Real Estate Investing Advice

Whether you are looking to lease an apartment, flip a house, or become a passive investor, real estate can be a great investment vehicle to help you reach your financial goals and ultimately reach the life you’ve always dreamed of having. But understanding the ins and outs of real estate investing on your own can be confusing as the industry continues to grow and develop. There is so much information out there today, and it can be tough to know where to begin or even how to start.

I’m here to help. Over my years of experience, I have developed industry knowledge and property investment advice to help you to learn more about real estate and important considerations to take before you begin investing. From start to finish, I have covered the real estate investing process so that you have expert tips every step of the way.

Passive Investing, Active Education

Educating yourself and learning as much as you can about the market will help you to make more informed decisions. Here, I cover everything from property management landlords to apartment investing, property taxes, and even general real estate education. My goal is for you to have some of the tools and resources you need in order to reach your real estate investment goals.

To learn more and possibly receive some one-on-one advice on real estate investment and creating an investment strategy, apply to work with me today!

In-House Vs. 3rd Party Property Management: Pros and Cons

When you want to make investments as a passive investor, there are numerous strategies that you can use to strengthen your portfolio. Among the most effective strategies that can bring in consistently high returns involves making investments in real estate. While it’s possible to manage the property investments that you make without any assistance, this would be considered an active investment strategy. When you purchase property to increase your passive income, there are two distinct options at your disposal, which include in-house property management and third-party property management.

What is Passive Investing?

Passive investing is an effective investing technique that aims to maximize returns by reducing buying and selling. In many cases, this is a long-term investment strategy where the passive investor will hold on to the investment for a lengthy period of time before selling it. Whether you purchase real estate or fine art, the point of making this type of passive investment is to sell the investment once it has increased in value and has provided you with the desired return. In today’s market, investing in properties is a relatively low-risk investment opportunity since property values have been increasing steadily for more than a decade.

Another popular form of this investment strategy is index investing, which involves a portfolio of bonds and stocks that mimics the overall performance of a specific financial market index. Since these funds aren’t actively managed, they have less fees and expenses to them. The general belief with financial markets is that they will have a stronger long-term performance when compared to single investments, which is why index funds are designed to match the return and risk of the market. By making the right investments with this strategy, you should be able to bring in steady passive income that will help you build your wealth.

What Is In-House Property Management?

The first method of managing the properties that you invest in is with in-house property management. This form of management can be provided by a full-service management company on an in-house basis. Instead of depending on outsourcing for your property management needs, hiring an in-house management company will allow the management of the property to occur within your own company. When you’re searching for the ideal property management solution, efficiency is key if you want to meet your expectations for the investment.

If you opt to self-manage the investment, you would be tasked with making individual hires to assist you in managing the property. These hires would cost a significant sum of money, which would only add to your expenses. Keep in mind that you would be required to evaluate every hire on your own to find the right accountants, CPAs, property managers, and project coordinators. If you decide to hire an in-house management company, your main focus would be on hiring the right property manager for the job.

Once you hire a reputable company, they should only come to you in the event that major problems occur or to provide you with status updates. The property manager will identify and evaluate prospective tenants for the property. When tenants apply, the management company will perform background checks and verify income. They will also draft up rental agreements and deal with any issues that arise while the tenant resides in the property.

What Is Third-Party Property Management?

While you engage in wealth building, it’s possible that you will only invest in 1-2 properties, which may make it more cost effective to hire third-party property management companies instead of bringing these companies in-house. Hiring a reputable third-party management company means that you will likely be paired with a property manager who has years of experience in managing properties for passive investors. These property management companies typically service multiple properties and have the infrastructure necessary to perform management in many areas around the country. They will perform all of the same tasks as an in-house property management company.

The main difference between in-house and third-party property management companies involves flexibility. If you have an issue with how your property is being managed or would like to make some changes, it may prove difficult to get in touch with the third-party management company. It’s also important to understand that third-party management companies handle many properties, which means that they may not treat your property with the kind of focus and attention that it requires. If you’re unable to provide some oversight with the company that you hire, issues with unpaid rents and poor tenants may not be resolved as swiftly as you would like.

Pros of Using In-House Property Management

Passive investing is a type of strategy that can be used with a wide range of different investments, the primary of which involves real estate investments. If you invest in one or more properties, it’s important that these properties are adequately managed. When hiring a property management company to manage the property for you, the two options available to you include in-house property management and third-party property management. While a third-party management company may be effective at managing your properties, it’s recommended that you consider in-house property management for the best results. The main benefits of using an in-house management company include:

  • As long as you have economies of scale, using an in-house management company can be cheaper than hiring a third-party provider. For one, the property management fees should be significantly lower. You’ll also benefit from lower construction management fees and lower material costs. For the materials that you purchase, you won’t need to pay the margin to third-party companies. Construction times will also be shorter in most situations.
  • As a passive investor, bringing a management company in-house allows for more integration, which is more appealing to most investors.
  • The quality of service is better since you can manage the team that you hire. With third-party staff, you may run into issues where they don’t produce timely results or are unable to efficiently manage issues that arise with the property.
  • In-house management companies focus entirely on your investments as opposed to providing service to many clients. As such, you will benefit from better and more focused service. The management company that you hire will always be aware of each tenant, all maintenance concerns, and any possible issues.

Cons of Using In-House Property Management

To effectively engage in wealth building, it’s important that you minimize risk and make smart investments. While there are numerous benefits attributed to in-house property management, there are also some potential issues that you should be aware of. The main problems that can occur with in-house property management include:

  • You will need economies of scale to bring property management in-house. If you only have a few properties, you likely won’t be able to pay every team member
  • It’s possible that the manager you hire will be less experienced and knowledgeable than you would prefer, which increases the possibility that a mistake is made while they are managing your property. The difference with third-party managers is that they are tasked with managing tens of thousands of different properties. Depending on the size of your business, you may be unable to attract the top talent in the field. You can mitigate the risk of a bad hire by doing your due diligence.

Both in-house and third-party property management have their advantages. However, in-house property management is likely the way to go if you want to make sure that the team you hire is dedicated solely to managing your investments. As long as you hire an individual who has extensive experience with property management, you can be confident that your property is in the right hands. With the consistent returns that can be earned with this type of passive investment, you can start adding to your wealth in a short period of time.

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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.


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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How to Compensate a Commercial Real Estate Broker

When you decide to list your apartment deal with a commercial real estate broker, the are paid a commission. Unlike residential transactions where the realtor’s fee is essentially fixes, the commission on commercial real estate transactions is negotiable. However, depending on the size of the deal and if it will be listed on-market or kept off-market, there are general guidelines for the commission structure and amount.

The information used to create this blog post is based on an interview I did with commercial real estate broker T Furlow. You can listen to his full podcast episode here.

Here are the three main structures for compensating a commercial real estate broker:

Compensation Structure #1 – Percentage of Sales Price

The percentage-based commission is the most common structure for on-market deals. The percentage generally decreases as the purchase price increases.

Sometimes, the commission is split between the buyer’s agent and your listing agent. This is referred to as co-brokerage split. But it isn’t uncommon for your agent to also find a buyer and receive 100% of the commission.

It is uncommon to see a commission of 6% (the standard fee on most residential transactions – 3% to each realtor), unless it is a very small deal under $1 million. Generally, the commission is 3% to 4% of the sales price. And the commission is capped at a certain amount. It is possible but rare for a broker to receive a commission of $300,000+. For larger deals, the commission can be less than 1% of the sales prices.

Generally, the percentage-based commission is set by the market and the sales price.

The advantage of the percentage-based commission is that your broker or a buyer’s broker is incentivized to maximize the sales price. The higher the sales price, the higher their commission.

The advantage of the co-brokerage split is that it increases the number of potential buyers. Rather than one broker – your broker – finding buyers, any broker in the market can find buyers for your deal. Plus, your broker is incentivized to put forth a greater effort to find a buyer so that they receive 100% of the commission.

Compensation Structure #2 – Flat Fee

The flat fee commission is the most common structure for larger apartment deals.  T considers sales prices of $8 million or more as large deals. Once the sales price exceeds $8 million, a flat fee commission between $150,000 and $250,000 is standard, but may be lower or higher depending on the market.

Flat fee commissions are also common if you want to sell your deal off-market with a broker. Expect to pay a higher flat fee for a large on-market deal than a large off-market deal since on-market deals require more effort on the part of the broker.

Generally, the flat fee is negotiated between you and the broker.

The major drawback of the flat fee compensation structure is that it doesn’t incentive your broker to maximize the sales price. No matter what the sales price is, they are paid the same amount.

Compensation Structure #3 – A Hybrid Structure

A hybrid compensation structure can be negotiated for any sized on-market or off-market deal.

Once you determine a strike price (i.e., the expected sales price), you offer a commission that is slightly below the market commission rate. Then, offer a significantly higher commission on any amount above the strike price.

This compensation structure is better than the percentage-based structure because your broker is incentivized even more to sell the deal above the strike price.


Let’s say you are selling a deal on-market and you determine that the strike price is $42 million.

Compensation Structure #1 – Let’s say that the market commission rate is 0.75%. If the deal sells for $42 million, the broker makes $315,000. If they can sell the deal for $44 million, they make $330,000.

Compensation Structure #2 – Let’s say you negotiate a flat fee of $275,000. If the deal sells for $42 million, $44 million, or even $50 million, the broker makes the same $275,000 commission.

Compensation Structure #3 – Let’s say you negotiate a 0.65% commission up to the $42 million strike price and 5% thereafter. If the deal sells for $42 million, the broker makes $273,000, which is less than Compensation Structure #1 and #2. If the deal sells for $44 million, the broker makes $373,000, which is higher than both Compensation Structure #1 and #2.

This example illustrates why I prefer Compensation Structure #3. If the deal sells at the strike price, you pay the lowest commission. However, if the deal sells above the strike price, you and the broker make more money! So it is a win-win.

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Stopping Self-Destructive Behaviors: Mindset Myth Debunked

Success is 80% psychology and 20% mechanics. 80% mindset and 20% action. 80% thinking and 20% doing. 

What does this mean and why is this principle universally accepted in real estate investing?

Simply put, the amount of time spent on your business is not directly proportionate to the success of your business.

Someone who works 12 hours days is not by default going to be more successful than someone who works 12 hour a month. 

Trevor McGregor, my personal coach, talks about the events leading up to action. First, there is a thought. Then, there is an emotion. Then, there is an action (or no action). 

The actions we take are based on our thoughts and resulting emotions, every single time.

Therefore, our quality of thought (i.e., our mindset) is the only factor that determines our actions. So technically, success is 100% mindset.

Whenever I speak with someone on the Best Real Estate Investing Advice Ever show and the topic of mindset comes up, I always want to know what actions listeners can immediately take in order to improve their all-important mindset.

Recently, I spoke with a guest who provided unique insights into how we can effectively improve our mindsets and ultimately stop self-destructive behaviors. The reason it was unique was because it goes against the conventional wisdom – that we can improve our mindsets by ourselves. No help is required. All we need to do is journal, mediate, or work more and BOOM, our problems are solved.

However, this is impossible. 

As I stated above, all actions are caused by our thoughts. There is no getting around it. Good thoughts lead to good action. Bad thoughts lead to bad action. Therefore, to overcome bad habits, you need to alter the cause – the bad thoughts.

Since all you have are your thoughts, how can you overcome your bad thoughts with your bad thoughts? It is not. Bad thoughts beget bad thoughts beget even worse behaviors.

That is why the help of outside factors is the only way to transition from bad thoughts to good thoughts. 

There are many obvious ways to accomplish this, like books, seminars, and mentorships. But Vahan Yepremyan provided a unique approach during our interview.

He said to ask someone close to you “which of my actions are holding me back from being successful?” Rather than attempting to subjectively determine your had habits, enlist the help of an objective third-party. Ideally someone who knows you extremely well and is more successful than you.

Once you’ve identified your bad habits, you need to determine if the cause of the habits are based on fact or fiction. 

A simple example is public speaking. Let’s say you ask an investor friend “which of my actions are holding me back from being successful?” and they say, “you aren’t picking up the phone enough to cold-call apartment owners” or “you have not started that thought leadership platform yet”.

Your immediate thought is, “well, that’s because I am afraid of speaking to stranger.” 

What is your justification for that fear? And what is the evidence for that justification. 

Maybe you are afraid to say something stupid. Well, have you said something stupid while public speaking in the past? And if so, what were the ramifications? Unless it killed you (which I assume is not true since you are reading this blog post), then your justification is usually based on a fictional, fabricated story, or at best partial truths.

Creating a new story based on reality may be as simple as becoming aware of the false one. Other times, it may require further help from outside factors. Following the example above, you may need to take a public speaking course or ask a friend to punch you in the face if you don’t cold-call a certain number of owners per week.

Overall, all bad actions are caused by bad thoughts. In order to overcome bad thoughts, you need the help of outside factors to identity your bad actions and thoughts. Then, you need to become aware of the story behind those thoughts. 

And the best way to accomplish this is with the help of objective, third parties who know you well and are already successful. They can help you identify the bad habits which you (and your bad thoughts) likely deny and help you create positive thoughts by altering the story.

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Apartment Renovations and Updates to Make This Spring

Spring is in the air and, as homeowners gear up for spring cleaning, it may be in your best interest to do some upgrading at your apartment properties as well.

You might be asking yourself, “Is that truly necessary?”

Yes. It is. The reality is that your biggest enemy as a real estate investor and landlord is a vacancy. In light of this, it is critical that you master the art of getting and retaining good tenants, and one of the best ways to do this is to make your investment property more desirable to renters through apartment renovation efforts.

Your apartment community should be not only functional but also attractive and comfortable. So here’s a rundown on the top renovations and updates to make to your apartment building this spring.

Spruce Up the Kitchens

Updating your apartment complex’s kitchens is one of the smartest apartment renovation moves you can make as a landlord, especially if a kitchen has mismatched appliances. In this situation, you should keep the kitchen’s newest appliance and replace the other older appliances to match them. Matching your microwave, dishwasher, and oven finishes will immediately make the kitchen look more cohesive and functional.

