Real Estate Investment Strategies

Since I left the advertising world in 2012, I have built a fruitful career as a real estate investor. The reason I get up and do what I do every morning is simple: I want to help my clients gain the financial freedom they need to live the lives they dream about. Of course, doing so is easier said than done. To achieve your goals as an investor, you need to be dedicated, and, most importantly, you need to have the right blueprint. That is where I can help. As I have crafted winning real estate investment strategies, I have gained control of more than $300,000,000 worth of property. To put it another way, I know what I’m talking about when it comes to investing. And you can be my next success story. Maybe you want to make real estate investing your career, not just a hobby. You might be interested in knowing how our current political climate affects our industry. Or, perhaps you are a millennial looking to buy your first house, and you want to make sure the volatile nature of the market does not harm your long-term prospects. To get started, feel free to peruse more than 50 blog posts below on the topic of real estate investment strategies. For more information, check out both volumes of my book and my podcast, Best Ever Show, the longest-running daily real estate investing podcast on Earth. And if you are ready to get to work, click here to find out how you can invest with me today.
Ash Patel and his agent Ragan Mckinney

Anatomy of a Sight Unseen Commercial Real Estate Acquisition

Networking:

In the last year, I’ve done a couple of deals with a top residential agent in my area.  Her name is Ragan Mckinney and she is an absolute savage with Real Estate.  In our conversations, I have been giving her my opinions on the benefits of commercial RE vs residential.  Ragan shared with me that she has turned down some very large commercial listings because they were out of her comfort zone.  With the tenacity I have seen from her and her team, I know they would crush it in CRE.  Ragan would certainly do a better job than the commercial brokers I have worked with in the past.  I absolutely did not want her to turn away deals and leave money on the table, so I offered to give her my opinion on any commercial properties that come her way.  A short time later, she called me and asked if I had any interest in buying a strip center that she was listing.  I asked her to send me the address and any numbers she had.

 

Due Diligence:

It was a strip center about 30 minutes from my house located in a small town and the list price was $489k.  I immediately spent hours on my computer researching the building, tenants, traffic counts, previous sales, competition, building owner, township, previous tenants, schools, politics etc.  Two of the most costly landlord responsibilities in CRE are roofs and parking lots.  Most county auditor sites will have aerial photographs that will allow you to closely examine the roof and parking lot.  A short time later, Ragan was able to gather the following rent numbers from the seller:

Insurance broker: $1600
Hair Salon: $950
Restaurant: $4000
Bank: Vacant

My initial proforma looked like this:

At a 14 cap and 40% annualized return, I am in!  All I needed was to review the leases and make sure there were no surprises.  I signed a contract which included 45 days for due diligence to review the financials.  When I asked for a copy of the leases, I was told there were no leases but all of the businesses have been there for 10+ years.  This was not going to work.  If these businesses left, the dirt and building are not worth anywhere near $400k.  In reality if the restaurant left, I would be left with a 50% vacant strip center with no anchor and two fillers.  I began getting little bits of information that made me think this deal was not worth pursuing.  I found out that the owner of this building just passed and the son inherited it.  The son wants to move out of state and hence the reason for the sale.  After I explained the importance of leases, the son drew up simple boilerplate one year leases and had the tenants sign them.  The restaurant was actually paying $3000, not $4000.  I informed my realtor that the numbers don’t work at this price.  I wanted to back out of the deal but Ragan convinced me to stay in the game and offer a lower price.  I re-worked the numbers and $380k was where I was at.  They immediately accepted the deal but told me they needed to be at $383k.  Done!  The new numbers looked like this:

The Twists:

A few days later, Ragan called to inform me that the sellers are rescinding their offer and they were happy to pay for any expenses I incurred.  Apparently there was some infighting within their extended family which is not uncommon with inheritance.  With commercial RE, this is not how deals work and they cannot simply pay my expenses and send me on my way.  She asked me for an official response that she can go back to the sellers with.  My response was if they don’t show up to the closing table, I would file a multi-million dollar lawsuit.  A few days went buy and I researched my options and lined up attorneys.  In our purchase contract, we had written in $0 for earnest money which I thought was a win.  It turns out that in some states contracts can be invalidated if earnest money is not part of the transaction.  Luckily Ohio was not one of them.  I began reading case law and found that I would have to prove monetary damages incurred to be successful in a lawsuit.  Loss of potential or future income is difficult to prove in court.  I concluded that if they did not show up to the closing table, I would have little recourse other than expensive litigation which may or may not go in my favor.  After hearing my response, the sellers informed Ragan that they would move forward with the closing.

A Free Restaurant?

As I started digging more, I found out that the restaurant operator is brand new.  Wait, I was told that restaurant had been there for over 10 years?  I later found out that the seller (the Son) was the restaurant operator for many years and had turned the business over to his CPA.  Even better, she wanted it to set up her 20 year old son.  Let me reiterate that; the seller abruptly gives a viable restaurant away to a lady who decides this would be great for her 20 year old son.  I asked if the Son sold the business to her or if he simply gave it to her.  It turns out that he literally gave her the business in return for signing a one year lease.  I would have felt better if she had purchased the restaurant so she would have skin in the game.  With a lease that has no personal guarantee, she could literally run the business down and walk away unscathed.  I had to get this lady on the phone and see what else I could find out.  My conversation with her was very positive.  She owns her own CPA business that she works at during the day and after 4pm she goes to the restaurant and works until close.  She is familiar with running restaurants, food costs etc.  Her plan is to grow the business for 10 years then hand it off to her son so she could retire.  She also shared her plans for growing the business.  I felt very comfortable moving forward after this conversation.

From a landlords perspective, this is actually a win.  I have a fully functioning restaurant in my building that I can sell to an operator if she ever leaves.  I also own all of the equipment inside of the building.  My goal with her, just like any tenant, is to do everything in my power to make her successful.  She has already grown the business by adding local delivery.

Closing:

The Seller was an incredibly nice guy and was very gracious at the closing.  He explained that the tenants actually pay for their own gas, electric and water, and there were no house meters.  Another win!  When I inquired about him giving the restaurant away, he explained that he grew up in the food business and he and his wife were just done and ready to move down South.  A few days later I went to meet all of the business owners and inform them of the new mailing address for rent.  I also wanted to check out the vacant bank space.  I took my kids with me and got them excited about being able to go into a bank and checking out the vault.  When I walked into the bank, I heard what sounded like a running toilet.  As I walked towards the sound, my feet began splashing on the carpet and my heart stopped.  As I got closer to the source, the sound was louder and it became apparent that this was a full pressure pipe burst.  I opened the closet where the sound was coming from and saw a broken pipe gushing water all over the place.  I scrambled to find the main water shutoff and spent the remainder of the weekend remediating the damage.  The seller found out about this through Ragan and he and his wife graciously came to help.  During this time, I was able to speak with them and get leads on potential tenants for the bank.  They also gave me the scoop on city politics and potential developments near this building.

Game Plan:

My plan was to call every bank in a 50 mile radius and see if I can get them to move/expand to this location.  After the first few calls, I realized that Ragan’s team would probably be much better suited for this.  If I can get just $2000/month from that space, the value of the building will have more than doubled even at a 9% cap rate.

 

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“It is Too Difficult to Invest Out-of-State” Real Estate Investing Myth Debunked

There are three phases to a real estate rental investment. 

  • Find the deal
  • Acquire the deal
  • Manage the deal

Most real estate investors find it is easier to handle the three phases in a local market. 

Finding deals requires implementing lead generation strategies. Lead generation strategies are either remote (i.e., direct mail, online advertising, cold-calling) or in-person (i.e., bandit signs, driving for dollars, door knocking). If you are investing in your local market, you can take advantage of both lead generation categories.

Once you find a deal, you can drive to the home or building yourself to perform due diligence to determine and offer price. 

After you have acquired the deal, you can either self-manage or oversee a third-party property management company.

When investing out-of-state, your options for finding, acquiring, and managing deals are limited…or are they?

Theo recently interviewed Andrea Weule on my podcast, Best Real Estate Investing Advice Ever. She lives in the highly competitive Denver, CO market, so she buys rentals out-of-state. In that interview, Andrea debunks the myth that you cannot invest out-of-state and provides interesting ways to generate leads and perform due diligence remotely.

The first phase is to find a deal. Andrea finds her out-of-state deals in three ways. First, she works with a real estate agent who sends her on-market deals off the MLS. She says that ignoring the MLS results in ignoring low hanging fruit. 

Secondly, she creates a list of motivated sellers. Andrea’s targets home that have been owned for more than 20 years and where the owner is 55 years old or older. She finds that these owners are often motivated to sell. They are approaching retirement and are thinking about the next phase in their life, which may require the selling of their home.

Andrea uses ListSource to create this list.

Then, she sends a sequence of three mailers for each address. Rather than using a generic “we buy houses” letter, she creates a message that speaks more directly to the 55+ years old demographic. The letters include questions like “are you looking for your next adventure?” or “do you want to eliminate the stress of owning a home?” 

These first two strategies (direct mail and MLS) are remote lead generation strategies. The third strategy Andrea implements is traditionally performed in-person – bandit signs. However, rather than flying to the market and placing the bandit signs herself, Andrea hires someone local to the area.

The process is simple. She creates a job posting in the “gigs” section on Craigslist with the purpose of hiring someone to place bandit signs in the local market. Andrea sends them the bandit signs, which have a GPS tracker. The GPS tracker allows her to confirm that the sign was places in the correct location. Once the bandit sign is place, she requests that they send her a picture. Lastly, Andrea will send them their payment via PayPal.

Andrea uses a similar strategy for the second phase of the real estate investing process – the acquisition. If someone is interested in selling her their property, she performs basic due diligence to determine an offer price. 

Back to Craigslist. She will create another job posting. But this time, she is hiring someone to take pictures of the prospective property, as well as to do a Zoom Tour. With the combination of the pictures and video from the Zoom tour, she has all the information she needs in order to submit an offer.

 

Overall, it is a myth that it is harder to or that you cannot invest out-of-state. All it takes is a little creativity and the use of technologies.

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Using Technology to Scale Your Apartment Investment Business

You’re already two months deep into 2020, and you realize that, if you don’t take drastic measures now, you may not end up fulfilling your New Year’s resolution to grow your business like never before. The question is, how exactly can you take your business to another level both quickly and effectively?

This question can be answered with a single word: technology.

Unfortunately, many real estate investors overlook the power of technology when it comes to scaling a business. And, if you’re like them, it’s likely because you simply don’t know how to enhance your business with technology.

Fortunately, I’ve put together this guide on how to scale a real estate business with ease using the latest technologies in 2020.

Use Technology Platform to Stay Organized and Operate More Efficiently

Real estate technology platforms are currently available to help you to remain organized, which is paramount for scaling a business in apartment investing. For instance, you can use these business intelligence platforms to store your significant portfolio information in one system. This information may include critical deal information, marketing collateral, space budgets, tenant updates, and lease terms.

With this type of centralized platform, everybody on your investment team can automatically access the real-time materials or information they need, rather than having to constantly send emails requesting this information. This allows your entire organization to run far more efficiently, thus saving you time in the leasing process. The more time you save, the more time you can dedicate to making more real estate deals and, therefore, scaling a business into a real estate empire more quickly.

Introduce Smart Technologies

If you’re wondering how to scale a real estate business, you may want to consider incorporating smart technologies into your apartment buildings as well.

For instance, to leverage smart technology, consider adding smart locks to your apartments, which will allow your tenants to enter their units without scrambling for their keys every time. A smart lock enables them to unlock and lock their doors remotely using a smartphone app. This means that you don’t have to deal with having to replace lost keys, for example, which gives you more time to focus on growing your business.

Scaling a business in real estate is also possible if you use smart lights and smart thermostats in your apartment complex. These technologies are very energy efficient and, thus, save you money—money that you can use for future deals to help to grow your business even more. Tenants will also love these value-add amenities.

Digitally Market Your Apartment Investment Business

When it comes to scaling a business, it is critical that you master digital marketing for real estate investors.

For one, you need to have a strong web presence. This starts with actually having your own property investment website. A website plays a key role in helping you to build leads online. Also, you may want to use Google Analytics with your website, as it will help you to comprehend how effectively your website is attracting potential clients.

