Aside from solely finding wealth, investors can benefit from learning how to improve their overall lifestyle which is what we aim to help with for our Accredited Lifestyle Investor audience. In this section, you will find content related to lifestyle improvement tips for passive investors. Ranging from physical and mental health, good habits, and personal growth tips, we’re excited to provide lifestyle content for the wealthy passive investor.
It’s funny when you stop to think about it. Who doesn’t want a nice car, brand new clothes, a beautiful house in a high-end neighborhood and a vacation home for weekend getaways? All these things can be categorized as having “stuff”.
While stuff can certainly be nice to have, don’t get me wrong; we need a certain amount of it, but what if you could have FREEDOM instead of more stuff? Which would you choose?
“You can have anything you want… But not everything you want.” – Susan Fussell
Would you choose a new car or a big house over your own life? Of course not. Then why is it that so many people are on the pursuit for stuff rather than the freedom of time?
A Powerful True Story
A woman named Bronnie Ware was a nurse in 2009. She worked in a terminally ill care unit with people living out their final days in life. Bronnie decided to ask her patients about their top regrets in life. She first published the results initially as a blog post, then later wrote a book on the topic, but I’ll get right to the point. The top two regrets were:
· I never pursued my dreams and aspirations
· I worked too much and never made time for my family
Moral of The Story
Passive income is not about money or obtaining more stuff. It’s about having FREEDOM and the ability to spend your TIME on the things you LOVE and focus LESS of your time on the things you dislike doing.
How Passive Investing Works
The first step in the journey to financial freedom is having more income than expenses. But what if you had more PASSIVE income than expenses? Meaning money that comes in each month without having to exchange your time and effort for it. This is the true definition of financial freedom.
Wealth is measured in time, not dollars – Robert Kiyosaki
I believe the reason that more people pursue stuff rather than freedom is simple. There is hardly any education on the topic of “Time Freedom”. Which is achieved through building passive income streams.
How To Buy More Time
Passive Investing is often misunderstood. Here are two simple examples of passive investing. *This example is for educational purposes only. Actual returns and yields may vary depending on investments you choose*
#1 You invest passively a high-dividend paying stock or REIT that distributes a 10% annualized return.
#2 You invest passively in real estate syndications (80% of my portfolio – FYI) which distribute rents and other revenue from the property. For simple numbers, we’ll say 10% annualized as well.
Investing $100,000 in each of these asset types would look like this:
Stocks/REITs: $100,000 x 10% = ($10,000 passive income)
Syndications: $100,000 x 10% = ($10,000 passive income)
Neither of the asset types above require your time or labor in exchange for the income they provide. Instead, they allow you to be a passive investor so you can spend less time working for money and more time on the things you enjoy the most.
While $20,000 is certainly helpful, most people living in The United States and the Western World could not retire on this amount of income. The real benefit comes when you have MORE passive income than you have living expenses. See example below:
Stocks/REITs: $500,000 x 10% = ($50,000 passive income)
Syndications: $500,000 x 10% = ($50,000 passive income)
Having $100,000 per year in passive income could certainly afford, at the very least, an option to work part-time and free up 50% of your time. For some, this amount of money could mean full retirement, depending on lifestyle expenses.
The Journey to Financial Freedom Begins with Your Mindset
How much of your time and money are dedicated toward acquiring “stuff” and how much time and money are being dedicated toward passive investments? Passive investing can yield returns that are much more powerful than money itself. TIME is our greatest asset in life.
You may delay, but time will not. – Benjamin Franklin
Most everyone on the planet is familiar with Instagram. First launched in October 6, 2010 on the App Store, it became the top photo-sharing app that same day. Eighteen months later, Facebook acquired the app for $1 billion in cash and stock. But did you know the first concept of Instagram was called Burbn. Burbn was a multifaceted app that allowed users to check-in, post plans, and share photos. It was more of a FourSquare competitor than the photo-sharing powerhouse it is today.
What caused this professional pivot? The founder of Burbn, after receiving venture capital investment, started building out his team. The two eventual Instagram founders, realized that photo-sharing was the most commonly used component of check-in apps, while also seeing that other mobile photo apps had cool features, but lacked any social component (does anyone remember Hipstamatic? ).
So how does this story of a company pivot have any bearing on you? In today’s economy, many people will be forced into making career pivots. We have seen teachers become private tutors. Uber drivers become GrubHub drivers. And of course, most have had to pivot from working in an office to working from home… while watching kids who are not in school.
How are you making that pivot? Have you been laid off or your business closed due to social distancing and need to change careers or adapt to a “new normal”? Let’s look at some other examples of pivots people have made.
Other examples of pivots are:
Alcohol distilleries are creating hand sanitizers
Sommelier offering virtual wine tasting and pairing menu, shipped to house
Wedding and family photographers are becoming graphic designers
Journalists are becoming copywriters
Manufacturers moving to medical supplies
Restaurants becoming grocery stores, selling the raw foods to make your favorite foods at home
Professional seminars going from in person to recorded video lectures combined with live
For some of these examples, the effected person adapted an existing skill set: teachers becoming tutors, sommelier’s offering virtual wine tastings. But others have become more creative: restaurants selling their raw goods or distilleries moving from spirits to hand sanitizer. But what is the underlying theme here?
As you look to make a pivot by choice or being forced to, the first step should always be self assessment. What are your natural talents and what do you enjoy doing? While we cannot always love what we are doing every day, finding enjoyment and meaning in your job allows you to bring a passion that will help carry you through the lulls of any day. And of course, your natural talents will allow you perform at the highest level as quickly as possible.
Once you have taken stock of your own abilities and talents, look for a hole that needs to be filled. If looking for another role within a larger company, this comes from job postings and networking. But if starting your own business, or adapting an existing business is more in the cards for you, finding a chokepoint and creating a way to relieve that chokepoint will lead to success. Instagram saw it in connecting the features of other mobile photo apps and creating a social platform around that. Airbnb saw the lack of hotel rooms when major conferences come to town (as well as offsetting high rent costs). Restaurants are operating like grocery stores. Personal trainers and boutique fitness centers are loaning out equipment and doing virtual sessions.
We are all adapting. Even if you are still in a secure job, working from home is an adaptation. While we all want to return to normal, none of us know what that will look like. But using this time to innovate with your pivot can help you and those around you grow in ways you may have never known was possible.
About the author:
Evan is the Investor Relations Consultant for Ashcroft Capital. As such, he spends his days working with investors to better understand their investment goals and background. With over 13 years in real estate, he has seen all sides of real estate from acquisitions, to capital raising on the equity and debt side, to operations, and actively invests himself. Please feel free to connect with Evan here.
If you’re a parent with a high net worth who cares about your children’s future, teaching youngsters about wealth management is imperative. Without the proper guidance, it’s easy for privileged progeny to quickly squander their money. Even worse, kids who don’t know how to handle money responsibly are far less likely to develop good character. Here are a few tips to ensure that your offspring can manage money intelligently.
Demystify Compound Interest Early
Without a doubt, understanding the nature of compound interest and learning how to leverage it wisely is the key to long-term financial success. Adolescents need to learn early on that compounding interest is often the albatross that sinks even the sturdiest of ships. Setting up a savings account that compounds monthly for a child will show them the power of compound interest in an extremely visceral way.
Help Them Start a Small Business
Few things in life teach an adolescent more about wealth creation and preservation than running an enterprise of their own. Whether it’s a lemonade stand or a leaf-raking service, operating a part-time business will teach kids the value of hard work and perseverance. Furthermore, starting a small business will allow children to familiarize themselves with the legal and bureaucratic hurdles that entrepreneurs have to negotiate.
Get Them Started Trading Stocks
Sooner or later, children need to understand the importance of investing in publicly traded companies when it comes to building wealth. Encourage them to play around with a trading simulator like MarketWatch Virtual Stock Exchange or Wall Street Survivor to get their feet wet. Stress the importance of structuring a portfolio that boasts a sensible mix of blue-chip stocks that pay dividends and more speculative start-up plays.
Put Them to Work on the Ground Floor
Those who’ve never held down a high school job that pays minimum wage have missed an amazing opportunity to grow as people. Quite a few notable wealthy parents push their kids into working entry-level jobs for a variety of reasons. Flipping burgers and washing dishes at a young age makes you a more empathetic and fiscally prudent adult later on in life.
Involve Them in a Rental Investment
If you want to show a young adult the surest path to financial success, introducing them to property rentals is a solid idea. You don’t even need to own an apartment complex or a mere duplex to get started. Buying a small parking lot or even a single space in a congested area works just as well. Showing them how to invest in REITs is another solid alternative.