In addition, you can make your kitchens more aesthetically pleasing by sanding and painting your existing cabinets. Then, you can top off your cabinet update with new, sleek hardware that will add a modern touch to your cabinetry. New countertops can also make your apartment units’ kitchens look newly renovated. Take your apartment renovation further by also installing glass tile backsplashes or even contemporary-looking faucets.

Update Your Bathrooms

Another one of the top ways to add value to apartments is to update your complex’s bathrooms. Why? Because many possible renters look for updated bathrooms. Simple fixes, like updating toilets, showerheads, faucets, and cabinet hardware, can be transformational for your units.

Also, if your bathrooms aren’t large, try to maximize the space you do have. For instance, use barn or pocket doors versus regular doors, and consider converting bathtubs into walk-in showers. You could also install shelves to create more storage without taking up large amounts of room. Finally, incorporating new vanities and increased counter space into your apartment renovation can further help to elevate an apartment unit’s bathroom design.

Modernize the Living Rooms

If you’d like to completely renovate an apartment community, consider also replacing the living room carpets or existing flooring with hardwood floors. Hardwood is a popular material used in rentals because it is simple to maintain and looks modern.

You can also create accent walls in your apartment units’ living rooms to make these spaces look more appealing. What’s great about this apartment renovation idea is that it isn’t expensive, yet it will set your living spaces apart from the traditional all-white walls.

If you’ve got a little more money and time, consider also knocking down walls to create more open space, if necessary. The open concept will make your apartment units feel brighter and larger.

Don’t Forget the Outdoors and the Amenities

Be sure to include outdoor upgrades as part of your spring apartment renovation process. For instance, you could complete some landscaping and add new signage. In addition, consider refreshing the exterior of your building with attractive balcony railings or even fresh siding.

Also, be sure to upgrade your amenities to further make your apartment community stand out for all of the right reasons. For instance, renovate the spa/pool area, fitness center, or club room. And consider adding stacked washers/dryers to your units rather than resorting to a community laundry room. In this case, you can convert your no-longer-needed laundry facility into an area for activities or even tenant storage.

The Benefits of Updating

Moving forward with an apartment renovation this spring will certainly make your apartment complex more attractive to prospective tenants, but it carries with it several other benefits as well.

For instance, if you install energy-efficient windows or programmable thermostats, you can decrease your utility costs for future renters. And this can be an attractive selling point. Along these lines, consider also adding energy-efficient light fixtures to your units. Replace any old heating, ventilation, and air conditioning systems with their more energy-efficient counterparts.

Also, by incorporating higher-quality and newer appliances and countertops, you can increase the rental experience in your property, which means that your tenants may want to stay with you longer. In addition, your new products will most likely not require as much maintenance, which will save you both money and time in the long run.

Yet another reason to complete an apartment renovation? You can deduct your renovation expenses at tax time if you’re making repairs with the goal of maintaining your investment property.

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What Does it Really Mean to Have an Entrepreneurial Mindset?

You may think you have an entrepreneurial mindset simply because you’ve fallen in love with the perks that entrepreneurship brings, such as financial independence and, possibly, more free time. In reality, though, being your own boss can bring with it certain challenges you might not have thought of before.

Your stereotypical entrepreneur has several core qualities that simply cannot be denied. If you possess these qualities, then you might possess the spirit of an entrepreneur. And, in this case, pursuing a career as a real estate investor may be the smartest career choice you’ll ever make.

If you’re asking yourself “What does it mean to be an entrepreneur,” here’s a rundown on the key features that make an entrepreneur.

Having an Entrepreneurial Mindset Means Being Scared

If you’re looking at a prospective real estate investment or business partner, it’s good to be the type of person who is scared to make the wrong choice. Why? Because you’ll be hyperfocused and take whatever steps are necessary to make the right decision. In other words, vigilance can become the secret weapon you wield to succeed as an entrepreneur.

Be willing to complete careful and regular market research to find the best deals possible.

Having an Entrepreneurial Mindset Means Being Fearless

If you’re asking “What does it mean to be an entrepreneur,” you may, understandably, think that being fearless and being scared is a contradiction. The reality is that these two emotions can go hand in hand. After all, even though you may not feel 100% confident about a particular real estate deal, for example, you could still see its huge potential and, thus, be willing to pursue it with your resources of money and time.

So, if you’re the type of person who is carefully optimistic, then a career as an entrepreneur may be the perfect fit for you.

Having an Entrepreneurial Mindset Means Liking Challenges

When employees face problems, they often try to get out of these problematic situations as quickly as possible. However, entrepreneurs take on a different approach: They are driven to work harder when they face adversity. That’s because they inherently don’t see things as insurmountable; instead, they see the process of creating and growing a business as a challenge to successfully overcome.

Having an Entrepreneurial Mindset Means Being Flexible

If you’re the type of person who is quick to take action and make a necessary change, then you may find entrepreneurship to be an excellent fit for you.
As an entrepreneur, you should spend some time writing down your business plan on paper. In fact, setting clear goals this way can also be highly beneficial. However, there might be moments in which you’ll simply have to improvise as you embark on your business plan. Being inventive in this way is an excellent skill that will keep you moving forward rather than becoming stuck due to analysis paralysis.

Having an Entrepreneurial Mindset Means Liking Change

If you are averse to change, then a career in entrepreneurship—and especially in real estate investing—is not for you. That’s because fearing change is essentially self-sabotaging behavior.
The truth is, markets are constantly changing, and demand and supply in real estate can especially alter from one season to the next. To excel as an entrepreneur, you must embrace change and be willing to use it to your advantage.

Having an Entrepreneurial Mindset Means Being Resourceful

Being resourceful in real estate investing means knowing how to find out information that you desperately need before jumping on a deal.

For instance, you can join local real estate networking groups or attend real estate conferences to develop an understanding of sales. You could also gain information to help you to decide whether to target commercial real estate or residential real estate starting out. Or, you can talk to real estate brokers in your area to find out which houses for sale might be the smartest investments for you. No matter what it takes, you’ll find the information you need to make your real estate dream work out.

Seize the Day

Now that you know the answer to the question “What does it mean to be an entrepreneur,” it’s time to take a good look at yourself and be honest. Do you have what it takes to succeed as a business starter and manager? In other words, do you have an entrepreneurial mindset?

If the answer is “yes,” then it’s time to get started with living out your purpose and tapping into the potential that has yet to be released like a stream. Fortunately, I can help you to capitalize on your entrepreneurial spirit to generate robust levels of revenue in the real estate industry.

Get in touch with me now to find out more about how you can use your business-oriented mind to thrive in the potentially lucrative real estate field.

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Hud Loan Programs for Apartment Syndicators: Everything You Need to Know

Hud Loan Programs for Apartment Syndicators: Everything You Need to Know

Let’s talk about one of the top loan program providers that apartment syndicators use on their deals: Hud.

Hud can be a great option for apartment deals. We’re going to cover each of their common loan programs, including their permanent, refinancing, and supplemental loans.

Loan 1: 223(f)

The first Hud loan, which is the permanent loan, would be the 223(f). This is very similar to agency loans, except for one major difference: processing time. Plus, the loan terms are actually a little bit longer. So for the 223(f), the loan term is going to be lesser of either 35 years or 75% of the remaining economic life. 

So if the property’s economic life is greater than 35 years, then your loan term is actually going to be 35 years. It’ll be fully amortized over that time period. Whatever the loan term is what the amortization rate will be. If you’re dealing with a smaller apartment community under the $1 million purchase price, then this is not going to be the loan for you.

In regards to the LTVs, for the loan-to-values, they will lend up to 83.3% for a market rate property, and they will also lend up to 87% for affordable. So that’s another distinction of the housing and urban development loans, which is they are also used for affordable housing. There will be an occupancy requirement, which is normal for most of these loans. 

The interest rate will be fixed for this loan, and then you will have the ability to include some repair costs by using this loan program. For the 223(f) loan, you can include up to 15% of the value of the property in repair costs or $6500 per unit. If you’re not necessarily doing a minor renovation, but if you’re spending about $6500 per unit overall, then you can include those in the loan.

The pros of this loan are that they have the highest LTV. You can get a loan where you don’t have to put down 20%; you can actually put down less than 20%. It also eliminates the refinance as well as the interest rate risk, because it is a fixed rate loan, and the term can be up to 35 years in length. You won’t have to worry about refinancing or the interest rate going up if something were to happen in the market. 

These loans are non-recourse as well as assumable, which helps with the exit strategy. There’s also no defined financial capability requirements, no geographic restrictions, and no minimum population. There’s essentially no limitation on them giving you a loan for a deal if the market doesn’t have a lot of people living in it or the income is very low. 

There are also some cons involved when considering a Hud loan. The processing time is much longer than some. The time for a contract to close is at a minimum of 120 days to six or nine months is actually common. Other loan providers have processing times between 60 and 90 days. Hud loans take a little bit longer to process. They also come with higher fees, mortgage insurance premiums, and annual operating statement audits.

Loan 2: 221(d)(4)

The next Hud loan is 221(d)(4). These are for properties that you either want to build or substantially renovate. 

Similar to the 223(f) loan, these loans do have very long terms. The length of the loan will be however long the construction period is, plus an additional 40 years. That is fully amortized. 

This isn’t the loan for smaller deals, because the minimum loan size is going to be $5 million. So if you have a deal that you want to renovate and has got a $1 million purchase price, you’re going to have to look at some other options. 

Similarly, this is for market-rate properties as well as affordable properties, with the same LTVs of 83.3% and 87% respectively. These loans are also assumable and non-recourse as well as fixed interest with interest-only payments during the construction period.

The CapEx requirements for this loan are quite different than the 223(f). For the 223(f), it was up to 15% or up to $6500 per unit, whereas for the 221(d)(4) loan actually needs to be greater than 15% of the property value or greater than $6500 per unit. 

The 221(d)(4) pros and cons are pretty similar to the 223(f) pros and cons. There’s the elimination of the refinance and interest rate risk, because of that fixed rate in a term of up to 40 years. They’re also higher leveraged than your traditional sources. Those longer processing time and closing times can be a pain. There’s going to be higher fees, and you also have those annual operating audits and inspections.

Loan 3: 223(a)(7)

Hud also offers refinance loans as well as supplemental loans for their loan programs. Their refinance loan is called the 223(a)(7).

If you’ve secured the 223(f) loan or you’ve secured a 221(d)(4) loan, you’re able to secure this refinance loan, and it has to be one of those two. You can’t go from a private bridge loan to this refinance loan– that’s not how it works.

The loan term for the refinance loan is up to 12 years beyond the remaining term, but not to exceed the term. If your initial term was 40 years and you refinanced at 30 years, then this refinance loan will only be 10 years, because it can’t be greater than 40 years. 

It will be either the lesser of the original principal amount from your first loan, or a debt service coverage ratio of 1.11 or 100% of the eligible transaction costs. These loans are also fully amortized. The occupancy requirements are going to be the same as the existing terms for the previous loan. These are also going to be assumable and non-recourse with that fixed interest rate.

Loan 4: 241(a)

Hud also has a supplemental loan program available, which is the 241(a). This is only probable if you’ve secured the 221(d)(4) or 223(f). 

The loan term is coterminous with the first loan. Whenever you acquire it, it’s just going to be the length of the remaining loan. You’re essentially just adding $1 million or $5 million to your existing loan. 

Your loan size can be up to 90% of the cost of the property, so essentially a 90% LTV, because you need to have at least 10% of equity in the property at all times. It’s going to be fully amortized. 

They’re also going to base the loan size on the debt service coverage ratio. Because of this, it needs to be 1.45. That’s a ratio of the net operating income to the debt service. Then, the minimum occupancy requirements are going to be the same as whatever the terms are for your existing loan. Like all the loans, they’re assumable, they are non-recourse, and the interest rate is fixed.

And that’s it for Hud loans! What do you think about taking out loans through Hud for real estate purposes? Tell us what you think in the comments below!

Image Courtesy of Pixabay

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Two Common Real Estate Scenarios: Communication and Protection

Two Common Real Estate Scenarios: Communication and Protection

In this blog post, we’re going to be looking at two niche real estate scenarios that can happen to just about any investors.

The first scenario involves dealing with older potential clients and original buildings. If you’ve been in this situation before, you know that it can be quite a delicate process getting older owners to sell.

Communication Issues

Imagine this: You just found a potentially amazing off-market apartment building deal. It has 150 units and a $4 billion portfolio. It was purchased back in 1978, just over the 39-year expiration of the depreciation tax benefits law. The owner is in his late 80’s and purchased these buildings when they were first built at the time. You give him a call and ask him if he has any interest in selling, but he has trouble hearing you. He hands the phone to his caregiver, who abruptly says no and hangs up. What solution is there?

What one should do in this situation is to get curious. Start asking yourself some questions, then draft a letter to them. This is how you can learn more about their situation while introducing yourself to them. This is your chance to say, “I’m not sure where you’re at in this stage of owning these properties, but I can tell you that you might be worried about tax liability when you sell them. I have experience purchasing these types of buildings and I’d be happy to talk about some solutions any challenges you might be having.”

Penning a handwritten letter shows care and integrity. Keep in mind that many people of a certain age are struggling to keep up with the constant innovations and growth in the tech and digital world. A handwritten letter could be a breath of fresh air and a means to communicate that potential sellers may appreciate.

Protection From Embezzlement

Now, think of this scenario: You’re embarking on a general partnership in the real estate industry. It is your first time committing to such a project, and you’ve heard horror stories from colleagues involving embezzlement, fraud, and massive loss of funds. The general partner controls the business plan as well as the financial account connected to the project. You’re wondering how you can protect yourself from them embezzling funds from the operational account, and what auditing protocol you can use to protect yourself as a passive investor from theft.

There are several ways to approach this, but we can look at the most tried and true method.