Also, when it comes to digital marketing for real estate investors, be sure to develop social media profiles, which are imperative for scaling a business. After all, some real estate firms drive every single lead they receive from Facebook, for example. To make Facebook work for you as you explore how to scale a real estate business, be sure to post content as frequently as you can.

In addition, get involved in conversations in relevant groups on Facebook. You might also want to purchase targeted ads aimed at reaching your chosen demographic and geographic area. These moves involving digital marketing for real estate investors can be extremely profitable and thus help with growing your business.

Automate the Process of Raising Capital

Another smart move for scaling a business is to tap into the power of syndication. That’s because today’s money-raising platforms are intended to automate the money-raising process for both funders and fundraisers.

For instance, if you’re seeking capital, a platform can handle a variety of important tasks for you, such as bookkeeping, providing investor updates, issuing legal disclaimers, and completing payment processing. In addition, investors can easily find your campaign among many other campaigns using their smartphones. Then, they can start investing in your venture with a few simple clicks. These platforms today make scaling a business easier by enabling business owners to reach a greater number of capital partners.

Automate Property Management

If you’re wondering how to scale your business in apartment investing, you may want to consider automating your property management functions as well.

Ideally, you want to embrace automation as much as possible, while still offering the personal touchpoint that customers are looking for. For instance, it can be helpful to offer online lease applications and payment collection. You may also want to offer three-dimensional virtual tours of your apartment units or even automated notifications for tenants.

Likewise, when it comes to maintenance, you could use an app to monitor your work orders’ progress. This type of technology can also streamline check-outs and check-ins to make the maintenance process more efficient.

Start Building Your Apartment Investment Business

If you’re serious about learning how to scale a real estate business, I can help you with the process of real estate business development.

I possess extensive experience in scaling my own business after raising more than a million dollars from investors for my first multi-family property deal. I now control more than $800 million in real estate assets, and I work regularly with investors to help them to launch and scale their own real estate businesses, too.

I can teach you how to purchase apartment complexes, bring in investors, and employ digital marketing for real estate investors. My goal? To help you to build an apartment syndication business that will allow you to reach your investment and financial goals.

Alternatively, I can introduce you to excellent opportunities to engage in passive real estate investment if you’re an accredited investor.

Get in touch with me to learn more about scaling a business and how I can help you to employ the right strategies to boost your bottom line in the months and years ahead.

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12-Month Goals for Passive Income Real Estate Investing

You look forward to creating more wealth for yourself in the months ahead. At the same time, you’re already busy, so you don’t have a lot of time to spare on your new endeavor. The faster and more easily you can make extra money, the better.

In your situation, generating passive income through real estate investing may be the wisest move you can make.

Unlike active investing, where you handle property acquisition and management yourself, passive income real estate investing involves putting your capital towards apartment syndication that a general partner is responsible for managing fully.

Here’s a look at the 12-month short-term goals for investing you should establish before embarking on your first syndication deal. Keep in mind, you might have additional goals that are personal to you, and this is not a comprehensive list. Consider writing down your real estate investment goals to better track your progress over time.

Vet Your Syndicator

One big goal during your first 12 months of passive income real estate investing should be to become a part of a high-potential property investing team. Then, you should aim to invest in your first real estate property (or even two or three properties) and finally start experiencing cash flow.

However, none of this is possible if you don’t partner with the right syndicator. For this reason, you need to look for an investor who has in-depth experience in the industry; specifically, this person must know how to turn failures into goals and wins. This is critical because someone who is experienced is more likely to avoid making extremely expensive, yet avoidable, mistakes with your investment capital.

Also, this sponsor is more likely to have a robust and proven personnel support network. The personnel they have relationships with should include contractors of various price points, brokers who are knowledgeable of various markets, property management companies who will manage the day-to-day operations, title companies, and even lenders who can provide funding.

Vet Your Deal

The benefit of passive income real estate investing is that you essentially serve as one of a deal’s limited partners. Because you’re relying on your sponsor to acquire and oversee the project, passive investing is generally lower risk than active investing is. After all, you’re already taking part in a real estate investing system that is already in existence and has experienced success in the past. Plus, if you picked the right sponsor, you’ll be partnering with someone with a track record of success, and you can rest assured that you’ll most likely receive positive results, potentially even exceeding projected returns.

Property Factors to Evaluate

In light of the above, one of the smartest moves you can make when it comes to passive income real estate investing is to carefully review the type of deal your potential partner is interested in pursuing. After all, even if a partner says that they are looking to invest in an apartment community, not all apartment buildings are the same. One apartment community could highly distressed, whereas another could be turnkey, and anywhere in-between.

For any apartment deal, factors that you should assess include the apartment community’s location, how many units it includes, and the available amenities. Also, what is the condition of the buildings? These factors will enable you to calculate what rent amount would be wise to charge, plus how much money would need to be spent on required improvements and repairs. Furthermore, the building’s overall condition can help to signal how frequent repairs may impact your cash flow each month. Of course, all of this information should be a part of the general partner’s write up for the deal.

Also, the property location will show you the socioeconomic factors in the local area that will impact your profitability long-term when it comes to resale value, occupancy rate, and rental yield, for example. Your syndicator should obtain important property documents, such as tax returns or lease copies, and hire a reputable inspector to pinpoint any covert problems before pursuing the property.

Start Receiving Cash Flow

Your goal in passive income real estate investing is clearly to make money. However, during your first one or two deals, in addition to making money, your chief focus should be to gain experience and first-hand education.

Also, make sure that the short-term goals for investing that you set for the first 12 months are timed, reasonable, attainable, measurable, and specific.

For instance, a specific goal is that you wish to complete two deals during the first 12 months and generate enough passive income from them to replace 50% of your income. In addition, to make your goal measurable, you can determine what you want the return on your investment to be 7% or higher. This gives you an excellent benchmark that you can measure your progress against and, thus, more easily determine if you’re on track to reaching your external goals as an investor.

An attainable goal when it comes to passive income real estate investing may be to invest your capital in a property that’s cash flow is positive. In addition, you want the property to have the potential to appreciate in the future. Also, a realistic goal is that you wish to maximize your profits by partnering with a strong syndicator who uses solid property managers.

Finally, if your short-term goals for investing are timed—for example, you want to invest in your first property within four months—this will give you the roadmap you need to accomplish your goal of being financially independent and stable long term.

Experience the Benefits of Passive Real Estate Investing Today

Are you bound and determined to increase your net worth through passive income real estate investing? It’s critical that you partner with a seasoned investing expert.

I currently control real estate valued at a total of more than $800 million, and I purchased the majority of this real estate with capital from passive investors. Therefore, I have firsthand knowledge of how to establish short-term goals for investing. And I know how to excel in the real estate investing business long-term.

Because of my extensive industry experience, many people have worked with me to find the types of property investment opportunities that will help them to succeed financially. Likewise, I can partner with you to help you to invest your capital wisely and enjoy an excellent return on your investment as a passive real estate investor.

Get in touch with me today to find out more about how I can make passive income real estate investing work for you over the next 12 months and beyond.

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Tips for Balancing Real Estate Investment Deals with Family During the Holidays

The end of the year and the holiday season can be an exciting time for many reasons. While this is a great opportunity to focus on your real estate investment deals and planning real estate investment strategies for the upcoming year, it is also a time to spend with friends and family. It can be tough finding a balance between work and family any time of year, but this is especially true during the holidays. So what can you do to ensure that your deals don’t fall through as the end of the year approaches? Here are my top 3 tips for balancing business with family during the holidays.

Prioritize What Really Matters

With so many different things going on at the end of the year, the most important thing to do is prioritize your responsibilities. Make of a list of your top 5 to-dos for the end of the year and only focus on those specific things. Whether that means closing your last real estate investment deal, finalizing your new marketing plan, or making sure to spend every Saturday with your family and friends. These are the top things that you want to focus on in order to finish the year strong.

Expert Time Management

Time is the most valuable asset that you have. If you are able to properly manage that, you will be able to better manage a hectic holiday schedule. Having a career in real estate can be incredibly time-consuming if you don’t manage your time effectively.

Break down your day into sections that focus on your top priorities. For example, if you know that you’re most productive in the mornings, block those off to work solely on your real estate investment deals or completing research. You can save responding to emails, calling investors, and any meetings for the afternoon. Having clear sections for your day will make it that much easier during the holidays to plan time away from work and celebrate with family.

Set Actionable Goals

Goal setting is a technique that many of the world’s most successful people use to stay ahead. An actionable goal is something that is specific and clear for you to work towards. Setting actionable goals you can accomplish before year end is a great way to stay ahead this holiday season and ensure that you have a strong start to the next year.

To get the best real estate investment advice ever, visit my blog to learn more about creating wealth and financial freedom through real estate investing.

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What You’ll Gain from the Best Ever Apartment Syndication Book and School

Like many visionaries, you see yourself being successful financially one day. More than that, you see yourself being successful and feeling happy about the work you’re doing, as it doesn’t feel like work. However, chances are that you’re disillusioned about all of the opportunities that have already come your way but never panned out. When will you finally get that break you’ve been yearning for? And will it be everything you dreamed it could be?

I remember what it was like to feel like the walking dead in my corporate advertising job years ago. However, I was fortunate enough to get that one big break I needed–the purchase of an apartment community with the help of $1 million that I raised through private investors. That was around 2012. Since then, life has taken a major turn: I now control over $700 million in real estate, and I’m not slowing down.

These days, I’m all about helping other people to attain wealth through real estate, too. So, if you’d like to hop on the bandwagon of wealth generation through real estate syndication, now is the perfect time to check out my Best Ever Apartment Syndication Book and Best Ever Apartment Syndication School. Let’s take a look at what you’ll gain from both the book and the school.

A No-Fluff Book

My syndication book is designed to introduce you to investing in apartments if you’d like to buy an apartment community but lack experience in this fast-paced area.

It is also an excellent option if you’re having trouble locating a stellar deal or if you lack access to capital from private investors. In addition, you can take advantage of my apartment syndication book if you’re not sure how to go about executing business plans in the real estate industry.

The reality is, my book happens to be the only one designed to help you to solve all of these problems. What makes my book such a handy tool is that it offers a multi-step system for getting your first syndication deal under your belt. Then, it helps you to take the proper steps to create a real estate empire worth millions or even billions of dollars.

The Best Ever Apartment Syndication Book: Getting Started in Real Estate Syndication

Learn the critical terminology you should be familiar with if you’re trying to get into apartment syndication. I also go over how to establish a quantifiable goal as an investor and develop a long-ranging vision that will keep you motivated in the field. You’ll also receive some pointers for evaluating and picking the property market you’re interested in making the foundation of your investing business.

Another important area I discuss in my book is how to surround yourself with the cream of the crop of real estate experts who will become your team. For example, I provide advice about how to build a brand that will attract passive investors. These investors will essentially become your partners as you pursue deal after lucrative deal.

The Best Ever Apartment Syndication Book: Becoming Successful at Real Estate Syndication

When it comes to attracting investment capital, my syndication book will show you how to tap into your current network to pinpoint passive investors who can become part of your team. You’ll also learn how to create a strategy for generating leads so that you can always find out about apartment deals that aren’t always on the market.

Another essential part of owning a real estate investing business is developing a solid business plan—one that will maximize the returns that your passive investors will receive on their investments. We’ll go over this in-depth, and we’ll delve into how to implement your plan to impress your investors.

Of course, a major part of implementing your business plan successfully is mastering how to evaluate apartment deals. I’ll take you through the process of preparing offers to investors and getting financial commitments from them.

The Best Ever Real Estate Syndication School

In addition to accessing winning strategies through my syndication book, you can join real estate expert Theo Hicks in our Best Ever Apartment Syndication School—yet another tool designed to catapult aspiring investors to success.

In our school, you can listen to a free audio course that will not only provide you with valuable investing information but also give you access to documents and spreadsheets you’ll need to get started with your investing business. The purpose of these resources is to help you to build your own property syndication empire.

Some of the education you’ll receive through the Best Ever Apartment Syndication School includes how to close apartment syndication deals, how to sell apartment syndications successfully, and how to secure the financing you need for syndication deals.

Take Advantage of The Best Ever Apartment Syndication Book and School Today!