Teach Them to Manage a Budget
Sticking to a budget is often the difference between long-term financial success and utter ruin. You can teach kids the importance of prudent financial management during their most impressionable years with an allowance. Give them a specific amount of money per month to spend and hold the line when it runs out early. Doing so will ensure that they develop discipline and a dedication to saving.
Stress the Importance of Charity
When you examine the lives of ultra-successful people, you often find that the most charitable characters make the most money. They also seem to enjoy their lives far more than those that don’t give back to society. Get your kids to contribute what money they can to charitable organizations early and often. Better yet, help them to organize a charity of their own for a worthy cause.
The Key to Effective Wealth Education for Kids
Bombarding youngsters with a lot of information all at once is a bad way to teach any lesson. Starting early and doling out little nuggets of wisdom gradually is the best way to develop a healthy understanding of wealth management and growth. No matter how smart a kid might be, he or she can’t possibly learn everything there is to know about managing money in a day.
JPMorgan Chase’s chief marketing officer for the home lending business said “due to the economic uncertainty, we are making temporary changes that will allow us to more closely focus on serving our existing customers.”
What are these temporary changes? To qualify for a residential mortgage at Chase, a borrower must have a credit score of at least 700 and will be required to make a 20% down payment.
JPMorgan is the first large lending institution to announce major changes to their lending criteria. I think a fair assumption is that other large lending institutions will follow suit in the coming weeks and months.
What does this mean for real estate investing and, more particular, apartments?
First, if less people qualify for residential financing, less people will be able to purchase their own homes. As a result, more people will be forced to rent. According to Experian, approximately 59% of Americans have a FICO Score of at least 700. And according to MBA, the average down payment across the housing market is around 10%. Therefore, the majority – and possibly the vast majority – of the population cannot qualify for Chase’s residential financing. Even if someone has a 700-credit score or higher, they may not be able to afford the 20% down payment due to the surge in home prices during the post-2009 economic expansion.
One benefit from buying a home during the post-2008 economic expansion was the increase in the value of the property from natural appreciation. According to Zillow, the average home value increased from $175,000 in March 2010 to $248,000 in March 2020. That is an overall increase of 47%, or 4.7% per year. This means that on average, the value of a home grew by nearly 5% each year. However, the Federal Reserve March consumer survey said home prices were expected to grow by only 1.32% this year, the lowest reading since the survey began in 2013. Therefore, one of the main financial benefits from owning a home has been eliminated, which may make renting more attractive.
16 million people are out of work due to the coronavirus. As a result, the number of borrowers who requested to delay mortgage payments rose by 1,900% in the second half of March. Currently, there has been a federal halt on foreclosures. So the question is, will foreclosures resume before or after these borrowers secure new employment? If it resumes before, many people will lose their homes and be forced to rent.
Overall, tighter lending criteria, the lowest projected home value increase since 2013, and the massive increase in the mortgage delay requests indicates that more people will be renting as opposed to buying in the near future. In fact, we are already seeing this happen. In March, the National Association of Realtors announced that they expect home sales to fall by around 10% compared to historical sales for this time of the year.
What do you think? Do you think more people will be renting or buying post-coronavirus?
Facing a looming recession can no doubt be scary for any business owner, including a real estate investor. After all, you may have worked for years to acquire your current properties, and the thought of losing it all is almost too much to handle.
The good news? It is possible for you to prepare for an economic downturn and potentially come out of it relatively unscathed.
Here’s a rundown on how to succeed with real estate investing during a recession.
Stay the Course with Your Criteria
When it comes to buying property during a recession, make sure you have well-defined criteria, rather than making an attempt to time the market. If you buy according to certain proven criteria, you can better avoid getting into financial trouble no matter how the market happens to be performing.
For instance, pay attention to market cycle stages for your target area. In a market suffering from a recession, you can expect your vacancy rate to increase. Meanwhile, the opposite is true for an expanding market.
Also, try to diversify your assets. In other words, rather than pouring all of your eggs into one basket—for instance, single-family rental properties—make sure that you also pour some money into apartment communities as well.
Invest in Existing Properties
Let’s say you’re seeking real estate investing opportunities during a recession but can’t seem to locate any deals. In this situation, consider investing some of your cash into your existing rental investment properties instead.
This may decrease your costs or increase your rent prices. Ideally, the investment you make in the property should make it stand out even more to potential tenants so that you can keep your property as in-demand as possible during an economic downturn.
Make Sure That You Can Access Money
Another way to prepare for a recession is to avoid spending and focus more on saving. Cash reserves can come in handy for taking advantage of any new deals that come your way.
In addition, consider getting a credit line on one of the investment properties you own. A credit line can be helpful because you only have to worry about paying interest if you use this money. This can give you access to capital right away if you need it for a major unexpected repair, for example, during your recession.
Recession-Proof Your Real Estate Investing Business
Although recession fears remain strong, your confidence in your business—and the business itself—can remain just as strong. I’m here to help you to navigate an economic downturn by showing you how to approach real estate investing during a recession, including buying new property during a recession.
Best Ever Conference 2020 Speaker: Andre Reed, Buffalo Bills Hall of Fame Wide Receiver
Lesson #1: Value your huddle
Everyone on your team needs to be on the same page. Everyone needs to know what the game plan is and everyone needs to execute the game plan. Everyone needs to respect each other and listen to each other’s input and feedback.
Champions lead by influence, not authority.
Lesson #2: Know your role
Champions know what they are the best at and what everyone on their team is the best at. Everyone focuses on their strengths for the betterment of the team.
Lesson #3: You win some and you lose/learn some
Champions know that things will not always go according to the plan. They know how to handle things when everything goes wrong and make it out the other side stronger.
Lesson #4: Champions aren’t randomly made
Being a champion is not based on luck. It is not a shake of the 8ball. It comes from hard work and following lesson #1, #2, and #3.
The State of Multifamily
Speaker: John Sebree
Lesson #1 From This Best Ever Conference 2020 Session: New jobs have been the major driver of the economic expansion
There have been 112 months of continuous job gains. Job growth is greater in the south than in the Midwest and northeast over the past three years. However, the US currently has more job openings than people seeking to work because of the disconnect between the skills required for the job openings and the skills of the people who are unemployed.
Lesson #2: Housing construction has fallen short of demand.
From 2000 to 2007, there was an oversupply of 2.5M units. From 2008 to 2020, there is an undersupply of 1.5M units.
Lesson #3: Class C is in demand
Most new construction has been Class A multifamily, so there has been and will continue to be demand for workforce housing, which is reflected by the lower vacancy rate and higher rent growth in Class B vs. Class A.
Lesson #4: Secondary and tertiary markets are in demand
More deals are being done and will continue to be done in secondary and tertiary markets due to the high level of competition in primary markets.
Best Ever Conference 2020 Panel: The Age of Data
Speakers: Michael Cohen – CoStar Group, Jeff Adler – Vice President, Yardi Matrix, Jilliene Helman – CEO, RealtyMogul
Lesson #1: How CoStar collects data
CoStar has over 1000 researchers who are working with the real estate community to collect data, but they are also moving towards internet listings services (ILS) like Apartments.com. They are also using military grade technology, drones, and cars to collect data.
Lesson #2: How Yardi collects data
Yardi has 600 people who independently collect and curate data, which is supplemented with information from property management companies.
Lesson #3: Tips on finding deals
If you are doing broker listed deals, you will overpay and that needs to be offset by focusing on markets with a high net migration.
You can look at Yardi loan maturity data to find owners whose loans are coming due. Come up with a valuation before reaching out to the owner.
Invest in markets where institutional money hasn’t gone to yet.
Fireside Chat: Asset Protection – Shielding Your Financial Empire
Speakers: Ryan Gibson – Founding Partner, Spartan Investment Group, Clint Coons – Anderson Advisors
Lesson #1 From This Best Ever Conference 2020 Session: Invest through a trust or LLC
Sponsors will not ask you if you are involved in a lawsuit, divorce, etc. Investing through a trust or LLC protects your investment from these and other outside concerns.
Setting up the trust or LLC in Wyoming or Delaware creates anonymity. Should you be sued, assets of the LLC cannot be accessed by creditors.
Lesson #2: How to screen a sponsor before investing
Always do a background check on the operator. Always speak with their other investors.
Accelerate Your Success Through Multifamily Syndication
Speakers: Mark and Tamiel Kenney – Co-Founder, Think Multifamily
Lesson #1: Have a strong why
They transitioned from W2 jobs to apartment syndications in order to save their marriage and to spend more quality time with their kids. Now, their clients are an extension of their family.