You can have some checks and balances before the deal is done, which won’t be very much. After the deal is closed, though, you can do a lot more. For this scenario, we’ll look mostly at what a beginner real estate investor can do preemptively to stay safe in a general partnership.

There is no money for a potentially untrustworthy or shady general partner to take before the deal, but you can do some due diligence prior to a deal. If a shady partner is going to steal money from the entity itself, then they would have to do it afterward. This is because that is when the money is physically in the bank account.

Before the deal closes, there are a few things you should do. First off, you should absolutely take the time to look at the overall structure of the deal to make sure that there is at least an 8% preferred return. Make sure that the general partner is getting paid an asset management fee if and only if they are actually performing. If they’re proving themselves and they’re returning the preferred return, they can get that asset management fee. Otherwise, they get nothing.

Obviously, these are things that aren’t going to outright prevent someone from stealing money in a general partnership. When it comes down to it, they’re just small things you can do to ensure that the deal itself is set up in the mutual favor of you and your general partner, so that you have an alignment of interest.

Those are some things you can do before the deal. Another thing you should absolutely be doing before signing on anything with a general partner is to check those references. You can absolutely not go into a general partnership blind with no knowledge of who you’re working with. Even if the hearsay is overwhelmingly positive, you absolutely need to still check in with the partner’s references. By doing so, you’re going to get a really good picture of what the partner is all about.

Call their references and listen to what they have to say. We’re talking about past partners, firms, project managers, any business colleagues or people who have worked with this particular partner. Even if you get glowing reviews, you should then Google your partner. Those are things you’re probably already doing, but it really can’t be optional if you’re a baby real estate investor. You can be seen as an easy target because you don’t necessarily know the signs and symptoms of a parasite real estate partner. When you Google them, look for the partner’s name or firm title. And don’t be afraid to dig deep.

This doesn’t directly answer the question of how to make sure they’re not embezzling money, and we’re aware of that. However, there is some prep work that needs to be done on the front end to mitigate the risk of getting in with a group that is known for criminal activity. Sometimes that front end research is really all you need to check out.

What do you think about these two scenarios in real estate? Have you experienced either situation in your career? Tell us your real estate story in the comments below!

Image courtesy of Pixabay

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Four (Little Known) Keys To Finding The Best Multi-Family Deals In Your Market

Finding the best apartment deals can be a bit tough if you have no idea how to go about it.

You find yourself asking questions like:

  • How do I go about it?
  • Do I use a broker or not?
  • Where can I find the best apartment deals?
  • How can I get these deals when I find them?

It’s alright; everyone starts somewhere. And today, you’re going to learn a straight forward, direct approach to finding off-market deals in your area.

Let’s get started!


Start on the internet.

Sounds simple right?

That’s because it is…

No matter what your investing criteria, chances are you can find a list of matching properties on ListSource. From there you can skip trace to find the owner’s contact information.

Get in contact with the owners by sending them emails, using cold calls and sending text messages – using multiple contact channels increases your likelihood of getting them on the phone (which is where most real estate deals actually get done).


Buy directly from the seller if you can

I interviewed James Kandasamy, owner of Achievement Investment Group, who told us “Both of my first two properties were bought directly from the seller. We use our own strategy to get in touch with the sellers and work directly with them. That’s the primary point on why we were able to get it at a good price/door.”

It’s hard to depend on brokers because they have a responsibility to make sure that they get the highest price for the sellers as well. The best deals will typically come directly from the owner.

There are a lot of sellers out there with problems that they do not want to bring to the market, which makes it easier to get the best price directly from them.

The key is to build a relationship with the seller. Any real estate deal of this type needs to based on trust; without it, you’ll be lucky to get past the front door, much less to the signing table.

How do you build trust with a seller? By being honest and true to your word over time. But beyond that, the way you communicate and carry yourself throughout the deal will have a big effect on whether the seller feels they can depend on you.

As an example, here’s the text James Kandasamy sent directly his sellers;

“Hi, I’m an apartment investor in this region (Central Texas) and I saw your property at XYZ, and I’m interested in buying it. You can sell it directly to me, without any broker’s commission. Would you like to talk further?”


You have to be persistent.

Truth is you might have to send over 500 text messages to get a deal. The response you’ll get back will be about 1%.

But all the money is within that 1%. It’s a numbers game, like so much in our industry.

The key to building a stable deal pipeline is persistence in following up and staying in contact with the sellers. Most investors follow up once or twice and lose interest. See this as what it is: an opportunity. A truly dedicated and dogged investor can make headway, even in a crowded market.


Be a problem solver.

James Kandasamy advises, “The money you make is a direct correlation to the value you provide. For me, it’s always you have to solve some problem to get extraordinary returns. If you are doing a deal which is stabilized you may get a good deal, but you’ll get a much better deal if there’s a problem in that deal and you’re able to solve it.”

Be a problem solver and you’ll be able to handle deals that other investors will be forced to walk away from.

Let us know in the comments about some of the biggest problems you’ve solved in your deals!


Image credit: Pixabay

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Navigating the Mechanics of an Apartment Deal

Navigating the Mechanics of an Apartment Deal

From the types of roof, electrical wiring, heating and cooling to the parking lot condition, windows and hot water heaters there are alot of checklist items to consider when negotiating your apartment deal.

Nathan Tabor shares his insight into some of the the nitty gritty so you won’t be left in the lurch after closing. Read on to find out what you may not have been thinking about for your ideal setup.


Check for city complaints

How do you know if the plumbing is alright? Or the electrical connections are okay?

“So the number one thing on top of my list that I do first when I start due diligence is to go to the housing authority or whoever is writing city complaints and get the last two years’ worth of city complaints. The reason why – I got burned on this.” says Nathan Tabor.

This will give you a general idea as to what issues you’ll be facing. From the housing complaints, you can determine what else is probably wrong with property revealing any expenses you will incur so you can factor them into your deal.


Thinking about the roof

The type of roof you have not only impacts your installation and maintenance costs, but plays a part in insurance costs as well.

Let’s look at pitched vs flat roofs. A flat roof is cheaper to install but that’s about as far as the benefits go. A pitched roof has a longer life span and has a more appealing appearance while flat roofs have an institutional vibe. You see a flat roof and the first thing you’re thinking about is a medical facility as opposed to something that feels like home.

Usually, flat roofs cost more to insure because they’re not going to last for very long and also have a greater chance of developing leaks. Not to mention the host of other problems a leaky roof would present in your apartment building.

Nathan on flat roofs: “…[With flat roofs] you’ve gotta climb up there often, make sure that the drains are unstopped… Depending on where you are in the South, flat roofs just make your electrical bills more, because in the summer it’s hotter, and in the winter you don’t get the sun.”


Look out for fire hydrants and mailboxes

Nathan sheds light on some other hidden costs:

“Do you know who owns the fire hydrants on the complex you’re getting ready to buy?”

Most folks would never think of this until there’s a gigantic puddle next to the fire hydrant. Sure, you can call the fire department to come over and fix it, but since it’s on private property you could be on the hook for a surprise $6,000 expense.

Nathan on multi-unit aluminum mailboxes: “I just thought hey, it’s stamped on the side of it “Property of the USPS”, they maintain it. Guess what they don’t do? They don’t maintain them.”

When Nathan looked into the replacement cost of a 4’x4’ mailbox seven years ago it was…wait for it…$1,800.


Water metering

Having one meter on a multi-unit complex means you’re footing the bill for your tenants no matter who is taking 20-minute showers, outside washing their cars or letting their faucets run. Having individually metered units means you can bill your tenants individually holding them responsible for their own water needs. If you’re looking at buying a complex with a single meter find out the the average cost of the total water bill. Then weigh the cost of conversion and savings over time to help you decide which route you want to take.

What does your due diligence look like? Let us know in the comments.


Image courtesy of Pixabay

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How To: Creative Financing for Real Estate

How To: Creative Financing for Real Estate

On a recent Situation Saturday segment on the Best Real Estate Investing Advice Ever podcast, Joe Fairless spoke with CEO Todd Dexheimer, CEO of Venture D Properties, LLC about creatively financing in the real estate business. How do you do that? Luckily, we got someone who not only knows how to do that, but he actually did it as well. And the story behind how his latest deal came to be is an all too familiar one to real estate investors.

The latest deal I did, which I think we can spend the most time on, was about 120-unit apartment complex,” Dexheimer said, “and I put it on a contract with the intention to just get regular financing on it. Well, I shouldn’t say regular financing. The property was 78% occupied. So, it was low occupancy, and it needed some work. So, sixty of the units had been renovated to a pretty good standard, but basically, the rest of the units needed a pretty substantial renovation. So, I needed to get either a bridge loan, a local bank loan, or seller financing, and as I went through this deal, I just didn’t want to use a bridge loan because they’re expensive. So, anybody who has done a bridge loan understands the expenses.”

This is very true. While a bridge loan can be helpful in the scope of buying a new property, there are many downsides to this type of financing. You’ll likely have to pay very high-interest rates and APR. Some lenders utilize a variable prime rate that can increase over time as well.

“So I was trying to get local bank financing, but I had kind of three strikes against me. The first strike was the fact that I was out of state. The second one is [that] I’m syndicating the deal, and the third one was the deal wasn’t stabilized. It was 78% occupied. So, three strikes against me. The local banks were very hesitant. I did have one local bank that was semi-interested, but we were running out of time. My earnest money was going to become hard. So, I said, ‘Look. Let’s do seller finance,’ and I approached it at that level, and we ended up working out a deal.”

Seller finance is essentially a real estate agreement in which financing is provided by the seller and included in the purchase price.

There are many benefits for both sellers and buyers when it comes to seller financing. From the buyer’s perspective, selling financing is one of the best alternatives to a standard bank or bridge loan. For real estate newbies who may not be able to pay that standard 20% down payment, it may not be the best option. But for those who are ready to invest, it’s very doable. Sellers can also benefit from seller financing by essentially using the loans as a form of additional income. Seller financing is essentially just real estate investment, just with a personal edge.

What do you think about creative financing strategies? Tell us about it in the comments below.


Photo source: Pixabay

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Why Did You Get into the Real Estate Investment Business?

Within the Best Ever Show Community, real estate entrepreneurs gather together to add serious value to one another’s investment strategies. One example of this is our weekly question, to which everyone in the community is invited to respond. Recently, I posed a question regarding the first thing that piqued everyone’s interest in real estate investing. Read on for their common answers!

1 – Taxes

Mark Slasor became interested in real estate investing because of the various investment property tax benefits. More specifically, because of the tax write-offs allowed against his W2 income.

However, tax write-offs, also referred to as deductions, are just one of many tax benefits that come from investing in real estate. Brandon Turner over at BiggerPockets wrote an in-depth article on the tax benefits that come from investing in real estate, which include deductions but also long-term capital gains, depreciation, 1031 exchanges, no self-employment or FICA (Federal Insurance Contributions Act) tax and “tax-free” refinances. For more details on these six tax benefits, you can read his post here.

2 – Control

When compared to other investment avenues, like a 401k, stocks, bonds, money market account, etc., investors have more control over real estate.

The investor decides which of the many strategies to pursue. They select the property. They pick the type of financing. They control the entire real estate investment business plan. Etc. Because of all of this control, the investor has the ability to directly influence the profitability of their investment project.

Jeremy Brown became interested in real estate because of this control factor. He realized the stock market was a lot like gambling. Generally, the value of the stock is tied to factors over which the individual investor as little to no control. Conversely, you have the ability to directly affect the returns of a real estate project.

Chris Mayes became interested in real estate for similar reasons. Not only did he love the thought of passive investment income and an early real estate retirement, but also his ability to be actively involved in the investment in order to directly impact the returns.

3 – Opportunities

There are such a variety of opportunities, whether it’s different investment strategies, property types, real estate investment business plans, etc., that investors frequently suffer from shiny object syndrome. “I want to fix and flip houses. But, oh look, what if I kept the house as a rental? Or, I could just skip single-family investing in general and jump straight to apartments. Hmmm. Maybe I should just take my capital and privately invest in a syndication…WHAT SHOULD I DO?!”

For the past 50 or more years, investors have reached the highest levels of success using every real estate investment strategy and investing in every asset type, which far outweighs the drawbacks of shiny object syndrome

Stevie Bear became interested in real estate because of this abundance of opportunities. He was attracted to the innumerable potential avenues to pursue for profitability in nearly any market or economy.

4 – Friends or Family

Some investors were lucky enough to be born into the real estate investment business. Leilani Moore was a property manager for her family’s business, learning the value of real estate investing over the years. Similarly, Barbara Grassey’s father was a real estate investor, and she enjoyed hanging around the fix-and-flip properties he was renovating.

Another personal relationship that leads investors into real estate is friends. Harrison Liu became interested in real estate because of a close friend who had been investing for years. In fact, this friend helped Harrison find his first deal and he’s been investing ever since.

Theo Hicks also became interested in real estate through a friendship. One night, over pizza and videogames, two of his buddies mentioned the value of real estate investing. In particular, they said, “sometimes, I forget I even own the property until I receive a check at the end of the month.” He was intrigued and ended up putting his first property under contract in less than a week.

5 – Infomercial

Infomercials may be a fading industry, but many active investors became interested in real estate from these flashy 30-second advertisements. Robert Lawry II is a perfect example. He saw expert Tom Vu’s infomercial when he was 14 years old. He learned that, once he bought his first investment, he could drive fancy cars, go on expensive boats and, most importantly, meet beautiful girls in bikinis! How do you say no to that?

6 – Financial Independence

Lastly, one of the main reasons why people are attracted to real estate is due to the prospect of financial independence. Purchase enough cash flowing real estate to replace your corporate income and you’re FREE. Stone Pinckney became an investor to pursue financial independence. Dave Van Horn wanted a way out of a dead-end job and a life of mediocrity. Eddie Noseworthy wanted the ability to create his own epic life and have more time to do the things he loves to do.

