental product
  • Below market rate rents
  • Housing for working families at 80% to 120% of median income: service sector/blue collar, large multigenerational family groups with 4-7 people
  • Housing for professional “location agnostic” roommate groups working remotely: location agnostic and use extra bedroom for remote work
  • Locations: urbanized suburbs of most major cities, close to amenities but not central business district

Why chose workforce housing as an investment?

Recession resilient

  • Deeply undersupplied
  • Multi-earner households (families or roommates), 
  • Multi-generational households (reduces poverty rates)
  • Work-from-home is accelerating absorption and rental rates

Sticky, long-term tenant base

  • Strong social networks: kids in school, family nearby
  • Economic sharing lifestyle: share income and expenses across the group
  • Naturally affordable rents without government subsidies

What is urban townhouse (UBH)? Designed and built-to-rent but lives like a house

  • Five bed/four bath, 1750 sqft.
  • Three-story townhouse
  • Two-car direct access private garage
  • Multigenerational and WFH space ground floor bedroom/bath
  • Located in existing urbanized suburban neighborhoods where families and work from home roommates want to live
  • Rent on average $3500 to $4000 per month
    • Value ratio $2 to $2.28 psf. (average 50% below market)
    • Per bedroom rent $700 per (40% to 50% below market)

Extended Stay Model – A Hidden Secret in the Hospitality Industry

Jennifer Maldonado, The Art of Raising Capital Program

Profitability and resiliency are the foundations to long-term profits.

During the pandemic, the extended stay hotel model worked well for first responders and essential workers.

Economy Extend Stay Hotels performed the best during the pandemic.

  • Top tier: occupancy is down 29.7% and average daily rates (ADR) are down 17%
  • Middle tier: occupancy is down 14.8% and ADR is down 13%
  • Economy tier: occupancy is down 3.1% and ADR is down 3.1%

Don’t chase the herd! Chase the returns!

Ash Patel, Rivershore Capital

By searching the MLS five times every day, Ash was able to know about properties before anyone else, even the brokers.

Don’t make excuses when things get hard.

As a commercial real estate landlord, your only job is to make sure that you tenant is successful: treat your tenant like a partner and they will take better care of your property

Success follows selfless acts for others.

Look for unconventional ways to by real estate.

Bringing Property Management In-House: Why, When, and How

Frank Roessler, Ashcroft Capital

Why bring property management in-house

To improve performance: The only real reason you to it. If you can’t do it better, don’t do it at all

Alignment of incentives: Move away from issues of fee-based management. No other clients of higher priority.

Improve communication: Faster awareness of property vitals. More involvement in property operations.

When to bring property management in-house

Pros and cons of bringing property management in-house day 1

  • Pros: 
    • zero disruption
    • small overhead: won’t have to build out an entire organization, which is expensive and time consuming 
    • reduced upfront costs: offices and employee benefits
  • Cons: 
    • no best practices: you will be learning on the job at the detriment of the first few properties
    • starting at a loss: one property will not cover cost of managing the property, won’t breakeven until you have a couple thousand units 
    • no industry top talent: don’t have a track record to attract best of the best

Pros and cons of bringing property management in-house when you have scale

  • Pros
    • Ability to attract top talent: people were eager to jump ship and provide a business plan
    • Starting with a profit margin: breakeven or make a little bit of money
    • Best practices: because you have the top talent
  • Cons
    • Major disruption: terminating contracts, providing notice, transition process, a million moving parts
    • Significant startup costs: hiring a full team before you even have revenue
    • Relationships can be hurt

How to bring property management in-house

  • Create a policies and procedures manual: a how-to guide for every single department and staff member in your portfolio
  • Hire a president to run the company: don’t reinvent the wheel, leverage that person’s knowledge, experience, leadership, and contacts.
  • Build out each department slowly and carefully before you take everything over: learning and development director, digital marketing director, revenue management, CFO, IT, HR, regional and area manager, regional maintenance director
  • Culture matters
  • Provide sufficient notice

Six Lessons in Becoming a Better Leader

Brandon Turner, BiggerPockets

The Four “Therefores”: Happiness and fulfillment is found through growth and achievement therefore, in order to grow, I need to focus on my superpower and less on other tasks therefore I need to hire a partner or outsource my non-superpower tasks, therefore I need to lead those people to where I desire therefore leadership is not an option for an incredible life

How to change your identity: mindset -> actions -> identity -> confidence -> actions …

You can be anything you want to be if you change your identity through your mindset actions and confidence

Brandon’s new mindset about leadership

  • My job is to be a general
  • Management is not leadership and leadership is not management
  • When you work with people you love and care for, it’s not work, it’s a beautiful life, a symbiotic relationship of mutual growth and respect
  • Leadership is the most manly of skills
  • Freedom is found through great leadership
  • Leadership is a skill

6 characteristics of a great leader

  • Quitter: find a way to quit your job as soon as possible by paying an expert to do it
  • Cutter: the one or two things you need to be doing
  • Caster: write down the vision for where you want your company to go
  • Coach: ask the right questions to improve performance of team
  • Scout: find and attract talent
  • Student: recognize you don’t know what you are doing and that you need to continually grow
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Top Takeaways From Every BEC2021 Day 1 Speaker

Four Steps to Build a Team That Lasts

Liz Faircloth, The Real Estate InvestHER

Step 1: Map out where you want to go: Determine your short-term (1 year) and long-term (3 and 5 year) goals. Define an overall vision.

Step 2: Take a personal inventory: Spend half a day figuring out everything you bring to the table from a credit (asset and liabilities), time, experience, skills, personality, and leadership perspective.

Step 3. Determine WHO you need to meet your goals and vision: Based on your business model, figure out the major roles you need to fill. Based on what you bring to the table, determine which roles you will fill and which roles you need a team member to fill

Step 4. Find people to gain alignment and diversity: The biggest mistake when building a team is lack of alignment (values, goals, expectations, entrepreneurial spirit) and lack of diversity (personality, risk, tolerance, skill set, experience). Leverage personality assessments to identify hires who complement your skills and gaps, and who are in complete alignment with your value.

Beyond the Pandemic: Adapting Investment Strategies to the New Normal

John Change, Marcus and Millichap

Vaccines are the key to the economic recovery: The amount of money in money market mutual funds and saving deposits are very high. There is the potential for $4.5 trillion to enter the economy once things are “back to normal” after the roll-out of the COVID vaccine.

Job growth and COVID: A record number of jobs were lost as 10 years worth of job growth were wiped out – 22M jobs. About half those jobs have come back. Hotels and restaurants were hit the worst and have yet to recover.

Retail and COVID: Retail was a mixed bag. It took a hit at the onset of the pandemic, hit a high after economic stimulus and has started dropping again. Restaurants, bars, electronic, and apparel sales were hit the hardest while home repairs and internet sales are at an all-time high.

Huge GDP growth forecasts: GDP is forecasted to grow between 5% and as high as 7.5% in 2021, which would be a 30+ year high.

Top myths of the pandemic

  • Huge wave of evictions are coming: rent collections are down YoY but are much better than expected due to economic stimulus
  • Widespread distress will spark significant discounting: distressed sales are 1% of total transactions, and delinquencies are well below distressed market levels
  • The retail apocalypses: rent collections on retail have surpassed expectations and are being dragged down by entertainment, restaurants, and health centers

2021 Trends

  • Class B and C multifamily: due to record levels of construction, Class A vacancy is increasing while Class B and C vacancy is at record lows
  • Self-storage: occupancy hit all time high Q3 of 2020

 

Seven Lessons Learned With $2.8 Billion of Real Estate During COVID

Jillian Helman, RealtyMogul

Lesson #1. Play defense before an economic crisis, not during a crisis: Three things to do during economic expansion to prepare for economic recessions: underwrite well and don’t do deals that don’t met your underwriting criteria; have a strong property management team in place; have open conversations with your lenders to ensure they will pick up your call during a recession.

Lesson #2. The proforma is always wrong: When creating your proforma for a new opportunity, have a minimum contingency budget of at least 10%, scale back the number of units you expect to renovate and lease, assume an exit cap rate that is 1% greater than cap rate at purchase, and increase vacancy and bad debt to stress test.

Lesson #3. Take a breath and be deliberate: Jillian’s top priorities are the health and safety of residents and team, keeping occupancy up, and shoring up cash reserves. This involved taking a deep breathe and deliberating to determine how to best focus on these priorities. She decided to halt renovations, rent increases, and all nonessential repairs.

Lesson #4. Don’t be afraid to innovate: For example, Jillian began using virtual, self-guided tours.

Lesson #5. Do experiments and test the market: In the example above where Jillian experimented with virtual tours, the conversion rate was higher than in-person tours with a leasing agent. Since the experiment works, she doubled down.

Lesson #6. Be a stellar communicator: Provide detailed monthly updates to investors, communicate what you are proactively doing, and be available and receptive to investors.

Lesson #7. Take a position: During COVID, this started by overcoming fear. Then, Jillian took an offensive position, assumed the world wasn’t ending, that the world would recover, and that data supported that investing still made sense.

What makes her afraid?

  • Silicon valley tenants/master leases with no credit quality a la We Work
  • Office with significant roll over (exception if the cash flow is strong enough to return full principal prior to roll over)
  • Retail unless it is main-and-main
  • Hospitality in all markets
  • Impact of insurance costs rising in markets like Florida and Texas
  • Modeling a refinance with Fannie Freddie debt less than a 4.5% to 5% all-in rate
  • Sitting in cash when inflation starts to rise

Where does she see opportunity?

  • Well-occupied apartments with reasonable bad debt financed with long-term fixed rate debt
  • New construction in growth markets with a late 2022/2033+ delivery
  • Growth markets – Austin, Dallas, Denver, Raleigh, Charlotte, Columbus, Phoenix, Jacksonville, Salt Lake City, Nashville
  • Office with long term credit tenants and a functional need to be in an office
  • NNN with great tenants
  • Retail at main-and-main trading at a discount
  • Not yet, but NYC, LA, Miami in 2022/2033

 

How to Bulletproof Your Mind for Extraordinary Real Estate Success in 2021

Trevor McGregor, Trevor McGregor International

Your mind is like a fertile garden. Whatever you plant, the soil will return, and your thoughts are the seeds. Plant positive powerful thoughts. To avoid too many weeks growing, you must stand guard at the door of your mind.

The two things that happen during the prime years of your life: The prime years of your life are between 25 to 65 years old. This is when you have the most opportunity as well as when the most regrets are formed.

TFEMAR: a thought turns into a feeling; feeling into an emotion; emotion into motivation; motivation to take an action; the action has a result. Therefore, your thoughts equals your results.

The 4S Success Formula: To be successful, you need to be in the right state, have the right story, the right strategy, and the right stands. Your state is your physiology, focus, and language. Your story is your identity – you are either a victim or a victor. Your strategy should be based on a character trait integration – what would so-and-so successful person do?