Lesson #2: Why multifamily is better than single family
Multifamily has better economies of scale. You can secure nonrecourse debt on multifamily whereas you are personally liable for the recourse debt secured on single family. You can hire a 3rdparty to manage multifamily whereas you’ll likely self-manage your SFRs. The value of multifamily is based on performance whereas the value of single family is based on comps. You can go bigger faster with multifamily.
Lesson #3: Why demand for multifamily isn’t going away
Traditionally, people transition from renting to buying when they get married and start a family. Currently, millennials are delaying marriage and starting a family, so they are renting longer.
Lesson #4: You can make more money as a syndicator than as a passive investor
As a syndicator, you can truly make money with $0 down through the acquisition fee, the ongoing asset management fee, and the profit splits. The limited partners must invest money to make money.
15 Strategies That Have Each Created $100M+ of Wealth
Speaker: Richard Wilson – CEO, Family Office Club
Lesson #1 From This Best Ever Conference 2020 Session: Play a unique game
Come up with a way to separate yourself from your competition. You need a hook. Are you offering a unique product? Or you marketing in a unique way? You need to figure out what you can do to differentiate yourself from the pack.
Lesson #2: Create a barrel of fish
One of Richard’s competitors sold their family office for $500 million. The business revenue didn’t support the $500 million valuation. Rather it was the network that was being purchased.
Revenue is great but having a barrel of fish – a strong network – is even more powerful and profitable.
Lesson #3: Find the choke point
When you find a situation in business where you or someone else struggles and you have a way to relieve that, it can be very profitable. Find out what someone’s pinch point is and create a business that solves that problem.
Lesson #1: The biggest change in agency debt since the recent recession
Brandi says the biggest change since the bottom fell out in 2008 is more strict lending criteria. Anyone could get a loan in 2006 regardless of their credit score and income. Now, lenders want to do business with people that they know and trust.
Lesson #2: What you need to be attractive to private equity
Michael said that the first question an equity firm will ask him when evaluating a potential deal is “who is the syndicator and what have they done?” They will only invest in deals where the syndicator has a proven track record doing similar deals. And they are targeting mid to high teen IRRs and value-add, opportunistic deals.
He also said that family offices are the best fit for apartment syndicators. Family offices are more entrepreneurial whereas institutions are more difficult to work with.
Lesson #3: You can borrow money from more than just banks
Spencer focuses on helping investors line up non-bank capital. One solid option are life companies. They offer longer term (up to 40 years) fixed rate loans. Interest rates are as low as high 2%.
Breaking Down Waterfall Structures
Speaker: Ryan Smith
Lesson #1: Tip for reducing taxes
Invest in GPs whose distributions are not always considered a return on capital but whose distributions are a return of capital. Depending on the source of the return of capital, it may not be taxable
The Pursuit of Value Investing
Speaker: Scott Lewis – Spartan Investment Group
Lesson #1: Tips on hiring the right team members.
Hire team members with experience, which is a combination of skill and luck. Focus on the skill sets your business needs and hire people with those skill sets. Team members must have good character so that they are ethical and responsible when a deal goes bad. Create a culture with a mission, a vision, and values to attract team members who align with that culture.
Lesson #2: Three questions to ask potential team members
What is your leadership philosophy? Tell me about a deal that went sideways and what you did? Tell me about your due diligence process?
Best Ever Conference 2020 Panel: Stories of Raising Capital
Speakers: Matt Faircloth, Neal Bawa, Ryan Smith
Lesson #1: We are transitioning from a LP market to a GP market
Ryan believes that we are transitioning from an LP-friendly market to a GP-friendly market. Margins are being pinched and are under pressure. As a result, he predicts that GPs will do less deals than they expect this year.
There will be more capital looking for deals than deals available. He thinks the 8% to 10% preferred returns will fall or go away entirely and that we will see more unique passive investor compensation structures in the near future.
Lesson #2: A track record isn’t required to raise capital
Neal says that it is a limiting belief to think that you need a track record to raise capital. No one would ever get started if track records were a prerequisite.
People do not invest in projects, they invest in people. It is the emotional connection you have, how candid you are, how well you come across, and how specific you are that matters.
If you don’t have a track record, tell a potential investor that if they invest with a syndicator that has 18 deals, they will get 1/18 of their attention and effort. If they invest with you, they will get 100% of your attention and effort and you are staking your entire business on this deal.
Lesson #3: Have transparency on social media
Matt says it is important to have transparency on social media because it allows you to build more trust with your investors. Matt shares the good, the bad, and the ugly of his deals on social media sites.
The other benefit is that someone can quickly vet him and his company. If someone Googles his name, they see all of the free content he has shared on YouTube and information on his company.
Lesson #4: You don’t scale by adding more content. You scale by repurposing content
Neal’s objective is to repurpose every piece of content at least 10 times. If he records a 1-hour podcast, he will create 1-minute videos and post them to YouTube. The best YouTube videos are pushed to investors and put into an ebook. The podcast and 1-minute videos are also shared on Facebook and LinkedIn. Etc.
Best Ever Conference 2020 Panel: Investing in Development Deals
Speakers: Scott Lewis – Spartan Investment Group, Kathy and Rich Fettke – co-CEO and co-Founder, Real Wealth Network, Celeste Tanner – Chief development office, Confluent
Lesson #1: Key things a passive development investor needs to know
Development has a higher risk.
The success of the project is in the hands of the City Planner.
It is extremely important to understand the county surrounding the project. Within the county, it is the community surround the project that is the most important.
NextDoor has been very influential in getting information out about projects and stopping the spread of disinformation.
Lesson #2: Difference between entitlements and permits
Entitlements are for land use whereas permits are for building code.
2020 Real Estate Location Trends
Speaker: Neal Bawa – CEO and Founder, Grocapitus
Lesson #1: The Bible got it wrong by one letter
Neal says that it isn’t the meek who will inherit the earth but the geek. All of the world’s richest people are geeks. And all of the best real estate investing teams have a geek.
Lesson #2: Most people use data incorrectly
Neal finds that most real estate investors only use the data that supports their viewpoint and throw out everything else. The best geeks are the opposite. They use data to create their viewpoint.
Lesson #3: The top five metrics of the geek
Neal selects target markets based on what he calls Realfocus metrics.
Realfocus metric number 1 is population growth. Only invest in cities with a population growth of at least 21.25% between 2000 and 2017.
Realfocus metric number 2 is median household income. Only invest in cities with a median household income growth of at least 31.5% between 2000 and 2017.
Realfocus metric number 3 is median home values. Only invest in cities with median home values that have grown by at least 42.5% between 2000 and 2017.
Realfocus metric number 4 is crime levels. Only invest in cities with a crime level index calculated by CityData that has been gradually decreasing and is below 500.
Realfocus metric number 5 is 12-month job growth. Only invest in cities with a 12-month job growth above 2%.
Lesson #4: Two top markets you’ve never heard of before
The two markets that you have probably never heard of before that have consistently had a 12-month job growth greater than 2% are St George, UT and Yuba City, CA. Other top markets are Raleigh, NC, Reno, NV, Gainesville, GA, and Ashville, NC.
Underwriting & Asset Management
Speaker: Frank Roessler – President, Ashcroft Capital
Lesson #1: Why asset management is necessary even if you have a great property management company
First is that the biggest risk point is the execution of the business plan. Everything can be right – the right deal in the right market at the right price – but if you don’t execute the business plan, it will lead to disaster. There are hundreds of moving parts that need to be taken into account when executing a business plan, so you need an experienced and organized asset manager to execute the business plan successfully.
Second is that the property is your baby whereas the property management company doesn’t own the property. No one is going to care for your baby – the property – as much as you.
Lesson #2: Asset management duties when managing a single property
Monitor the key performance indicators, like occupancy, rents, evictions, bad debt, loss-to-lease, etc.
Manage the expenses. There is a range for each expense category and it is the asset manager’s responsibility to make sure that you are not overspending or underspending.
Manage and work with the staff. This includes email and phone call communication but also face-to-face meetings.
Oversee capital expenditures. Make sure the major capex projects are on-schedule and on-budget.
Lender communication. The asset manager communicates with the lender if you are required to cure certain deferred maintenance items, during a refinance or supplemental loan, or if you aren’t meeting your debt service obligations.
Improve the quality of life for your residents. Host events to make the existing residents happy so that they pay rent on time, pay more rent, stay longer, and refer other residents.