The Importance of Networking

Whether you’re newly interested in the real estate investment business or you’ve been making deals for years, networking is clearly one of the most valuable aspects of a good investment strategy. Like some of those above, perhaps you have family and friends who are experienced in the biz. Maybe you’ve only read about this investment strategy and read a handful of real estate investment books. Either way, I’m here to help you take your deals to the next level!

Join me as a passive investor on my next big apartment syndication, or apply for my private program!

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Real Estate Horror Stories From Five Active Investors

If you’re in the biz long enough, you may just see and experience just about everything. Some of those experiences are going to be great teaching tools, and that includes real estate horror stories. I’ve collected similar tales from active real estate investors in order to pass them on to you. Read on to learn from others, and maybe you can avoid similar situations.

Michael Beeman and a Rotten Contractor

Michael’s first investment was a large single-family home. The plan was to follow the BRRRR (buy-rehab-rent-refinance-repeat) strategy, as it was a distressed asset that required approximately $25,000 in renovations.

Unfortunately, nothing went according to plan. Because he hired a terrible contractor who botched the renovations, Michael had to tear down everything and start from scratch. As a result, he went $25,000 over budget. While he technically didn’t lose any money, this did wipe out any equity he could have pulled out with a refinance.

Michael did learn a valuable lesson (always screen a contractor), and consequently, a year after this incident, he had built a portfolio of 31 cash flowing units as a successful and active real estate investor.

Glen Sutherland and the Flood

Glen had a troublesome tenant who broke the terms of the lease and wouldn’t voluntarily vacate the premises. He successfully filed for an eviction. But, one week before the scheduled eviction date, the tenant decided to leave. Great news, except for the fact that, on the way out, without Glen’s knowledge, the tenant opened the valve on the hot water heater. By the time Glen realized what had happened, over three feet of water had accumulated in the basement.

Lucky for this active real estate investor, the basement was unfinished, which mitigated the damage. One dumpster, three days of shop vacuuming, and a few dehumidifiers later, the basement was usable again. But, being a tenant-friendly real estate market, Glen was unable to take legal action against the tenant…

Julia Bykhovskaia and the “Philanthropic” Contractor

In this real estate horror story, Julia purchased a fully furnished property with the intention of using it as an Airbnb. It did require a few renovations, so she hired a contractor to perform the work. When she checked in on the status of the rehab, she noticed that all of the living room furniture had vanished. She asked the contractor what happened, to which he responded that someone stopped by and really liked the living room furniture, so he let them take it all – even though Julia explicitly told to keep the furniture.

After a week of screaming and yelling, Julia and the contractor negotiated a solution. She withheld money in lieu of the furniture from the contractor’s payment. As a result, she was able to purchase furniture of a higher quality for the living room.

Theo Hicks and Niagara Falls

Theo’s first deal as an active real estate investor was a value-add duplex in Cincinnati that required around $25,000 in renovations. He closed on a cold and dreary Thursday afternoon in February. His intentions were to begin the renovations that Saturday but decided to take the weekend to celebrate his first deal instead.

Theo showed up on Monday to rip out the carpet and paint the walls. But, once he opened the front door, he heard an unexpected noise – a faint whooshing sound. As he approached the stairwell to the basement, the sound became louder and louder. He walked down the stairs, turned to face the bathroom, and was confronted with a waterfall!

Being his first deal, Theo didn’t understand what the real estate agent meant when she told him to “put the utilities in your name.” As a result, the heat was off the entire weekend. The pipes froze, thawed, and burst, leaving him with a mini Niagara Falls in the basement bathroom.

Grant Rothernburger and the Kentucky Derby

The winner (or I guess loser) of the worst real estate horror story is Grant.

Grant was touring a prospective investment property in Kentucky that smelled like a barn. He walked into the basement and discovered the source of the smell…HORSES! That’s right. There were three horses wandering around the basement. The property was located in a small town, but it was not a rural area. There shouldn’t have been horses in that area in general, let alone the basement.

Needless to say, Grant decided to pursue other investment opportunities, but did walk away with a pretty hilarious story!

Are you an active real estate investor with a horror story to share? Comment below! Want even more actionable real estate advice? Check out these investment books.

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What’s the Best and Highest Use of $20 Million in Real Estate Investing?

Our Best Ever Show Community on Facebook is full of real estate entrepreneurs who love to share ideas. To do so, we post a new question each week regarding various real estate topics, particularly property investment strategies. Our question this week started off with a hypothetical: Someone is handing you $20 million in property for FREE. Which asset class would you choose?

This week’s question was a little different. We conducted a survey in addition to asking for written responses to the question, particularly for those who selected “Other.” The breakdown of the answers regarding the best real estate investment strategies was as follows:

  • Multifamily: 58
  • Self-Storage: 15
  • Commercial offices, retail centers, etc.: 11
  • Other: 5
  • Mobile Home Parks: 4
  • Single Family: 2
  • Urban Mixed Use: 2

Property Investment Strategies Focused on Self-Storage

Mitchell Drimmer is one of the 15 people who selected self-storage, mainly because he has purchased multifamily in the past and is not a fan. He admitted that multifamily may perhaps have a higher cap rate but are nothing but problems day in and day out, especially in “value neighborhoods.” Mitchell hasn’t purchased self-storage in the past. But as an outsider, he says self-storage seems like a business with almost no clients, no hard luck stories from residents, no evictions, no complaints about certain maintenance issues, and very little code enforcement issues. Done properly, at the right price and in a good location, Mitchell believes self-storage is a great property investment strategy.

Ryan Gibson also selected self-storage for similar reasons – it is an asset class with the lowest “resting heartbeat” (no tenants, little maintenance, minimal employees). But, additionally, he picked self-storage because it has the most automation and the highest returns.

Single Family Homes as One of the Best Real Estate Investment Strategies

Brandon Moryl was one of only two people who selected their $20 million to be in the form of single-family homes. In particular, luxury homes. According to him, that part of the real estate market has yet to fully recover, meaning there is the potential for a lot of growth. Additionally, there is less competition in the high-end SFR space compared to your typical $75,000 fixer upper. He also said, “with the stock market killing it and the overall economy rocking, combined with programs like 5% jumbo [loans], that’s is where I would be.” Finally, and maybe most importantly, he says it’s sexy owning million-dollar homes. Indeed!

Niches are the Best Real Estate Investment Strategies

The investors who selected “other” offered more creative or niche property investment strategies.

Danny Randazzo went with a diversified approach. Chibuzor Nnaji Jr. concurred. Danny would look for a deal in each asset class and invest in a few of the most attractive opportunities. “It could be one deal requiring $20 million or it could be a deal in each. Share the love!”

Deren Huang, with the support of Michael Nerby, would invest in NNN, or triple net leases. According to Wikipedia, a triple net lease is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance and maintenance (the three “nets”) on the property, in addition to any normal fees that are expected under the agreement (rent, utilities, etc.). He said NNN is the true passive investment.

Leaving Real Estate Behind

The last two individuals left behind property investment strategies entirely – at least in part.

Lane Kawaoka selected two answers. He would invest in multifamily because it “it’s the sweet spot in terms of the sharp ratio risk-reward matrix. Not too hot, not too cold…just what the baby bear likes.” However, he would consider accepting the entire $20 million amount in the form of a savings bond and just live off the interest.

Finally, Diogo Marques would forgo real estate altogether and purchase solid, stable companies that he could see operating in 10 years’ time with a 10% to 15% net profit margin annually.

Finding a Property Investment Strategy for You

Do you have a business plan that is not included here? Please leave it in a comment below! Maybe you need help finding the best real estate investment strategies for your unique business model and financial situation. Consider applying to my private program, during which you will receive expert feedback and actionable advice that can help you build your strategy. Additionally, learn how to raise money for your deals and how to choose properties for great returns.

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The Secret to Eliminating Competitors in a Hot Real Estate Market

How do you approach finding, underwriting and acquiring deals when there’s so much competition that you cannot find a deal at a price that will meet your investment return goals?


This was the exact situation that my apartment syndication business faced in mid-2017. We had a lot of leads coming in that met our initial investment criteria, but the competition was such that the purchase price kept creeping higher and higher until the deal was projected to achieve returns that were below our passive investor‘s goals.


So, what did we do? Like any effective entrepreneur, we went into problem solving mode. More specifically, we reassessed our investment criteria.


The four questions we would ask for any deal we came across to determine if it met our investment criteria were:


  • Was it built in the 1980s?
  • Are there 150 or more units?
  • Is it in or near a major city?
  • Is there an opportunity to add value?


If we didn’t answer “yes” to all four of these questions, the deal would automatically be eliminated from contention. The benefits of setting initial investment criteria is that you don’t spend an inordinate amount of time underwriting deals that do not align with your business plan.


Up until mid-2017, we didn’t have much of an issue finding and purchasing properties that met this criterion. However, as of late, we have. In particular, we had a challenge finding apartment communities that were built around 1980, mostly due a high level of competition. So, we decided to adjust our investment criteria to include apartment communities that were built in the 1990s and the 2000s. And as a result, we purchased an apartment community built in the 2000s for the first time.


We like to look at properties built around 1980 because we are value-add investors. Generally, anything built earlier than 1980 would be to distressed to fit into our value-add business model. Conversely, anything built later than the 1980s wouldn’t have enough value-add opportunities or wouldn’t be sold at a price that would allow us to meet our investment goals. Or so we thought.


After reviewing all the potential deals in our pipeline, regardless of age, we realized that these newer deals – the ones built between 1995 and 2005 – were actually projecting returns similar to those that were built in the 1980s. Generally, since they are newer buildings, the opportunity to add value was lower, but that was offset by the reduction of certain expenses, like ongoing maintenance, management issues, vacancy rates, resident turnover and overall risk.


I think the reason why, in our current market, 1980s properties have comparable returns to 1990s and 2000s properties is because value-add apartment investors are conditioned to make the former property type a priority. Most value-add investors (including us at the time) wouldn’t even look at communities built in the late 1990s or early 2000s because they think the numbers won’t work as well because there will be less opportunity to add-value. However, we were able to apply our value-add investing knowledge to a property built in the 2000s and create a business plan that would enable us to achieve the desired returns of our passive investors. Whereas most investors pursuing deals in this age range aren’t looking at them through the value-add lens, we were able to identify areas that could be improved that the other, non-value-added investors had missed.


In other words, we leveraged our unique skillset (understanding how to recognize opportunities to add-value) to defeat the competition and be awarded the deal.


So, if you are having trouble finding deals that achieve your desired returns, reassess your acquisition criteria. Start looking at deals that fall outside your criteria and see if you can project similar returns. You may end up discovering what we did, which will lower your risk in the deal since it is newer and comes with lower risks and ongoing expenses. Or you might discover that deals in smaller markets, or smaller in size or another investment strategy all together is a better fit.


All that being said, our priority is still properties built in 1980. And we’ve only purchased one apartment community outside that range. So, we’re keeping our eyes out for our initial criteria but also now acknowledge that sometimes it makes sense to upgrade, especially when everyone else is looking at the same types of deals as us.


What about you? Comment below: What unique strategies have you implemented in your business to out compete your competition?


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3 Investing Secrets from a Nation’s Top Broker

As you complete more and more deals, you will begin to accumulate the insider secrets of what it takes to be a successful investor. Once you’ve eclipsed a billion-dollars’ worth of deals, then those secrets are worth billions too!


Karen Briscoe, a Principal of the Huckaby Briscoe Conroy Group, is an individual full of billion dollar secrets. Her group has sold over 1,000 homes valued over $1 billion. It’s also been named to the Wall Street Journal Top Realtor Team list. Karen condensed these secrets into a published book – Real Estate Success in 5 Minutes a Day: Secrets of a Top Agent Revealed. In our recent conversation, she provided the top three secrets to her success and how you can apply them to your investing business.


Secret #1 – Invest in the up-and-coming markets


Karen’s first secret can be explained through the lyrics of a Frank Sinatra song. “One of the top tips that applies to investors in particular is what I call ‘New York, New York’, the song by Frank Sinatra with the chorus ‘If you can make it there, you can make it anywhere’,” she said. “If you look at the fundamentals of a certain market and you find that investors are being successful in that market, then you want to go to the next market [over], or like Wayne Gretzky says, ‘Go to where the puck is going’ – if you want to go where the market is going, then find the markets that have similar fundamentals but are on the edge, or soon to be the next place where everybody wants to be, because that’s where the best values are.”


This “New York, New York” strategy is followed by corporate giants like Starbucks and McDonalds. They search for the fundamentals and trends that hallmark an emerging market, set up their locations there and wait for the market to surge.


The fundamentals Karen says to looks at are the rental pool, jobs, schools and metro access. Or, for a hack, she said, “you could just apply the Starbucks effect, the Frappuccino effect that is talked about – how there has been found that there’s a halo effect around Starbucks. So, you could maybe go to that next ring around it and look in that area for what is upcoming neighborhoods that could be trending into better values over time.”


For a comprehensive guide for evaluating and selecting a target market, click here.


Secret #2 – Start a meetup group


Karen’s second secret, and my favorite, is to host a meetup or seminar. They type of individuals you’ll invite will depend on your business model and investment niche. As a broker, Karen said, “we’ve done investor seminars in conjunction with local lenders and other professionals like CPAs and financial advisors, because they too have a pool of clients who want to have real estate as part of their portfolio.”


There are many ways to structure a meetup group, and I wrote a piece for Forbes outlining a few successful methods. The main way Karen differentiates her meetup from her competitors is that hers is invite-only. She said, “I know that there are many agents that have done seminars that they open up, but we keep it invitation-only, and then that way these professionals are inviting their clients and offering a value-add service for their clients who have an interest in real estate.”


Secret #3 – Take Immediate Action


Karen’s final secret, which is also her Best Ever advice, is to start now. “There’s a Chinese proverb that the best time to plan a tree was 20 years ago, and the second best time is now,” she said. “I would say the same thing about real estate investing. I think the best time to invest in real estate was 20 years ago, and the next best time is now. I think many people become paralyzed with it, and I’m not discounting the fact that it has a lot of logistics associated with it, but the idea is just find yourself a real estate professional that you trust, find a lender that can work with you on getting financing that you can structure that works for you, and do it.”