If you’re tired of spinning your wheels in your current career or even in real estate, my Best Ever Apartment Syndication Book and the Best Ever Apartment Syndication School can give you the boost of knowledge you need. The information you gain from these two helpful resources can quickly set you on the path to achieving sustainable revenue gains.

I’ve personally experienced what it feels like to taste success in the highly competitive real estate investing world, but my success didn’t come easy. Nonetheless, I learned how to become a better investor through a wide range of situations I encountered in various deals, and I am eager to share with you the lessons I’ve learned so that you can avoid many of the mistakes I made.

Work with me to learn more about how the combination of my apartment syndication book and school can change the course of your finances and, in turn, your life for the better.

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Helping Your Real Estate Business Recover After a Bad Apartment Deal

The longer you work in the real estate business, the more likely you are to go through some stellar deals and experience some major wins. On the flip side, so to speak, you may also come across some bad deals that you’re fortunate enough to avoid. However, you may also find yourself encountering a seemingly good deal gone bad, and just like that, your real estate dreams may feel as though they have been dashed.

Not so fast, though. Yes, going through a bad deal can be both emotionally and financially painful. However, learning from mistakes made during the deal can also be an eye opener and a teaching moment that will help you for many years to come.

Here’s a rundown on a few errors commonly made with apartment investments, as well as what you can do to recover after a bad real estate business deal.

Common Reasons for Experiencing a Bad Deal

You may find your real estate deal going sour for a number of reasons. Perhaps you impulsively bought an apartment community and made plans for it on the fly, rather than creating a business plan and sticking to it. Another way you may end up in a tough spot with a deal is if you fail to hire investment team members who truly have a handle on your local real estate market.

Likewise, not obtaining the education you need to thrive in real estate can cause your deal to go south fast. For example, perhaps you fall into the trap of overpaying for a property. Miscalculating estimates, under budgeting, not calculating cash flow properly, or not coming up with multiple strategies for making money from a property can also doom your deal.

Let’s take a peek at what you can do to bounce back after making any of these mistakes and experiencing real estate industry setbacks as a result.

Let Go of Your Bad Real Estate Business Investment

This is one of the most important things you can do as you try to recover from a bad investment. Yes, you may think that you could perhaps turn your sour deal around. However, it is far wiser to plan your exit strategy and follow through with this strategy instead.

One option in this situation is to simply sell your now-undesirable apartment asset at a loss. Why? Because offloading a bad investment puts you on the path to starting over with a better deal. Simply put, cutting your losses may pave the way for more gains in the future.

Analyze Your Real Estate Business

After you have unloaded your apartment community, it is time to complete a comprehensive analysis of what resulted in your real estate crisis. This is where you ask yourself the five W’s of who may have caused it, what may have caused it, where the problem erupted, when the issue happened, and why your deal went south. During your analysis, you should jot down figures and facts—anything that can help you to fully reflect on your situation.

Next, write down your business’s strengths, weaknesses, opportunities, and threats; this is an important step in overcoming business obstacles. You’ll also want to take stock of your liabilities and assets following your bad deal, as this will further help you to diagnose your current situation. Armed with these details, you can now create a stronger plan for your next real estate business deal. You could even ask colleagues or friends for feedback on your new plan as well as on the bad deal.

Don’t Second-Guess Yourself

It’s natural for apartment syndicators to constantly wonder what they could have done to avoid bad deals. However, constantly singing the “shoulda, woulda, coulda” blues won’t do much to help you. Rather than being so hard on yourself for your oversights and mistakes, concentrate on goals and success habits that can help you to avoid making the same mistakes twice.

To achieve this, consider creating a list filled with goals you would like to achieve during your future real estate business deals. But make sure that your goals are timely, realistic, measurable, specific, and attainable. For instance, rather than saying that you want your next deal to be a successful one, say that you would like your next deal to net you a certain dollar amount. Also, be sure that your new plan provides you with a solid fallback option, too.

Move Forward, Full Speed Ahead

Now that you have a good idea of what you’d like your next deal to look like, it’s time to take action and make it happen. In other words, start looking for your next apartment deal. The more investment properties you buy, the more experienced you’ll be in spotting potentially lucrative deals and bad deals. Also, you’ll be in a better position to recover after one failed deal if you own many assets that are generating revenue for you.

Take Steps to Recover After a Bad Real Estate Business Deal Today

Once you realize that a deal has gone belly up, you may immediately feel discouraged. And understandably so. But the good news is that every cloud has a silver lining. You can recover after a bad deal (yes, really) and turn mistakes into cash.

I have had my fair share of mistakes in real estate. I’d be glad to help you to find your way back to the path to success after you’ve experienced a less-than-stellar real estate business deal. And, as your mentor, I’ll show you what you can do to stay on track and avoid bad deals in the future.

Get in touch with me today to learn more about how you can live your best life in real estate investing no matter what the industry throws your way.

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What to Include in Real Estate Business Team Interviews

As a real estate investor with an eye on owning apartment communities, you need two things in your arsenal to maximize the returns on your investments. One, you need a solid understanding of how to identify potentially lucrative deals and how to execute them. And two, you need to surround yourself with a winning team of professionals who will support you each step of the way.

So, who exactly do you need to hire to be on your real estate investment team? And how do you know which candidates are truly the best ones to work with as you strive to succeed in apartment syndication?

Here’s a rundown on what to include in real estate business team member interviews as you try to establish an all-star investment team.

How to Choose a Mentor for Your Real Estate Investment Team

A mentor is a core investment team member, meaning that he or she is one of the most critical experts to have on your side before you embark on any deal. An important question to ask a potential mentor is if he or she owns properties, and what the mentor’s net worth is. This can demonstrate his or her success in the biz and prove their experience and expertise. Also, will the mentor want to take part in your real estate deals, or will he or she simply advise you? Establishing the nuances of the relationship right away will make things easier in the future. Finally, make sure that your potential mentor shares your business values and understands your goals.

How to Choose a Property Management Company for Your Real Estate Investment Team

A property manager is yet another core investment team member you’ll need to hire to effectively manage and scale your business. When interviewing real estate managers, be sure to ask them how many rental units they currently manage. Ideally, you want a manager with anywhere from 200 to 600 rentals, as too few units indicates that the company may not have much experience, whereas too many rentals mean you may become a number. Be sure to also ask about the company’s management fees, and choose one whose fees are based only on collected rents, as this will motivate it to constantly fill vacancies.

How to Choose a Real Estate Broker for Your Real Estate Investment Team

Your real estate broker will also play an important role in your investment team, as he or she will help you to buy or sell properties when the time is right. Make sure that you ask potential brokers how much they charge and why they stand out from their competitors. For instance, if you’re big on communication, you may want to go with a broker who prides himself or herself on constantly being available by email or phone. In addition, consider asking brokers if they offer any guarantees, which means they’ll stand behind the service they give you.

How to Choose a Real Estate Attorney for Your Real Estate Investment Team

A real estate attorney may not necessarily be on your core investment team, but he or she is a secondary team member who still plays a valuable role in your real estate investing efforts. A wise question to ask an attorney is what he or she recently did during a transaction that did not occur as planned. In addition, you may want to find out if he or she can recall a time when his or her efforts had a positive impact on the outcome.

How to Choose a Mortgage Broker for Your Real Estate Investment Team

You may also choose to include a mortgage broker as a secondary investment team member. Before you hire a given broker, consider whether other fees exist beyond points and interest. Also, what is the funding timeline? In other words, how quickly can your loan be turned around? Make sure that the mortgage broker you hire also has experience with funding the kinds of real estate projects you are pursuing.

How to Choose an Accountant for Your Real Estate Investment Team

As you seek to build the ultimate team, note that you’ll additionally need to work with an accountant. This individual will make sure that, in all of your revenue generation activities, you don’t end up getting into trouble with Uncle Sam by not paying your taxes or not paying enough taxes based on your earnings.

Ask potential accountants what types of companies they’ve worked with, and check to see how many years of experience they possess. It may also behoove you to ask them if they are Certified Public Accountants (CPAs) or if they have other qualifications. Note that no CPA designation is necessary to fulfill the responsibilities of a real estate accountant.

Another thing to consider when interviewing accountants is if they own any real estate properties of their own. Or, how many of their clients own rental properties that produce income? If they are also real estate investors or at least work regularly with real estate investing clients, they’ll have a better idea of how to help you manage the financial aspect of your own real estate business.

Start Interviewing Experts and Hiring Winning Professionals

No real estate deal is successfully executed in a vacuum. In other words, if you expect to make lucrative deals happen, you’ll have to rely on other people—like a mentor—to pursue, execute, and generate money from these deals.

I could be the mentor you need to get your real estate business off the ground and start experiencing serious gains as an investor. I’ll show you how to successfully fill all of the other openings you have on your investment team as well. In fact, you can check out my three-step approach to hiring brand-new real estate team members with ease.

Contact me today to further discover how to add competent experts to your real estate investment team time and time again.

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Balancing Your Day Job and Your Real Estate Side Hustle

Who says you can’t work your 9-to-5 and still dabble with real estate on the side? In fact, research shows that a whopping 44 million people have side hustles in an effort to boost their household incomes and, thus, more easily make ends meet. So, you can do the same by working on your real estate business part-time.

The question is, how exactly do you balance your day job and your real estate side hustle? Here’s a look at how to start investing in real estate on the side.

Create a Routine That Works for You

If you’re wondering how to start investing in real estate while still working a full-time job, note that the secret to your success will be in your routine. It’s human nature for people to look for patterns in their days and then stick with them. So, capitalize on this as you seek to develop your real estate side hustle.

To enjoy a nice balance between your day job and your real estate gig, develop a schedule that will work best for you. For instance, after you finish your 9-to-5 each day, build in some moments to scout for properties to invest in before the sun goes down. Also, be sure to carve out dedicated time for addressing any real estate–related emergencies that may crop up each day. When you learn how to expect the unexpected and plan accordingly, you’ll start saving yourself a whole lot of stress.

Starting Practicing the Pomodoro Technique

The Pomodoro technique is a well-known tool used to enhance a person’s time management skills. It is based on the idea that you can fully devote no more than 25 minutes of your time to a certain task.

In light of this, you should spend 25 minutes on real estate investing research, for example, then take a five-minute break. If this process goes on for a couple of hours, you should then take a 15- to 30-minute break before resuming your work. Using this technique will help you to stay focused on your real estate side hustle during the time of day you’ve allotted for your part-time gig.

Do Plenty of Research Before You Invest

When it comes to investing in any asset, conducting in-depth research early on is the key to financial success. So, if you’re curious about how to start investing in real estate, be sure to investigate the various factors that might impact your real estate investment before you dive in. The more informed you are, the more likely you are to make smart decisions regarding where to put your money.

For instance, when you’re working on your real estate side hustle, be sure to pull up-to-date property comps. These comps will tell you what homes are selling for in a certain neighborhood. This will give you a good idea about how much you should offer for an investment property that is for sale in that area, or how much you can expect to sell an investment property for there.

Delegate Your Responsibilities When Handling Your Side Hustle

As you work on your real estate side hustle, you may come across situations where you could use some extra help. And that’s okay. In fact, in certain situations, it’s best to simply hire a professional or start building a team of professionals, rather than attempting to solve the problem yourself. Or, you can glean invaluable advice from a reliable mentor in the real estate industry.

Reaching out to experienced individuals, such as underwriters, property managers, and for help with your real estate side hustle has a twofold benefit: One, you give yourself some room to breathe while running your side business, and two, you get to build your professional investing network.

Motivate Yourself to Keep Going in the Real Estate Field

Once you’ve established a routine for doing your real estate side hustle, try to set some mini-milestones and goals for yourself. Then, when you reach these milestones, give yourself an enticing reward.

For instance, once you finally make it to a local real estate networking event you’ve been putting off, be sure to reward yourself with a pack or two of nice business cards to handout there. Or, treat yourself to some new investment books once you’ve secured adequate funding from passive investors to purchase your first apartment property. Rewards are great incentives for you to keep working hard on your side hustle until you see it generate the results you’re dreaming of. And if you don’t reward yourself, who will?

Start Taking Your Real Estate Side Hustle to the Next Level!

Balancing your day job and your real estate side hustle can feel like a major chore in and of itself. However, many investors who have mastered the art and science of this eventually leaped into real estate investing full time. The same can happen for you as long as you remain persistent, diligent, and disciplined.