Lesson #3: Asset management duties when managing a portfolio
In addition to the duties from lesson #2, asset managers who manage a large portfolio have two extra duties.
First is managing scale. Implement a system of schedules and reminders, creating daily, weekly, and monthly to-do lists. Create an organized file sharing platform where each deal has its own folder and each project has its own subfolder. Delegate tasks to other team members because one person cannot wear all of the hats. Don’t become too emotionally invested. Celebrating win and use problems as a learning experience.
Second is implementing more sophisticated processes. Get a revenue management software like Yieldstar or LRO. Do a cost segregation analysis to accelerate depreciation. Hire a local tax protester to protest the taxes each year. Recapitalize rather than sell so that the taxes remain the same. Do 1031 exchanges into new, like-kind deals to defer taxes. Purchase interest rate caps on floating rate loans. Once you’ve done over $500 million in agency loans, secure a line of credit and use that line of credit to buy more deals to avoid prepayment penalties.
Lesson #4: Do’s and don’ts of asset management.
Crawl before you walk. Work with another institution or start small to gain experience before pursuing larger deals.
Know the best practices of property management so that you know if your property management company is doing a good job.
Work with experienced professionals. Hire people who have past experience rather than hiring young talent who have to learn on your dime.
Conduct weekly calls with your team and with your property management company.
Don’t forget about the residents.
Don’t reinvent the wheel. Follow the proven processes used by other successful apartment investing companies.
Don’t spread your staff too thin.
Don’t be a stranger. Make sure you are visiting your properties in-person once a month.
Next Level Portfolio Management
Speaker: David MacAlvaney
Lesson #1: The good
Unemployment is at a 50 year low. Wages are rising. Consumer confidence is high.
Lesson #2: The bad
Corporate debt is at an all-time high and is not being used productively. Executive confidence is low. The FED’s balance sheet is expanding.
Lesson #3: The ugly
The FED deficit. Banks are relying on central banks which is keeping the market together. Total debts are beyond unsustainable. The ratio of debt to GDP is 320%.
We are currently back to the SFR pre-recession prices when adjusted for 2020.
There is a 3.6% REAL return in the stock market.
Lesson #4: The case for gold
It is insurance against the uncertainty from the bad and the ugly. We are in an uncertainty trifecta: political uncertainty, geopolitical uncertainty, and uncertainty in the financial market.
Best Ever Conference 2020 Panel: Taking The Next Leap
Speakers: Dan Handford – Managing Partner, PassiveInvesting.com, Ellie Perlman – Found and CEO, Blue Lake Capital, Holly Williams – General Manager, MQ Ventures, Vik Raya – Co-Founder, Viking Capital
Lesson #1: What not to do when taking the next leap
Dan said that he will not invest with a GP unless the sponsors work in the business full-time. He doesn’t want to invest with a part-time apartment syndicator. But before quitting your job and going into apartment syndications full-time, be a co-GP first to build your credibility and track record.
Lesson #2: Advice on quitting your W2 job to become a full-time real estate investor
Holly said that she made the decision to quit her full-time job when she was more passionate about investing than she was her job. However, even though she was making over six figures as a part-time passive investor, she was still afraid to make the leap. For her, it was about making a mindset shift as opposed to making a rational, intellectual decision to quit her job.
Lesson #3: The two ways to build relationships with brokers
Vikram spent three years building a relationship with brokers before he did his first deal. It involved conversations on the phone, flying to the market to meet with brokers in-person, wining and dining them, and reviewing their deals and providing feedback. He did everything he could to prove to the brokers that he was serious about closing on a deal.
More recently, Vikram was having a hard time being awarded a deal. He was invited to multiple best and final offer rounds but was never awarded a deal. Then, he decided to meet his brokers in person and gave them a bottle of Don Perignon. Within a week, he was awarded a deal.
Lesson #4: How to overcome last minute challenges
Ellie recently had a deal in Atlanta under contract that was at 98% occupancy. Five days before closing, she discovered that the occupancy had dropped to 82%. Due to the occupancy requirement of her lender, she lost the financing on the deal. Rather than cancel the contract and sue the seller, she renegotiated the purchase price with the seller and convinced the lender to finance the deal. Within 45 days of closing, she was able to increase the occupancy to 90% and was able to demand a higher rent on the newly leased units without having to renovate the units first.
Mindset Mastery for Passive Investing
Speaker: Trevor McGregor – Peak Performance Coach and Business Strategist, Trevor McGregor International
Lesson #1: The four things you must continually check in with
Your mindset. Your values. Your rules. And your emotions.
Thoughts are the seeds of a garden and you reap what you sow.
Lesson #2: The six human needs
Certainty, uncertainty/variety, significance, connection, growth, and contribution. Which of these six are the reasons why you are investing?
Lesson #3: Know your emotional home
If you have a negative emotional home, you are moving away from something, like doubt, fear, and worry. You want to have a positive emotional home where you are moving towards something that you want.
A Holistic Investment Approach to Passive Investing
Speaker: AdaPia D’Errico – VP of Strategy, Alpha Investing
Lesson #1: Understand your intentions
Whatever your intentions are for passively investing should align with the intentions of the sponsors. The same applies to values. You must have the same values as the sponsors you chose to invest with.
This alignment is paramount to making money.
Lesson #2: Have a strong why
You need to have a strong and meaningful enough “why” to weather your doubts during a downturn.
Lesson #3: Intellect and instinct
You need to use your intellect and instincts when you are approaching a sponsor and a deal. You need to use your left brain to fact check the deal, using logic, reason, and analysis. And you also need to use your right brain to gut check the deal, using your institution.
Elite Capital Raising Webinar Strategies
Speaker: Bryan Ellis – CEO and Host of Self Directed Investor Radio, SelfDirected.org
Lesson #1: The myth of rationality
Most webinars focus on the background of the team, the capital structure of the deal, the return projections, and details on the investment strategy. This is all important information to include. But people do not invest rationally, so this is not the information that will persuade them to invest in your deals.
Lesson #2: The alchemy of thought
People do not invest rationally. They rationalize.
First, they have an automatic response to the deal. This reaction is not in their control. It is automatic.
Next, they have an emotional stimulus. This is how they feel about what you are saying about the deal and what you are trying to get them to do.
Then, they think about the data and facts about the deal.
Once they’ve gone through the first three steps, they have their impression of the deal. They will go back over each of the three points, pick out the pieces that make the most sense to them and supports their impression, and ignore the rest. In other words, rationalization.
Then they decide.
Most webinars completely ignore the automatic response, the emotional stimulus, and the impression and only focus on the data and facts. But the data and facts are the least important or the last thing that is considered.
Lesson #3: How to get more capital commitments from fewer investors with less resistance and less time
Create questions in the mind of the prospects that can only be answered by reaching out to you. Don’t answer every single question.
Create urgency by design. Let them know why investing now will be better for them.
Have someone else tell the prospects why they should invest. This should be someone who is more credible than you like someone who is currently investing in your deals.
Best Ever Conference Speaker: Whitney Sewell – Director, Life Bridge Capital
Investment Lesson #1: Have a never give up mentality
Whitney first applied this lesson to his pre-real estate careers as a member of the military, a police officer, a federal agent, and a horse trainer.
When he hired Joe as his coach, Joe told Whitney that it is great to have a never give up mentality but that he needed to focus on putting that mentality into actionable steps. As a result, Whitney started his daily real estate podcast, “The Daily Syndication Show,” which he attributes in part to the growth of this business.
Lesson #2: Scaling a syndication business
Whitney’s second lesson is how to use focus to scale a business. He was a federal agent by day and horse trainer/farmer by night. Once he decided to go all in with syndications, he sold him farm. With this renewed focus, he was able to launch his syndication business.
His other lesson for scaling a business is to find a partner. From his podcast, he discovered that those who had rapid results had a business partner. In fact, Whitney met his partner at his second Best Ever conference.
Lesson #3: Have a why
The mission of Whitney’s company is to help other families through the adoption process. He said that there are 160 million orphans in the world. And the cost to adopt just one child is between $40,000 to $60,000.
Speaker: Glenn Mueller – Denver University
Lesson #1: We are in a lower for longer environment
The three main drivers of real estate demand are population growth, GDP growth, and employment growth. Compared to previous periods of expansion, these three factors are lower during the current period of expansion. Additionally, these factors are nearly identical to the interest rates (i.e., the costs of real estate). As a result, the current expansionary period has been more stable and has exceeded the typical 10-year periods of expansion in the past.