Karen Briscoe, a billion-dollar broker, has three secrets to her success. They are:


  • Investing in the up-and-coming markets
  • Hosting an invite-only meetup group
  • Taking immediate action


Apply these secrets to your investment, which may require creativity on your part, and replicate her massive success.


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Three Ways To Thrive In A Trump Real Estate Market

This post was originally featured on Forbes Real Estate Council on


If you’re a real estate investor and been keeping up with current events, chances are you’ve asked yourself this question: “How will Trump’s presidency affect the market?”


Since Donald Trump has made millions as a real estate entrepreneur, common sense says he will likely implement policies to strengthen the real estate industry. At the very least, he wouldn’t make a decision to undermine it. He wouldn’t hurt his own bottom line, right?


But with the current political climate as it is, it’s difficult to predict what Trump will do. If you’ve tuned in to any of the major news networks since the beginning of the 2016 presidential campaign, one of the most consistent things you’ve seen from Trump is … well, inconsistency.



I don’t know what will happen over the next four to eight years, and I don’t think anyone does —Trump included. I am not a politician, nor a political strategist. But I am a real estate entrepreneur. And the good news from a real estate perspective is that Trump’s actions shouldn’t matter.


Ultimately, as investors, we can’t make decisions based off of who the president is or who controls the House or the Senate. While Donald Trump’s inauguration and the ensuing tweetstorm are causing some Americans to celebrate and others to mourn, there are three simple principals that real estate investors must follow to thrive in the current market of uncertainty — tried and true methods that work in any market, at any time in the market cycle.


1. Don’t buy for appreciation.


Natural appreciation is a simple concept. It’s an increase in the value of an asset over time. From 2012 to 2016, for example, real estate prices in the U.S. as a whole increased by 13%, according to Zillow. If you purchased a property for $1 million in 2012 and sat on it, making no improvements, the property would have been worth $1.13 million in 2016.


Sounds like a good investment strategy, right?


Not necessarily.


It’s important to make a distinction between natural appreciation and forced appreciation. Forced appreciation involves making improvements to the asset that either decreases expenses or increases incomes, which in turn, increases the overall property value. Unlike forced appreciation, natural appreciation is completely outside of your control. Say you purchased the same property in the example above for $1 million in 2008. Four years later, the property value would have decreased by $229,000.


Many investors, past and present, buy for natural appreciation, and it is a gamble. Eventually, they all get burned—unless they’re extremely lucky. Buying for natural appreciation is like thinking you’ll get rich at a casino by playing roulette and only betting on black. Maybe you can double up a few times, but sooner or later the ball lands on red or — even worse — double zero green, and you lose it all.


That’s why I never buy for natural appreciation. Instead, I always buy for cash flow. When you buy for cash flow (and as long as you have a large supply of renters), you don’t care what the market is doing. In fact, if the market takes a dip, the demand for rentals will likely increase. When real home prices dropped 23% from 2008 to 2012, the number of renter-occupied housing units increased by 8%.


 2. Don’t over-leverage.


Leverage is one of the main benefits of investing in real estate.


Let’s say you have $100,000 to invest. If you decide to invest all of your money in Apple stock, you would control $100,000 worth of stock. On the other hand, if you wanted to invest all of your money in real estate, you could spend $100,000 on a down payment at 80% LTV (loan-to-value) and control $500,000 in real estate. If you’re a creative investor, you could use that $100,000 to control an even larger value of real estate. That’s the power of leverage.


But there’s also a catch.


The less money you put in the deal — or more specifically, the less equity you have in a deal — the more over-leveraged you are. Consequently, the higher your mortgage payment will be. In a hot market, over-leveraging may seem like a brilliant idea, but what happens when property values start to drop?


According to Zillow, from 2008 to 2012, real property prices in the U.S. dropped by over 20%. If you purchased a property in 2008 with less than 20% equity and wanted to sell in 2012, you would have lost a decent chunk of change.


My advice? Always have 20% equity in a property at a minimum. Avoid the tempting 0% down loans at all costs. Doing so (in tandem with committing to not buy for appreciation) will allow you to continue covering your mortgage payments in the event of a downturn.


3. Don’t get forced to sell.


When you’re forced to sell, you lose money.


The main reasons people are forced to sell or return properties to the bank are that they speculated and bought for appreciation, or got caught up in a hot market and were over-leveraged.


Another reason you would be forced to sell is if you have a balloon payment on a loan. This is typical for commercial real estate but not residential. The problem investors have is when they have a balloon payment come due during a downturn in the market.


A way to mitigate that risk is to be aware of when your balloon payment is due and plan years ahead of time for what type of exit strategy you are going to pursue.


Some common exit strategies are:


  • Selling the property
  • Refinancing into another loan
  • Paying off the balloon payment


By sticking to the three principles above, I’ve personally accumulated over $170 million in real estate assets over the past four years, and at the same time, I’ve helped countless of my investors generate passive income streams. Regardless of what President Trump does or doesn’t do over the next four or eight years, if you stick to these principles and invest in income-producing real estate, your investment portfolio will not just survive. It will thrive.


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Friday Facts – Best Real Estate Investing Advice Ever Lightning Round Q&A

Learn this week’s Best Ever guest’s best ever books, real estate deals, ways to give back and biggest mistakes


Kim Ades from JF999: World Class Author, Coach, and Thought Leader Sheds Light on Why the Successful RE Pros are Succeeding


Best Ever BookAsk and It is Given by Esther and Jerry Hicks


Best Ever Deal Kim has Done – “This house, the house I live in.”


“I was supposed to buy it, and then it got pulled out from under us and we ended up buying it afterwards at a lower price than out original offer.”


“It was a matter of maybe a month or so. A month or so later, with a new agent, things had changed and we found a bit of a loophole that allowed us to get us a lower price.”


“The loophole was the size of our balcony. Our balcony is oversized, and apparently because it’s oversized, it had to be ripped down, so we asked them to pay for the tear down theoretically, and they took that amount off the top of the price.”


Best Ever Way Kim Likes to Give Back – “Coaching, It’s just what I do.”


Biggest Mistake Kim Has Made So Far In Real Estate – Not knowing the tax law


“I mentioned to you that I used to own property when I was young, with my first husband (I’m remarried now). One of the things that happened to us is we owned a company together, and as our marriage unfolded, I ended up selling my shares. I didn’t know much about tax law or anything like that, and I made a huge error in the way that I sold my company, and a couple of years after the sale I ended up getting a call from our government (CRA) letting me know that I owed them $300,000 in taxes… So not quite the real estate story you wanted, but still, definitely an investment that kind of blew up on me, and it was a scary time. But luckily, I had the money, so I just paid it off and right after that I just really scaled back. I stopped going to get my hair done at the hairdresser’s, I learned to color it myself. I just took care of things a little bit differently and stopped living very frivolously, and just kind of scaled back until I recalibrated and kind of felt more comfortable again, but it took me a couple of good years until I got back on my feet after that.”


“There’s a way that you sell your company where you get a $500,000 tax exemption from the sale of a company, and I didn’t sell it that way, so I didn’t get that benefit, so all of it was taxable. I didn’t know, and because I didn’t pay that on that amount for a few years after that, not only did I incur a tax bill, I also incurred a bill on the money that wasn’t paid.”


“[My recommendation is to] speak to an accountant, and even a tax lawyer would be really helpful. Don’t just sell your shares… Understand what you’re getting into and make sure you’re taking the right steps from a legal standpoint and understand what the tax implications are. Taxes are a big deal.


Read Kim’s Best Ever advice: The One Characteristic Differentiating a Real Estate Pro and a Real Estate Rookie

Ricky Beliveau from JF1001: A Hidden Wealthy Niche that Involves a Fine Tuned Team


Best Ever BookHow I Built This (a podcast, not a book)


Best Ever Deal Ricky has Done – First rental property purchase


“The first building I ever purchased. I currently own it today – it’s my largest rental property. My purchase price was $930,00 and reappraised for $2.2 million.”


“I used FHA Owner Occupant, and in Massachusetts at the time the max one you could get was $816,000 for FHA, and then actually using the paper that I wrote I went to my mother, who had just inherited some money, and I asked her if she would invest in the property with me. So she gifted me $160,000 to get me started on that first property.”


“It’s a three-family property. When I purchased it, it was a nine-bed, three-bath; I lived in one of the units and I got my hands dirty and renovated it and turned it into a 12-bed, six-bath.”


“I was able to really drive up the rents and drive up the value. And also, I bought it at the perfect time. Boston in 2010 had really plateaued. From 2007 to 2010 it had almost been dead even, and then right in 2010 is when the market started to explode, and it hasn’t stopped since.”


Best Ever Way Ricky Likes to Give Back – Mentoring college students


“Right now, I’m a member of the Venture Mentoring Network at Northeastern. What that is is it’s startups and college students who have ideas and they’re trying to start their businesses. Right now, I’m mentoring a bunch of college students, trying to help them get their businesses going.”


Biggest Mistake Ricky Has Made So Far In Real Estate – Self-managing


“Thinking back, one mistake I made from the start was that I tried to self-manage my rental portfolio. I think that you can’t really deliver the high level of service that these tenants need when you’re doing it on your own, at least from my standpoint. I quickly realized that it was a mistake that I was trying to do that on my own, and I was able to correct that by hiring a management company to take over that for me.”


Click here to listen to my full interview with Ricky and learn about the hidden wealthy niche – condo conversions

Matt Wood and Mike O’Connor from JF1002: A Unique Way to Pay Investors Using a Property’s Cash Flow


Best Ever BookRich Dad Poor Dad by Robert Kiyosaki


Best Ever Deal Matt and Mike have Done – “Our 32-unit deal. We picked it up for $640,000 and it just got appraised for $1.35 million. It brings in roughly $18,000/month.”


Best Ever Way Matt and Mike Like to Give Back – “We’re pretty involved in our church and we like to get involved with the service aspects there. We do different habitat type builds and stuff like that, so it’s just getting your hands dirty and getting involved.”


Biggest Mistake Matt and Mike Have Made So Far In Real Estate – Rushed a Rehab


“I would say on 16-unit deal … We basically rehabbed all 16 units; some of them were floor-to-ceiling molds, a good majority of them were. We — I’m not going to say we cut corners, but we rushed the job in some areas, both with our repairs and with our tenant placement to get the thing up and running quicker than we needed to, and I would say that that probably cost us about six months of being at full stabilization, just because tenants were having to be evicted, repairs that we made weren’t holding up… So really going back and actually doing that right the first time would have saved us a lot of time and a lot of money.”


Click here to listen to my full interview with Matt and Mike and learn a unique way to pay your investor’s their preferred return

Joel Owens from JF1003: What the Big Box Companies Look for When They Lease Commercial Real Estate


Best Ever BookInvesting in Retail Properties by Gary Rappaport


Best Ever Deal Joel has Done – $410,000 commission from BiggerPockets


“On the brokering side, I have a client that contacted me off of BiggerPockets a couple years ago; he’s one of my higher end clients, and he bought two pieces of properties for about 22 million dollars, and I made about $410,000 in commission on that one.


Best Ever Way Joel Likes to Give Back – BiggerPockets forums


“I’m a moderator in Bigger Pockets, I’ve known Josh since he started the site a long time ago; we’ve got over 730,000 members now, and I’ve got about 12,000 posts on there, and I usually go on there … I don’t have time to help everybody individually because I’m working with my clients and my own investments, developing deals for myself, but if I can put something on there and then it can stay on there 24 hours a day, seven days a week, and thousands and thousands of people can read it… So I’ll usually try to answer questions or put information on there that people find useful.”



Biggest Mistake Joel Has Made So Far In Real Estate – Purchasing Multifamily from Fraudulent Owner


“There was one deal one time, it was a multifamily building that I bought, it was around 20 units, and it was an owner-financed deal. It was showing that the tenants were all paying, but the owner actually took a home equity line of credit out for their personal property, and they were putting that into the units. Only two were supposed to be vacant, 18 were supposed to be occupied, and you looked through the business bank statements and it was showing that 18 of them were paying, but found out post-closing that half that money was coming from the home equity line of credit. They were taking that and putting it in like they were collecting those rents from those tenants.”


“That is considered fraudulent, but an attorney told me that basically I could take him to court and we could spend a year, a year-and-a-half of my life on it, and even if I win and collected a judgement, I’d still have to chase him for the money. I lost about $15,000 on that and spent a lot of my time, effort and energy on it. But it was a good learning experience, and I just learned from that that the residential space – I hate dealing with those types of tenants every day; it’s just not my cup of tea. I just like retail, national tenants backed by thousands of stores; it’s more passive, I can be traveling, I can do whatever and I’m not worried about bigger headaches, residential landlord laws being changed more in favor of the tenants. When you get into business landlord law, it’s a lot more favorable to the landlord.”


What would Joel have done differently? – “I’m trying to figure out if someone’s doing something fraudulent. I think I should have looked at the records more; it was many years ago, I was just getting started, and you get excited when someone’s willing to owner-finance something. I should have looked at the purchase price I was paying more, and I should have conducted more tenant interviews, and I should have looked at these files that they presented with the leases and really saw what wasn’t there that should have been there as far as the quality of tenant and the income levels, and everything else… There were probably more red flags, but at that time I wasn’t as seasoned an investor, and so it goes back to it, again — if I had had someone looking at that asset for me that had that deeper level of experience, maybe I would have never gotten into that property in the first place, because they would have known to look for things that I didn’t know to look for at that time.”


“It’s the same principle with retail – if someone’s willing to buy something, they need to use somebody or go through someone that has that level of experience that sees a hundred things, versus the three things they might be looking at.”


Click here to listen to the full interview with Joel and learn how to lease property to large commercial tenants



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The One Characteristic Differentiating a Real Estate Pro and a Real Estate Rookie


What makes one real estate professional better than another real estate professional. For investors, this may be the most important questions we can answer.