2021 Forecast for Apartment Investing

Brad Sumrok, Apartment Investor Mastery

2020 performance highlights

  • 2020 ended up a pretty darn good year for apartments
  • Lost 22M jobs and now down 10M – correlated with apartments
  • Occupancy dropped 60bps
  • Rents went down only 1%
  • Price per door went up and cap rates went down, so investors ‘net worth went up by owning deals

Jobs and population growth are the top two economic factors that make multifamily tick: Migration growth is important but the market must also be landlord and business friendly

Sumrok process for double digit returns

  • 1st investment is specialized education
  • Define why, SMART goals, investment criteria
  • Stabilized and value-add
  • Select the right market
  • Leverage OPE, OPT, OPM (including syndication)
  • >60 units for economic of scale
  • C and B class
  • Be dynamic (i.e., now A Class in recessed markets)
  • Exponential and expansive mindset

How to select the right target market

  • Landlord and business friendly
  • Above average cap rates
  • Above average job growth
  • Above average pop growth
  • Above average affordability gap: rent of median apartment unit < PITI of median SFR
  • Understanding local “markets” and cycles: boots on the ground
  • =highest returns and lower risk

2021 Forecast

  • 3,695,100 new jobs up 2.6% and 2.9% in 2022
  • Job growth strongest in white collar (Class A)
  • Occupancy down 40bps due to new supply
  • Rents up 1% in 2021 and 4.1% in 2022
  • Construction up 14.5%
  • Top 2021 markets: Atlanta, DFW, Austin, Houston, Tampa, Jacksonville, Phoenix, Columbus, Denver, CO Springs, NC, Nashville, Knoxville, Indianapolis

In one year from now, if you waited, you will regret it.

How to Write Off Almost Anything

Karlton Dennis, Karla Dennis and Associates

The two kinds of tax payers you don’t want to be

  • Ultra-aggressive: don’t know how to leverage tax codes but goal is pay least amount of taxes as possible
  • Ultra conservative: don’t want to take any of the deductions they qualify for and are afraid to reduce taxes because they’ve been living in fear (listening to info online, news, past CPAs, etc.)

Four simple steps to following the tax code

  • You must have a business: run your business like a business, have a time investment in a business, have a mentor or coach, have a business and strategy
  • Your business expenses must have a business purpose: there is not a list in IRS handbook that says what you can and cannot write off. If it is ordinary, necessary, reasonable in pursuit of income, it can be deducted
  • Proof of payments: keeping copy of receipts is important because it is documentation of exactly what you spend your money on – what is business and what is not business. Take pictures of your receipts
  • Expenses properly reported: If you are trying to do tax planning on your own, you will fail.

Most common tax nuances

  • Not keeping property receipts
  • Recording keeping is muddled
  • Miscategorized expenses
  • Late on bookkeeping

How the wealthy stay in the 0% to 15% tax bracket: organization and a strategic tax plan.

Passive Investor Tips for Investing in Multifamily Syndications

Travis Watts, Ashcroft Capital

What is financial freedom? When your passive income exceeds your lifestyle expenses.

What is the right investment criteria? There is no right or wrong investment criteria. What matters are your goals and your risk tolerance.

Difference between passive and active investing

  • Passive: Lacks time, enjoys reading financial news, likes to own a little bit of a lot, seeks to match not beat the stock market
  • Active: Enjoys the business of real estate, may not value diversification as top priority, seeks to control investments, has an advantage of competition, seeks to beat the market
  • Active is hands on, passive is hands off

2021’s Place in the Housing Cycle

John Burns, Burns Real Estate Consulting

High demand: 

  • Consumers made $1.03T more than usual last year due to government stimulus 
  • Consumers spend $535B less than usually last year, despite spending more on goods
  • Consumers saved an additional $1.6T in 2020 compared to 2020
  • Most homeowners and potential new home buyers are far better off financially today than a year ago
  • Google search has risen 56% for new homes, 9% for new homes
  • Millions of workers no longer need to commute

Low supply: 

  • Home listings are down over 40% YoY
  • New supply has fallen – 10% fewer communities to sell from YoY
  • Unsold new homes dropped 69% YoY

High demand + low supply = 2021 housing boom: John says we are clearly in an upcycle.

Unlocking the Fund of Funds Model

Hunter Thompson, Asym Capital

Traditional real estate partnership: Capital partner and operating partner form management LLC that purchases real estate

Co-GP model: multiple capital partners and operating partner form management LLC that purchases RE – SEC doesn’t like, especially with increasing number of capital partners

SPV/Fund of Funds:

  • SPV: special purpose vehicle
  • Considered a pass through entity
  • Doesn’t mean there are multiple assets
  • A bunch of investors invest in a SPV, there is a manager of the SPV (placement agent) who invests with another operator

Why would anyone invest through an SPV instead of investing directly with an operator?

  • Your clients desire your expertise
  • Gives them access to otherwise unavailable operators: high minimum investment
  • The dream clients you have attracted have picked you to rely on
  • Provides investors an opportunity to defer to your due diligence
  • Most investors are not like you 
  • The economies of scale are not necessarily less favorable

Preferential treatment of SPVs

  • Operators prefer to focus on implementing the business plan not investor relations/fund administration
  • You can leverage what you are bring to the table as a negotiation tool to receive preferential economic treatment
  • Many operators are willing to forego some of the economies in order to receive larger checks

Three Things it Takes to Make the Inc 5000

Defining your culture: Start with your why. why do you do what you do? Why do you go to work in the morning? Then, transcribe your why into a one or two sentence mission statement to inspire you and your team to show up.

Next is to know where you are going and what the end state looks like. This is your vision – what does success look like to you.

Third is to define your values. These are the behaviors you want to see in your organization.

Last is to avoid the say-do gap. Be care that you don’t say one thing and do another, because then your culture isn’t believable.

Developing your plan: Understand what you are going before you do it, but set a time limit. A good rule of thumb is to understand and education yourself for 90 days, develop a plan for 90 days, then go out and take action.

A good strategic plan includes three goals, three to five objectives, and multiple key results over a three year period.

Assemble your team: First, understand your strengths and weaknesses. This is best accomplished by asking your friends, and especially your spouse. Then, find people who fulfill your weaknesses.

When hiring people, focus on their character more than their competencies. You can teach competencies but you cannot teach character. Then, focus on experience but understand their track record to ensure they were successful because of skill and not luck.

Why Consider Industrial: The Case for Industrial Syndications

Monick Halm, Real Estate Investor Goddess

What is industrial real estate: all land and buildings which accommodate industrial activities

Why consider industrial real estate

    • Escape the feeding frenzy that exists in other asset classes
    • Diversify your portfolio
    • Long-term NNN leases with excellent tenants
    • Increasing demand by companies (especially e-commerce)
    • Strongest performing asset class throughout the pandemic

What is the current state of the market for industrial real estate:

  • Industrial spaces are being used by essential businesses –
  • Industrial has been the strong asset class during the COVID pandemic
  • Rents are going up and occupancy is going up

Institutional Capital Demystified

Lance Pederson, Verivest

Having a fund is a more efficient way to capitalize.

Being an operator is like owning a trucking company and having to own a refinery create your own fuel. 

Institutional capital is the equivalent of owning a job

There’s a reason why you’re seeing sponsors with 30+ year track records raising capital on crowdfunding websites because the cost of capital is much cheaper

Create Class A and Class B shares to attract HNWI, SPVs, institutional investors, etc.

Institutional readiness checklist

    • Conviction/differentiated strategy
    • Polished online presence
    • Pitch deck/executive summary
    • Due diligence questionnaire
    • Verified track record
    • Investor references
    • Secure data room
    • Quarterly reporting

If you focus on building your HNWI base, the rest well come.

Five Evolutionary Ideas for Your Business

Joe Fairless, Ashcroft Capital

Protect against biggest liability you’re currently not paying enough attention to: For 99% of syndicators, compliance. Most securities attorneys are really good at answering the questions you ask, but your are still at risk when you aren’t asking the right questions. The solution is to hire a an in-house compliance team member and acquire the proper insurance.

Bring the best out of your team: create a single KPI for each team member or a one sentence description of what their roles is so they know exactly what is expected of them and to motivate them to exceed their KPI for a bonus.

Enjoy better deal flow, deliver better returns, and create more sanity: create a fund instead of single asset purchases. It increases deal flow because you can be more flexible with the types of assets you target. It generates better returns because you can commingle capital within a fund, so there is less ideal capital.

Get better results on your thought leadership platform and in your commercial real estate business: Once your thought leadership platform matures, transition it to other people. They can focus on growing the brand and you can focus on growing the investing business.

The success paradox: The more successful you become in business, the less likely you will receive constructive criticism from your team members. The solution is to find three people in your circle who will provide you with honest feedback. Also, identify an event that didn’t go according to plan and think about how you were responsible for it taking place.

Intellectual Debate: Interest Rates Will Be Higher in 24 Months

Hunter Thompson, Asym Capital; Neal Bawa, Grocapitus Investments; John Chang, Marcus and Millichap; Ryan Smith, Elevation Capital Group

Winner – Interest rates will not be higher in 24 months

  • The question shouldn’t be, “will interest rates be higher,” the question is “how low will interest rates go and when will they go negative?” Hunter says many industrials countries already have zero and negative interest rates.
  • Japan is the new mode: in response to an 80% drop in their stock and real estate markets, they decided to print money to halt unemployment. This money printing will not end in the foreseeable future, and is being mimicked by other industrialized countries. Therefore, rising interest rates would blog up the global economy
  • The trend is your friend and don’t fight the Fed. The trend has been down and to the right for more than 40 years. Fed said they will keep the funds rate at 0% through 2024

Losers – Interest rates will be higher in 24 months

  • There isn’t evidence that the Fed will continue lowering interest rates. The prediction is based on the desire of real estate investors to see lower interest rates
  • Fed will rise interest rates to control inflation: $5 trillion in stimulus money was injected into the economy, increasing the money supply to an all-time high. GDP is forecasted to grow between 5% and 7%, which means inflation.
  • Fed always rises interest rates after recessions
  • Fed sees pandemic as a short-term risk, which means the Fed has changed its position

State of Multifamily Market: Apartments in the Age of COVID

Robert Calhoun, CoStar

The spring leasing season wasn’t lost: It was just pushed back later into the year. We lost 61k units in demand between March and June 2020 and gained 69k units in demand between July to November.

Demand in the suburbs are strong while multifamily continues to underperform in downtown areas

  • One bed rent: drop overall at onset but suburban bounced back while downtown dropped significantly 
  • NYC rents by commute time: 12% increase in rents in areas with 51 to 60 minute commute times, 9% reduction in rents for areas with commute times less than 10 minute
  • Densely populated metro areas had really bad net absorption
  • Change in asking rent from March to Dec: Downtown markets top list of markets with greatest decrease and suburban markets top list of markets with greatest decreases
  • 2021 YTD rent change: mix of downtown and suburban areas with increases in rents
  • Concessions: nearly triple for downtown and only slightly higher for the suburbs
  • Availability rate: spiked nationally, getting better which was driven by suburbs. Rates were massively elevated in downtown areas but improved quickly
  • Rent trends by unit type: two-bed are in more demand than one-bed, underperformance of studios
  • Starts and under construction: massive supply wave over last five years but constructions have rolled over in 2020 especially starts
  • Under construction by star rating: vast majority are high end expensive properties largely in downtown areas, lack of supply of affordable housing
  • Rents by star rating: 3 star rents returns to normal seasonal patterns while 4 and 5 star has underperformed
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My 5 Takeaways from BEC2021 Day 2

The Top 10 Things to Ask Before Investing

Ryan Gibson, Spartan Investment Group

Your interview with the operator

  • Ask open ended questions: When interviewing operators, see if they are interested in what you have to say
  • Write down notes
  • Keep a log of operator Q&A
  • Portfolio projects
  • Referrals
  • Property location

Are they an operator or syndicator? Determine what role the company plays. How are they compensated, how are they aligned with you? Are they aligned with the success of the project?