Lesson #2: Look at the important real estate factors constantly
The three metrics that run real estate cycles are vacancy, rent growth, and income. When vacancy is low, rents increase. When rent increases, income also increases.
Since these are the factors that run the real estate cycles, you should be analyzing them on a frequent basis. And the best place to stay up-to-date on these metrics is CoStar. Either purchase a CoStar subscription yourself or leverage a relationship with a broker who has their own subscription.
Lesson #3: Industrial has been the best asset class in the past 5 years
Why? Because of the Amazon and Walmart effect. Amazon’s online business and the resulting increase in Walmart’s online business has benefited the industrial asset class the most.
Investment Lessons Learned from Crowdfunding $2 Billion in CRE
Speaker: Jilliene Helman – CEO, RealtyMogul
Lesson #1 From This Best Ever Conference Session: Find your passion
Jilliene’s father was in the import/export business and always talked about the perils of inventory. At 17 years old, when her father asked her what she wanted to do when she grew up, the said she was going to sell money so that she didn’t have to deal with the same inventory issues as her father.
Lesson #2: Get started
Her first transaction was a duplex in a class D area. Her most recent deal was a $60 million transaction. If she didn’t take the leap and acquire the pretty scary duplex deal, she wouldn’t be where she is today.
Lesson #3: You must try even when you may fail
She was afraid to raise money from family and friends. To overcome this fear and change her mindset, she started parking illegally all over LA. She ended up paying over $1,000 in parking fines but was able to change her mindset around fear and taking risks.
Lesson #4: The proforma is always wrong
To minimize the “wrongness” Jilliene always includes a minimum 10% contingency budget, because you don’t know what is going to happen.
Use a cap rate at exit that is at least 1% greater than the cap rate a purchase.
Reduce the number of units renovated and re-leased per month. Four to six units per month, sometimes up to eight, is a more realistic assumption.
Increase the vacancy and bad debt during the renovations period. Expect more tenants to leave because of the chaos that comes from the construction process. Also, someone who can afford a $600 rent may not be the same demographic that can afford a $800 rent, so expect a lot of tenants to skip
Best Ever Conference Panel: Exploring Niche Asset Classes
Speakers: Brandon Kramer – Senior Associate, Marcus & Millichap, Stuart Kerber – Columbia Ag Investments, Kathy Fettke – Owner, RealWealthNetwork.com, Adrian Beales – LifeAfar
Investment Lesson #1: Tips to invest in agricultural land
Specialize in a crop that is in your wheelhouse. Stuart focuses on cherries and apples.
It is better to invest in land that already has the infrastructure rather than starting from scratch.
The more common way to invest in agricultural land is the tenant-lease model, which is when someone buys the land and a farmer leases the land. The less common but more profitable model is the direct investment, which is when someone buys the land and farms the land.
Lesson #2: Adding lifestyle to your investment
Adrian’s first business model is to raise money for hotels in foreign countries where the investors can actually vacation at the investment. His other model is to find and sell apartments to his investors in foreign countries. The investors benefit from both returns and a lifestyle experience.
Lesson #3: The resurgence of suburban offices
Suburban offices have been looked down upon during the last few years. However, once millennials start having kids and moving out of the urban core, suburban office will have a resurgence.
The Unknown Unknowns of SEC Law
Speakers: Dugan Kelly – KellyClarke Law, Merrill Kaliser – Kaliser & Associates, Robin Sosnow – Managing Partner, Sosnow & Associates
Investment Lesson #1: Using an online platform to advertise your investment
There are online platforms, like CrowdEngine, that help apartment syndicators advertise their 506(c) deals so that they don’t have to start from scratch.
Lesson #2: You need to be careful with the intent behind a post as a 506(b) syndicator
With 506(b) offerings, you cannot drive traffic to your deal or website when posting on social media but you can talk about putting a deal under contract or closing on a deal. If you don’t follow this practice, you will lose your exemption and need to change to a 506(c) offering that allows for general solicitation.
Lesson #3: If you have an investor who is not happy, buy them out
The SEC isn’t looking for syndicators who are not in compliance. They get involved if an investor reaches out to them. An easy solution to this disruption is to buy them out, especially if they are a smaller investor. It will save both money and stress.
Lesson #4: If the person investing is expecting a return on investment and that is it, it is a security.
This is different when a few people invest and are actively involved in the deal, which is called a JV.
Actively involved could be someone investing a lot of money who has a say over the fees the sponsor charges (i.e., acquisition fee, asset management fee).
JVs are much more cost-efficient on smaller deals compared to syndication.
Lesson #1 From This Best Ever Conference Session: Tips for evaluating a PPM
Mark focuses on uncovering any hidden fees. He will request a spreadsheet that lists out all of the fees.
Ansa is a return chaser and wants to invest with a syndicator that she believes has a good track record and that she has a good gut feeling about.
Lue actually doesn’t read the PPM. He is more focused on the person who is putting the deal together and that they are trustworthy.
Lesson #2: Major red flags
Mark’s major red flag is when syndicators overpromise or underpromise on the returns. He eliminates anything that is below a 10% return and anything over a 25% return.
To avoid investing with a syndicator who has any red flags, Ansa talks with people who’ve invested in the past, talks to the principal to make sure they are focused on the operations over the sales and that they understand the financial aspect of the deals.
Lesson #3: The importance of property management
A lesson Lue learned on an unsuccessful passive investment was that the property management company makes or breaks the deal. Therefore, having a back-up property management company is a must. If the first one needs to be fired, the back up can quickly take over as opposed to an extended period of time where there isn’t a professional management company.
Mergers, the Ultimate Collaboration
Speaker: Celeste Tanner
Investment Lesson #1: The development companies who were impacted by the economic recession the most were mono-focused rather than diversified
Lesson #2: Merge with a company whose strengths are your weaknesses and vice-versa
When considering a merger, the most important question to answer is “are we complementing each other or are we cannibalizing each other?” Companies who cannibalize each other have the same strengths and same weaknesses. Ideally, one company has strengths that are the weaknesses of the other, and vice versa.
Lesson #3: The two companies need to have aligned visions
Things that they must be aligned on include how to approach profits, investors, financial interests, trust in leadership, diversity of investments, and governance/accountability with board of directors and investors.
Best Ever Conference Keynote: How We Win in 2020
Speaker: Joe Fairless – Co-Founder, Ashcroft Capital
Lesson #1: How to accomplish more
Have a thorn. A thorn is a negative experience that you can draw upon to propel yourself forward. Joe’s thorn was losing money on his first deal – among other things that went wrong with the deal and around the time of the deal.
The three components of a thorn are that it needs to cut deep, it fades over a certain period of time, and you need to document the thorn.
If you don’t have a thorn, manufacture one. If you need to manufacture a thorn, you need to know what the quantifiable objective is for the manufactured thorn. For example, if you don’t read one paragraph every day for a week, you have to hold dog poop in your hand and lick it. (that’s right – I said dog poop).
Lesson #2: How to raise more money
The number one thing you can do to raise more money is to hire a data scientist. We use data to find markets and underwrite deals, so why should you use data to find more investors.
Things to look at include investors who invest multiple times, largest investors, cities they prefer to invest in, lead sources, loan preference, and top repeat investors.
Lesson #3: How to scale your business
Having the right team members impacts your ability to scale a business. That means hiring people who are both talented and a good fit with your company.
You can hire people who are talented but are not a good fit. And someone who was a good fit when you first started your business doesn’t mean they will always be a good fit.
To determine if your team members are a good fit, the two questions you should be asking yourself on a quarterly basis are: (1) are the responsibilities that I hired this person to initially do the same responsibilities they are doing today, and if they aren’t, are they uniquely talented to fulfill those new responsibilities and (2) knowing what I know now, would I rehire this person?
Overcoming Financial Hardship
Speakers: Tyler Burke – Investment Associate, Spartan Investment Group, Josh Davis – Owner, Davis JM Capital, Kevin Bupp – Owner and CEO, Sunrise Capital Investors, Matt Owens – Owner, OCG Properties
Lesson #1 From This Best Ever Conference Session: Quickly scaling an SFR business is inefficient
Kevin Bupp lost it all during the financial crisis of 2007-08. Among many investment lessons learned, one was that quickly scaling an SFR business is inefficient. He owned 120 SFRs spread across multiple counties in Florida. As a result, there were maintenance inefficiencies, management inefficiencies, and financial inefficiencies. That is why he now prefers more recession efficient asset classes like mobile home parks.