The great news is that you don’t have to figure out real estate investing all by yourself. I can guide you through the investing process from the beginning. For instance, you can take advantage of my book Best Real Estate Investing Advice Ever Volume II to kick start your real estate investing career. I’ve also written about 22 tactics for going from your corporate job to multifamily real estate investing, based on my personal experience.

With my help, you can experience excellent returns relatively quickly and avoid making the mistakes that so many novice real estate investors make.

Get in touch with me today to learn more about how to start investing in real estate while still holding down your 9-to-5.

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The Ultimate Guide to Real Estate Asset Management

You’ve sealed the deal, and now, an attractive apartment property is a major part of your real estate portfolio. You’re happy, and so are the passive investors who helped to make your apartment syndication deal possible.

Now what?

Now, it’s time to get serious, as your work has only begun. After all, acquiring an asset is helpful only if you take the right steps to manage it once it’s yours. The question is, where exactly do you start?

Fortunately, I’ve compiled the ultimate guide to effective real estate asset management, filled with the best real estate investment strategies. Here’s a look at the most critical things to add to your real estate investment management to-do list right away.

Real Estate Asset Management Step 1: Follow the Money

After you’ve purchased your apartment property, it’s time to take a good look at the budget. You need to make sure that the numbers are accurate; otherwise, your revenue-generation opportunity may end up costing you more than you bargained for.

So, to ensure that you remain financially afloat, examine your anticipated rental income each month, and compare this with your monthly expenses. These expenses may range from taxes to utilities or insurance fees. Also, be sure to calculate potential costs related to property upkeep and maintenance. You should also have money set aside for emergency expenses or vacant unit coverage. Be sure to budget in the cost of using a property manager to oversee your apartment community as well—which brings us to the next point.

Real Estate Asset Management Step 2: Secure a Property Manager

The great thing about hiring a property manager when you’re investing in apartments is that you don’t bear the burden of keeping up with finding and signing on new tenants, maintaining the units and grounds, executing leases, managing the budget for the property, and other similar duties. For a percentage of the rent you collect each month, this third-party service will complete these duties for you. You can also rely on the service to manage a range of tenant issues on your behalf.

Real Estate Asset Management Step 3: Complete Inspections

Just because you’ve relinquished control to your property manager doesn’t mean it’s time for you to coast. Quite the contrary. While your management company focuses on completing the tasks you’ve delegated to it, you should double-check the work it is doing to make sure that your business is being handled to the values and standards of your company.

Also, when tenants move out or in, be sure to walk through their units to ascertain that your property is in tip-top condition. If you notice any damage or appliances not working, for example, address them right away. Feel free to also complete regular inspections while your tenants are living at your property. Just be sure to give them 48 hours’ notice in writing prior to performing your property inspections.

Real Estate Asset Management Step 4: Maintain a Desirable Property

This is one of the most critical steps you can take when it comes to real estate investment management. After all, nobody looks forward to going to or staying at a property that appears run-down. Investing in landscape maintenance and appropriate outdoor lighting can go a long way in making your apartment property look cared for.

Real Estate Asset Management Step 5: Market Your Asset

If your apartment happens to be in an area with a lot of demand for housing, then advertising your available units is a smart move. This will enable prospective tenants to learn more about what your property has to offer, as well as how to contact you for a rental opportunity.

Your property management service can handle your advertising for you. However, whether you’re doing the advertising or you’re outsourcing it to a property manager, make sure that your ads end up on social media—an increasingly popular tool for marketing real estate rentals.

Real Estate Asset Management Step 6: Choose the Best Tenants

According to federal law, you cannot discriminate against a tenant on the basis of protected factors, like sex or race. Still, it’s paramount that you do screen them based on whether they can afford to cover their rent obligations each month. Check their references, including personal references and former landlords, to see how good (or bad) they are about taking care of the units they rent out. And verify their incomes to make sure that they can meet your established rent levels.

Real Estate Asset Management Step 7: Think Outside of the Box

Remember that your apartment property is more than just a piece of real estate sitting along a busy corridor: It’s an asset. That means your goal should be to improve your property’s value long term. Let’s take a look at a couple of ways you can do this.

First, look for any hidden costs that you may have previously overlooked. For example, when it comes to your property’s electricity, you could use one meter for the entire property, or you could allow every unit to have its own meter. Do some investigation to find out which option would save you the most money, then go with it.

Also, have you ever considered providing rental insurance to your tenants? Not many landlords have. But if you can become the anomaly by doing this, you could easily generate more revenue on a monthly basis without adding a whole lot of work to your plate.

Master the Real Estate Investment Management Process!

Embarking on the real estate asset management process can no doubt be an intimidating experience. However, it can also be an exciting and fruitful one if you know which steps to take from the start.

I have extensive experience with business development in real estate, particularly when it comes to apartment syndications. In fact, expert investor Theo Hicks and I offer free education through a top-notch Apartment Syndication School. So, we can help you through this process.

Get in touch with me today to learn more about how to successfully manage your property and thus watch your bottom line grow like never before.

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Steps to Quitting Your 9-5 for Real Estate Investing

You feel a piece of your soul shatter each time you punch the clock at work.

Sure, you have a job. And sure, it’s paying the bills. But it’s not the fulfilling career you’ve always dreamed of having. And it’s not helping you to get ahead financially.

If you’re feeling stuck in your 9-to-5, you’re not the only one. Research shows that over 70% of employees don’t feel happy about their career choices. The good news? You can quickly change your career path by breaking into the dynamic and potentially lucrative real estate investing field.

Here are five steps to investing in real estate that can get you started today!

Find a Mentor

If you’re wondering how to get started in real estate, the first critical step to your success is finding a mentor, asking them questions, and reading everything you can get your hands on.

Here’s why having a mentor is especially critical starting out.

When you begin your career in real estate investing, you’ll no doubt find it difficult to set up your real estate business, find deals, make offers, and develop an appropriate exit strategy. However, having someone else to give you valuable advice with each step can quickly help you to have several deals per month, rather than just a few deals in a year’s time.

For starters, your mentor can guide you through the process of restructuring your time and income. This will put you in the best position to leave your 9-to-5 and start building the type of business you’ve always dreamed of owning.

Also, when you speak to a real estate mentor, your mentor can share lessons with you about his or her successes and failures—lessons that may help you to avoid making critical mistakes in the beginning. In addition, your mentor can help you to confidently analyze potential deals as well as provide helpful recommendations and connections.

Choose Your Niche and Market

Picking your real estate investing niche and market is one of the most crucial steps to investing in real estate as well. After all, not all markets are lucrative. And, once you find a promising market, a niche is what will pay you the big bucks.

For example, take a look at fields outside of real estate. The specialized professionals—like contractors, engineers, technicians, dentists, and medical surgeons—are the ones who bring in the most bacon. In the same way, you need to narrow down your area of focus and work on mastering it.

Some popular investment niches today include single-family homes, small or large apartment buildings, office properties, and industrial properties, for example.

Going back to the first step, read about the niche that interests you the most, and try to find a mentor who has extensive experience. Your mentor can also point you to the local market that may give you the best return on your investment. The better you become in your chosen niche, the more credibility you develop.

The Steps to Investing in Real Estate Include Securing Capital

If you’re wondering how to get started in real estate, it’s critical that you learn to bring in investors to secure capital.

The truth is, you can’t build and scale your business efficiently on your own. You need partners who are willing to contribute their capital to help you to complete deals that will make both of you money. In the real estate investing world, these are passive investors.

To draw passive investors, you absolutely have to network. For example, you’ll need to attend industry conferences, clubs, or meetings, where you can meet these potential business partners in person. Then, once you make connections, put together a plan detailing a particular real estate deal you’re interested in. You can share this investment plan with your connections to see who is willing to work with you.

With the right investors on your side, you can quickly take advantage of hot deals and start generating revenue at a much higher level than you could have done without outside help.

Build Your Team

Creating a robust real estate investing team is also one of the most critical steps to investing in real estate. Your team should consist of several core individuals who will provide you with guidance and advice on various aspects of your business.

For instance, you might want to hire a real estate broker to help you to find and close deals. You might also want a real estate attorney, who can help you with structuring your company, in addition to advising you on your due diligence. You will additionally need to find a reputable insurance agent to help you to protect the assets you accumulate over time.

An accountant can help you to watch your bottom line and keep it strong. Contractors are critical to have on your team as well, as they will give you an idea of what repairs need to be made to your assets whether you’re renting them out or flipping and selling them.

The Steps to Investing in Real Estate Include Finding and Making Great Deals

Finally, you need to know where the good deals are if you’re going to succeed as a real estate investor. For example, industry professionals at meetings may tell you about deals you may be interested in. Or if you’re trying to sell a property, you might find a buyer at your local real estate conference. You may also find gems among bank-owned properties or even get lucky with properties being sold at auctions.

Take the First Step Today!

Creating any business can be a challenge, and a real estate investing business is no exception. However, surrounding yourself with the right industry knowledge and the right people can help you to master how to get started in real estate.

Learn how to apply the above steps to investing in real estate. Contact me today to learn how to quit your 9-to-5 and start doing something you’ll enjoy for years to come.

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What to Look for in Residential Real Estate Investments

Looking for the right residential real estate investments is not a black-and-white process, as many factors are involved in selecting the perfect property. It’s especially critical that you understand these factors if you’re interested in drawing in capital from other investors. After all, these partners will ask you about these factors before contributing capital to your potential deal.

Here’s a glimpse at what you should look for in a property when embarking on a deal.

Consider the Neighborhood

Note that your chosen neighborhood will ultimately determine the type of tenant or buyer you will attract, as well as your rate of vacancy. For example, let’s say that you buy a property near a college. In this situation, you can expect to draw students to your property, which means you may have a hard time filling your vacancies during the summer months.

Look at the School System When Searching for a Residential Property Investment

If you are targeting families as part of your residential real estate investing strategy, it’s imperative that you consider the quality of the schools near your target property. If you can’t find highly-rated schools close by, you may want to avoid purchasing it, as this will negatively affect the investment’s value, and you might have trouble selling it to your target buyers.

Take a Peek at the Job Market Around the Property

If you want to attract the most tenants or buyers possible, it’s wise to choose a property in an area where employment opportunities are on an upswing. So, take a look at the local media to see if major companies are relocating to that area, for example. When companies move to cities, workers who are looking for places may very well flock to these areas, which is good for local landlords and sellers.

Keep an Eye Out for Future Development In the Area of Your Target Property

When you’re getting into residential real estate investing, before purchasing a property, try to check with the area’s planning department for information about a new development coming to the area. If you see construction in progress, or if construction will be taking place soon, this indicated a high-growth area. This is great when it comes to drawing more buyers and tenants to your home. Of course, keep in mind that new housing may end up competing with your property, and some new developments might hurt their surrounding properties’ prices.

Look out for Property Taxes in Your Target Area When Delving into Residential Real Estate Investing

Property taxes will probably vary across the area you are targeting for your residential property investment. For this reason, it’s important that you know how much your target property’s taxes are. High taxes aren’t necessarily bad if your property is in an area that draws long-term renters, for example. However, some not-so-attractive properties also come with high property taxes—a situation you don’t want.

The city’s auditor or assessor office is a good place to find out tax information for the properties you’re interested in purchasing. Alternatively, you could speak with property owners in the area. Also, try to find out if taxes will increase in the future. Towns that are facing financial crises might boost taxes to a level that is beyond what you’ll be able to charge a tenant or buyer.

Find out What the Local Crime Situation Is Before Engaging in Residential Real Estate Investing

As a general rule of thumb, tenants don’t want to live in or even near crime hot-spots. So, do your due diligence in this area before purchasing an investment property. For instance, check with the public library or local police for up-to-date crime statistics regarding your target neighborhood. Specifically, check how much petty criminal activity, serious criminal activity, and vandalism is taking place there. You could also ask how frequently police show up in the neighborhood.

Consider Local Amenities Before Embarking on Residential Real Estate Investing in an Area

Before you settle on an investment property, tour the property’s neighborhood to check out its public transportation, movie theaters, gyms, restaurants, and parks. All of these are amenities that attract tenants. Also, check with the area’s city hall, as it might offer promotional literature on the various public amenities in the vicinity.