Tell me about a deal gone bad? This is Ryan’s favorite question. Having no deals that have gone bad indicates low experience or a lie while having deals that have gone bad helps you judge the grit of the syndicator. 

What is their mission, vision, and values? Does their mission, vision, values, align with yours? Ask them to give an example of how they’ve used their values recently.

Who is on the team? Are they a one-man band or do they have a deep bench? Are they vertically integrated? Are they using the fees they charge to hire a great team or to pay themselves?

What is their core business model? Selling education? Working elsewhere? Focused on deals? Gurus?

What is your investor communication plan? Ask for last three communications to get a better understanding of their communication style. Is the plan in writing? Can you verify property performance against projections?

What is the performance of their portfolio?

  • Historical performance (proforma vs actual): comparison is more important than absolute return since it gives you the right context
  • Was it project level IRR or investor IRR: total project may look better than investor level
  • Consistent metrics: Ryan likes to use equity multiple and how long it took gives true time tested return, IRR might be misleading or not the best metric

Obtain reference and conduct a background check

  • Don’t ask for a reference, find your own, because no one gives bad references
  • Find others that have invested in the company
  • BBB, Google reviews, 506 Group, etc. – search for the company name and name of the principles

Insurance

  • Does SEC attorney provide E&O insurance to cover for lawsuits
  • What exclusions are included on their title insurance?
  • Is there property insurance at least from an A rated Carrier?

Decision to exit

  • What would make an operator exit early? What is their justification for selling?
  • Have they sold early in the past? How many time and, how did the actual returns compare to projections?
  • How do they brief investors?

 

The Devastating Impact of Climate Change on Your Real Estate Investments in the Next 10 Years

Neal Bawa, Grocapitus

Impact of climate change in 2020 and questions to think about

  • 2020 had $95B in damage from climate disasters
  • What will happen to your investments when taxes increase to pay for massive sea walls?
  • Where will the money come from to fix Texas’s power grid?
  • In California, the six greatest wildfires happened in 2020, and will double in five years. How will this impact California cap rates?
  • Cities with sea level rise exposure are already priced at a 7% discount

Many climate risks may become uninsurable: Insurance companies are starting to buy climate data from Moody’s and creating city-by-city insurance plans.

Climate data is being used to downgrade entire cities: When a city is downgraded, their ability to borrow goes down, making it harder to fund re-construction projects. As a result, people move out, and it continues to spiral.

The end of the 30-year mortgage: Full cities may change to 20 year or 15 year mortgages options

The cities with no climate risk will be the next gold rush.

Overall, the people who set ratings, cap rates, insurance rates, mortgage terms, as well as cities are taking climate risk into account, and so should you.

How to Automatically Get More Passive Investors

Michael Blank, Nighthawk Equity

Create a lead magnet: When someone downloads a lead magnet, they get tagged in system as “downloaded”, and put on email list to receive educational emails

Join the club: After downloading the lead magnet, they are invited to fill out a detailed questionnaire, and get tagged as “joined”.

Schedule a call: Included is the option to schedule a call after filling out the questionnaire. After the call, they get tagged as “deal ready” and are now prepared to receive upcoming opportunities

Follow up automation: Automatically send follow-up emails to people tagged with “downloaded” and “joined” until they move forward in the process and set up a phone call or unsubscribe.

How to Create a Social Media Content Engine

David Toupin, Obsidian Capital & Real Estate Lab

Create lots of content one or two times per month: Either by yourself of hire a videographer for one or two sessions each month, and upload all the content to a DropBox folder

Hire an editor to create a content database: use month’s worth of content to create longer videos, shorter videos, and pictures with caption. The goal is to create at least 10 social media posts per one hour of video content

Hire a content manager: the content manager will use the content database to compile one month’s worth of social media posts.

Determine what the focus of your content is going to be: All posts should be directed towards achieving your end goal

You will approve the posts: Once the content manager has compiled a month’s worth of posts, you review and approve

Schedule the posts: After you’ve approved the posts, the content manger schedules them throughout the next month.

Rinse and repeat

When to Bring Property Management In-House

Frank Roessler, Ashcroft Capital

Day 1: Pros and cons

Pros: 

  • zero disruption
  • small overhead: won’t have to build out an entire organization, which is expensive and time consuming 
  • reduced upfront costs: offices and employee benefits

Cons: 

  • no best practices: you will be learning on the job at the detriment of the first few properties
  • starting at a loss: one property will not cover cost of managing the property, won’t breakeven until you have a couple thousand units 
  • no industry top talent: don’t have a track record to attract best of the best

When you have scale: Pros and cons

Pros

  • Ability to attract top talent: people were eager to jump ship and provide a business plan
  • Starting with a profit margin: breakeven or make a little bit of money
  • Best practices: because you have the top talent

Cons

  • Major disruption: terminating contracts, providing notice, transition process, a million moving parts
  • Significant startup costs: hiring a full team before you even have revenue
  • Relationships can be hurt
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Webinar Recap: Looking to Note Investing in the Global Health Crisis

The performance of real estate notes was a bellwether for the economy in the last recession, so in this Best Ever Webinar we explored the performance of 1st position and 2nd position notes, how the market has been affected by COVID, and what the data indicates about the real estate market at large.

As a servicer of tens of thousands of first position notes, Jorge Newbery pointed to the $4MM loans currently in forbearance, which are on the precipice of foreclosure after government intervention comes to an end.

The counterargument speared by Kathleen Kramer was that the $4MM homes don’t represent the volume of homes in trouble, but in part those taking advantage of the situation. She also pointed to all-time highs in homeowners equity relative to average debt amounts and record low interest rates that could allow troubled homeowners to be bailed out by refinances.

Jim Maffucio added that we see the unemployment rate dropping and average HHI of homeowners being significantly higher than the last recession where subprime mortgages were provided to low wage earners.

Regardless, all agreed that the amount of unpredictability in the future has returned to normal along with pricing for notes, suggesting that for the time being the market has an optimistic outlook on the future of residential real estate.

What the future holds for commercial notes is a larger question with retail and hotels going to double digit CMBS special servicing rates. Will there be opportunity to buy distressed office notes? Whispers of the opportunity are just beginning and it could be too early to see what the future holds.

Watch the on-demand playback of this webinar and past webinars on our conference platform NOW! Our networking has started for this year’s Best Ever Conference, don’t miss out! Use code WINNERS30 for 30% off your ticket here.

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Beyond the Comfort Zone

Stephane Rochet shares how making a plan for success also means creating a plan to push your own boundaries

In the early 2000s, Stephane Rochet worked as a police officer in his community. During his shifts and interactions with his fellow officers, he noticed many of them were often discussing their real estate investments and what was happening in the world of “alternate investments.” After leaving the police force in 2007, he still recalls that environment as the place where he first learned about the potential of real estate investing.

“It was just a realization that the traditional stocks, bonds, put money into your 401(k) and hope for the best, wasn’t working for me,” remembers Stephane. “So, I started to look for other alternatives, and that’s where it started me [into real estate investing], and then the journey continues.”

Stephane moved with his wife and two children to San Diego, California, to pursue a career in the field of athletic performance, specifically around the strength and conditioning of athletes. He also started investing in single-family houses, kickstarting what would become a very active interest in multifamily syndication and the alternate investments he used to hear so much about.

To grow, Stephane began to seek networking opportunities to build relationships and connections with like-minded investors. After several lackluster experiences with local meetups, Stephane realized that the Best Ever Conference presented serious options for personal growth and learning opportunities.

“I made three simple goals. I’m a little bit of an introvert, so going to this, I said, ‘Hey, look, you have to get out of your comfort zone and meet people.’ There were a few people that I had met with or talk to, or emailed or Facebooked before going, and I said, “Well when I’m there, I’m going to actually meet them in person and talk to them.” remembers Stephane. “I had a list of about four names of people who I had contacted previously, had been in touch with, and I sought them out, met them, we had discussions, and they introduced me to other people.”

Meeting people beyond Stephane’s known network was the ultimate goal. He found it easy to achieve, given the conference’s tools, to connect with attendees and plan your experience before arriving on-site.

“I was just determined to meet five new people every day, and that was easy because you had presenters. You’d go sit in a room with presenters, and you just talked to the people beside you while you’re waiting,” said Stephane. “Because I’m new and learning, I wanted to make sure to take advantage of the presenters that were there, so I looked at the schedule beforehand and set out my schedule and made sure I got to see all the presenters that I was interested in.”

As with most conferences, the real test is what you’re able to do with the knowledge you gained once you arrived home. For Stephane, it was not only useful but remained to be empowering on his real estate journey.

“I don’t know if I really realized it until I was on the flight home, but I just felt really excited and a lot more confidence that A, we could do this thing, B, we were on the right track, and C, you didn’t need to be, especially gifted,” said Stephane. “I mean, obviously, you have to get the knowledge, and you have to have some skills, but there were so many regular people just like me out there that were plugging away and doing the same thing.”

In the landscape of COVID-19, Stephane believes that the environment of meaningful relationships and networking comes slightly more complicated. However, not all things have to get harder. In fact, it’s Stephane’s philosophy on real estate investing as a whole that truly relies on keeping things simple.

“It’s so easy to get into the weeds, but an investor doesn’t really care about that, especially on the first call or anything,” said Stephane. “Just remember to keep it a simple, broad picture, and explain things in a way that people can just grasp it and understand why it’s a good investment or why it’s a good path to follow.”

This year at the Best Ever Conference, taking place February 18-20th, there is a full day dedicated to networking. Start networking now and use code WINNERS30 for 30% off your ticket! Register here.

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Networking in 2021

As any real estate investing pro can attest, networking is an irreplaceable factor in the success of active and passive investors. In a world catapulted into the virtual space during 2020, many investors have struggled to find how to network impactfully.

With meet-up groups delayed and in-person meetings on hold, the virtual space is now the only space to network. While many are postponing conferences, some are taking advantage of the opportunity to join in on virtual networking from right where they are.

A previous conference attendee said, “This is the lowest barrier to entry because you don’t have to leave your living room. You don’t have to buy a plane ticket. So if you’re thinking about going, you really don’t have an excuse.”

The goal of our virtual Best Ever Conference is to provide maximum value to each attendee in both insights and networking opportunities. The conference is filled with speakers and content focused on our audience’s curated needs and interests. We have a whole day set aside for networking and we strongly encourage you to take advantage of our exceptional platform that makes virtual networking easy. Some of the ways you can connect:

• Set 1-on-1 Meetings with Other Attendees
• Join Q&A Rooms for the Latest Topics
• Enter the Networking Lounge with Custom Table Topics
• Speed Networking to Make as Many Connections as Possible
• Playback Any Keynote Speaker on Demand

Our platform is open to attendees NOW. Start your networking. Use code WINNERS30 for 30% off your ticket! Register here.