Lesson #2: Be aware of where you are in a market cycle
Matt Owens’ business also took a hit during the financial crisis of 2007-08. In hindsight, he realized that his success wasn’t based on a fantastic business model but a business model that only thrived during certain parts of the market cycle. His fix-and-flips were successful because the market was great for the fix-and-flips. When the market was no longer great for fix-and-flips, his company suffered.
Now, he always makes sure the numbers would make sense on his fix-and-flip deals during any part of the market cycle.
Lesson #3: Turn a negative addiction into a positive addiction
Josh’s hardship wasn’t real estate related. He was discharged from the military, fell into drug addiction, and landed himself in prison. Eventually, he learned to turn his negative addiction towards drugs into a new addiction of working harder than everyone else in real estate investing and is about to complete his first active deal.
Exploring Alternative Investments
Speakers: Dan Handford – Managing Partner, PassiveInvesting.com, Roni Elias – TownCenter Partners, Jeremy Roll – President, Roll Investment Group, David McAlvany – Precious Metal Portfolios
Lesson #1 From This Best Ever Conference Session: Making money through litigation
Roni makes money with a publicly-traded litigation company. Each fund has 1000 cases and he has a 90% win rate on 25,000 cases. The IRR on the funds are in the 60%+ range. For example, a personal injury fund could make a 16% IRR in less than 16 months and then 50% or higher over time.
Lesson #2: Making money through ATMs
Jeremy invests in ATMs. The investment funds have a 4 year payback period and 7 year term. The funds result in a fixed cash-on-cash return of 24.5% and an 18% IRR.
Lesson #3: Make money investing in gold
David invests in precious metal portfolios. He likes these investments because they are not tied to the financial markets. If the overall economy worsens, his investments thrive.
Peak Performance with a Special Ops Veteran
Speaker: Alex Racey, First Principles of Performance
Investment Lesson #1: The first principles of performance are eat, sleep, move
These three principals are all tied together. If you are suffering in one, you suffer in all three and your performance suffers as a result.
Lesson #2: The three common performance categories
Most people fall into one of the following three performance categories.
First is “kick the can.” This is someone who was a star athlete in high school or college. They shifted 100% of their focus from athletics to their job. They make a lot of money but their physical, mental, and emotional health is lacking. They tell themselves that they will eventually refocus on their fitness.
Second is “head in the sand.” This is someone who is overwhelmed by the number of fitness routines and diets and say, “screw it” and decide to ignore them all.
Third is “all good.” They work out and eat well but ignore ongoing pain and issues, like joint pain, back issues, etc. Alex says this is the category he falls into.
Lesson #3: How to optimize your performance.
To optimize your performance, you must optimize your eating, sleeping, and moving. Alex says the best approach is to Google metabolic flexibility for eating, sleep hygiene for sleeping, and minimum effective dose for moving.
Industrial – The Hottest Asset Class?
Speakers: Brandon Kramer – Senior Associate, Marcus & Millichap, Celeste Tanner, John Comunale, Nick Koncilja
Lesson #1 From This Best Ever Conference Session: The nuances of industrial
There is a major difference in returns for 22 ft vs. 24 ft ceilings, having cross-docking capability, and laser leveled floors, for example.
Lesson #2: Warehouses are the best
Warehouses have been the best performing asset class for the last 5 years. And is forecasted to continue as such for the next 5 years.
Lesson #3: Industrial cap rates are close to multifamily cap rates
Due to low construction costs, low operator exposure, and low turnover costs, cap rates on industrial assets are nearing multifamily cap rates.
eQRP, the Business 401k
Speaker: Damian Lupo – The eQRP Company
Investment Lesson #1: Your biggest financial shackle is the IRS
70% of your earnings go to the IRS over your lifetime. eQRP can drastically reduce this number.
Lessons #2: eQRP vs. SD-IRA
Using a SD-IRA to invest with compared to an eQRP is slower, has a lower maximum deposit amount ($6,000 vs. $57,000), and results in a tax bill, whereas eQRP is faster and is tax-free.
Lesson #3: Damian’s rules for investing
Only invest with self-responsible people, have no more than 5% of your capital in any deal, and don’t invest in dangerous places (a security guard was murdered at one of his properties).
Asset Protection Planning for Real Estate Investments
Speaker: Clint Coons – Anderson Advisors
Lesson #1 From This Best Ever Conference Session: Ask the right questions
When you are thinking about protecting your assets, the wrong question is how much will it cost? The better questions is if I get sued tomorrow, how many assets will I lose?
Lesson #2: Don’t put multiple properties into an LLC
You should separate your investments into separate LLCs. If you group your properties together under one LLC, one lawsuit puts all the properties at risk.
Lesson #3: Don’t hold cash in your personal bank account
If you are sued, your personal cash is at risk. Set up a separate LLC and deposit profits into a bank account under the LLC’s name.
Lesson #4: Don’t make offers in your personal name
Set up a separate LLC to make the offers. If you end up walking away from the deal, the seller can sue you personally for damages, especially if the value of property dropped during the time the property was off the market.
You can always assign the contract to yourself later.
Senior Housing – the 3 Best Ways to Get Started NOW!
Speaker: Gene Guarino – Residential Assisted Living Academy
Investment Lesson #1: Everyone will get involved with assisted living in one way or another:
Lesson #2: Own a home and lease that home to a senior housing operator
In doing so, you can charge a higher lease amount than you would be able to charge by using the home as a regular rental.
Lesson #3: Own a home and be the senior housing operator
The average cost for assisted living is $4,000 per month per person, and the resident will pay all cash. Much better terms than your typical rental.
Intellectual Debate: You Will Have Greater Success Over the Next Years If You Sell More Than You Buy in 2020
Speakers: Jamie Smith, Jilliene Helman – CEO, RealtyMogul, Neal Bawa – CEO and Founder, Grocapitus, John Sebree
Lesson #1 From This Best Ever Conference Session: Why you should buy more than you sell in 2020
Only buy long-term value-add deals in quality markets with quality underwriting and management.
When you sell, you lose the future wealth potential and you are taxed on the income.
Three other reasons to buy now is that interest rates are extremely low, there is a huge demand for multifamily but not enough supply, and you will lose 2% each year due to inflation if you are liquid. Even if the returns are lower, it is better than having your money lose value while sitting in a bank account.
You should be playing defensive and investing in asset classes such as mobile homes and workforce housings, which continue to perform during recessions.
Lesson #2: Why you should sell more than you buy in 2020
People are no longer underwriting deals based on fundamentals of property but on aggressive proformas. They are also more leveraged and securing loans with longer interest-only periods, and sponsors are trying to maximize their fees.
The government is continuing to spend our tax dollars to create inflation (i.e., quantitative easing) which is unsustainable.
Rent growth is slowing and expenses are increasing, which means NOI growth is slowing
An economic slowdown is inevitable and you want to have cash to take advantage of the opportunities.
People are now buying overpriced properties from veteran investors who are waiting for a recession.
There is a trillion-dollar debt deficit.
People from get-rich-fast courses are flooding the market.
The FED continues to cut interest rates even though the economy is supposed to be strong. What do they know that we don’t know?
You’re an accredited investor who is looking to increase his or her net worth in the new year. The question is, how? Should you focus on securities, like stocks, or should you channel your energy into the potentially lucrative real estate industry?
The truth is, real estate remains one of the best investments available today. So, it only makes sense to fill your portfolio with successful properties this year. Still, you won’t be able to take advantage of the swiftly changing real estate market if you don’t have the foundational knowledge and experience needed to make this happen.
That’s where an investment conference comes in.
Real estate conferences can easily teach you how to generate passive income from rental property, for example. You can also learn how to navigate even the most complex deals.
Here’s a rundown on why real estate properties make excellent investments for accredited investors and why you need to attend real estate investing seminars in the coming months.
Enhance Your Education
One of the biggest reasons why you should attend an investment conference this year is that it will educate you on how to excel in this competitive industry.
Yes, life can get busy, so it’s easy to put your own industry education on the back burner. Deep down inside, you realize how important education is for you to master the real estate investing field. At the same time, you may feel that so many other things in life are vying for your attention—for example, home life, your business, and your children’s extracurricular activities—that you simply don’t have time to attend a conference.
The truth is, you can’t afford NOT to go to an investment conference. Here’s why.
A real estate investing conference will provide you with a large number of resources, education, and information that will transform your thinking and, thus, your approach to business. Many conferences feature keynote presentations, along with breakout sessions and panels that the foremost industry experts lead. Through these sessions, you can discover the most current strategies and resources for generating passive income from rental property and growing your real estate investing business.