Take a Peek at Vacancies in Your Target Investment Area

If you’re serious about residential real estate investing, it’s wise to also look at the quantity of vacancies and listings in your target investment area. If the neighborhood has a high listing number, this could indicate a normal seasonal cycle, or it could be a sign that the neighborhood is declining. Either way, you as a landlord will likely have to lower your rent to draw tenants. On the flip side, a low vacancy rate in an area means you can raise your rental rates.

Start Your Search for Residential Real Estate Investments Today!

Real estate is one of the best investments you can make, but your choice of property will either make you or break you in the business. The good news is that you don’t need to navigate residential real estate investing on your own.

I can guide you through the process of buying real estate assets to add to your portfolio. In addition, if you’re looking for a passive real estate investment opportunity, I’ve got you covered. Contact me to get started with property investing today!

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Ten Questions to Ask Your Real Estate Mentor Early On

You feel a surge of excitement as you imagine building your own modern real estate empire. You’re already brainstorming how you’ll secure financing for your future deals and what types of deals you’ll pursue. You’ve even found contractors who can help you with any renovation work you’ll need to do.

But there’s still something missing.

If you plan to set sail on the open sea of real estate without a rudder—also known as a mentor—to guide you, you’re selling yourself short.

The reality is, if you want to thrive in the competitive and constantly evolving real estate investing world, it’s critical that you enlist the help of a real estate mentor. Here’s a rundown on 10 questions to ask your real estate mentor early on so as to put yourself in the best position to succeed in real estate investing.

1. Which Investment Approach Has Worked Best for You?

This is an essential question to ask mentors for real estate investors because it’s a good idea to choose a real estate mentor whose investing strategy mirrors yours.

The main strategies you can use include buying and selling, also known as flipping; wholesaling; and buying and holding, also known as owning rental properties. In addition, you’ll need to decide whether you plan to zero in on commercial properties or focus on residential ones. The best mentor is one who has extensive experience in using the strategies you’re aiming to use.

2. What Should You Look for During a Property Tour?

As you embark on the path to investing in real estate, you may immediately assume that all fixer-upper properties are excellent deals. Wrong.

The truth is, both experience and attention to detail are needed to decide if the cost of renovating a property would surpass your possible profit from that property.

So, see if your mentor will allow you to accompany him or her on a property tour. This will give you a firsthand look at how he or she determines whether a property is worth investing in. In addition, ask your real estate mentor what his or her target return on investment typically is. Such insight from mentors for real estate investors can help you to consistently choose lucrative investments in the future.

3. What Drew You to Real Estate Investing, and How Experienced Are You?

Just as a hiring manager may want to know how seasoned a job candidate is, you should find out how experienced your real estate mentor is right away.

Ask your mentor how long he or she has been investing in real estate, as well as what caused him or her to become a property investor. Also, ask how many real estate properties he or she owns in total.

It’s also a wise idea to ask the mentor how many real estate assets he or she purchased last year, as well as what his or her plans are for the current year. Why? Because you want a mentor who understands not only past markets but also the present market climate.

4. How Are You Financing Properties?

The answer to this question from mentors for real estate investors will help you to choose the right property financing avenue for your needs. For instance, you could seek a loan from a bank, or you may want to tap into the resources of accredited investors instead. Your mentor can tell you the pros and cons of each approach and share with you what has worked best in his or her situation.

5. What Industry Technology Are You Using?

Ask your real estate mentor what technology he or she is leveraging for automating tasks. These technologies may range from property management software to lockboxes, for example. The right technology will save you on time and ultimately improve your investing experience.

6. What Mistakes Did You Make as a New Investor?

Your first year as a real estate investor will probably be your hardest one. However, you can save yourself a lot of confusion and heartache by finding out what costly mistakes your mentor made starting out and how to avoid these mistakes.

7. Do You Utilize a Property Management Company?

As a general rule of thumb, wise mentors use property management companies to help them to manage their rental properties. So, if your real estate mentor doesn’t use such a company, you may want to think about finding another mentor.

Using property management companies will prevent you from having to go hunting for late rent payments or spending a lot of time on property repairs. In other words, it’ll give you the freedom you need to thrive as an investor.

8. Who Are Your References?

Be sure to ask your real estate mentor for his or her references—and I’m not just talking about other real estate investors who are gleaning wisdom from him or her.

Feel free to also talk with your mentor’s past joint venture partners or even people who’ve purchased his or her flip properties. All of these parties can give you insight into what they liked (or did not like) about the mentor’s work, and this can impact how you approach your future projects.

9. How Have You Failed?

All experienced real estate investors have experienced setbacks in their careers. Learning about these setbacks from your real estate mentor early on can help you to make wise decisions both now and in the future.

10. What Exit Strategy Have You Developed?

This is yet another critical question to ask your real estate mentor, as the whole point of getting into property investing is to build wealth. Your mentor should be able to tell you how he or she will sell his or her investments to turn his or her equity into cold, hard cash.

For instance, maybe your mentor plans to sell a property to a tenant using a lease option. Alternatively, you could sell a property using a real estate broker, or you can wholesale the property to another investor. Understanding your real estate investing exit strategy is paramount because you may end up needing to leave the game at any point, and you need to be prepared for this.

Start Taking Advantage of Mentors for Real Estate Investors!

Building a property investing career can no doubt be exciting, but it can also be intimidating. The good news is that I, Joe Fairless, can walk you through it from the start, serving as your hands-on real estate mentor. Contact me today to find out how I can help you to start off on the right foot and keep moving in the right direction as a real estate investor.

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skyscraper commercial investment real estate

Lucrative Commercial Property Investment: Office vs. Industrial vs. Apartment Real Estate

So, you’re reflecting on the past few months to see how far your bottom line has come. If you haven’t made significant gains financially, now may be a good time to get serious about expanding your real estate investing footprint. Or maybe it’s time to buckle down and develop a footprint in the first place.

The commercial real estate industry continues to show great promise for those interested in attaining their individual American Dreams. For instance, perhaps you want to retire early and retire well, or maybe you’d like to build an empire that you can pass down to future generations. Achieving your dream is certainly possible, but if you’re using real estate to do it, you need to know where to put your money.

So, which type of commercial investment real estate property should you pursue for your next investment?

Here’s a rundown on the differences among office, industrial, and apartment real estate investments and how to choose commercial investments based on your particular situation.

How to Choose Commercial Investments

A Glimpse at Office Real Estate

Office real estate is usually categorized into a couple of types: suburban and urban. Suburban office facilities are typically smaller than their urban counterparts and can be found in office park environments (for instance, a medical office park). Meanwhile, urban facilities, which include high-rise buildings and skyscrapers, are present in cities.

An office commercial investment real estate building can feature a single tenant or multiple tenants. In addition, it can be classified as Class A, B, or C. A Class A building usually features cutting-edge systems and are designed for your premier office user—one willing to pay above-average rent. A Class B building usually features average rent prices and fair finishes. Meanwhile, a Class C building offers below-average rents and functional space for tenants.

Why Choose Office Commercial Investment Real Estate?

As you explore how to choose commercial investments, note that one of the main benefits of investing in office buildings is that these spaces have a tendency to provide a hedge against inflation. That’s because an office building has triple net leases, where regular rent increases are built into the leases. In addition, with triple net leases, your tenant will pay you not only rent but also repairs/maintenance, property taxes, and property insurance.

Another reason that investors embrace office properties is that they are among the types of properties with the greatest amount of bank financing available.

The main downside of this type of property is that when a tenant churns, you may need to heavily renovate the empty space to make it suitable for the next renter.

A Glimpse at Industrial Commercial Investment Real Estate

Industrial buildings are useful for housing tenants’ industrial operations and are typically found on the outskirts of cities, usually along core transportation routes.

Tenants may use industrial buildings to do heavy manufacturing or light product assembly. These types of buildings can also become distribution centers. Some tenants may additionally look for flex industrial properties, where they can take advantage of office space along with industrial space.

Why Choose Industrial Real Estate?

If you’re exploring how to choose commercial investments, a major reason to pursue industrial properties is that the capital requirements for these spaces tend to be relatively low.

On the flip side, the lower cost of entry for industrial real estate investing compared with other kinds of commercial real estate investing is making this market very competitive at the moment.

Still, like office buildings, an industrial property comes with triple net leases, so your tenants will assume responsibility for all expenses related to renting your property.

A Glimpse at Apartment Commercial Investment Real Estate

You can invest in various types of apartment buildings, such as high-rise or mid-rise buildings. High-rise buildings feature at least nine floors and one or more elevators, whereas their mid-rise counterparts feature fewer floors and only one elevator.

You can also invest in a garden-style apartment building erected in an urban, suburban, or rural location. Walk-up apartment buildings are also an option if you’re okay with owning buildings featuring 4-6 stories but no elevators.

Why Choose Apartment Deals?

A major perk of investing in an apartment is that these types of properties can be effortless to find. In addition, if you’re planning to seek funding through a bank, banks generally like lending on these types of properties. Plus, they’re wonderful generators of cash flow.

Many investors also like apartments because they offer the best portfolio diversity due to the high number of tenants you can have in one building. The industrial and office niches are riskier in this sense because they come with fewer tenants.

Additional Benefits of Apartment Commercial Investment Real Estate

A major appeal of apartment investment properties is that they usually come with limited risk. Why? For starters, high vacancy in apartment buildings is relatively rare. In fact, apartments offer the greatest growth prospects compared with industrial and office buildings because today’s dislocated homeowner is becoming a renter.

In addition, when tenants move out, you usually just need to add some fresh carpet and paint before you re-rent their units. Of course, in some situations, much more needs to be done, which can add up financially.

Start Mastering How to Choose Commercial Investments Today!

Now couldn’t be a better time to delve into the dynamic commercial investment real estate market and look for new revenue-generation opportunities. Understandably, though, you may be overwhelmed by the idea of having to choose among office, industrial, and apartment buildings for your next investment.

I can guide you through the process of selecting your future commercial real estate investments so that you avoid making costly mistakes. Get in touch with me today to learn how you can buttress your bottom line and enjoy new levels of wealth via commercial real estate in the years ahead.

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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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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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office real estate investment properties in Huston

Real Estate Investment Properties: Retail vs Office Spaces

Every real estate investment opportunity comes with risk, but it also comes with the opportunity to boost your bottom line like never before. You just need to know what a good opportunity looks like, especially if you’re contemplating pouring your money into office or retail real estate investment properties.

To help, I’ve compiled some property investment advice focused on the differences between a retail real estate investment property and an office property, so you can decide for yourself which one may produce the greatest return on your investment, or ROI, in your particular situation.

The Potential ROI of Each Property Type

A major advantage of investing in retail spaces is that these properties are generally landlord-friendly. That’s because tenants typically pay all expenses in net net net leases, or NNN leases. In addition, retail properties often have high rental yields of between 5% and 12% because they have well-known companies as tenants or have several different tenants.

With the “anchor effect,” a large store, like Walgreens, is used to anchor an outdoor shopping mall. The benefit of this setup for investors like you is that the rents of the other shops in the area can go up as a result of the additional shopping traffic generated from the mall’s anchored properties.

Also, you can take advantage of what’s called the percentage rent with retail real estate investment properties. This rent is dependent on the mall retail properties’ sales volumes. That means if a shop is doing extremely well with its business, you can collect more rent. In this situation, you’re gaining profit via the tenant’s base rent and can also get a portion of the tenant’s sales to boot.

Office Properties

Investing in office space often means less risk for you. Additionally, these properties are a bit more cost-friendly compared with retail spaces, as long as you account for all the expenses carefully. At the same time, you may not receive as great of an ROI. However, if cost is a factor, investing in office space over retail space makes financial sense.

Retail and Office Real Estate Investment Properties’ Lease Terms

An especially good reason to invest in retail is that the lease terms can run as long as 10 to 15 years. Retail tenants have a tendency to stick around longer since they have invested in substantial amount of money in their leased spaces. For instance, they invest their capital in decorating, customizations, and improvements. If they stay in one place for a while, they can amortize these costs over a long period.

Also, retail giants are relatively established, which means that, compared with smaller businesses, big retail companies can more easily assume the monetary risk that comes with longer-term leases.