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To Create Something Meaningful

How artist-at-heart Marc Cortez evolved his technology and media business success into a passive investment career

Creativity and connection fueled the early stages of Marc Cortez’s career. He thrived in competitive, start-up environments where the stakes were high, but the growth opportunities were endless. After building thriving social presences for some of the world’s biggest brands, Marc evolved his business savvy into advising budding entrepreneurs to raise capital and develop their business plans. It didn’t take Marc long to start formulating business plans of his very own.

Almost ten years and several successful ventures later, Marc finds himself exclusively in the investor seat at his firm Cortez Holdings Group. The creation of this investment group was made possible by the successes achieved in his earlier career.

“I’m an artist at heart, but my passion for real estate was inspired by the freedom I can create in my life,” said Marc. “Professionally, I spent the last ten years in tech and media turning big wins into passive investments by way of syndications. I’m consistently pursuing ways to grow my portfolio and increase my cash flow.”

Growing his portfolio and increasing cash flow has been significantly impacted through attending conferences like the Best Ever Conference. A long-time attendee, Marc began attending as a volunteer to help a friend. What started as a simple act of friendship turned into a consistent presence each year, where Marc now ushers VIP guests throughout the event.

Beyond simply attending the event, Marc’s most memorable takeaway is essential for investors of all skill levels to keep in mind.

“Make one really good friend. It’s easy to run around dropping ‘cards’ off and playing the quantity over quality game. But one incredible connection can open up an entire world,” said Marc. “I’ve seen deals and business partnerships sprout and excel from these relationships. So build a healthy connection with at least one person and be amazed at the future potential.”

Personal connections have changed the way that Marc views his personal investments, finding that the personal element often helps propel deals far faster than they would otherwise go.

“Discussing a potential sponsor with people in the same sphere or community also helps with diligence. It’s easier to get a recommendation or review,” shared Marc.

Understanding another key component of relationships is critical in bringing value to investments: how people handle adversity.

“I have a longstanding relationship with the partners [at an investment group], and I trust that my best interest as an investor is a priority, but even more so that a great relationship is a priority,” said Marc. “I can recall countless examples of how they’ve supported me inside the investment and out.”

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Living Life Fully

Dave Allred discusses what it looks like to define a path for success while making the most of each moment along the way

Discussing finances was something that wasn’t done in Dave Allred’s family growing up. Having never had those critical conversations around money or money management, Dave realized in his early adult life that he wanted more for himself around financial understanding and financial freedom.

At age 21, he committed to becoming a lifelong student of finances and investing. While he actively continues pursuing knowledge and personal development today, he credits much of his success, both personally and professionally, to that commitment very early in his life.

“I think it’s really important in our personal development is that we’re always teachable and coachable,” shared Dave. “That’s just been a guiding principle of mine is to always be a lifelong student. Not only in finances but also in real estate, personal development with my own family.”

While networking may be a topic that can make some uncomfortable, Dave rethinks networking as truly prioritizing relationships. It’s authenticity and relevancy that distinguishes the development of relationships from mere networking, which Dave believes can often come across as “gimmicky” or forced in certain situations.

“I feel like relationships are the new currency in business. My best deals, the business that I’m most proud of, has actually been with my friends, with my network,” shared Dave. “They’re people that I trust and that we have similar interests; we’re on the same mission in life.”

Relationship building has never been more critical than in our current environment, where how those relationships are built has had to be rethought due to the ongoing COVID-19 pandemic. While conferences like Best Ever Conference are transitioning to a virtual platform to foster a sense of community and connection, Dave believes that meaningful relationships can continue to form beyond these virtual events.

“The power of social media and staying connected through Facebook groups, my Instagram page allows me to put a lot of content out there just to keep adding value for others. I follow on Instagram a lot of the people that I really respect,” said Dave. “While that’s not as personal as meeting in-person or on a call, I feel like we can still stay very connected, know what we’re working on, what we’re up to. I’m inspired by a lot of others in the space through social media. It’s a very powerful tool to be able to still communicate, add value for each other, and really collaborate.

Beyond a continuous drive to learn also lives a desire to document and measure success. Dave spent a significant amount of time creating his “lifestyle design”, or what he calls a blueprint for his own life. By documenting his core values, mission statement, non-negotiables, and more, he could use those as a foundation to build financial success on top.

“People overestimate what they can accomplish in one year, but they underestimate what they can accomplish in three to five years. I found that to be true over and over,” said Dave. “If we can get clear on what we really want in the long-term and have the right habits and behavior then we can actually accomplish amazing, significant things, but it takes time.”

Start your networking today at the Best Ever Conference, taking place February 18-20th. Use code WINNERS30 for 30% off your ticket! Register here.

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The Art of Doing

Rob Withers explains how the world around him inspires his philosophy behind real estate

Born and raised in Arizona, Rob Withers moved to Colorado for college and found his home. He spent a large bulk of his life fully engrossed in all the outdoor activities that Colorado has to offer. From mountain biking to hiking to skiing, Rob took advantage of being outdoors whenever he could. The only time that seemed not to be possible was when he worked as a technology consultant for more than 25 years but discovered real estate investing on the side.

Only a few years out of college in the 1990s, Rob invested in several single-family rental homes in Arizona and Colorado. The time commitment of his family and a full-time job at a multinational consulting firm kept him from fully investing his time to learn what was necessary to attain true success and the desired returns on his investments. Leaving the investing world feeling discouraged, another opportunity presented itself that changed how Rob invested both then and for his foreseeable future.

“Around 2010, a good friend of mine who was a realtor said to me, “Lakewood Housing Authority is selling off all this inventory, duplexes, single-family homes. The income’s great. You should really look at this. I know you dabbled in real estate a while ago.” And he had the contract to sell off 40 or 50 doors,” remembered Rob. “And so at the time I bought three duplexes, and the math was totally different than it was in the ’90s. Since then, I expanded buying more rentals and developed a partnership with a builder to build single-family homes and duplexes in Denver.”

The transition from single-family properties to duplexes opened Rob’s eyes to the multifamily syndication model. Rob bought and sold a 64 unit multi-family property in 2019. Over the last few years, he’s been transitioning more of his time, energy, and financial resources to diversify his investment portfolio and develop relationships in the real estate investing community.

Attending conferences like the Best Ever Conference in 2019 was an easy decision for Rob to make, given his close geographical proximity to Keystone. He was also inspired to lean into his desire to learn and do more within real estate.

“I was impressed with the quality of the people at the conference. Many have had successful careers and are learning the business” said Rob. “But then there are others that are a little bit more mature and have been around the block a bit longer but are still very approachable and still willing to discuss deals. I feel like I learned a lot and met great people.”

When thinking about the impact of what COVID-19 has on the reality of networking in 2021, Rob believes there are definite impacts for new relationship building, especially if real estate investing is not your primary occupation.

“For me personally, I still feel like there’s so much more I could do on the real estate side, simply around networking if I didn’t have the challenge of 40 to 50 hour a week job. So that does impact me,” reflects Rob. “But there are certainly tools that can help; I think a key for a conference where there’s a larger group setting is to create a form of engagement where there can be joint participation.”

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Eyes on the Skies

Lifelong pilot Tait Duryea shares how his passion for real estate soared after the Best Ever Conference experience.

An active lifestyle was always in the cards for Tait Duryea. Alongside his avid love of flying, Tait had always been intrigued by real estate investing. Not long after he started his career as a pilot, he purchased his first rental property in Las Vegas, Nevada at the age of 24.

“It was just a single-family house in Las Vegas. I put a property manager between me and the tenants, so they wouldn’t know how young I was,” remembered Tait. From that single-family home onward, he fell in and out of real estate investments without a particular strategy. Being newer to real estate, he discovered the Best Ever Conference taking place in Denver in 2019 and decided to take part.

“The catalyst for getting me more active with [real estate] was Best Ever Conference. It was the first conference that I had ever attended and it just catapulted my career from being someone who was new to the ropes from reading books and listening to podcasts, to being someone who did real estate and had a real estate network, because it’s all about relationships,” said Tait. “It launched my true real estate investing career, got me out of single-family [investments] and into commercial and syndication.”

Passive investments, like multi-family syndication, weren’t something that Tait was even aware existed prior to the Best Ever Conference. During the event in 2019, a mock debate whether active or passive investing was better took place, prompting some new thinking.

To many, the concept of networking can seem artificial, forced, or even trite. However, relationship building proved to be an essential element that Tait took from the Best Ever Conference, retaining relationships forged over that weekend into his real estate transactions today. The absolute, exponential power of relationships in the real estate investing business is something that Tait believes is worth experiencing and contributing to.

“Just having a network of like-minded real estate investors who you know personally and that your friends with is rocket fuel,” said Tait. “And unless you’ve been to a conference and you start talking with other people who are doing things like you are and have ideas and contacts and people that can help in what you’re trying to do, it’ll change your investing career.”

Attending the Best Ever Conference ultimately changed how Tait invested, shifting 50% of his investment portfolio into finding, vetting, and investing in limited partnership syndication deals instead of all active investments in single and multi-family homes.

Tait believes there’s never been a better year to try it out.

“This is the lowest barrier to entry because you don’t have to leave your living room,” said Tait. “You don’t have to buy a plane ticket. So if you’re thinking about going, you really don’t have an excuse.”

Start your networking today at the Best Ever Conference, taking place February 18-20th. Use code WINNERS30 for 30% off your ticket! Register here.

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January’s Free Webinar on The Future of COVID-Affected Asset Classes

Covid-19…we all hate the word now. Not that we didn’t before. But, as investors, the multifaceted challenges just keep piling up. If you are in trades, Pfizer and Moderna are probably a good bet. but for us? In real estate? Where should we place our bets? 

With the vaccine, many are expecting to show an increase of earnings. Does that include real estate? What about the US dollar? Commodities? Bonds? 

The widespread economic hardship caused by Covid-19, and the growing dread of it ever truly going away, is crippling. With a vaccine now in place, many are shuffling and preparing for a recovered marketplace and an uptick in the economy, as, hopefully, they should. 

How does this affect the different asset classes? The main focus for our webinar this month is Assisted Living, Retail, and hospitality. These sectors have been hard-hit by Covid and we turn to experts in the field to give a glimpse into their realities and what they feel the future looks like in a Covid-19/post Covid-19 era. 

You should join us as we sit with co-founder of Accountable Equity, Josh McCallen, Dusty Batsell, Executive Vice President of Real Estate for Baceline Investments, and Loe Hornbuckle, CEO of The Sage Oak Boutique Assisted Living and Memory Care. 

Register and join us live here.

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Raising Real Estate Capital with Crowdfunding

When raising capital, real estate investors often graduate from personal contacts to complex partnerships or institutions. Another option to consider is crowdfunding. On this Best Ever Show podcast, real estate investor and CEO Chris Rawley explains the power of crowdfunding as a capital source and how to tell if it’s the right option for you.

About Chris Rawley

Chris Rawley has been a professional real estate investor for over 20 years. His portfolio includes single-family, multifamily, and commercial properties. He currently focuses on income-producing agriculture as an opportunity for passive investing. His platform, Harvest Returns, matches quality agriculture deals with investors to raise much-needed capital for U.S. farmers.

Why Crowdfunding?