As an example, a seminar may emphasize to you the value of creating a detailed business plan for your company. Following the conference, you may become motivated to develop a comprehensive plan and even enlist the help of a dedicated coach to assist you in achieving your real estate investing goals.
Learn How to Solve Problems and Improve Your Portfolio
Another significant benefit of going to a real estate investing conference? You get to surround yourself with smart and giving individuals who are active in real estate.
You can share any challenges you might be facing with your portfolio with the individuals there and get some insight into how to solve it. For instance, you may speak one-on-one with an expert about your need to expand your portfolio, and he or she might offer you the chance to invest with them on their next apartment syndication.
All in all, real estate conferences are an excellent springboard for seeing new possibilities when it comes to producing passive income from rental property.
Grow Your Business (and Passive Income)
Attending an investment conference is also a good idea if you’re looking forward to growing professionally as a real estate investor. After all, you can’t help but grow if you tap into the expertise of other entrepreneurs who realize that real estate remains among the top investments for accredited investors.
In addition, an investment conference gives you a chance to finally slow down by taking a break from your daily grind. Rather than hustling after deals, you can focus on being a little self-reflective. Specifically, you can ask yourself how the information you’re learning can help you to accomplish your real estate investing goals as efficiently and effectively as possible.
Build Your Network
Yet another major reason why accredited investors should attend an investment conference this year is that it will allow them to effectively network.
Being able to connect with experts of various backgrounds and in different niches can open your mind to a number of possibilities when it comes to real estate investments for accredited investors.
While networking with other people, consider how you can add value to their businesses. Also, assess who you’d be interested in meeting and building relationships with. Furthermore, try to focus more on listening and less on talking.
All in all, try to socialize with new people, not just people you already know. And don’t forget to take part in happy-hour times, as they can be as useful for networking as breakout sessions are.
Start Boosting Your Knowledge Through a Real Estate Investing Conference Today
If you’re serious about strengthening your bottom line in the year ahead, it only makes sense for you to take advantage of an investment conference right away.
At the conference, you’ll have the chance to hear from more than 50 influential speakers who can show you why real estate is one of the best investments for accredited investors. You’ll also have the chance to network with fellow real estate moguls from across the globe. With these resources, you can be well on your way to earning passive income from rental property.
Contact me today to find out more about how to experience today’s best real estate investing conference and what your conference goals should be this year.
You’re ready to finally stop spinning your wheels and start bringing in large sums of revenue as a real estate investor. But to achieve this, you need two M’s: motivation and moolah. This is particularly true if you’re seeking to become an accredited investor in real estate.
The good news is that, if you meet the special requirements for becoming an accredited investor, you can reap the many rewards that come with holding this title. Here’s a rundown on the benefits of becoming an accredited investor.
What Is an Accredited Investor?
First, let’s answer the question, what is an accredited investor? An accredited investor is essentially an individual whose net worth, individually or with a spouse, surpasses $1 million. In addition, you can become an accredited investor in real estate if you made more than $200,000 per year during the past two years, or if you and your spouse made more than $300,000 during this period.
Experience Greater Returns
A major benefit of becoming an accredited investor is that you can expect greater returns. Ideally, you should pursue a return greater than 8%, which is the average return received in the stock market. Some development deals that carry a greater risk may give you an internal rate of return of 15 to 25%. The more risk you take on, the higher your return may be.
As long as you educate yourself, work with other experienced investors, and exercise due diligence, you should have no problem experiencing excellent returns. With an average return of 8%, you may double your money in nine years. However, a higher return of 12%, for example, will allow you to double your funds much sooner—in just six years.
Diversify Your Portfolio
Yet another benefit afforded to accredited investors is that they can diversify their investments in this role. Stocks tend to be volatile, but you can diversify your portfolio via commercial real estate investing. Real estate is uncorrelated or less correlated to the stock market, so even if stocks end up tanking, your real estate investments can help to buffer your losses.
Become an Accredited Real Estate Investor
Now couldn’t be a better time to stretch your real estate investment muscles by becoming an accredited investor in real estate. Work with me as I complete my next apartment syndication deal. I’ll help you to make the most of the deal so as to maximize your return.
I control over $700M in property, so I am adept at finding properties, creating plans for improving cash flow, and negotiating deals for winning returns. By working with me as an accredited investor, you can earn money passively—without having to work a 9-5. Get in touch with me to learn more about how I can help you to grow your bottom line as an accredited investor in real estate.
If you’re serious about becoming an expert in real estate investing, you’ll want to start with a general crash-course. And real estate investing books are some of the best resources you’ll have at your disposal as you move along your journey to more financial independence.
Of course, not all books are created equal. Not even close. Fortunately, you don’t have to waste time with the wrong books to finally discover the right books for any avid real estate investor. Here’s a rundown on just some of the best real estate investing books on the market today.
Best Real Estate Investing Advice Ever
Consider adding the book, Best Real Estate Investing Advice Ever, by Joe Fairless and Theo Hicks to your library. This book discusses how you can transition from investing in single-family homes to purchasing multifamily properties. You’ll also learn how to raise funds for a deal, as well as how to be an innovative investor, no matter what your financial situation might be.
Rich Dad, Poor Dad
Develop your wealth mindset with great advice from Robert Kiyosaki when you read his book, Rich Dad, Poor Dad. Discover the power of creating a passive income for yourself, even if you’re not already wealthy, using wise real estate investments.
The Complete Guide to Buying and Selling Apartment Buildings
In Joe Fairless and Theo Hick’s newest text, the Best Ever Apartment Syndication Book, you’ll explore how to access private capital so that you can buy a potentially lucrative apartment community. You’ll learn how apartment syndication works, how to establish quantifiable goals, and how to build a strong brand that will attract passive investors to you. In the end, you should know how to surround yourself with a winning team in real estate.
Become a Successful Real Estate Investor
As you enter a new decade, it’s critical that you take your real estate investing education up a notch if you want to compete like never before. In addition to reading all of the best real estate investing books you can get your hands on, check out the Best Ever Show. We interview real estate experts and entrepreneurs to get their best ever advice that you can then apply to your own real estate business.
Also, consider listening to our newest series, Apartment Syndication School. Learn all about how to complete a syndication deal from start to finish.
“Hey Joe. My cousin’s friend’s grandfather’s former college roommate is a Russian Oil Tycoon with a trillion dollars to invest. Do you want me to make an introduction?”
Okay, maybe not that extreme…
While I do receive the majority of my potential inquiries through my Invest With Joe landing page, I also receive inquiries from people I meet who say they or someone they know has a whole bunch of money and either want to buy a piece of real estate or passively invest in one of my future deals.
If you have had some level of success in apartment investing, you do or will run into similar scenarios – even if you aren’t currently raising capital.
Many high net-worth people know the wealth conservation and wealth building benefits of multifamily real estate. However, just because someone has enough capital to invest in your deals doesn’t mean they can, will, or even should invest. In order to determine if a high net worth individual is serious about investing in one of my deals, here are the 11 questions I ask:
1. Do you want to invest in multifamily, value-add projects?
Our business plan is to purchase stabilized multifamily deals that have the opportunity to add value. That is, either increase the income or decrease the expenses by improving the physical property or improving the operations.
Value-add multifamily projects are just one of many syndication business plans. Maybe they invest in value-add deals that aren’t multifamily. Or maybe they invest in multifamily deals that aren’t value-add. If the high net worth individual doesn’t invest in value-add deals and multifamily deals, then my business may not be the ideal fit.
Obviously, if you’re business model isn’t value-add multifamily, then replace “multifamily, value-add projects” with your investment strategy.
Keep in mind that just because they haven’t invested in your investment type in the past doesn’t automatically disqualify them. Instead, you should provide them with a resource that educates them on your business plan (like my Passive Investor Resources Page).
When speaking with a prospective investor, I want to know what their return expectations are. Most high net-worth individuals will be familiar with these two return factors. If their cash-on-cash return and internal rate of return expectations differ greatly from the returns we offer to our limited partners (LPs), our deals may not be an ideal fit.
Of course, you may run into high net-worth individuals who care more about another return factor or care more about capital preservation than the ongoing returns. The purpose of this question is to determine if the returns you offer to LPs are aligned with their return expectations. If they aren’t, this individual likely won’t invest in one of your deals.
3. What is your investment minimum and maximum hold time?
Another important question I ask prospective investors is when they need to receive their initial equity investment back. Generally, our exit strategy is to sell our deals within 5 to 7 years. On some deals, we are able to return a portion of the LP’s initial equity upon a refinance or supplemental loan. However, this question is focused on the investors’ entire equity investment.