Meanwhile, office lease terms typically run from around three years to as many as 15 years. Newer or smaller companies usually can’t guarantee that they’ll be financially strong long-term, so they usually choose shorter leases. So, if you prefer longer leases, retail may be the way to go. On the other hand, office tenants often renew their leases, so office real estate investment properties are still an attractive option.

Managing Your Office or Retail Real Estate Investment

A major benefit of both retail and office properties is that the landlords and management companies that support them are usually free from responsibilities related to the property. This makes these properties different from apartment buildings, where tenants may contact their landlords when something malfunctions or is damaged.

For example, an apartment building tenant may need a floor refinished. In this situation, the tenant has to inform the landlord of this and then wait for the landlord to handle it. However, tenants in office and retail properties are usually more on top of problems with their spaces because they don’t want to lose business due to property-related issues. As a result, they typically have a greater amount of freedom to address repairs before they affect their businesses.

All in all, both retail and office properties are excellent sources of passive income if you want to be more hands-off after the deal is done.

Long-Term Outlook for Office and Retail Real Estate Investment

Properties

If you’re interested in diversifying your portfolio, your best bet is to go with retail property investment. This is especially true if you plan to invest in a shopping center or mall. Why? Because this type of deal features several income sources from many tenants. That means, if a single tenant ends up going bankrupt or moving locations, you won’t be affected as much financially.

The above is good news considering that retail has had a hard couple of past years, with the increasing popularity of online shopping. However, experts say that retail sales in the third quarter of last year actually rose by more than 6% year-over-year. This was the largest gain since back in 2012. Retail sales are expected to continue to be healthy in 2019 due to increasing consumer confidence, a robust job market, more wage growth, and lower taxes.

Office Properties

For office properties, the outlook also remains positive. During the first three quarters in 2018, activity began to slow down, but it remained positive. However, during the final quarter, the industry had a very optimistic outlook due to a leasing market that was active, coupled with rent growth. In 2019, this same momentum is continuing. The demand for flexible space is continuing to boom, especially space used for technology and coworking purposes.

Start Purchasing Real Estate Investment Properties Today!

If you’re ready to take your bottom line to a whole new level, both office and retail real estate investment opportunities may be a smart choice depending on your end game. The great news is that you don’t have to dive into the property investment world on your own.

Learn how to raise money to invest in real estate from me, Joe Fairless, to start your journey towards financial independence.

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How to Make Your Passive Investors Aware of Potential Real Estate Investment Risks Without Ruining Your Chances

The greater the risk, the greater the reward, right? This old adage applies in many aspects of life, and real estate investing is one of them. The question, though, is what amount of risk is appropriate?

 

The reality is, the chance to purchase physical assets provides many investors with a sense of comfort. Plus, the fact that the real estate market has rebounded from the Great Recession of 2008 and has reached all-time highs lately makes this industry even more appealing to investors. Still, these investments may come with several risks that your passive investors should consider, rather than simply paying attention to the anticipated return.

 

Here’s a rundown on how to make your passive investors aware of potential real estate investment risks without ruining your chances.

The Risk of Commercial Renters Going Bankrupt

How stable and long-lasting is a commercial real estate property’s stream of income? That’s what ultimately drives its value. For instance, if Apple signs a 20-year lease with you, the price tag of this lease is much higher than the total amount of money you’d generate in an office building featuring many smaller tenants.

 

However, to make your passive investors aware of credit risk, show them recent news reports about Sears’ financial struggles. Sears used to anchor malls back in the 1990s, but these days, it is going through the bankruptcy process. The truth is, even tenants who are the most creditworthy can end up going bankrupt, so this is a risk that’s important for passive investors in commercial real estate to consider.

 

Demonstrate to investors how you’ll deal with renter turn around in a lucrative way so that, if this ever happens, they know you can recover easily.

Real Estate Investment Risks Include Leverage Risk

The greater the amount of debt you have tied up in a real estate investment, the greater the risk associated. In this situation, investors would be wise to demand more in return.

 

The thing about leverage is that can certainly help to propel a project forward quickly, in addition to increasing returns if everything is going well. However, if the loans associated with a project happen to be under stress—for instance, the return on the asset is not sufficient for covering the interest payments—an investor tends to lose large sums of money quickly.

 

The Leverage Rule

 

In light of the above, a good rule of thumb is not to let leverage exceed 80%. A return on an asset should primarily be generated from the real estate property’s performance—not through excessive reliance on leverage. So, be sure to instruct your passive investors to exercise caution when it comes to the amount of leverage used for capitalizing an asset. Also, remind them to ascertain that they receive returns that are commensurate with that asset’s risk.

Discuss with Them Any Structural Risk

Structural real estate investment risks aren’t related to a real estate property’s structure; rather, they have to do with the financial structure of an investment, as well as the rights provided to participants.

 

You need to tell your passive investors what their rights are based on their positions in a joint venture, like a limited liability company—for instance, whether they have a minority or majority holding. This will determine how much they’ll have to pay the person managing the company when the real estate asset is sold, as well as how much profit they’ll receive from the deal.

 

Also, how much equity is the manager investing compared with the limited partners? If limited partners are involved in deals with advantageous profit splits with the managers, and if the managers have a lot less cash invested in these deals, the managers are incentivized to take more risk. Make sure that your passive investors understand this structural risk concept before moving forward with a deal.

Liquidity Risk as it Relates to Various Markets

To make your passive investors aware of liquidity risk, ask them how they’ll exit an investment if they need to. Use two completely different cities to make your point about this type of risk.

 

For instance, dozens of investors might show up to place bids in a large real estate market like Houston, no matter what the market conditions may be like. Meanwhile, a real estate asset located in the city of Evansville in Indiana won’t draw as many market participants. This is an important consideration because it may be easier to get into the Indiana investment, but it will also be harder to get out of it.

Idiosyncratic Risk – Location, Location, Location

Idiosyncratic real estate investment risks are related to a certain property. Point your private investors to the current example of Wrigley Field to help them to understand a particularly important type of idiosyncratic risk: location risk.

 

Buildings behind this famous Cubs baseball field in Chicago have been used to host privately held rooftop parties. However, these assets are becoming bust investments because a brand-new video board will totally block their views into the field. Meanwhile, property values around The 606—Chicago’s high line— are rising.

 

Additional Idiosyncratic Risks

 

Other types to consider include construction risk. Construction makes a project riskier by limiting the ability to collect rent or profit during the construction period. In addition to construction risk, there are environmental risks, which may include workforce and political risks, budget overruns, and soil contamination.

 

Yet another type of idiosyncratic risk to factor in is entitlement risk. Entitlement risk is where a government agency that has jurisdiction over your project will not issue the necessary approvals for your project to move forward.

Start Making Smart Investments Amid Today’s Potential Real Estate Investment Risks!

Real estate investing does come with multiple risks, but if you and your private investors weigh the risks and the rewards wisely, you can enjoy great returns from one deal to the next. Learn more about finding and making great apartment deals from my and Theo Hick’s book, Best Ever Apartment Syndication Book.

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a row of homes in a neighborhood

Top Trends in Real Estate Investment

Real estate trends and investment opportunities are always fluctuating and changing along with the market. This year has been no different. Being aware of recent patterns will help you to better navigate the market and to make better investment decisions overall. Whether you’re looking to start investing in real estate or are an experienced, accredited investor already, here are some of the movements to pay attention to.

Single-Family Homes

Single-family homes have continued to be a real estate trend as the market continues to grow. This property type is defined as a single unit structure that is detached from anything else. As more and more individuals are looking to rent more than just apartments, this is creating a growing market for rental homes. As a result, investors are increasingly becoming more active in building this market segment.

Single-family homes can be a great long-term investment option depending on your individual financial goals. But there are a variety of important considerations that should be made before investing in a single family home. First and foremost, location is a huge factor that must be considered. Is the property located in a good area? What is the local school district like? Particularly since this property type attracts families, you want to ensure that you are taking that into account when developing an investment strategy.

Interest in Texas

It’s no secret that Texas is a state that continues to generate huge opportunities when it comes to real estate trends and investments. This year in particular, the industry has seen continued interest and growth in Texas. With the growing and profitable oil and businesses, there are more and more companies that are flocking to the Lone Star State. This growth is creating more and more real estate investment opportunity in the state, including commercial spaces.

A Rise in Rentals

Another trend that has been steadily growing over the last few years is the increase of rental rates, particularly in cities. As cities continue to boom and grow, so does the number of people looking to rent property. What this means for real estate investors is that there will likely continue to be more and more opportunities to invest in apartment syndications. This means making passive income from monthly rental fees and the eventual sale of the property!

If you’re interested in learning more about investing in apartments, I created an entire FREE apartment syndication school to give you a solid foundation on the subject and the basics you need to be a successful investor.

New Construction

Another real estate trend that has been sweeping the country recently is a rise in new construction. This property type is defined as a building or home that is brand new and has never been occupied before. As the population grows, there is a need for new houses or rental spaces. As a real estate investor, purchasing a new construction property or apartment complex in a stable area could be a great addition to any investment portfolio.

Use of Technology

All aspects of the real estate market have been impacted or updated due to the continued use of technology, and this especially applies to marketing and online listings. More and more, the use of online marketing is helping to build awareness of what’s going on in the real estate industry. With the popularity of apps continuing to grow, you can now search for property listing, check housing prices, and see what realtors are active in your area all at your fingertips. This access to information is also making it easier to meet and connect with other investors that are also interested in purchasing or investing in real estate.

But the technological impact has not just be limited to apps. This includes the use of professional photographers and videographers, as well as staging floor plans and designs. This means that, when looking at a property online or via an app on your phone, the quality and level of both photography and interaction has improved. This continued use of technology will raise the bar for investors and buyers alike. Technology is truly shaping the way that all stakeholders in the real estate industry interact.

Last Thoughts

Real estate trends and markets will continue to grow and develop with time. As you become more and more familiar with real estate investment trends you will be able to better recognize what opportunities you can capitalize on. Being aware of the trends and regularly keeping up with the latest market regulations will help you to be a more informed and successful investor.

To learn more about real estate investing and to get detailed advice on how to grow as an investor, check out my blog.

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How to Earn Tons of Extra Cash-Flow While Still Working Your 9-5 with a Real Estate Passive Income

Most people know what it’s like to sit at a 9-5 job everyday and wish there was a way to simultaneously make more money. Real estate passive income is one of the best ways to not only generate passive income while still working your day job, but also to build wealth to one day not have to actively work at all. Investing in real estate doesn’t have to just be a dream. With the right tools and training, you can begin investing in real estate and turn your dream into a reality.

So how do you get started in real estate and set yourself up for financial success? Passive income through investing will take some time and research to set up but is well worth it in the long run. Doing the research to determine which investment strategy is right for you will allow you to make decisions that align with your overall financial goals. Having clearly defined goals is also important in guiding the entire investment process.

One of the first steps to getting started with real estate passive income is figuring out exactly how much money you have to invest in a particular strategy or deal. Once you know how much you can spend, you will be able to identify your target market. After that, you will then be able to explore which passive investment option is best for you.

Rental Properties

One of the most common ways to create real estate passive income is by owning a rental property. By renting out an apartment or home every month, you have the ability to generate significant income. As long as the price of rent exceeds the amount of the mortgage, maintenance, and management of the property, you will actually make money every month. That revenue can then to used to expand your investment options, retirement fund, or savings.

Having the right tenant and being able to easily attract tenants is also an incredibly important factor that should be taken into consideration when deciding to rent. With the right tenant who pays on time and cares for their space, investing in a rental property is one of the best sources of passive income.

Apartment Syndication

Apartment syndication is another profitable option for creating real estate passive income. This will often require you to partner with a syndicator who brings together capital from multiple investors like yourself to purchase an entire apartment complex. The process can be complex and is considered an advanced real estate investment option.

However, the complexity of the process is often well worth it. One of the biggest advantages of being a passive investor is being able to get the benefits of owning an apartment complex without having to commit all of your time like active investors. This option is similar to investing in stocks or bonds and is a long-term investment strategy.

Diversify Your Investments

One of the key rules to investing in real estate is to diversify your portfolio. This is particularly true as a passive investor just starting out because diversification helps to mitigate risk and increase profitability.