If you’re doing real estate investing, the conventional funding path usually goes like this. You first use your own money and then approach friends, family, and business contacts for passive investing. When those sources run dry, you may turn to institutional funding or spend considerable time developing partnerships from scratch. Institutions have a high lending threshold and are suited for larger commercial properties such as retail shopping centers. They also come with significant oversight and conditions.

Many individuals engaged in commercial investing have quality deals that don’t meet institutional criteria. Crowdfunding provides a robust, flexible funding alternative. As the deal sponsor, you have access to suitable investors. You also gain legal and regulatory resources that would cost you considerable time and money to build on your own.

Advantages of Crowdfunding

Assembling a syndication deal involves adhering to complex financial regulations and drafting the requisite documents. If you do it yourself, you spend significant time and money on accounting, tax, and legal services. You need to understand the role of the various oversight agencies such as the SEC and hire the right experts. The beauty of crowdfunding is that the platforms handle much of this groundwork for you.

Each platform differs in the type and amount of guidance it provides. For example, Harvest Returns offers its sponsors the benefit of the legwork Chris initially did for his real estate ventures. His business spent considerable money to have securities attorneys put all legal and regulatory requirements in place. As a result, his platform’s listing sponsors benefit directly from this expertise and documentation. They still need to learn the legal environment, but they do not start from scratch and slow the deal.

Another major advantage of crowdfunding is the built-in pool of investors. You don’t have to find and vet your backers. You also have access to a more extensive and diverse group that you would likely discover independently. When the platform accepts your listing, you are guaranteed eyes on your project. You are not guaranteed quick results, but your deal will have the attention of the right audience. This alone is gold for commercial investing.

Crowdfunding may be right for you if:

  • You have exhausted non-institutional resources.
  • You have a successful track record.
  • You have a niche asset class, such as income-producing agriculture.
  • You have a partially funded deal that could benefit from additional investors.

Choose the Right Platform

Crowdfunding investment platforms took off around 2015 and today offer diverse opportunities for various real estate asset classes. You can find platforms tailored to single-family flips, wholesaling, and commercial projects such as retail shopping centers. You can also find options for specialized assets such as specific financial instruments or agriculture.

Chris advises beginning by defining the type of investor you are. Do you fix and flip houses? Do you wholesale apartment buildings? Are you targeting niche real estate markets such as sustainable development? You want to identify the crowdfunding platforms catering to your project niche and research each one to find the best fit.

Most platforms expect sponsors to list exclusively with them rather than attempt to raise funding on several sites. This requirement eases regulatory compliance, and you will likely sign an agreement with the platform you finally choose. A way to feel more comfortable about exclusivity is to speak with other sponsors who have succeeded on that platform. Most sites are happy to provide references. Chris suggests you be wary of any platform that won’t do so.

Your next step is to determine if you qualify for the platforms you’re interested in. They have listing criteria that syndication sponsors must meet. They also differ in the resources they offer, such as regulatory forms. Your best bet is to reach out to them and learn their guidelines and support for sponsors. Most have sales and marketing teams to provide information and perhaps speak with you about your particular situation. Established platforms have more stringent listing criteria, while smaller or newer players often have more flexible requirements.

For their part, investors are looking to mitigate risk. They examine each deal in light of questions such as:

  • Is this project viable?
  • What return can I expect?
  • Can this sponsor deliver results?
  • Can I safeguard capital gains or income?
  • What are the tax implications?

Chris stresses that many investors want to make personal connections and to believe that their capital helps the greater good. If you can demonstrate how your project will benefit the local community or causes such as sustainable farming, your support will grow.

As with any deal, investors look for strong fundamentals. Platforms differ in their due diligence procedures, but you always want to prepare a solid business case and be ready to speak to it.

Build Your Team and Track Record

Investors want to see that a sponsor has a successful track record. As Chris puts it, they don’t want to invest in a newbie’s mistakes. You are best off trying crowdfunding after you have done at least a few successful deals.

For investors, a sponsor’s experience is often the differentiator between two similar offerings. Even a short track record builds credibility. Before attempting crowdfunding, do one or two syndications on your own, either with personal contacts or an established partner.

A credible sponsor has a strong team as well as a track record as an active investor. Investors want to see that you have accounting and legal experts as well as any other business advisers appropriate for your asset class. This shows that you have some experience, are serious, and run your active investing as a business.

Present a Winning Deal

Many platforms conduct a thorough background check on potential sponsors before moving forward with them. They examine the deal’s structure and numbers to determine if it is a viable investment.

Each platform has requirements for putting your listing in front of investors. Your listing needs to differentiate itself from other concurrent offerings. At a minimum, it should include essential details about your project, such as location and asset type. Also, your platform may ask you to provide supplementary information for investors such as a business plan or pitch deck.

Once the raise is underway for your project, potential investors want a thorough understanding of the deal and expected return. Some platforms handle all of the interfacing for you and cater more to passive investing. Others treat the process more as active investing. You might host a webinar or answer questions in a formal round table for the active investor who wants a voice in your project.

Chris has found that people respond well to webinars, as they can interact with the sponsor and ask live questions. They can also meet the members of the sponsor’s team, such as the attorney or CPA. In Chris’s words, the process lends tangibility to the deal and builds trust.

Crowdfunding for Agriculture Investing

The food supply and related issues are hot topics today, and many investors are curious about agriculture opportunities. Crowdfunding is a good option because the platforms present you with curated projects appropriate for your goals. Chris’s platform structures agriculture deals similarly to the real estate deals he’s done for years. They have debt offerings from 7% to 12% and equity deals in the teens. They also offer opportunities in AgTech, which is the application of computer technology to farming. These offerings are higher risk but offer potentially greater returns as much as 40%.

Unlike most real estate, agricultural properties are unique. Each farm is distinctive and should be evaluated on its own merits. Indoor projects have gained momentum and include vertical and hydroponic farms. These options allow more locally grown produce and some refuge from climate and transportation infrastructure impacts. Successful investments enjoy a high rate of return.

Chris keeps the minimum investment in his projects as low as $5,000. This threshold allows more investors to participate and to diversify their portfolios. As for farmers interested in funding sources other than banks, Chris urges them to reach out to his team.

Crowdfunding for syndication is a relatively new and evolving space with numerous platforms catering to all asset classes. If you’re ready to move beyond personal capital, take a look at what it has to offer. Not only might you fund your next deal, but you might also find lucrative investment opportunities you never knew existed.

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5 Ways to Win the Apartment Bidding War

Whether you are new to apartment syndication investing or an active investor expanding your portfolio, you will compete for deals. Other bidders may have more experience or higher offers. How do you win the seller and the contract? Let’s look at five ways to make your offer stand out.

Keep in mind that even in competitive markets, sellers don’t always take the highest bid. Sellers differ in their motivations, and the five tips below will help you craft the best possible offer for the deal you are pursuing.

1. Offer Hard Earnest Money

Hard earnest money is a non-refundable deposit. It is a good-faith move that shows the seller you are serious enough to leave money on the table should something go wrong. It also signals that you can afford to buy the property.

In a typical deal, the earnest money is refundable. You provide a deposit as soon as possible after signing the contract, preferably within three days. The amount is often about 1% of the total price. If you purchase commercial properties for $500,000, you pay the seller $5,000. If you or the seller cancel the contract, you receive your money back.

A bolder move is to make the earnest money non-refundable. Even if the contract is canceled or falls through, the seller keeps the deposit. Sellers are rightfully concerned about buyers tying up the property in contract and then backing out or losing funding. The buyer may find a better opportunity or walk for financial reasons. Meanwhile, the seller has effectively taken the property off the market. Backup buyers may lose interest, and the market could shift by the time the seller relists.

You can view a non-refundable deposit as compensation for the risk the seller assumes by entering a contract with you. First, you want to decide when the money goes hard. The most straightforward option is to make the deposit non-refundable from day one. Sellers find this attractive as they can keep the money no matter what.

However, it may be in your best interest to tie non-refundable earnest money to a contingency clause or other stipulation. You could require that the funds harden at the end of the due diligence period. Alternatively, you could make a portion of the deposit immediately non-refundable and include the remainder after meeting a condition.

Include Contingencies

Even if you harden your earnest money from day one, you still want to include contingencies for events beyond your control. This approach protects you against deal-breaker concerns such as severely failed property inspections or title issues. It still covers the seller in case you back out due to funding or other reasons within your control. If a seller demands a no-contingency hard deposit, consider this a red flag.

2. Shorten the Due Diligence Window

Another way to woo the seller is to shorten the time to closing. If an active investor, you can often shrink the time needed to close from a boilerplate period to a realistic estimate. Advantages to the seller include faster closing and the assurance that you are serious about owning the property. Sellers often have stakeholders in passive investing and are motivated to provide a smooth transaction. Buyers keeping their options open do not press for fast closing. In turn, assuming you have your financing in place, you obtain your investment faster.

The most effective way to shorten closing is to compress the due diligence window, which is when buyers discover most issues. Be aware that the due diligence period protects your right to cancel the contract and reclaim your deposit should you find problems. The average window is 30 days. If you invest in retail shopping centers or other commercial properties, you may need that time or more.

After the due diligence window closes, you can’t cancel the contract or get your earnest money back. This applies even if you find a related problem. To protect yourself, be realistic about the scope of work. Determine the time you will need to conduct all activities, such as inspections and title verification. Build in some cushion for repeat inspections, inclement weather, or other factors that could slow progress. Then see if you can save a week or more without jeopardizing your interests.

3. Sign an Access Agreement

Typically, your property access for due diligence begins after you and the seller sign the purchase sale agreement. An access agreement gives you limited rights to begin property inspections early. Sellers like this option because it shows you are serious and potentially willing to shorten the closing time.

In an early access scenario, you sign an access agreement once the seller accepts your letter of intent and agrees to move forward with your offer. A contract negotiating period follows, which can be brief or extended depending on the deal. An access agreement lets you begin due diligence early by allowing limited property access for inspections.

If all goes well, you can complete at least some of your due diligence before signing the purchase sales agreement. You can even tie the formal due diligence period to the access agreement by starting the clock then. For example, your due diligence window could expire ten days after contract signing. However, you want to be confident of the property and the deal before you shorten your protection under contract.

4. Use the Seller’s Purchase Agreement

Once the seller has accepted your letter of intent, you begin contract negotiations. When active investing, you often provide your version of the purchase sales agreement prepared by your attorney. The seller compares yours with their contract version, and your teams hash out the details until reaching an agreement. The agreement becomes the final contract that all parties sign.

This negotiation process may be fast and smooth on a smaller residential property or with a seller you have previously worked with. If your focus is larger commercial investing, such as in retail shopping centers, finalizing a contract will likely be more complex and lengthy. Backers who are passive investing may not realize that contracts sometimes collapse due to non-financial discrepancies. During negotiations, you risk the deal falling through due to disagreements over legal language or similar matters.

You can mitigate risk by using the seller’s purchase sales agreement instead of drafting your own. Take their documents and have your attorney mark them up with proposed changes. Submit the revised contract to the seller for review. This way, the seller quickly sees which changes you present instead of comparing your version with theirs. The process makes it easier to negotiate specific terms under contention and validate those that are not. You and the seller can reach a final contract more quickly and with less chance of a legal stalemate.