Kim Ade, who is the President and founder of Frame of Mind Coaching and was recognized as one of North America’s Top 50 most influential women in real estate, has built a career around answering that question. She began investing in real estate, attending conference and events, and coaching investors in order to learn what drives the best real estate professionals.


In our recent conversation, Kim provided the insights she discovered by studying the top performing real estate and business professionals.


If I were to ask you, “what do you think makes for a top performing real estate investor?” Are they good at building rapport? Closing deals? Identifying different options available on both the buyer and seller side? Something else?


According to Kim’s studies, while all these skills are important, they are not critical. What’s really critical is if a person has a high degree of emotional resilience.


Kim said, “As a real estate professional, if you lose a deal, what do you do when that happens? And even as an investor, what do you do when you lose a deal? What do you do when a deal goes south? What do you do when you’re actually losing money on a deal? What do you do? How do you bounce back from that?”


The professional who has the ability to bounce back with the greater speed and agility, meaning they have high emotional resilience, is much more likely to succeed.



Calculating Emotional Resilience


To determine a real estate professional’s or your own level of emotional resilience, analyze failures. It’s easy to remain resilient when things are going according to plan. But it’s the losses that allow us to determine someone’s ability to not only move on as opposed to wallowing in a defeat, but to also take a bad situation and turn it into an advantage.


For example, Kim said, “Years ago, we used to own this software company, and we went to our first ever trade show and FedEx didn’t deliver our booth. We were a little bit upset, because it was our first trade show, so how do you show up to a trade show and have a booth with no actual booth? There was nothing there, so what we did is we went to Walgreens in the states and we bought a board and some markers and some tape and we made a sign; the sign says ‘FedEx didn’t deliver our booth, so now we’re forced to give you 50% off just to attract your attention.’ Man, there were line-ups at that booth…”


Kim didn’t allow this failure to emotionally trigger her. Nor did she remain calm, chalk the tradeshow up as a loss, pack up what little materials she had, and go home. Instead, she went into brainstorming mode and was able to turn a potential devastating situation into a positive and profitable one. What would you have done?


Kim said, “you have to move on, and the faster you move on, the better. I will also say that if you can do something with your experience, turn it into a positive somehow, then not only are you just moving on, you’re leveraging it. You’re winning from it. You’re not just losing and learning a tough lesson. You’re actually winning.”


The idea is that no matter what, there is always a silver lining. But many people aren’t used to looking for it. Most people just assume a silver lining or opportunity doesn’t exist. But from Kim’s experience, and my personal experience, that just isn’t true.


How do you look at things in this silver lining and always seeking out the opportunity way?


When Kim teaches people to make this mindset shift, she said “number one is we look at their history. There’s a philosophy and the philosophy is this – we always look for evidence to support our beliefs… One of the things we do is we help someone look backwards and we say, ‘look at all the things that have happened and let’s look at how they showed up.’ We’ll start to show people that they have been involved in a huge number of opportunities over time, but they never thought of it quite that way.”


The other thing, Kim said, is looking “at how so many awesome things happen to you all the time, every single day, that we just take for granted. Like this morning – did you have a hot shower? You probably did, and you don’t kind of stop and take notice. Or if you go into a building and you go up in the elevator, do you know how much planning went into that elevator or you, how many people were involved in creating the building, creating the structure that allowed you to get into that elevator that day? We don’t think of getting into an elevator as an opportunity, but it’s pretty massive.”


It’s about going from a limited mindset to an abundance mindset. We don’t live in a zero-sum world. There are infinite numbers of opportunities, but if you’re stuck in a limited frame of mind, you just don’t see them.


Make the shift!


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Happy Memorial Day! The Best Ever Advice from 5 Military Veterans

In honor of Memorial Day, here are 5 pieces of best ever advice from five military veterans I’ve interviewed on my show.

Mark Allen from JF930: Recession-Proof? Why You MUST Diversify Your Assets


Mark served in the US Army as a Field Artillery Office where he led troops in Operation Enduring Freedom.


Mark is a brokers and real estate investor who focuses on single-family rental portfolios around the country and multifamily in Texas and Oklahoma.


Mark’s Best Ever Advice?


“Diversification. It’s what I push now to multifamily owners if I have a single-family portfolio listing.”


“My dad put all of his eggs into one basket in 2004 through 2006 and ended up getting caught with his pants down with several loans on the books. That was a lesson I learned from him and luckily I didn’t have to learn from myself.”



Bill Allen from JF905: Flying Planes, Flipping Houses, and Hiring the Right People


Bill is an active duty Navy pilot and actually fell into real estate investing due to his constant military moves.


In 2016, Bill flipped 13 houses and wholesaled 54 deals while still working full-time.


Bill’s Best Ever Advice?


“To take really fast action and implement. I’m an implementer. I got this idea in January of last year and I just ran with it. The reason I think I was successful is because I took action and implemented it and did the things that other people won’t do.”


“It’s a little bit risky. If it doesn’t work out and I say, ‘Hey, I didn’t have my mind made up that I would continue and quit,’ I could have lost $20,000, but I went in knowing that.”


“I don’t think there’s a lot of risk to it. If you take action – risk is that you’re afraid to fail and then you fail and then you quit. If you just don’t quit – you’re going to fail. Just accept it and don’t do the same thing again.”



Jimmy and Bob Vreeland from JF872: How to SCALE a Private Money Raising Empire and JF786: Over 100 Properties Acquired in 12 MONTHS from LEASE OPTION Masters


Jimmy and Bob are graduated of the United States Military Academy at West Point and the Air Force Academy respectively,


They currently have over 100 properties in their portfolio under lease option.


Jimmy and Bob’s Best Ever Advice? Click here to learn how to acquire over 100 properties in 24 months utilizing the lease-option strategy.



Shawn Petree from JF464: How He Bought Two 12-plexes with NONE of His Own Money


Shawn Petree was in the military, on the construction side, for 10 years in both the Army and the Air Force.


Since he began investing in 1997, he has closed over 350 transactions on all types of properties.


Shawn’s Best Ever Advice?


“Always have an exit strategy.”


“When you get a house, you need to know what you are going to do with it. Most people go into fix-and-flips thinking they are going to fix and flip it and sometimes the market will change on you and you can’t sell something if there is a downturn. The lesson I’ve learned over time is to find a property, flip a property first, if you can’t flip it, fix it and fill it.”



Scott Lewis from JF965: Why He SOLD All He Had, Went to War, then Returns to Develop Land and Syndicate BIG Deals


Scott served as an active duty Infantry Office in the US Army where he deployed as an Infantry Platoon Leader in support of Operation Iraqi Freedom.


Scott co-founded Spartan Investment Group, which completed 4 projects totaling $2.5M with an average ROI of 36% in 24 months.


Scott’s Best Ever Advice?


“The best advice is broken down into two categories. One is just starting out, and if you’re just starting out, take some time to learn yourself before you start. There’s some personality assessments out there… DISC and Myers-Briggs are two that are out there. I really recommend you go out and you figure out what type of personality you are. Then once you figure out what type of personality, build your tribe around your weaknesses.”


“Myself, I’m a DISC D, that means I’m a driver – I just want to get stuff done, I don’t really pay attention to details. So I went out and I found a partner who is very into details and he’s very detail-oriented. The two of us, plus a couple other members of our team kind of really round that out.”


“Once you figure out your team, then start with an education period. Just figure out what asset class you want to focus on, and then go. For those of us that have been out there and have been in the trenches, constantly challenge your assumptions and operating models.”


“We recommend a devil’s advocate. The Israeli Mossad, which is their version of the CIA, they call that the 10th man. This person is just the person on the team that disagrees with everything that’s going on. What that does is it ensures that groupthink doesn’t cause you to make a bad decision.”



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Friday Facts – Best Real Estate Investing Advice Ever Lightning Round Q&A

Learn this week’s Best Ever guest’s best ever books, real estate deals, ways to give back and biggest mistakes


Joel Sherlock from JF993: How to Build a Fund and Buy BIG Deals in Many Markets


Best Ever BookThe Saint, the Surfer, and the CEO by Robin Sharma


Best Ever Deal Joel has Done – “I would say that the first time I ever sold my renovation and bought my next flip. I thought I was a genius.”


Best Ever Way Joel Likes to Give Back – Charity work


“I sit on the board of a children’s charity in Vancouver. We have medical needs disabilities children’s camps. It’s call the Zajac Ranch. Amazing work. I love to be involved in that. Love giving back.”


Biggest Mistake Joel Has Made So Far In Real Estate – Rushed Due Diligence


“Not enough due diligence. Blinded by excitement.”


“Taking pressure from … another agent on the other side. On the surface, it’s like, ‘Hey that’s a great deal. Well you need to make your mind up quick because we have a bunch of other people looking at it. We just ripped through the due diligence really fast and it was a big house. There was a lot of value to it. It was a flip that we did. Luckily, we got our money back, but it was just a far larger project than we initially thought and a traditional due diligence period would have found that.”


Click here for the full interview and learn how to build a buying fund of over $2 million


Kevin Carroll from JF994: Investing with Your Mastermind Network, Leveraging REALTORS, and a Road Trip with Contractors


Best Ever BookRich Dad Poor Dad by Robert Kiyosaki


Best Ever Deal Kevin has Done – “Double landed a piece of land here in Idaho. Made an $80,000 commission check. That was pretty nice.”


Double landed means Kevin “represented the buyer and the seller.”


Best Ever Way Kevin Likes to Give Back – Educating others


“By writing the book [A Journey to Financial Independence] and doing podcasts like this, I really hope to show people, your listeners and people out there that this is an amazing industry that we’re in, and I think that we all have a responsibility to figure out a way to become what I like to call a “one hundred percenter”, so have your passive investments – have them pay more to you every month than you need to live. I want to teach people how to do that so that they don’t have to work anymore.”


Biggest Mistake Kevin Has Made So Far In Real Estate – Overestimating the sales price and rehab budgets


“Usually, when we make mistakes we overestimate what we can sell it for; we think we’ll sell it for 200k and it really sells for 180k. And we underestimate what the repairs are going to be – that’s probably the easiest thing to get away from you. If you have a $30,000 budget and you spend 50k – that’s obviously a problem. But it’s very easy to do, so that’s probably the hardest thing, to stay in budget.”


Click here for Kevin’s full interview and learn how to increase your business through a mastermind group and leveraging other realtors

Leonard Spoto from JF995: Defer Your Taxes with the 1031 Exchange!


Best Ever BookOlivia the Pig by Ian Falconer (reading it to his daughter!)


Best Ever Way Leonard Likes to Give Back – Donating to Charity


“We donate to a couple of really good causes that are near and dear to our heart. Hydrocephalus Foundation is one of them, and the Ronald McDonald Fund.”


Biggest Mistake Leonard Has Made So Far In Real Estate – Ineffective communication


“Not effectively communicating. You think everybody is on the same page, and this just happened to me the other day, where you think everybody is on the same page, but they’re not… So aligning everybody’s goals and making sure everybody understands the goals and making sure that you understand what you think your partners are going to be doing.”


Click here for the full interview to learn how to defer capital gains taxes

Dawn Rickagaugh from JF996: How to Buy, Hold, and Sell Seller Financed NOTES


Best Ever BookCourse in Miracles by Helen Schucman


Best Ever Deal Dawn has Done – “Buying a non-performing diverse note that was in second position for $10,000 and nine months later getting $80,000 when it paid off.”


Best Ever Way Dawn Likes to Give Back – Homes for the less fortunate and educating other investors


“Creating homes for families who are shut out of the system. They don’t have all cash, they can’t get a bank loan, but they still need stability for our communities and they need a home for the family. So that owner carry thing that I help make happen in my own backyard – that makes me feel good.”


“Also sharing information, so people get inspired to do this in their own communities and create those financial solutions just one moment pop to another.”


Biggest Mistake Dawn Has Made So Far In Real Estate – Unfounded trust


“Trusting a title company to do the right paperwork, to do it right, and then finding out they didn’t, and then I just want to hit myself.”


To mitigate the risk, “I read things. I take responsibility for all the documentation and paperwork, the due diligence. I kind of read stuff; just sort of reading things.”


Click here for the full interview and learn how to invest in notes via seller financing



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Friday Facts – Best Real Estate Investing Advice Ever Lightning Round Q&A

Learn this week’s Best Ever guest’s best ever books, real estate deals, ways to give back and biggest mistakes


Quincy Long from JF986: How and Why You Would Leverage Other People’s IRA and Cash


Best Ever BookRich Dad Poor Dad by Robert Kiyosaki


Best Ever Deal Quincy has Done – Turning Down a $2.5 Million Offer and Pursuit of a $10 Million Sale


“Well, I hope the best deal I’ve ever done is participated in a different real estate transaction, where we bought 196 acres on Maui for $900,000 cash from a bankruptcy estate, which we got a 2,5 million dollar offer before we closed on the property, and turned it down because we think we may be able to sell if for maybe 10 million or more. So that isn’t completed yet, but I believe it’s going be one of my biggest investments with the dollar return for effort hour.”


“[Our projected hold period is] Up to five years for that kind of property. We’re going to market it to the ultra-wealthy. There’s a lot of Chinese and other Asians that visit Hawaii, so that’s the target. There’s some movie stars and what not that have property in the same area, but it’s also a good property for eco-tourism. Just fantastic waterfalls and caves… Probably for the holding period we’ll do some eco-tourism to pay the costs of the property until we can find the correct ultra-wealthy buyer that can write a check between 10-20 million dollars. That’s the plan at this point.”


“[To find potential buyers], we’re at the end of this month or in the month of April sending a professional film crew out to document and film the property, because it’s kind of a rugged piece of property, you can imagine that of course. And then there are sites that are catering to the ultra-wealthy type properties, the trophy properties, if you will. So there’ll be a large internet marketing campaign specifically to target the ultra-wealthy individuals that might be able to afford such a property.”