As an example, this may mean investing in both rental properties as well as single family homes or investing in rental properties in multiple states to expand your investment to a variety of different markets.

Learn More About Passive Investing

The more you learn about real estate investing and passive investment options, the better you will get at identifying the right opportunities. Take advantage of all the information available regarding becoming an accredited passive investor by taking online courses, attending training programs, and diving into as many books on the top as you can. Having a solid understanding and knowledge of real estate will give you the ability to make the best decisions for your financial situation.

Earning tons of extra cash flow while still working your 9-5 job is possible with real estate passive income. With the right preparation and research, you can start investing and work toward financial freedom.

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Investing in Apartment Complexes: What It Takes to Become an Apartment Syndicator

Apartment syndication, which means making deals and investing in apartment complexes, is a complex strategy that can lead to an incredibly lucrative career. Whether you’re interested in active or passive investing, understanding the basics of apartment syndication is invaluable.

Here’s what it takes to become a successful apartment syndicator:

Some Basic Industry Knowledge

First and foremost, in order to become an apartment syndicator, you need to have a strong knowledge and understanding of the real estate industry as a whole. This means knowing and understanding basic real estate terminology, legal implications, and industry buzzwords.

Investing in apartment complexes requires meeting with potential investors and outlining all of the key aspects of a deal. Knowing the basics of real estate investing and apartment syndication, such as passive investment, target markets, due diligence, and off-market deals will give you a competitive advantage and is fundamental to not only getting a deal but closing the deal.

You can gain extensive industry knowledge through academic courses, online trainings, or certificate programs. There are a variety of ways to augment your real estate knowledge and expand your general knowledge.

Stay in the Loop

Continuing to stay up-to-date on all the latest industry trends and topics will also ensure that you have a strong foundation to rely on when becoming an apartment syndicator. This includes keeping up with the latest market trends and any updates to legislation that will impact the real estate industry and overall economic climate.

Staying in the loop is key to truly keeping up with the market. For real estate, this means understanding the property values and demographics in the area you’re investing in. Even following popular real estate blogs, podcasts, and thought leaders will give you an advantage and help you to learn about the issues impacting the industry.

Regularly reading industry magazines and publications will also help to make sure that you are staying up to date on the latest information available. Being aware of what is going on in the market will also allow you to have in-depth conversations with investors and can help with negotiations.

Business Savvy

Once you have developed a solid amount of industry knowledge and education, another key aspect of investing in apartment complexes is having overall business skills.

Basic business skills that are applicable to apartment syndication include:

  • Project management skills
  • Negotiating
  • Business plan development
  • Problem-solving
  • Communication skills
  • Marketing
  • Networking
  • Finance

Apartment syndication involves managing large amounts of investment capital and being able to determine a successful overall strategy that will offer investors timely return on investment. Just remember, find partners and create a team of experts so you don’t have to wear all the hats at once.

Becoming a Successful Apartment Syndicator

Investing in real estate is one of the best ways to generate wealth and create passive income. Combining extensive industry knowledge, business know-how and overall real estate experience will give you the foundation you need to be successful in apartment syndication.

If you want to learn more about investing in apartment complexes and apartment syndication, check out the only book available today to offer a comprehensive deep dive on the subject: Best Ever Apartment Syndication Book.

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5 Lessons Learned from the Worst Real Estate Investments

When seeking to learn investment lessons from others’ real estate investing mistakes, you don’t just want to hear about their worst deals ever. What you really want to know is why it was bad and how you can avoid making the same mistakes!

That said, here are five lessons active real estate investors learned from their worst deals ever:

Lesson #1 – Rental Properties are Better Wealth Builders Than Fix-and-Flips

Garrett White learned two valuable investment lessons from his worst deal ever. It was his first attempt at a fix-and-flip in 2017. Up to that point, he had only purchased rental properties. Garrett purchased the property for $77,500 from a burned-out landlord, put in $18,500 in renovations, and sold it for $120,000 three months later.

While he was able to make a profit on the deal, the first lesson he learned was that, compared to fix-and-flips, rental properties and rental syndications are much better wealth builders. On fix-and-flips, the main benefit comes from the short-term forced appreciation. Whereas for rental properties, you’ll benefit from short-term forced appreciation, long-term natural appreciation, ongoing cash flow, tax advantages, and the principal paydown. He made a quick profit with fix-and-flips, but to build long-term wealth and use his time more effectively, he believes rental properties are a much better option.

Lesson #2 – Time is Your Most Valuable Asset

Another investment lesson Garrett learned from his real estate investing mistake, which resulted in his worst deal ever, was the importance of time. He said the amount of time, hustle, and stress involved during those three months spent on the flip were greater than the four years of owning six rental properties combined. The large time commitment involved in identifying a fix-and-flip opportunity, evaluating and closing, managing or doing the renovations, and selling the deal weren’t worth the stress and short-term profit. Instead, Garrett would have rather spent his time cultivating relationships with brokers, owners, and accredited passive investors so that he could syndicate deals and buy rental properties.

Lesson #3 – Consider Creative Financing Before Passing on a Deal

Robert Lawry II’s worst deal ever was a deal he didn’t do. It was a 2-bedroom condo with an oceanfront view listed for $30,000 in 1993. Robert was 19 and couldn’t fund the purchase price, so he passed. Today, the condo is valued at $800,000…ouch!

But Robert learned a valuable investment lesson. Rather than passing on the deals he cannot fund alone, he now knows that he should brainstorm creative financing options first. For example, he could have raised private capital to purchase the condo. Or he could have implemented the house hacking strategy, bringing on a roommate or two to cover the acquisition costs and to pay rent to cover the mortgage payments.

Don’t pass on the deal just because you cannot fund the acquisition costs. If the return projections are truly strong, you shouldn’t have an issue finding someone to help you purchase the deal.

Lesson #4 – Don’t Deviate from Your Investment Criteria

Eric Jacobs’ worst real estate deal was a home he purchased in the Bahamas. He knew it wasn’t a good deal but he bought it anyways. Eric lost a fair amount of money on this deal, but he, fortunately, learned an important investment lesson and realized the error is his ways and didn’t pursue any more deals in the Bahamas real estate market.

His real estate investing mistake was that he fell in love with the property. As a result, he deviated from his investment criteria and ignored the results of his underwriting. We’ve all been there, but we must remember that we set our investment criteria the way we did for a reason. If the deal doesn’t meet our criteria, no matter how much we love it or try to bend the numbers, we have to pass.

Lesson #5 – Hold Partners Accountable

On Roman Bulgakov’s worst deal ever, he was betrayed by his real estate business partner. He trusted that his partner had the best intentions of the company in mind when the reality was that his partner was only looking out for himself.

Roman partnered with a contractor who agreed to finish the project in six months at an agreed upon price. However, the contractor ended up taking twice as long and charging twice as much. By the time the deal made it to the closing table, Roman only made $1500.

Roman’s investment lesson is to keep partners accountable. He failed to create accountability checks along the way, which the contractor took advantage of. Moving forward, Roman has a defined process with his partners in which he has frequent check-ins to receive status updates on his projects. That way, he can catch timeline or budget deviations before it’s too late!

The Value of Real Estate Investing Mistakes

Though a misstep may sometimes be inevitable when you’re entering into a new business venture, it’s important to see these as an opportunity to grow. Every bad deal is an investment lesson, an experience that, with some hindsight and careful reflection, you can really learn from. For even more actionable advice, check out my book series, Best Real Estate Investing Advice Ever!

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5 Reasons to be Skeptical of a Real Estate Deal

Each week within the Best Ever Show Community, we post a question. Our most recent inquiry was “what is the biggest red flag for you when evaluating a potential real estate deal?” Moreover, how do you find good real estate investments?

Depending on your business plan, the entire underwriting process – which includes gathering the required data, building a financial model, performing a rental or sales comparison analysis and visiting the property in person – can take anywhere from a few days, to a few weeks to even a few months. Then, once the property is under contract, you’ll have 30 to 60 days to perform additional due diligence to confirm your underwriting assumptions and create a business plan.

When you add to that the costs associated with both underwriting and due diligence, the deal evaluation process requires quite the investment, of both time and money.

Therefore, the earlier in the process you can identify potential red flags or disqualifiers, the better, as you will save yourself both money and time.

In fact, I created a series about the top 10 tips for underwriting a deal (click here to listen to part 1). In addition, here are five more tips on things to look for when evaluating potential real estate deals.

1 – Errors in the Offering Memorandum

The offering memorandum (also referred to as the OM) is a sales package created by the listing real estate broker that is used to market and provide a summary of the deal. The key word here is “sales.” The purpose of the OM is to help the real estate broker sell the property for the highest price possible, because the higher the sales price, the higher their commission.
While the OM will include a rent roll, T-12 and proforma, you should NEVER use that data when evaluating a deal. It should, at most, be used as a guide. The reason is because the information provided in the OM may not be 100% accurate.

For example, Youssef Semaan comes across many real estate deals where there is a discrepancy between the OM and the actual rent roll. On one deal, he discovered that the rents listed on the OM were $50 to $100 higher than what was listed on the rent roll. That’s a huge problem! On a 100-unit property in a market with an 8% cap rate, that is a difference in value of $750,000 to $1.5 million! To make matters worse, on that same deal, the OM listed an occupancy rate of 100% (a red flag in and of itself) while the actual rent roll occupancy rate was significantly lower. This is why you must always use the actual historical profit and loss data and a current rent roll when evaluating a deal.

Another error you might find on an OM is a calculation error. Taylor Loht came across a real estate deal where the internal rate of return was calculated incorrectly. Other examples of miscalculations I’ve seen are an incorrect cap rate, net operating income, capital expenditure budgets, and results of a rental or sales comparable analysis. While it may seem like these calculation errors are a moot point (we’re supposed to use the actual rent roll and T-12s and create our own cost assumption, right?), if the owner or listing real estate broker made mathematical mistakes on the OM, how can you trust the other information that they provide?

2 – Indications of an Unethical Owner, Listing Broker or Property Management Company

A discrepancy on the OM compared to the rent roll or T-12, or a calculation error on the OM might have been an honest mistake. However, there are other things that cannot be seen as anything other than unethical behavior.

For example, Todd Dexheimer caught a property management company forging the certified rent roll, P&L statements (i.e. T-12) and leases. They also claimed an occupancy rate of 90%, but the actual rate was 81%. The only reason they uncovered these forgeries was because the management company accidentally sent out the actual rent roll and then tried to recall the email.
Another example of unethical behavior happened to Eric Jacobs. Usually, in the terms of the purchase sales agreement, the owner is required to provide the buyer with the property’s financials, including a certified rent roll, T-12, leases and bank statements. However, Eric had a real estate deal where the owner refused!

Unfortunately, we live in a world with dishonest people. And, since the real estate industry is a part of the world, you may come across a deceitful person during your career. My advice on how to find good real estate investments? Run at the first sign of unethical behavior

3 – Unrealistic Profit and Loss Statement

The profit and loss statement (also referred to as the T-12) is a document or spreadsheet containing detailed information about the revenue and expenses of the property over the last 12 months. Generally, when underwriting a real estate deal, the T-12 is used as a guide for determining the stabilized income (i.e. loss-to-lease, bad debt, concessions, other income, etc.) and operating expense amounts. For example, if the other income was 13% of the gross potential rent (also referred to as GPR) and the contract services were $250 per unit per year, then it is safe to assume those same amounts when you take over the property. However, there are other times where the T-12 data is unrealistic, which means adjustments are necessary.

For example, on the income side, Ajit Prasad said that an “other income” amount that is greater than 20% of the GPR is a red flag. The incomes included in the “other income” category are late fees, lease termination fees, lease violation fees, and damage fees, which are all associated with a poor resident base. Therefore, a higher other income can indicate a poor resident base, which may disqualify the real estate deal or is something that will be reduced after you take over the property.

There may also be unrealistic amounts on the operating expenses side. For example, Joseph Gozlan said that this can occur when the owner has economies of scale in the same area. If the owner controls thousands of doors in one submarket, they may have a carpet cleaner, garbage person, painter, etc. on staff rather than on contract, which drastically reduces certain operating expenses. Or, they may have a family or friend who owners a service company (like a landscaping or pest control company) and provides their services for free or at a reduced price. However, once you take over the asset, those economies of scale and/or family and friends discounts go away.