5. Guarantee a Closing Date

A strategy often used in residential purchases is to guarantee closing by a specific date. Sellers frequently have personal contingencies that make a hard close date very alluring. Commercial investing is more impersonal, but timing the close still offers advantages in certain situations.

One scenario is to help the seller secure a tax advantage. If the deal is near year-end, the seller may prefer to close either in the current year or in January. Active investing requires considering the capital needs of any other investors as well as complex financial requirements for short and long horizons. Further, some sellers may have a fiscal cycle that differs from the calendar year. As a motivated buyer seeking a win-win, try to learn the seller’s timing preferences.

Sometimes non-financial events trigger a desire to close before or after a specific date. Major elections, local laws taking effect, and other situations may spur a seller to choose the buyer who can guarantee a closing window. Most often, the seller seeks an early close, but sometimes not. Be clear on which timing scenarios you are willing to accommodate before engaging with the seller on this point. If they ask for a 90-day close when you were expecting 60 days, will it work for you?

Target the Deal

In addition to a favorable price, which strategy should you include in your offer? The answer depends on the deal. Though the market for apartment investing is competitive, your job is to focus on this particular deal. It’s the one you want.

To help you plan your offer, try to learn:

  • About other offers on the table. If they all include non-refundable earnest money, you want to offer more.
  • The seller’s motivations. This will help you understand whether a committed buyer, quick close, highest price, or other terms matter most.
  • Other factors important to the seller. Are there tax considerations driving a desired close date? Did a previous buyer walk, leaving a skittish seller who would appreciate a non-refundable deposit and access agreement?

Keep in mind that you can combine strategies to craft a top offer. An access agreement facilitates a shortened due diligence period, for example. If other buyers are going with hard earnest money, perhaps you can meet an earlier date or raise the amount. With perseverance and flexibility, you can be the dream buyer sellers want.

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Interest-Only Commercial Real Estate Loans – Potential Pros and Cons

As the name implies, when you secure an interest-only commercial real estate loan, the monthly debt service is equal to the interest on the principal loan balance. For example, on a $10 million loan amortized over 30 years with a 5% interest rate, the interest-only payment is $41,666.67. Whereas the debt service on a non-interest-only loan would be $54,486.03 (principal plus interest).

Generally, when securing a bridge loan, the debt service will automatically be interest-only. However, when securing an agency loan from Fannie Mae or Freddie Mac, you may have the option to receive one or more years of interest-only payments (even up to the full hold period for the most experienced borrowers).

When securing an agency loan and deciding whether to pay interest-only or pay principal plus interest from day one, here are some things to think about:

Potential Benefits of Interest-Only Payments

There are two main potential benefits to securing an interest-only period for a commercial real estate loan.

First is the higher cash flow during the interest-only period. When implementing a value-add business plan, you are forcing appreciation by improving the physical property and the operations to increase the net operating income. Typically, this process takes at least a year to complete. So, during this value-add period, the net operating income (and therefore, the cash flow) is lower. When you secure an interest-only loan, the lowered net operating income may be offset by the reduced debt service. As a result, you can use the extra cash flow to either reinvest in the property or, more likely, distribute returns to your investors. In fact, one of the best ways to achieve the preferred return during the renovation period is to secure an interest-only loan.

The second potential benefit of the interest-only loan is that you and your investors can receive cash sooner rather than later. The additional cash flow received during the interest-only period helps increase the IRR compared to receiving that cash at sale. Back to the $10 million loan example in the introduction, the difference between the interest-only payment and the principal plus interest payment is $12,819.36. Technically, all payments above the interest amount reduces the loan balance. So, rather than receiving that additional payment during the business plan, you would receive it at sale. Due to the time value of money, that $12,819.36 is worth more when received during the hold period than it would be worth in the future, say once the property is sold in 5 years. In addition, in the event of a massive reduction in property value, you and your investors will be much happier if you were able to receive those additional cash payments, especially if the value of the property is lower than the loan balance that would have otherwise been paid down.

Potential Drawbacks of Interest-Only Payments

There are three potential drawbacks to securing an interest-only loan.

First is that there is no principal paydown. As I mentioned above, this is also a potential benefit due to the time value of money. However, if the plan is to refinance or secure a supplemental loan after implementing the value-add business plan, the proceeds will be lower due to the fact that no principal was paid down during that period. Or, if the market cap rate increases and the value of the property decreases, you may become “underwater” on the mortgage and have to actually pay to sell the asset.

Secondly, once the interest-only period expires, the debt service increases. If you are not implementing a value-add business plan, unless the rental rates increase naturally, your cash flow will take a major hit once your debt service increases. If you are implementing a value-add business plan, you will need to increase the cash flow by an amount that is equal to or greater than the increase in debt service once the interest-only period expires. If you are unable to increase the cash flow as quickly or as high as projected, you may not be able to achieve your projected returns once the interest-only period expires.

Lastly, you may convince yourself to do a bad deal because of the lowered debt service during the interest-only period. For example, you may underwrite standard principal plus interest debt and the deal doesn’t meet your return projections. But if you underwrite three years of interest-only, the deal does meet your return projections. This isn’t a problem as long as you are conservatively underwriting the deal. Since you know the deal doesn’t make sense with a standard principal plus interest loan at the current net operating income, you need to be confident in your ability to increase that net operating income amount before the interest-only period expires.

Conclusion

Overall, interest-only loans are best when you are implementing a value-add business plan. As long as you are conservatively underwriting your deals and are confident in your rent premium assumptions, interest-only loans are a great way to distribute the preferred return to your investors while you are repositioning the asset.

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2021 Winners

Net Seller? Or Net Buyer? You decide…

As many of you know, we had an intellectual debate of sorts, last week, discussing whether net sellers or net buyers would be the winners in 2021. 

Moderated by Ben Lapidus with panelists: Brandon Kramer, Senior Associate and Associate Director with Marcus & Millichap, Anna Dwyer, Senior Acquisitions Associate with City Line Capital, Josh Satin, Vice President of Acquisitions with Gelt Inc., and Scott Lebenhart, Director of Acquisitions with Ashcroft Capital, the debate was informative and had several good points for both sides.

While I wish we could say we have a clear answer for you, we don’t. Truly, both have their benefits and drawbacks. A lot will depend on where you are with your real estate investing and what will work best for you personally. 

Though thoughts were divided, those that argued FOR net selling said, while buying is still on the table, there will be more opportunities to sell than buy in 2021 and this may be the last opportunity to take the chips off the table.

The FOR team also made the argument that the asset choice matters…several industries, such as self-storage or hotels, are consolidating rapidly and creating cap rate compression. Additionally, real assets move with inflation. And, with financial assets at an all-time high, where would you put proceeds from real estate sales?  Where else is there to invest?

Definitely food for thought.

Now, here comes the AGAINST net selling…saying CASH is king (which is hard to argue) and proceeds won’t need to be placed anywhere. Sometimes, the best answer is to take a knee, “be still”, and assess the operating environment. There is an opportunity cost to trapping your capital into long holds when greater opportunity could be just around the corner.

All in all, with audience participation, the team debating AGAINST the motion “Winners in 2021 Will Be Net Sellers” had audience sentiment at +13 points compared to the FOR team’s at +1 point. 

If you missed the seminar and would like to see the full playback, those that are ticket holders for BEC 2021 have access to it via the private Facebook and LinkedIn groups. So join the groups, if you haven’t already, and check in.

If you aren’t already a ticket holder for BEC 2021, BUY NOW. We have plenty of promotions and discounts that can help offset the cost of what is truly a ‘can’t miss’ conference for those in real estate investing. Check our social media sites for current offers: Facebook, LinkedIn, and Instagram. 

Next webinar will be announced soon and, we promise, you will be one of the first to know!

 

 

 

 

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The Meeting of Minds

Did you feel that? Those goosebumps aren’t from the weather getting colder outside; it’s this incredible lineup of speakers at the Best Ever Conference that’s giving us chills. If you haven’t been to BEC2021.com lately, we have added a stellar lineup of speakers covering a wide range of topics that can help you grow your business and avoid the expensive pitfalls that the uneducated make when building their portfolio. 

From CRE celebrities to authorities on financial freedom, the BEC will be covering every topic you could possibly want to learn about. Here are just a few of these commercial real estate masterminds you will be hearing from:

Brandon Turner

VICE-PRESIDENT | BIGGERPOCKETS & OPEN DOOR

Brandon Turner is the host of The BiggerPockets Podcast, author of several real estate books, and founder of Open Door Capital LLC, an investment firm that focuses on the acquisition and management of mobile home parks and apartments across the US.

 

JILLIENE HELMAN

CEO | REALITYMOGUL

Jilliene Helman is Chief Executive Officer of RealtyMogul and its wholly owned subsidiaries, RM Manager, RealtyMogul Commercial Capital, RM Adviser, RM Technologies and RM Communities. She has been involved in investments with property values over $2 billion, including over 15,000 apartment units, and is a pioneer in real estate crowdfunding.

 

MICHAEL BLANK

CEO | NIGHTHAWK EQUITY

Michael’s an entrepreneur through and through and passionate about helping people become financially free with real estate investing.  He’s the author of the Amazon bestseller ​“Financial Freedom with Real Estate Investing”​ and host of the popular Apartment Buildings Investing Podcast.  He’s helped investors purchase 5,000 multifamily units valued at $330M through his content and training programs.

As CEO of Nighthawk Equity, he controls over $90M million in performing multifamily assets all over the United States and has raised over $21M.

 

LIZ FAIRCLOTH

CO-FOUNDER | THE REAL ESTATE InvestHer

Liz Faircloth co-founded the DeRosa Group in 2005 with her husband, Matt. The DeRosa Group, based in Trenton, NJ, is an owner of commercial and residential property with a mission to “transform lives through real estate.” DeRosa controls close to 1000 units of residential and commercial assets throughout the east coast.  Liz is the co-founder of The Real Estate InvestHER® community, a platform to empower women to live a financially free and balanced life through over 30 Meetups across the US and Canada and an on-line community and membership that offers accountability and mentorship for women to take their business to the next level! She is the co-host of the “The Real Estate InvestHER Show” and recently published their first book, “The Only Woman in the Room – Knowledge and Inspiration from 20 Successful Real Estate Women Investors!”

 

BRAD SUMROK

OWNER/PRESIDENT| APARTMENT INVESTOR MASTERY


Since 2005, Brad has personally helped his students purchase over 2 billion dollars in apartment complexes, involving thousands of investors who have taken his training. Many of Brad’s students began with zero previous investing experience and, within a few short years, hundreds of students have retired and/or increased their net worth by over $1 MILLION. Even more are earning double-digit average annualized returns! Over the years, Brad has owned over 5,000 units in 8 US Markets. His mission is to impact and mentor over 1 million people to achieve financial freedom by investing in apartments following the proven Sumrok process and improving working class communities.