If I ask a potential investor this question and they say “I would like all of my capital back within 2 years” or “I don’t want my capital back for 10 years”, then our deals may not an ideal fit.
4. Can you show proof of funds?
I may speak with an individual who claims to be an accredited investor, but doesn’t actually met the liquidity and net worth requirements. Asking for proof of funds is a simple way to confirm their accredited investor status.
If you are doing a 506(b) and are accepting non-accredited investor money, you may still want to ask for a proof of funds. If you have a minimum investment of $50,000 and they send you a screenshot of their bank statement that shows a balance of $15,000, they likely won’t be able to invest in your deals (or at least not in your next deal).
5. Have you invested as a limited partner on a syndication deal?
I ask this question to gauge the experience of the high net-worth individual. From my experience, if I receive an inquiry from someone who hasn’t invested in a syndication deal before, the chances of them investing in one of my deals is very low. Apartment syndication is a complex investment strategy. Heck, the PPM is usually over 100 pages long. It takes time for someone to not only become educated on the syndication investment strategy but to become comfortable with it as well.
I don’t recommend that you reject someone who has never invested as an LP before. However, while it is definitely possible, don’t expect them to invest right away.
6. Are you comfortable investing with other LP’s or would you require to be the only LP in this investment?
The majority of my investors are comfortable investing alongside other LPs or they don’t have enough capital to cover the entire LP equity investment themselves. However, I do have a handful of investors who want to be the only non-general partner (i.e., my business partner and I) LP on the deal.
When speaking with a prospective investor, I like to know if they are comfortable investing alongside 10, 20, 50, or more other investors or if they would like to be the only LP. If it is the former, great. If it is the latter or if they are investing a substantial portion of the equity, I will ask them if they are willing to commit non-refundable equity (we will do the same) to create an alignment of interest to close. Our reasoning is simple – if they are investing all or most of the capital and back out last minute, we have to scramble to find other investors on very short notice.
7. What is the amount you are looking to invest should we both find this to be a good fit to move forward?
I also like to get an estimate on the amount of capital they are able and willing to invest. First, we have a minimum investment amount for all of our deals, so I need to confirm that they will exceed that threshold.
Second, if someone invests more than 20% of the equity required to close, the lender will perform additional due diligence on that person, which includes looking at bank statements and tax returns.
Third, see question 6.
And lastly, and this is more important for investors who are just starting out, the size of deals you look at is dictated by the amount of money you can raise. For example, if you are capable of raising $1 million, your maximum purchase price is around $3 million (generally, you are required to raise 30% to 35% of the total project costs). Additionally, a good rule of thumb is to have verbal commitments equal to 150% of the project costs, because not every single one of your investors is going to invest in every single deal. If you need to raise $1 million, you want verbal commitments of at least $1.5 million. By understanding the maximum amount of money someone is able and willing to invest will allow you to calculate your maximum purchase price.
8. What is your timeframe for investing that equity?
Assuming this high net-worth individual is a good fit, I want to know when they are able to invest their equity. Some people are ready to invest right away. Others may need to liquidate other investments before investing. The individual’s answer to this question isn’t a disqualifier, but if they account for 50% of your verbal commitments and cannot invest in a deal for 12 months, then that will affect your maximum purchase price for those 12 months.
9. (If out of the country) Have you invested in the US real estate market before?
If you are speaking with an international investor, the first thing you need to determine is if your offering type (i.e., 506(b), 506(c), etc.) allows you to accept international money.
If you are able to accept international money, you want to know if this international individual has invested in the US real estate market before. There are extra steps required on the part of the international investor to place capital in US real estate. If they haven’t completed those steps, their capital might be delayed to the point where they cannot invest in one of your deals. If they committed a substantial portion of the equity, that is a huge issue.
10. Should we both think this is a good fit, who is/are the decision maker/s when deciding to invest or not invest?
The answer to this question also isn’t a disqualifier. It just lets me know how to approach this individual. If they are the sole decision-maker, great. But if I know that they have a partner, significant other, or someone else that needs to sign-off on the investment, I want to also speak with that person as well.
They may have different passive investing expectations or concerns than the person I’m speaking with that I would like to know and address upfront, rather than in the middle of the capital raise.
11. Is there anything else we should know about you?
This final question is to obtain information about the potential investor that wasn’t provided in the answer to one of the previous ten questions on this list.
The entire purpose of asking these questions is to gauge the seriousness of the investor. Whenever you send out a new offering to your list of investors or present the deal on a conference call, expect to receive a lot of questions from investors. When you understand each investors’ specific situation, you will have a clear picture on who will and who won’t ultimately invest, which can save you a lot of time and headaches while raising capital for a specific deal.
In a recent blog post, I outlined the three economic metrics that will encourage you about the impact a potential market correction will have on the multifamily industry (which you can read here).
Essentially, the economy has been extremely strong since the last market correction in 2007-2009 while, at the same time, the overall number of renters and the overall share of renter-occupied units has also increased.
In 9 cities, the percentage of renter-occupied units has increased by 30% or more. And in one of those 9 cities, the increase was more than 50%.
You no longer have to sip your cup of joe on your way to your 9-to-5. Instead, you’re sipping coffee as you browse the Internet from home, looking for the next piece of real estate to flip for a profit. All of a sudden, you shake your head and snap back to reality. You were daydreaming. But who says your dream of becoming your own boss as a real estate investor can’t become your reality?
Research shows that investment in commercial real estate in particular increased 17% between the fall of 2017 and the fall of 2018, and residential real estate also remains attractive to investors. So, if you’re asking yourself, “What is the best long-term investment?”, now appears to be as good a time as any to seriously explore investing in single-family homes, apartment communities, or even business spaces as your next career move.
Of course, just like the greater economy, the real estate market goes through various highs and lows, so it’s critical that you assess the current market before simply diving in. Here’s a rundown on the top four real estate market trends or red flags to look for before investing in a deal.
1. The Demand for Property
If you notice a slip in property demand and/or you see businesses folding in a real estate market, this is a sign that you should not invest your money in the area right away for two reasons.
First, if companies are shutting down rapidly, this means that property values overall may start to decline as people move away and seek new job opportunities. Second, if business owners are avoiding the area, this might mean that the demand for properties in that area is low for one reason or another. If you ignore these signs and move ahead with a property purchase there, you may not get much return on your investment when you decide to sell. Or it might take a while for you to unload it.
Reasons for Low Interest in an Area
If a certain area is not piquing the interest of buyers, the culprits could be increasing crime rates, new developments close by, subpar school systems, or a less-than-stellar economy. No matter what the situation may be, it’s a good idea to select locales that are established or are rising in popularity if you want to avoid profit loss in the future.
2. The Job Market
In a similar vein, before purchasing real estate in a certain market, you should take a detailed look at your target area’s current job trends. For instance, are hiring volumes climbing and what kinds of positions are available?
This is critical because job market trends have a correlation with real estate market trends. For instance, if jobs in an area are not high-paying and don’t offer much growth potential, there will be fewer reliable renters or buyers available to you.
3. The Commercial Sector
A commercial sector that is stagnant in an area is a major red flag for investors. If businesses in a locale haven’t been there very long or if there aren’t many new companies moving in, this area might not be the wisest place to pursue an investment property. Many companies invest in their communities, so areas with lots of industry or other businesses are likely more financially sound.
Also, see if any major employers are planning to close their doors or downsize in the near future. If it appears that large employers plan to stay put long-term, this is good news for you. You can find information about which companies are planning to stay or go by reviewing local newspapers or even city council meeting and zoning board meeting minutes.
4. Community Planning
If the community you’re targeting for your investment property has a solid master plan in place, it’s likely a good one to stick with. That’s because master plans essentially lay out communities’ visions for themselves, and visionless communities will likely end up fizzling out at some point.
Elements of a Solid Master Plan
A strong master plan at the community level should explain not only how the community sees itself but also how it plans to turn its vision for itself into a reality. This plan outlines truly realistic and relevant changes, and it also focuses on actual solutions. Furthermore, it fosters innovation and promotes problem-solving. If there is little evidence that a community’s master plan is being executed, you may want to bypass that community when it comes to looking for a real estate investment property.
Start Real Estate Investing Today!
If you’re asking, “What is the best long-term investment?” and you are interested in getting your feet wet in real estate investing, I can help. In no time, you can experience the unique monetary potential that real estate has to offer. Get in touch with me today to find out more about the current real estate market trends and to start earning money as a real estate entrepreneur.