Best Ever Way Quincy Likes to Give Back – Helping Others Decrease Their Taxes Owed


“What I do every day… Somebody asked me a question recently – if I was rich enough to retire, what would I do? I said I’d educate people about self-directed IRAs, of course, because I actually enjoy doing that and I think it’s important. I’ve just finished my estimated taxes before I’m going to Europe – tomorrow, actually – for three weeks… And I’ve finished my estimated taxes and looked at the dollar amount that I’m going to have to pay as an estimate, and I just got sick to my stomach and I thought “I need to do everything I can…” I’m all for paying your taxes that you owe, but no more than that. I don’t want people to be a tax donator, as I call them. When you do a deal that you could do tax-free, you’re a tax donator, and I just have a real problem with that, because I don’t think the government uses the money as wisely as I would if I had that money.”


“So again, I believe in paying my share of taxes, but not a single dollar more. I believe in that so much in fact, that teaching other people how to avoid paying taxes by using the government’s own rules that they laid out for us is almost like a mission to me. So that’s what I like to do to help people – teach them how to get out of paying taxes using the government’s own rules and following those rules.”


Biggest Mistake Quincy Has Made So Far In Real Estate – Failing to Perform Due Diligence on a Borrower


“Oh, that’s easy… I’ve made lots of mistakes. And yes, I’ve been very successful, but anybody that tells you that they’ve never made a mistake has either never done a deal or they’re lying. I would have to say, again, because I do a lot of note deals, my biggest mistake was doing a deal where I did plenty of due diligence on the property, but not enough due diligence on the person that was borrowing the money in that case. I always make the strong suggestion that anything you’re doing, you do due diligence on the deal itself, but most importantly you do due diligence on the people.”


“I failed to do that, frankly… So I had a great and perfectly valid hard money loan out of my account from the perspective of the property, and we ended up foreclosing on it and it’s been a great rental, and we’re getting ready to sell it after a couple of years of renting it. But four days after the buy borrowed my $200,000, he turned around and went to a different title company and borrowed another $215,000 on a property worth about 270k. Then he also sold it at a third title company ten days later for — I don’t remember the number, but he took a $45,000 down payment… And I found out later he had partners at the foreclosure sale where he bought the property for $100,000, so he took like half a million dollars from people on a property that he had a net of $100,000 in. Basically, after all of this broke and I ended up foreclosing on the property and did due diligence on the individual, I found pretty strong evidence that he’s a crook.”


“Had I known that, of course I would not have made the deal in the first place. I think that’s my biggest mistake and my biggest learn – you have to do due diligence both ways: people involved, as well as the property or the deal itself. And that’s true for real estate, it’s true for notes, it’s true for private types of investments like limited partnerships, stuff like that as well.”


Click here to listen to my full interview with Quincy to learn how to use other people’s money to invest in deals.


Marina Sud from JF987: How Her Attorney Scored her BIG CASH by Noticing this Minor Detail


Best Ever BookHarry Potter by J.K. Rowling


Best Ever Deal Marina has Done – $60,000 profit on a Hoarder’s Home


Best Ever Way Marina Likes to Give Back – “Donate with every closing to animal shelters and breast cancer research.”


Biggest Mistake Marina Has Made So Far In Real Estate – Counting Eggs Before They Hatch


“Just thinking that it’s all done before you’re closed… Counting the money in your pocket when there’s none.”


“[My lesson learned is to] just kind of relax and breather and just let it go. It happens when it happens.”


Click her to listen to my full interview with Marina to learn how to build the best real estate team.


Jack Petrick from JF988: Why FREE Advice Could be the Most EXPENSIVE Advice


Best Ever BookRich Dad Poor Dad by Robert Kiyosaki


Best Ever Deal Jack has Done – Ten Homes for $4,000 to $5,000 Each


“A lot of them. Really, honestly, the last ten houses I’ve picked up for like 4k and 5k each, I would say they were pretty much the best deals I’ve ever got.”


Best Ever Way Jack Likes to Give Back – Educating and Mentoring Other Investors


“Teaching knowledge. I have so many people that I’ve mentored and I’ve provided my playbook, my handbook on how to do this, where it took me 15 years of mistakes to get to those points. My brother right now has done a second house, a total rehab in two months, and right on budget… I just love being able to mentor and provide those services to others, and be able to help people have a better lifestyle.”


Biggest Mistake Jack Has Made So Far In Real Estate – Saving Money to Lose Money


“Bending over to pick up nickels when dollars go over your head… Meaning trying to save money, but in the end you’re really hemorrhaging out more money than you’re saving by trying to do work yourself, by trying to bring in your own crew to do all the work at $10/hour labor versus getting professional tradesmen in. That’s a mistake. Hire the right people to do the job and get it done right, because in the long run it’s gonna cost you less money and you’ll have a better quality of like and experience. Pay for it when you need to.”


Click here for a summary of Jack’s Best Ever advice: Why Free Advice Can Be the Most Expensive Advice for Real Estate Investors


John Roy from JF989: How to Save Paradise and Put Up a Parking Lot…and Garages for BIG MONEY


Best Ever BookThe Fish That Ate the Whale by Rich Cohen


Best Ever Deal John has Done – Over $10 million Profit on Turnkey Parking Garage


“Downtown Cincinnati. We took an old mall, we converted into a parking garage. Purchased it for $14.5 million approximately, and when I said “we purchased it”, we helped that real estate group buy it. Now potentially worth $25-28 million, two years later.”


“It was already done. It was turnkey.”


Best Ever Way John Likes to Give Back – Educating Others on Parking Garage Investing


“I like to volunteer my expertise in parking. Like I said, it’s a difficult field to get into, but I will always take calls and give people advice. They’re free to call me on my cell phone and I’ll walk them through a process, I have no problem doing that.”


Biggest Mistake John Has Made So Far In Real Estate – “Partnering up with a developer where you contribute the land and they don’t contribute enough equity themselves. We will never do that again.”


Click here to listen to my full interview with John to learn all the ins and outs of parking garage investing



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Why Free Advice Can Be the Most Expensive Advice for Real Estate Investors


You just finished reading Rich Dad, Poor Dad, attended your first real estate seminar, or had some other introduction into real estate investing. You are extremely excited for the potential of achieving financial independence or growing your own business empire with real estate. And you want to scream it from the rooftops.


The next time you see your family or friends, you bring up your new aspirations and what do they say? “Investing in real estate? That’s risky!” and “Ew. Why would you want to be a landlord and clean toilets?” and “my uncle invested in real estate and lost everything when the market crashed. I’d avoid real estate like the plague” and on and on.


Can you relate to this experience?


Since these people should know us the most, are closest to us, and love us dearly, how much weight should we give to their advice and criticism?


The answer like most things in life is it depends.


Jack Petrick, who has been a full-time investor for 15 years, faced this dilemma when he first started, and continues to face it to this day. In our recent conversation, he explained how this “free advice” can end up being the most expensive advice you receive.


Jack’s Best Ever advice is that free advice is expensive advice. “There’s a lot of people that have opinions on what we do,” Jack said.  “There’s just a lot of naysayers that don’t have necessarily the experience to be able to provide an input or opinion in your life if this is what you want to do.”


The most expensive free advice that I can think of would be to not invest in real estate at all! Another example would be passing up on an extremely lucrative deal because you were talked out of it by your mother.


Maybe free advice isn’t the best term. There are a lot of free resources (podcasts, webinars, YouTube videos, etc.) that offer sound real estate advice. I think “unfounded advice” rings truer. If you were to have a health issue, for example, you wouldn’t ask a family or a friend for medical advice (unless they were a doctor, nurse, etc.). You would ask a professional who has experience diagnosing and treating medical issues. The same logic should apply to real estate investing, and business in general, as well.


Personally, some of the worst investment advice I’ve gotten is from family members, who should know me the best. Fortunately, I didn’t act on that advice, and that’s how I’ve gotten to where I am at today. However, I did take some advice from them on other things and it has helped me out. We’ve got to be able to distinguish between the good and the bad when it comes to the advice provided by those with minimal to no real estate experience, and especially if they are loved ones since there’s emotions involved.


When asking for real estate investment advice, Jack says, “I would just really vet out the experience of those people that are providing that advice.” To add to that, I would say to find out how much experience they have in the niche you want to pursue. It’s important to get advice from people who have done what you are currently doing, and even better, are still currently in that niche.


For example, if you want to raise money from private investors and buying large multifamily buildings, you will likely receive better advice from a multifamily syndicator with hundreds of transactions compared to a fix-and-flipper, a syndicator with no deals, or your uncle Bob.


Additionally, certain advice may be good or bad depending on what stage of the process you are in. You can get the same advice, but it can be either good or bad depending on where you’re at in your business cycle. In the beginning stages of your career, for example, you can afford to have a more aggressive business plan. But 20 years later, when you are approaching retirement, you will likely have a more conservative approach.  Also, if you are a brand-new investor who is single, you can likely take more risks compared to the brand-new investor who is married with four children.


Overall, when actively asking for and passively receiving advice, it’s important to pay attention to who is giving that advice and understanding if they have the expertise to back it up.



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How to Double Your Rental Income with Furnished Rentals

In 2016, furnished rentals collected $3.2 billion per month in rents across the United States.


I bet that piqued your curiosity!


For example, there are 100,000 to 200,000 traveling nurses per year in the United States. They work for 6 to 12 months on a contract basis before picking up and moving to another part of the county. That’s 100,000 to 200,000 candidates for a furnished rental, and it’s just one example.


Kimberly Smith has been involved in the furnished rental business for over 20 years, way before popular businesses like AirBnB were founded. In our recent conversation, she gave us an inside look at how to run a successful furnished rental business. This business model is relevant to a single-family investor, someone involved in apartment investing who has a 1000-unit building, and everyone in-between who wants to increase their real estate investment income.

How to Find Tenants?

Marketing for tenants for a short-term, furnished rental is different than finding a standard renter.


One way to find tenants is through old-fashioned relationship building. The idea is to find a large corporation or institution to tap into. For example, you could reach out to a nearby university’s student housing department, a hospital’s housing coordinator, or a corporation’s human resources manager and ask if they are in need of short-term housing.


Kimberly said, when she searches for potential tenants, “I would do old-fashioned request proposals with major corporations, and they would say, ‘Okay, I need 103 one-bedrooms for 6-months. Can you get them all ready for me?’”


Fortunately, with the advent of the Internet, finding tenants and increasing your rental income is much easier than the old-school cold-calling of the past. There are distribution portals online you can leverage. Kimberly offered examples of these distribution portals, “You’ve got HomeSuite, you’ve got AirBnB, you’ve got, you’ve got HomeAway. All these guys are just starting to think, ‘How do we best service the needs of the business traveler?’ So in the short run, you want to be in all those places.”


Another great resource for finding renters and increasing your real estate investment income is a creation of Kimberly’s called Corporate Housing By Owner. “For the last 8 years, Corporate Housing By Owner has created an annual report,” Kimberly said. “You can get it on or you can register for free at and you can download it for free. And it will tell you – we asked hundreds of people across the country, ‘How do you market your furnished rentals and where do you get your best results from?’ We have 8 years of data in that report and [you should] start by just reading the details.”

Who Manages the Furnished Units?

When comparing management of unfurnished vs. furnished rentals, Kimberly provided an analogy of a tortoise and a hare. “In unfurnished property management, you are the tortoise – you are renting a property for a year, and if your kitchen has a leak, you report it and they come out in the next week and they’re going to fix it for you.” For furnished rentals, Kimberly said, “If I’m there for 30, 60, 90 days and there’s something wrong, I need you to deal with that [right away].”


Therefore, the furnished property manager is going to have a level of involvement that far exceeds that of the standard, unfurnished property manager. As a result, you are going to pay a premium. Kimberly said, “for corporate housing, an Avenue West-managed corporate housing brokerage [Kimberly’s company] would charge between 25%-35%, depending on the market. If it’s a corporation, it’s paying rents via credit card. Avenue West is incurring that expense, and not passing that on to the owner. They’re doing all the key arrivals. They are doing whatever background checks are necessary. They’re doing all of that service for that corporate tenant. They have extensive software to do the invoicing and such that’s necessary as part of that whole thing. And they’re building relationships. [The owner is] working with a management company that doesn’t say, ‘Oh, I hope to find you a corporate housing rental.’ [They’re] dealing with an Avenue West company who’s been around for 18 years, developing these relationships, that says, ‘Hey, these are the corporations that work with me every day.’”


Most unfurnished property managers do not understand corporate housing. Therefore, Kimberly recommends finding a property management company, like Avenue West, that specializes in furnished rentals. “I would be a little wary in just handing a furnished rental that you’re expecting to get a business client into an unfurnished property management because they don’t really understand how to find that right tenant.”

How Much Money do Furnished Rentals Make?

To determine the rates you can charge for furnished/corporate rentals, Kimberly said, “You want to look at the extent of stays in your neighborhood. You want to look at the hotel rates in your neighborhood. You may even be able to find exact corporate housing rates in your neighborhood.”


According to Kimberly, the average daily rate for a one-bedroom corporate housing rental was $150 in 2016. However, this varies from market to market, so in some market it will be higher and in others, lower. Kimberly said, “You have to understand your individual market and figure out where you fit. And you can purchase something called Corporate Housing Industry Report, which this year is a 206-page document that goes through all major metropolitan state areas and looks at … the average rent that was collected last year on a studio, on a one-bedroom [and] on a two-bedroom.”


For example, Kimberly said in Arizona, an unfurnished, one-bed unit will rent for $750 a month, but the same unit furnished will rent for $2,500. Whereas in other locations, like San Francisco in 2016, an unfurnished unit rents for more than a furnished rental. It is very market-dependent. Kimberly’s recommendation is to look at the Corporate Housing Industry report to see if corporate housing is an effective business model in your area.


For a personal example, I currently own a four-bed single-family property in Dallas, TX. It currently rents of $1,200 a month. Kimberly said, if I furnished the unit and offered it as a corporate rental, I could get $4,100 a month in rent. Knocking off the 35% management fee, that’s $2,665 a month, which is more than double the rent I am charging now and seriously increases my real estate investment income.