 

Also included in the lineup is:

  • H. Gregory Baker, Partner of Lowenstein Sandler LLP
  • Kathy Fettke, Co-CEO of RealWealth
  • John Chang, Senior Vice President, National Director Research, Marcus & Millichap Services
  • Frank Roessler, Co-Founder of Ashcroft Capital
  • Trevor Shakiba, Certified Financial Planner and President of Shakiba Capital
  • Ketan Patel, High Performance Coach of Ketan Patel Coaching
  • Whitney Sewell, Founder and Director of Life Bridge Capital
  • James Maffuccio, Co Founder and Chief Investment Officer of Aspen Funds
  • Monick Halm, Founder of Real Estate Investor Goddesses
  • Ashley “BadAshInvestor” Wilson, Principal of Bar Down Investments, LLC
  • John Burns, CEO of John Burns Real Estate Consulting

Now, if that doesn’t whet your whistle, remember, if you have been reading our blog (and of course, you have been), you know that we have already started events leading towards BEC 2021 FEB.18 – 20. So far, we have started a series of webinars that you really can’t afford to miss. We kicked it off in December with a discussion on the Biden presidency and what it means for commercial real estate, and yesterday our webinar was a debate on whether the winners of 2021 will be net sellers or net buyers. 

Though we have more webinars heading your way, if you purchase your BEC 2021 tickets now, you have access to exclusive groups with instant playpacks of the webinars and other content that the regular ‘Joe Blow’ isn’t getting. 

Buy your tickets to BEC 2021 now. The spots are filling fast and this something you won’t want to miss, really, that you can’t miss if you want to continue building your business and investing in the coming years.

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10 Ways to Promote and Market Your New Book

Whether you are a multifamily investor, fix-and-flipper, real estate agent, or any type of real estate professional, publishing an ebook or hard copy book is a powerful way to grow your business.

The main reason why is because whenever you publish a book, you instantly increase your credibility and reputation in the eyes of customers (buyers, sellers, investors, etc.).

“Wow, they’ve written a 450-page book on how to complete an apartment syndication. They must be experts.”

By positioning yourself as an expert with your book, you build trust with your customer at an accelerated pace. And as Bob Burg says in The Go-Giver, “All things being equal people will do business with, and refer business to those people they know, like and trust.”

He is a real-world example of the power of writing a book: I recently interviewed Max Keller of “Deals Chasing You.” On the podcast. He wrote the book on senior housing. When he sends direct mailers to generate senior housing leads, he includes a note that if they call, he will send them a free copy of his book. As a result of this simply tweak to his marketing, he quadrupled his response rate.

Writing a book = increased credibility = increase trust = more business.

We have previously written about the logistics on writing a book, which you can read here.

The purpose of this blog is to outline the best ways to promote your new book before and after it is published to ensure a successful launch, getting the book in front of as many of the right people as possible in order to maximize its impact on your business.

When creating a marketing strategy for a new book, it is important to keep top of mind that there are three parties involved in the publication of a new book:

  • The authors: you and any co-authors or ghost-writers
  • The end customer: the people who will purchase and benefit from your book
  • The contributors: anyone who contributed to the information in the book, including editors, formatters, the person who wrote the foreword, people who give testimonials, people who are features in the book, people who provided advice that was included in the book, etc.

Therefore, when you are thinking about strategies for promoting your book, how to tap into the self-interest of each party must be top of mind.

Each of the following strategies benefits either the end customer, the contributors or both. Obviously, the authors benefit regardless from the book sales.

We marketed our most recent publication, Best Ever Apartment Syndication Book, in 10 ways, which I will outline below. However, one strategy that we didn’t utilize for our syndication book but do plan on utilizing for the book we are currently working on (the working title is Best Ever Passive Investor Handbook) is giving the book away for free.

This is the strategy Max Keller implemented (discussed above). Giving a book away for free adheres to something we consistently talk about here – adding value for free.

When Max Keller receives inbound calls from prospective senior housing leads, he not only sends them his book for free but also directs them to the chapter or chapters that will address a specific problem or challenge they are facing. By going above and beyond for these callers before they’ve even expressed interest in selling allows him to receive exclusive deals with no other active buyers or competitors.

Max says his goal is to give away 1 million books!

This is even something that can help you generate book topics. Do you receive the same questions repeatedly from customers? Right a book on the subject. Whenever you receive an inquiry, rather than answering the question (or in addition to answering the question), offer to send them the book for free.

As I mentioned above, we plan on utilizing this strategy for the passive investing book we are working on. Passive investors ask similar questions when presented with opportunities or when initial inquiring. Therefore, we are writing the go-to book on passive investing and will send a copy to investors.

In addition to sending the book for free, here are 10 other ways to promote a new book:

1. Social Media

One of the first ways to start promoting a new book is on social media. In fact, you can start marketing your book on social media before you’ve written a single word.

Here are some examples of social media posts ideas pre-launch:

  • Announce the topic of the new book you are writing
  • Ask for feedback throughout the process, like titles, questions to address, cover designs, etc.
  • Provide frequent updates on your progress (i.e., outline is done, first chapter is done, 50% done, etc.)
  • Provide advice on writing a book that you have learned along the way.

As an example of this last point, we created a post where I posted a few lessons he learned on how to effectively overcome writer’s block.

The purpose of pre-launch promotion activities is to engage your audience and would-be purchasers in the process of writing the book. That way, they feel as if they have a stake in the book since they were involved in its creation process. Plus, they are aware of the book and what will be included far in advance, which increases the chances of them buying (and maybe even promoting the book themselves).

Once the book is published, you can create a post on social, announcing that the book is now available for purchase. On Facebook, you can create a paid advertisement for the book. A 30 to 60 second spoken video explaining what people will learn from the book is the most effective type of Facebook advertisement.

You can also use social media to share some of the other promotion strategies I will outline below.

2. Pre-Order Page

Another effective pre-launch promotion strategy is to allow buyers to pre-order your book.

How to tactically setup pre-orders will depend on how you publish your book. If you are working with a publisher, they will likely need to be the ones who setup the preorder process. If you are self-publishing on Amazon, click here for the process we used to set up preorders.

Once the preorder page is live on Amazon (or somewhere else, again, depending on the publisher), you promote the page on social media.

3. Book Page

Creating a book page on your website is another way to promote your book. The timing of the book page can coincide with the preorder page going live.

Here are examples of the book pages we created for our three books:

Your book page needs to answer the question, “why should I buy this book?” Therefore, it should give would-be buyers an exclusive look, a sneak peek into the valuable information they obtain.

4. Free Giveaways

One of the benefits offered to those who pre-order the book, and something that should be presented front and center on your book page, is a free giveaway.

The free giveaway should be one or more resources above and beyond, yet related to, the book.

For example, for those who pre-ordered our Best Ever Apartment Syndication Book, they received eight free documents. We asked people to email us their receipt of purchase and in return we emailed them the documents.

I think this is the best strategy for promoting a new book. People are more incentivized to pre-order the book because of the fear of missing out (FOMO). Therefore, while writing your book, constantly think about excel calculators, PDF guides, eBooks, etc. you can create and give away.

So that people continue to purchase the book after it is published, you can still giveaway completely different documents or a portion of the ones given away to those who preordered.

Another twist on the free giveaways is to create a contest where people can win a free signed copy of your book. For example, when Theo and I used to do weekly Follow-Along Friday podcast, we did a Best Ever Trivia Question of the Week. The first people to email us (or comment on the YouTube video) the correct answer received a free, signed copy of our first book.

5. Reviews

For the people who organically find your book (i.e., people who are not already in your audience) will make their purchase decision on the reviews – both the quality and quantity. Therefore, you want to obtain many quality reviews as fast as possible after launch. The most effective way to accomplish this is to get reviews before the book is published.

You don’t want fake or generic reviews. These turn off would-be buyers. Instead, to ensure that the reviews are genuine, send a PDF of the book to people before it is published and ask them. Tell them when the book will be published and ask them to leave a genuine review within a few days of launch. Then, once the book is launched, follow-up with that person to make sure they left the review.

They benefit because they get access to your book before it is public for free.

For the Best Ever Apartment Syndication Book, each person on our team was responsible for getting at least five reviews and then following up to make sure those reviews were posted.

Once the book is published, you can generate even more reviewed by leveraging another free giveaway. For the Best Ever Apartment Syndication Book, those who left a review and emailed us a screenshot received a free document.

We were able to generate over 300 reviews for the Best Ever Apartment Syndication Book using this strategy.

6. Testimonials

Obtaining and putting testimonials in your book and/or on your book page is a great way to get other people to promote your book. Therefore, for whatever you are writing about, get at least five people who have already benefited from the advice in the book to write a testimonial. Or, even better, get one person who is well known. For example, I was able to get a testimonial from Barbara Corcoran of Shark Tank on my first book and Brandon Turner on my second book, which were featured on the front cover of the book.

They benefit by having their name and business included in a best-selling book. You benefit because you can use the testimonials to promote the book.

You can include the testimonials on your book page too. Then, people who view the page will not only learn what they will learn by reading the book, but also how the advice has already helped someone else achieve success.

Additionally, the people who wrote the testimonials are more likely to share the book on their social media and other platforms, allowing you to tap into their audience.

7. Foreword

You can use the foreword to promote your book in the same way as the testimonials. Except the person who wrote the foreword is even more likely to share the book with their audience. The foreword is usually multiple pages long compared to a one or two sentence testimonial, and their name is oftentimes included on the cover.

For example, Master Platinum Coach and former Tony Robbins’ Master Coach Trevor McGregor wrote the foreword to the Best Ever Apartment Syndication Book. As a result, we were able to get our book and name out in front of his high performing, large audience.

8. Other Contributors

In addition to the people who wrote the testimonials and foreword, anyone else who contributed to the book can be a promotion source.

This was how we were able to get exposure for our first two book – Best Real Estate Investing Advice Ever Volume I and II. For both books, each chapter was dedicated to a real estate professional I interviewed on my podcast. Once the book was published, nearly all of them shared it with their audience. And why wouldn’t they? The book was basically a biography of their investing careers and their Best Ever advice.

Other contributors that can promote your book, as I mentioned in the introduction, are:

  • Editors: the proofreader and/or copy editor may share the book with their audience to promote their own editing services
  • Designers: the people who designed the cover and/or any interior designs may also share your book to promote their own design services
  • Acknowledgements: anyone who helped in any other way with the book are usually included in the acknowledgments section. Since their name is included in the book and they benefited the creation of the book, they may share it with their audience

Overall, the more you can include other people in the book, the more potential promoters you have once the book has been launched.

9. Your Thought Leadership Platforms

Using a similar approach to promoting your book on social media, you can promote your book on all your thought leadership platforms, like your newsletter, podcast, blog, or YouTube channel.

Once the book is published, you can do a mini-series about the book. For example, Theo and I did a 10-part podcast series summarizing the Best Ever Apartment Syndication Book.

10. Other People’s Thought Leadership Platforms

Another way to tap into other people’s audiences is to promote your book on their platforms. The simplest approach is to be interviewed on someone else’s podcast. You would want to make sure you request that the episode air the week of the book launch.

In addition to providing a sneak peek into the content of the book, offer to giveaway a free document to anyone who buys the book or provide an exclusive discount code.

Once the interviews are live, share them on your social medial and other thought leadership platforms.

In Conclusion – Be Creative

My last piece of advice for promoting your book is to be creative.

The examples above are the things we did to market our three books. But there are countless more ways to increase the exposure of your book. So, for each of the 10 categories, brainstorm other ways you can leverage them to promote your book.