One way to identify an unrealistic T-12 is to calculate the expense ratio. The expense ratio is calculated by dividing the total operating expenses by the total income. While it varies from market-to-market, if you see an expense ratio of less than 40%, that is an indication that the income and/or operating expense data is unrealistic.

The best way to overcome an unrealistic T-12 is to base your underwriting assumptions on how YOU will operate the property, not how the current owner is operating the property. And hiring a great property management company can help you with this.

4 – Bad Market

Another factor that may disqualify a potential real estate deal is the market. Ryan Gibson performs market studies for all of his deals. If the results of his market study indicate a lack of demand or a market that is not strong enough to expand in, raise rents or execute a value-add business plan, he passes on the deal.

Last week, I posed a question to the Best Ever Community about the red flags that disqualify a real estate investment market. Here is the blog post that outlines the top six responses.

5 – Issues Identified During the In-Person Visit

Even if everything looks good on paper, I always recommend that you visit a property in person before moving forward with a real estate deal. There are certain red flags or disqualifiers that cannot be uncovered until you see the actual property.

For example, Joseph Gozlan said that too many cars in the parking lot on a Tuesday around 11:00am is a red flag because it indicates a high level of unemployment. Also, Adam Adams visits the property and the surrounding neighborhoods to look for indications of crime.

Visiting the property in person may also change your exterior renovation budget. For example, Theo Hicks was reviewing an OM that stated the property only needed new roofs and new window A/C units for an exterior renovation budget of ~$500,000. At that point, the real estate deal made financial sense. However, after visiting the property in person, the exterior renovation budget increased to over $1.5 million. At that point, the deal did not make financial sense.

Work with Me on One of My Deals

As an active investor who spends a lot of time evaluating a deal, I’ve seen a whole host of red flags. If you’re a passive investor who’s still unsure how to find good real estate investments for your portfolio, consider working with me on one of my apartment syndications. I carefully vet each property to ensure its profitability, and, if we work together, I’d be happy to review the details with you so you can be sure too!

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What is Possible in 9 Years as a Real Estate Investor?

“To whom it may concern” is how my letter started out.

It was 9 years ago and I had finally, after 10 long months of looking for my first investment property, found a deal. It was a 4-bed, 2-bath single family residence in Duncanville, Texas. The purchase price was $76,000. The rent was $1,050. The property didn’t really need any repairs. The puppy was going to cash flow and I was going to get my first investment property. Heck yeah!

Well…that was until the lender had their say. Apparently, in 2009, a bunch of lenders were feeling the burn of loose or nonexistent underwriting guidelines from years prior and were looking to correct those mistakes. Good for them. They should. But, it was bad for me at the time because they were asking me why on earth would I want to buy an investment property if I didn’t *gasp* own my primary residence?

Pretty simple, actually. I lived in NYC. Places cost too much. After all, I started out making $30,000 as a junior project manager so how the heck could I have afforded to buy a NYC apt?!

So, on September 25, 2009 I wrote a letter to the lender and told them the situation. Here it is:

 

To whom it may concern,

I am a resident of New York City and am looking to purchase an investment property in Duncanville, Texas. I have lived in New York City since June 2005 but am originally from Texas. I went to elementary, middle and high school in the DFW area and graduated from Texas Tech University with a degree in Advertising.

My mom, brother, sister, dad, niece and nephew all still live in the DFW area and I visit them as often as I can and usually spend Christmas in DFW. My family, particularly my sister and dad both of the whom have professional real estate experience, has been instrumental in helping me identify the income-producing property I currently have under contract and am looking to close on. Additionally, I already have had conversations with XYZ Property Management (edited this part because the management company was TERRIBLE – that’s another story) office in Duncanville and am planning on utilizing them to manage the property.

Although I’m not sure when, I do plan on eventually moving back to Texas and specifically to the DFW area. Under normal circumstances, I would own my primary residence; however, I live and work in Manhattan where the cost of real estate is prohibitive.

If you would like any further information, please call me directly at XXX.XXX.XXXX.

Thanks,

Joe Fairless

 

Fortunately, it worked! They approved me for the loan and I was the proud owner of this, ahem, beauty!

 

street view of a single-family home

 

I still have this house today. Speaking of today, I just got done signing the loan guarantor docs on a 400+ unit apartment building worth over $30M that my company is closing on tomorrow. It will put our portfolio at 4,169 units and worth over $350,000,000.

I have documented most of the lessons learned after I close each project and you can read the lessons learned here:

 

Closed on 250-units in Houston, TX…2 Lessons Learned

Closed on 155-units in Houston, TX…3 Lessons Learned

6 Ways to Creatively Get into the Multifamily Syndication Business

Investor Analysis After Closing on a 296-unit Apartment…2 Lessons Learned

Closed on a 200+ Unit Multifamily Syndication…1 Simple Lesson

I Just Reached Over $100,000,000 in Apartment Communities…Lesson Learned

How to Find Deals in a Hot Market

How to Find Private Money Regardless of Where You Live

 

The purpose of this is to simply say that whatever you’re looking to do in real estate, it is possible. I went from making a $30,000 salary with $20,000 in student loans after college to being a multi-millionaire.

If you have big, audacious goals then good for you. It’s possible. Others before you have accomplished it (or something similar) so you can too. It’s possible.

 

Here are 9 beliefs that I’ve lived by through my 9-year journey:

  1. Nothing in life has meaning until I decide to give it meaning.
  2. Challenges are a gift. Life happens for me, not to me.
  3. Help enough people get what they want and I’ll get everything I want.
  4. Richest people in the world build networks. Everyone else looks for work.
  5. The secret to living is giving.
  6. Work harder on yourself than you do your job.
  7. Best way to get out of a funk is to move and be grateful.
  8. Have perspective by remembering that I will die.
  9. Be proud of who I am when nobody is looking.

 

Here are 9 habits that have helped me be consistent with my progress:

  1. Immediately think of one thing I’m grateful for when I wake up.
  2. Drink a liter of water with a scoop of wheatgrass in the morning
  3. Do cardio and weights (not just cardio)
  4. Volunteer at least once a month
  5. Think about life in terms of # of experiences remaining, not years remaining
  6. Journal my thoughts, feelings and whatever else comes in my head daily
  7. Always have a vision board prominently displayed everywhere (wall in office, phone, computer background)
  8. B.R. (always be readin’)
  9. Be incredibly responsive to my clients and my investors. And even more responsive to my wife!

 

What about you? Comment below: Do you have any beliefs or habits that have helped you achieve success? If so, what are they? Would love to learn about them so I can see about incorporating into my life/routine as well.

 

Subscribe to my weekly newsletter for even more Best Ever advice www.BestEverNewsletter.com

 

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How 28 Real Estate Investors Completed Their First Investment Deal

We regularly post a new question to the Best Ever Show Community to get responses from active real estate investors. This week, the question was “after you first became interested in real estate, how long until you had your first deal under contract?”

Now, if I had to guess, only 1 out of every 10 people who become interested in real estate actually pull the trigger. And an even smaller number of people pull the trigger on their first real estate investment within a year! That being said, if you are interested in real estate but haven’t yet completed your first investment, let this blog post be a motivator that also gives you hints at how to get your first real estate deal. Because, of the 28 responses, 24 investors acquired their first deal within 1 year. That is over 85%! And, if they can do it, so can you.

Less Than a Week

Two investors had their first deal under contract within a week of becoming interested in real estate. When Shannon Feick was browsing the local newspaper looking for a place to rent, he came across a potential candidate. Within 3 days, rather than renting, he purchased the property using a lease-option.

Theo Hicks had his first real estate investment property under contract within 48 hours of learning the power of real estate from a friend. He learned about this investment strategy on a Tuesday and had a meeting with a real estate agent on Wednesday. Then, setting up an MLS automated email, he received an email with a listing that met his investment criteria that same Wednesday! He toured the property the next day and had a signed contract by Thursday night, utilizing the house-hacking strategy.

While closing a deal within a week of becoming interested in real estate is a possibility, especially with the use of creative financing, it is not without its risks. Shannon said that she ended up losing the property after two years. And, due to a lack of experience and education, Theo had a nightmarish experience on his first deal. Fortunately, that didn’t stop them from continuing, as they are both still active investors to this day.

1 Week to 1 Month

Two more investors had their first real estate investment deal under contract between 1 week and 1 month of becoming interested in real estate. Dan MacDuffie bought his first fix-and-flip project within 14 days, and Adam Adams acquired his first deal for only $100 within three weeks. Reach out to Adam on the Best Ever Community to learn how he was able to accomplish such a feat, as well as how to get your first real estate deal!

1 to 6 Months

The most common timeline between becoming interested in real estate and putting a deal under contract is 1 to 6 months, with half of the responses falling within that time range.

Whitney Sewell has a very inspiring entrance into the real estate industry. While working every night of the week, as well as weekends, as a police officer, he came across Rich Dad, Poor Dad, and knew he needed to make a career change. Within 3 months, he purchased two 3plexes, using private money from passive real estate investors for the down payment, which meant that he had none of his own money in the deal. He eventually sold the properties without making a profit, but he gained a lot of knowledge and experience that he still applies to this day.

Matt Skog spotted a seemingly vacant house but one month later, he discovered that the owners were actually just out-of-state for the winter. However, the owners were downsizing into a smaller home, which allowed Matt to acquire the property with a 0% interest seller financing loan. A few years later, he sold the contract and has tripled that profit in just over 7 years.

Two investors become interested in real estate and made the smart move to educate themselves prior to purchasing a deal. Brandon Abbott acquired his first real estate investment deal after spending 45 days reading 6 real estate books and listening to countless podcasts. And Michael Rafales read Rich Dad, Poor Dad and How to Invest in Real Estate With No and Low Money Down in February and bought his first investment in June.

Other investors who fall within the 1 to 6-month time range were Peter Eiseman (1 month), Brian Trippe (45 days), Devin Elder and Cody Dover (2 months), Julia Bykhovskaia, Davi Brown, Hai Loc, and JP Sayers (3 months).

6 Months to 1 Year

The next most common timeline between becoming interested in real estate and putting a deal under contract is 6 months to a year. In fact, this is where I fall – I had my first deal under contract (a single family residence) within 10 months.

Similarly, it took Garrett White 9 months before purchasing his first real estate investment – a single family residence. Tom Lipps was in the research phase for 6 months (reading blogs and books and listening to podcasts) before finding the right property 3 months later, for a total of 9 months. Kris Bennett had two apartment deals fall through, continued on his search and eventually succeeded in closing on a self-storage deal 12 months after starting his search.

Other investors who fall within the 6 months to 1-year time range were Sean Morrissey (9 months), John Jacobus and Kurt Schuepfer (11 months) and Justin Silverio (12 months).

1 to 5 Years

Two investors had their first real estate investment deal under contract 1 to 5 years after becoming interested in real estate investing.

Chad Althaus became interested in real estate investing while he was still in college. After saving up the money for a down payment during his remaining two years until graduation, he purchased a property within a year of commencement.

It took Lucas Miller a couple of years before acquiring his first property for reasons to which I am sure everyone can relate: he was confused about which investment strategy to implement, so he went through a multi-year trial-and-error phase.

5 or More Years

The last two investors are a case study in patience and long-term determination, because they purchased their first real estate investment after being interested in real estate for over 5 years!
Darrin Carey had a casual interest in real estate for 15 years, at which point he made the decision to become a serious investor. Two years later, he closed on not one, not two, but four deals in quick succession.

It also took Greg Gaudet 15 years to invest. He fell in love with real estate and decided to become an investor in 2003 while working as an appraiser. However, he said he made up for his procrastination by purchasing two properties in Maui over a three-month period and is currently on the hunt for his next deal.

Reach Out and Keep the Dream Alive

At the end of the day, whether it takes less than a week or 15 years to acquire your first real estate investment deal, what matters most is entering the game! My recommendation for those who are in the process of purchasing their first deal: reach out to one of the investors in this blog post on the Best Ever Community on Facebook. They’ve all completed at least one deal, and maybe they can offer you the advice you need finally pull the trigger.

Still at a bit of a loss for how to get your first real estate deal? Check out my book, Best Real Estate Investing Advice Ever Volume I. Take the first big step in your new real estate endeavor with some actionable advice!

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