Furnished, corporate rentals are a $3.2 billion a month industry and is relevant to investors in all niches.


To find tenants for furnished rentals, build relationships with local corporations, hospitals, and universities, or post a listing to any number of distribution portals like AirBnB.


To manage the furnished rentals, hire a property management company who specializes in corporate rentals. However, expect to pay 25% to 35% in management fees.


Depending on your market, the increase in cash flow from converting an unfurnished unit into a furnished unit will more than cover the increase in management and other expenses. However, before pursuing furnished rentals to increase rental income for yourself and other investors involved in the deal, determine the rental demand in your area.

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Friday Facts – Best Real Estate Investing Advice Ever Lightning Round Q&A

Learn this week’s Best Ever guest’s best ever books, real estate deals, ways to give back and biggest mistakes


Todd Tresidder from JF979: Why He Went Through FIVE Property Managers in FOUR Years


Best Ever BookThe War of Art by Steven Pressfield


Best Ever Deal Todd has Done – $800 Tax Lien


“Tax lien deal. I got a perfectly rentable house – it’s not a great value; it was probably worth 60-80k, and I think I was into it for about $800 in back taxes. That was obviously the best deal ever.”


Best Ever Way Todd Likes to Give Back – Educating Other Investors


“Through education, the business I’m doing. I love sharing my knowledge and sharing it at cost-efficient price points so people get more value than they pay for. I love the difference it makes in people’s lives. There’s not a week that goes by that somebody doesn’t write an e-mail telling me how I changed their lives.”


Biggest Mistake Todd Has Made So Far In Real Estate – Out-of-town investing


“Buying out of town, hands down. I did 9 things out of 10 right, and I did that one wrong (i.e. going through 5 property managers in 4 years). I was warned, I’d read it, but I just thought that there’s got to be a way to find an honest property manager. Luckily, I did find one [soon] enough to turn it around and sell it, but basically buying out of town is just so inefficient… It’s really hard.”


Click here to listen to Todd’s full interview and see how he overcame multiple corrupt property managers

Whitney Nicely from JF980: How She Became the MILLENNIAL MILLIONAIRE NEXT DOOR


Best Ever BookShoemaker of Dreams: the Autobiography of Salvatore Ferragamo


Best Ever Deal Whitney has Done – $9,000 profit on a $3,000 house


“I had a house… It was a three-bedroom, two-bath, and the backside of it had caught on fire a number of years ago, and I had it under contract for a lease option for $6,000 with $100 and $200/month paid off whenever it was I paid off $6,000, so 5-6 years at $200/month.”


“I sold it on a lease option for $12,000, with $5,000 down and $300/month. So I bought it for $6,000, I sold it for $12,000. This morning I was talking to my seller and he was like, ‘Well, what if we didn’t do the lease option? How much would you give me just to cash it out?’ and I said, ‘I could give you 3k,’ and he said ‘Okay, fine.’ So now I bought the house, people gave me 5k, I’m giving it to my seller, and I get to keep 2k, and now I’m cash-flowing $300/month on a $7,000 balance.”


Best Ever Way Whitney Likes to Give Back – Tithing and sponsorship


“I tithe to my church and I sponsor the youth groups trips – mission trips, fun trips, whatever.”


Biggest Mistake Whitney Has Made So Far In Real Estate – Winging it on her first investment


“I paid $20,000 for one of my first houses with cash, my life savings, and we get to the closing table, the seller shook my hand and he said ‘Thank goodness you bought this, because no other investor in town offered me this much money.’”


“That’s how new I was when I started and how clueless I was — I didn’t realize it didn’t have a central heating air unit; it didn’t have heat and air when I bought it. It also had old wiring – we had to redo that, and it was on a hill, and a part of the hill had given way, and the foundation was screwed up and we couldn’t do anything to it until we put three sides of the foundation back on, to the tune of about $10,000, and my brother’s sweat equity.”


Lesson Learned: “Don’t wing it… For crying out loud, when you’re putting offers in on houses, have a formula. I like to use ARV x 70% – Repairs… That’s the most cash I can give you. And probably on that house – I was probably in that formula, but I hadn’t planned on putting $50,000 of my own money into the house just to be able to rent it. Get a plan, find somebody to help you, [and] don’t just wing it. And those watch those TV shows, oh my gosh…!”


Click to read Whitney’s Best Ever Advice: How the Millennial Millionaire Next Door Finds Endless Streams of Deals


Mauricio Umansky from JF981: How He Controls 17% of the LA Market Share and Became #1


Best Ever BookDelivering Happiness by Toni Hsieh


Best Ever Deal Mauricio has Done – Selling the Playboy Mansion!


“I have two favorite deals. Number one was selling the Playboy Mansion – absolutely fantastic, the first deal to hit one hundred million dollars in Los Angeles. Number two is an investment I made in Malibu on a property that I just sold for 70 million dollars.”


“I received the listing of the Playboy Mansion by coming up with an amazing listing presentation and a full marketing plan, and all of my ads already done when I went in for the presentations. So I didn’t leave anything to chance. I already had the whole marketing campaign laid out as if I already had the listing.”


Best Ever Way Mauricio Likes to Give Back – Mistakes lead to opportunities


“I make mistakes all day long. I think that it’s not a question of what mistakes you make, it’s a question about mistakes lead to different opportunities and how you resolve mistakes.”


Biggest Mistake Mauricio Has Made So Far In Real Estate – Charity and homes for the needy


“We give back two different ways. On a personal note, I give back really to the Children’s Hospital of Los Angeles. I spent the first six years of my life in the Children’s Hospital, and thanks to them I got cured. And the second thing that we do as a company is we have a hundred percent participation in give-back homes. We build homes for the needy, and we love it.”


Click here to watch Mauricio’s full interview

Bruce Norris from JF982: When to Be AGGRESSIVE from an Investor of Over 2,000 DEALS


Best Ever BookThink and Grow Rich by Napoleon Hill


Best Ever Deal Bruce has Done – Understanding when do something, along with how to


“I don’t know how to develop building lots. I don’t know how to look at a hill and say, ‘Gosh, we could carve that up,’ but there’s a project that I bought in 2002, close to Lancaster, somebody had paid three million dollars to create the lots; I paid $270,000 at 90% discount. They knew how to create the lots; I knew when to buy them. I would rather know when to, than how to, any day.”


“We built [on the lots]. We waited until 2004 to start the 93-house track. We were in kind of a remote area called Rosemont. At the end of our project, our land cost was 1% of our sale price. We sold them for $280,000.”



Best Ever Way Bruce Likes to Give Back


“I like our charity event, where we give back every year to the Children’s Hospital and Make-a-Wish.”


Biggest Mistake Bruce Has Made So Far In Real Estate


“In 1989 I bought seven custom home lots, because everything I touched at that time was working really well, and I still own those homes about two and a half years later, at a cost of $2,100/month. I made the payments, got myself out of it, but it taught me to understand that the ‘When to…’ part of it was really important.”


“The last house I closed in that cycle was I wrote a personal check for 62k to close the last one.”


“I was very happy to see that go. Here’s the good news about that – a lot of people had downturns in the last cycle… I stuck with it; I had a partner who left the country, so I had to finish the houses out of pocket. A lot of the partners couldn’t come up with any money at all, so I paid it all, even though the loans were in their name. What was great about that experience is that I had a $21,000/month extra overhead literally hit me in a 30-day period and went on for a long time… But because I decided to solve it, I had to learn to make 21k extra a month. In our industry you can do that. But after everybody was paid off, I still had the skill level to earn the money. That was actually the biggest reward.”


Click here to listen to Bruce’s full interview



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Friday Facts – Best Real Estate Investing Advice Ever Lightning Round Q&A

Learn this week’s Best Ever guest’s best ever books, real estate deals, ways to give back and biggest mistakes


Tony Javier from JF972: How to Flip Over 100 Homes a Year in OTHER MARKETS


Best Ever Book7 Habits of Highly Successful People by Stephen Covey


Best Ever Deal Tony has Done – Quick Flip and a $40,000 Wholesale Deal


“There’s two of them. One of them was a deal we made over 100k last year. it was a really quick flip. And actually, the best one we ever did was a wholesale deal – we bought it for 25k, cleaned it up, put it back on the market and sold it for 65k. We made 40k on a wholesale deal. There was only a $65,000 sale price.”


Best Ever Way Tony Likes to Give Back – Advice to New Investors


“I have a lot of people reach out to me that see my Facebook and my TV and stuff and say, ‘Hey, how do I get started?’ I used to blow those people off, and now, as long as I have the time and I can fit them in my schedule, I give people advice… Because the one thing — like I said, when I first got into it I was doing things on my own, so if I can have a quick conversation with someone and either help them avoid a mistake or help them to get started that much quicker, I don’t mind lending that little bit of advice based on my 16 years of experience.”


Biggest Mistake Tony Has Made So Far In Real Estate – Working with Awful Contractors


“I bought a property; I could have wholesaled it quickly and made 20k. Instead, I let my ego get a hold of me and said, ‘You know what? I can make 50k on this deal.’ Again, in Tampa, Florida. I had three bad contractors, ended up spending twice as much money on the project, ended up selling for $40,000 less than we anticipated, and ended up losing $65,000 on that deal.”


“It’s only one of four or five properties I’ve ever lost money on, and it was a huge learning lesson. I basically wrote a $65,000 check for a big learning lesson.”


Click here for Tony’s Best Ever advice: How to Successfully Market for Real Estate Leads with TV Commercials

Clay Malcolm from JF973: How to Make a Pot of Gold with Tax Advantages


Best Ever BookSpectrum of Consciousness by Ken Wilber


Best Ever Way Clay Likes to Give Back – Audiobooks for the Blind


“My favorite way is I have been involved with a company that reads textbooks onto tape, so that blind students can use those textbooks in their studies. I always thought that was cool.”


Biggest Mistake Clay Has Made So Far In Real Estate – Lack of Empowerment to take Action


“I would say not empowering myself to make a move… And I’ll go back to 2008 – I hadn’t practiced moving funds into different investments, and it stalled me. It was an interesting thing, it’s part of my psychology that if I haven’t done it before, it seems bigger than it would be, and if I had been more agile and thinking and been empowered already to make financial moves, I think I could have mitigated some of my losses. It didn’t work, but that was the lesson, for sure.”

Listen to Clay’s Full Interview about Self-Directed IRA Tax Advantages Here

Scott Carson from JF974: Take Notes about NOTES and Debt


Best Ever BookOutwitting the Devil by Napoleon Hill


Best Ever Deal Scott has Done – $12 Million in Notes for $1 Million


“I’ll say probably the biggest deal we’ve done individually – we bought a portfolio of 200+ assets that were worth about 12 million that we picked up for just over a million bucks. It’s been great, we’ve been modifying those loans, we had some that we foreclosed on, but it’s been a really growing period, going from buying one-off loans to small pools… That’s been one of our largest pools so far of assets that we’ve bought.”


What’s the number one risk in deals like that?


“The number one risk is not knowing our property values or checking taxes. There’s three things with notes that you’ve always got to double check. You’ve got to make sure your property values are accurate – and that doesn’t mean going by Zillow photos; that means literally having somebody drive by the property.”


“We made a mistake early on in our business where we trusted a realtor to drive by. She took great photos of three sides of the property, but she missed the big, gaping hole on the other side… So using realtors, making sure that we tell them, ‘Hey, please look at all sides.’ We want to make sure it’s a Blazing Saddles house. That’s the biggest thing, knowing your values.”


“Second thing is double-checking taxes. You’ve always got to double-check the taxes owed, and you want to make sure that the borrowers’ name on the note matches up with who’s on the county records. If it’s a different name, that property was probably going to tax sale and your note is now worthless.”


“And third thing is checking title. That’s pulling a title report, or as we call it, an O&E report – Ownership and Encumbrance Report is kind of a watered down title report that just shows us what the condition of the lien history is and if there’s anything else on title that might be blocking our ability to foreclose.”


“Those three things are the biggest things. Having your vendors in place is also critical. If you buy a lot of notes, you want to make sure you have your systems down, because you don’t want to sit around for 6-12 months figuring things out while your fruit is rotting on the vine”


Best Ever Way Scott Likes to Give Back – Charitable Donations and Free Educational Courses


“We have a big, big passion for two sets of individuals: we work a lot with young kids, we always like to donate to Toys For Tots at the end of the year, along with different children’s charities. We do a lot with a Fresh Start out in San Diego where they go out and perform surgeries for children with face deformities, and we also have a big passion for helping past and present military and first responders. We love working with those guys, whether it’s Wounded Warriors or other charities that help out with our past and present military.”


“We provide education classes for free to those guys, and just really love helping those out because they’ve done a big job in helping us have the freedoms that we have today.”


Biggest Mistake Scott Has Made So Far In Real Estate – Incorrect Expectations for Project Timelines


“I think probably a couple of those would be with our Chicago deals. We bought stuff and we foreclosed on stuff in Chicago before, around Chicago, Illinois… I would probably have talked to my attorneys a little bit more that were handling that foreclosure process and what they expected the timeframes to be, and double that timeframe. If they said six months, plan on a year; if they said a year, plan on two years.”


“We’re still going to come out making our money back and giving our investors a good return on their money, but some of the things that have happened up there have been outside of our control and outside of our trainees’ control. It’s just kind of ridiculous.”


Listen to Scott’s Full Interview About Buying Notes Here


Mark Kenney from JF975: Hotels and Multifamily Investing on a PASSIVE LEVEL


Best Ever BookRich Dad Poor Dad by Robert Kiyosaki


Best Ever Deal Mark has Done – Passing Two-Year Projection in Under a Year


“The one we closed on September 2016 in North Dallas. We already raised rents twice, already passed our year two projections, and it’s only been since September. That one I think is going to really be our best deal ever.”


Best Ever Way Mark Likes to Give Back – Providing Educational Opportunities and Supporting for the Disadvantaged


“We help educate people. We actually do some events here and there as well, and starting to do more of that. Anything we know, we’