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Commercial Real Estate: What to Expect from a Biden Presidency

What does Biden’s presidency mean to commercial real estate? Last Thursday was the launch of the first of many monthly web series leading up to the Virtual Best Ever Conference 2021, scheduled for February 18-20. Our topic of conversation? Just that.

Commercial Real Estate: What to Expect from a Biden Presidency

President Donald Trump finally accepted defeat after one of the most divisive (or should we say interesting?) races in the history of the U.S. With three days of refusing to work with Biden’s team, claiming election fraud by the president and efforts to top the counting of ballots, the former vice president secured the election with wins in several states that Trump won in 2016. And, in case you missed it, Biden has hinted he will be pushing for changes in the real estate industry. Will these changes be good or bad?

We had an awesome virtual gathering of panelists that dialed in to discuss the Biden presidency and what it means for Commercial Real Estate. With more than 70 participants, the audience engaged the panelists in ways we didn’t anticipate and it truly made for an informative webinar with a lot of takeaways.

Panelists included John Chang from Marcus & Millichap, Rebecca Walser from Walser Wealth Management, Professor Anthony Grasso from Rutgers University Camden, and Ben Lapidus, from Spartan Investment Group.

What did you miss? Well, frankly, quite a lot. Now, while we won’t give you ALL the juicy details we can give you a few hints of what you can expect to learn. With the purchase of your ticket to attend BEC 2021, it gives you access to this webinar and all future webinars leading up to our virtual conference.

The discussion included the specific migration patterns of the US population into secondary markets, asset class winners and losers in a COVID era and post-COVID era, the three tax code changes to anticipate and the three recommendations for 2021 to protect against it, the down ballot results effect on the American consciousness and what this means for real estate investors, and more.

As real estate investors, these topics are important to discuss and familiarize yourself with in order to remain knowledgeable and aware of what will affect you, your business, and your decisions in the coming years.

For full access to this webinar and future exclusive content, visit BEC 2021 and purchase your tickets today. We’ll have video conferencing and chat rooms dedicated to hundreds of different networking topics, all from the comfort of your home.

Again, as we lead up to BEC 2021, we will be hosting monthly webinars specifically for ticket holders. We are still running 30% off through 11:59 a.m. for Black Friday (and now Cyber Monday). To receive the discount, just use code BF30 when checking out.

Our next webinar is: Debate: Will 2021 Winners be Net Sellers or Net Buyers?

We will have two teams of commercial real estate experts face off to debate whether you should focus your 2021 on buying or selling. Who will become the winners in the new economy and how will they get there?

We will be announcing the date and the real estate experts soon, so look for it in an upcoming blog and email.

We can’t wait to virtually meet you.

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Syndication Expert Theo Hicks Walks Through Apartment Turnovers

If your business is apartment investing, you know good tenant relationships are critical to long-term success. Not only do you want to retain responsible renters, but you need a smooth process for turning over apartments when they move out. This step may sound simple, but its management affects your finances, tenant retention, and your reputation.

Syndication School instructor and Joe Fairless Best Ever Show podcast host Theo Hicks takes a turn in the guest chair to discuss apartment turnovers. He talks about inspecting a rental unit and organizing your information for efficient results. He shares his process and a free handy checklist that you can use in your inspections.

About Theo Hicks

Theo Hicks is a syndication expert who co-hosts the Joe Fairless Best Ever Show and the Apartment Syndication School education series. He also co-authors the Best Ever Weekly Newsletter and Blog, which presents strategies for passive investing, active investing, and managing commercial properties.

Joe and Theo recognized the need for quality guidance on getting started in apartment investing and syndication. Theo hosts free podcast courses that include worksheets and other documents for your business use. He also runs a private program for investors seeking mentorship on investing in commercial properties.

Trained in chemical engineering, Theo purchased his first multifamily property in 2015 and never looked back. His passion is the intersection of personal development and success. Here, he shares tips for smooth rental unit turnovers.

Turning Over an Apartment

If you’ve ever moved into a residence with some damage or broken fixtures, you know how frustrating it is. Sometimes, a management company or owner walkthough of a vacated property is too cursory and misses needed repairs. You want to do better for your apartments, and there are practical reasons why.

Protect Your Investment

First, you want to provide a high-quality residence for your tenants. Not only is it the right thing to do, but they will thank you by taking better care of the property. They will also stay longer, which lowers your costs and supports a stable neighborhood and property value.

Theo stresses that happy tenants help preserve your reputation. Active investing means your name is out there. People tend to write reviews when they have complaints rather than compliments. In today’s online world, your apartment complex could be reviewed on several websites and easily found in searches by prospective tenants. Business associates and vendors also check your reputation as part of due diligence. You want to model how to manage apartment investing well.

Dive into the Details

Each vacated apartment merits a detailed inspection. Theo advocates using a template checklist to standardize your process and ensure you don’t overlook anything. The list should have columns for noting any damage above normal wear and tear. You can deduct these items from the tenant’s security deposit.

If you find damage, you want to note whether it is a repair or replacement item. You will end up with an itemized list of what is ready for cleaning, what needs replacement, and what needs repair. This approach simplifies matters for your maintenance manager or vendors, such as the cleaning company.

Master Inspection Checklist

Theo cautions that you want to use a written checklist for each walkthrough. If you have done several of them, you may be tempted to rely on memory. However, it’s too easy to miss a small repair item that a new tenant will spot immediately.

If you focus on passive investing, you likely rely on a property manager or another owner to handle walkthroughs. Consider following up with them to ensure they are using a written process and documenting each turnover carefully.

Theo presents an overview of what to address for each section of your apartment. The below shows you the work scope you can expect, leaving full details to the checklist.

Outside and Mechanical

Theo recommends starting with the outside of your property and noting any issues. This is good practice regardless of whether a tenant has just moved out, as you can catch maintenance needs before they become serious. Also, check the unit’s patio, balcony, or yard for disrepair or landscaping needs.

Check the mechanical systems inside the unit, including HVAC and water heater. If the building has central HVAC, make sure heat and air are working in the apartment.

Laundry Facilities

The interior laundry room is a frequent site of water leaks and clogged connections that pose a fire hazard. If your building shares a laundry room, you can take the opportunity to do a spot inspection.

  • Washer and dryer operate normally.
  • Hardware connections are intact.
  • Hoses don’t have cracks or clogs.
  • There are no signs of water leaks, such as stains or warped flooring.

Interior Fixtures

Check fixtures such as lights that are common to all rooms. You want to ensure they work and don’t present a safety hazard.

Now is an excellent time to check walls and other surfaces, which can hide issues at first glance. Inspect walls, ceilings, baseboards, and flooring for cracks, nicks, stains, and holes. Look for mold or mildew that may need treating or indicate hidden water damage.

  • Light fixtures, bulbs, and switches work, are in good cosmetic condition, and are secured.
  • Electrical outlets work and are undamaged and securely fastened.
  • HVAC vents open and close. Air ducts are clear.

Entryway and Livingroom

Check the entryway interior and exterior for missing or broken items. The door should close smoothly, lock securely, and be free of damage or warping.

  • Windows open smoothly and stay in position. Glass is set securely in the frame. Locks work and are tightly installed.
  • All windows have screens in good condition.
  • Blinds and other window coverings operate smoothly and are in good condition.
  • Smoke alarms are present and operating.
  • If carbon monoxide detectors are installed, they work.

Kitchen and Bathrooms

These rooms are time-consuming to inspect because of heavily used fixtures and appliances. In addition to daily wear and tear, these areas also contend with moisture and heat.

Kitchen

You want to inspect and test each appliance even if it looks in good working order. Check the condition of each cabinet. Sometimes tenants don’t report minor maintenance issues.

  • The oven and broiler work on all settings and heat to correct temperature.
  • Range elements are intact and heat promptly and to correct temperature.
  • Range hood has a filter and working light and fan.
  • Refrigerator and freezer are operating at correct temperatures.
  • Refrigerator and freezer lights work. Shelves and bins are intact.
  • Ice maker and water dispenser operate without clogs. Replace the water filter.
  • Garbage disposal works.
  • Sinks and faucets function with no leaks or clogs.
  • Dishwasher works on all settings and doesn’t leak.
  • Microwave operates normally. Have it tested for leaks.

Bathrooms

You want to physically inspect each fixture to ensure it is working correctly and securely anchored. In Theo’s experience, escutcheons tend to loosen. An escutcheon is the metal plate covering the hole where plumbing pipes exit the wall. It can look intact but fall from the wall when touched.

  • Toilet is free of clogs and flushes without running.
  • Shower turns on and has expected water temperature and pressure.
  • Faucets have hot and cold water and operate without leaks.
  • Sinks drain properly.
  • The vanity has no damage.
  • Cabinets doors and drawers work.
  • Mirrors are intact.
  • Tile is free of mold, mildew, and damage.
  • Escutcheons are intact and well secured.

Bedrooms

Bedrooms and areas such as dining rooms have few fixtures and are straightforward to inspect.

  • Doors open properly, lock from the inside, and are free of damage.
  • Closet doors work and are in good condition.
  • Closet fixtures such as racks, rods, and shelving are intact and well-secured.
  • Hardware functions properly.
  • Mirrors are intact and anchored.

Take Final Inventory

Now that you’ve gathered your walkthrough information, it’s time to take inventory for your next steps. Do you need to make any repairs or replacements before renting this unit? The answer is likely yes, even with normal wear and tear.

At this point, you can quickly generate a list of replacements and repairs, by room or system, to give to your maintenance manager or vendor. After they address all items, the unit is ready for cleaning and a final walkthrough.

When you do the final walkthrough, try to see the apartment through a new tenant’s eyes. What’s your first impression? As Theo says, you should think, “Wow! I want to live here for a long time!”

If you standardize your turnover process, you’ll have happier tenants and better profits. Success lies in the detailed work behind an immaculate apartment.

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BEC 2021 Goes Virtual During Pandemic

Well folks, we have to acknowledge that COVID-19 isn’t going anywhere…at least not anytime soon. As a result (and as you may have noticed), BEC 2021 will be held virtually, for the first time, due to COVID-19. And, while we are disappointed not to be together in person, we are excited to funnel all our efforts into a virtual networking experience like no other. Seriously. As soon as you sign up, you will start reaping the benefits.

What do I mean? We really had to think out of the box on this one. The big question was: How can we make a networking event successful in a virtual environment? The Best Ever Real Estate Conferences are great because they provide attendees with the opportunity to network with fellow investors and industry influencers from around the world. That is it’s greatest benefit and we know how critical that is to you and your business.

In order to offer all attendees the opportunity to share business strategies, meet high net-worth individuals, and learn something new, we came up with a solution, several in fact, that I think you will love.

We’ll have video conferencing and chat rooms dedicated to hundreds of different networking topics. If you want to meet like-minded folks from around the country, if you want to find a partner, deal, or money from the comfort of your home office, or if you just want some good old fashioned new conversations in a world devoid of connections, then this virtual event is a can’t miss.

Exclusive to this year’s virtual event, when you sign up you will be thoughtfully placed into a Mini Mastermind group with your fellow attendees of groups no bigger than 8 people. No other conference provides you the opportunity to connect so intimately and learn as thoughtfully from your fellow attendees this far in adva