JF1395: Why Focus On Industrial Space? With Rich Kent

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Rich and his team oversee the industrial commercial division of Avistone’s capital market operations. They love what they call “flex space”. Warehouses with offices in the front and industrial operations in the back, and a lot of small businesses operating in them. Another big advantage to the industrial space is the leases are short term (3-5 years) and allows them to add value over time. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Rich Kent Real Estate Background:

  • Oversees Avistone’s capital markets operations
  • More than 30 years of experience in financial services, real estate investment, and capital markets
  • Completed transactions in commercial properties valued at more than $2 billion
  • Based in Laguna Niguel, CA
  • Say hi to him at https://avistone.com/
  • Best Ever Book: Siddhartha by Hermann Hesse

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Rich Kent. How are you doing, Rich?

Rich Kent: I’m doing well.

Joe Fairless: I’m glad to hear that, and welcome to the show. A little bit about Rich – he oversees Avistone’s capital markets operations. He has more than 30 years of experience in the financial services, real estate investment and capital markets; he completed transactions in commercial properties valued at more than two billion buckaroos. Based in Laguna Niguel, CA. With that being said, Rich, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Rich Kent: I’d be happy to. Avistone is a buyer of multi-tenant industrial properties nationwide. We’ve been in operation for about four years. We started buying properties in 2014, and today we have 19 industrial business parks, all multi-tenant, in a number of different states, including Florida, Atlanta, GA, Columbus, Ohio, California and Texas.

Prior to starting Avistone, if I go way back, I actually started in the financial services industry as a stockbroker at Paine Webber Jackson & Curtis back in 1979, which obviously is dating myself…

You know, it’s actually a pretty good place to start in financial services, because as a stockbroker in financial services you really get in touch with people’s ideas and needs of investing, and what the different options are, and portfolio management, and optimizing out asset selection… But in the 1980’s I went to work for Drexel Burnham Lambert, and I was in the institutional mortgage-backed securities group, buying up Fannie Maes and Freddie Macs, and hedging out pipeline interest rate risk in the financial futures market.

In later years I worked for Salomon Smith Barney’s Commercial Real Estate Group in New York City, doing commercial mortgage-backed security loans all over the country. After the merger with CitiBank, I went to work for what became Deutsche Bank Berkshire Mortgage making large Fannie Mae loans on large apartment complex and senior facilities all over the country.

During the downturn in commercial real estate about ten years ago I was very fortunate to be one of two people hired by Auction.com, which was then REDC, the large single-family house auction firm. I was hired with Dan Culler who’s one of my partners now, to start the commercial division at Auction.com. We started an online auction for distressed commercial assets, both REOs and loans, and we grew that to several billion dollars in auctions. It was a very successful platform, I really enjoyed working there; it was a really good place to ride out the storm in real estate.

But right about 2013 we saw the market starting to turn around, and the reason we knew that is that we had fewer and fewer assets at auction. We elected to start our own firm and jump on what we believed at the time to be a very good bull market in commercial real estate, which has proved to be correct, and we specialized in the industrial space, for a lot of reasons that we can talk about.

Joe Fairless: Please, yeah. I’m very curious to know why you specialized in the industrial space.

Rich Kent: Well, what we liked — now, everybody is pretty aware right now that industrial is the new darling of commercial real estate.

Joe Fairless: Real quick – maybe not everyone listening knows even what industrial space is, so can you give an example of what that is and why they are, in your words, the darling?

Rich Kent: Sure. When most commentators or financial magazines talked about industrial, they’re really talking about in today’s market what we call the big box or the big bomber spaces that Amazon would be in, Costco, FedEx… Very large distribution, logistic warehouse operations.

After all, look how successful Amazon and the internet has been. That has been a huge boom to industrial properties. But those are the big single-tenant spaces. We specialize in what’s called flex space. Flex space is a combination of office and industrial in the back, and you see them in most major cities, you’ll see this type of properties. They’re not really sexy; they’re single-story, they’re concrete tilt-up… Again, offices in the front, warehouse, roll up garages in the back, but it’s really where small businesses go to grow.

We love that space right now because so much of the economy is based on small businesses. In fact, we were just looking at this the other day… 47% of all employee growth is in small businesses, businesses under 100 people. We like that space, and we like it also because we could buy these properties at a fraction of their replacement cost.

If you think about it, these properties are not expensive to build. They’re single-story concrete tilt-up, but they take a lot of land. So where are you gonna find 30 acres of land along a major highway in Atlanta that you could hope to buy right now at a good price? But number two, even if you could buy it, you would not build this type of product. So everything that we see that we buy was built in the 1990 or maybe the early 2000’s. It is not getting constructed today. So what we do is we go into major markets – we like to buy in NFL-type cities, because when you have a robust city, you have a lot of different economic drivers and you’re not building this property type anymore, typically we see occupancy levels right between 90% and 95% in these submarkets.

And again, because you’re not building it, where are the tenants going to go when their leases come due? So we get a lot of retention on our rollover. We like the shorter-term leases (usually 3-5 years), because that’s what allows us to build value over a period of time.

I know you’re really active in the multifamily space – well, that’s another great market, because every year all the leases come due, so you could adjust your rents to the activity in the market.

Joe Fairless: Yeah, so the business is able to get a good foundation and they’re all set up, and now three years has come up, and assuming that they are doing well, then they’ll wanna stay there and continue to grow and be there permanently.

Rich Kent: Correct. And before we buy any asset, we interview the tenants, and the tenants say to us: “We don’t have very many options where to move to.” We like that. And again, if you’re not building this property type anymore, that puts pressure on rents.

Joe Fairless: Now, with not building this property type anymore — and by the way, I love how you described the flex space… Office in the front, industrial in the back. It reminded me  of you being the real estate mullet, business in the front, party in the back. [laughs] I immediately thought of that. But am I imagining things? I thought that there’s a lot of industrial being built for data centers and things like that.

Rich Kent: Exactly, that is where data centers and the big distribution warehouses – those property types are being built. What you’re not seeing built are these flex industrial business parks.

Joe Fairless: Describe a handful of tenants. What is their business?

Rich Kent: Well, when I say that we appeal mainly to small business, that is true for maybe 75% of our tenants. The other 20%-25% are Fortune 500 companies. I’ll give you some examples. CVS Pharmacy – if anybody orders medicine from CVS online, it probably comes from our property in San Antonio, Texas. They’re one of the tenants in a multi-tenant project there. So that would be an example.

General Dynamics has space with us in one of our Tampa properties. Subaru is a big tenant of ours in one of our Columbus, Ohio properties. So we have those kinds of tenants, but we also have a lot of smaller businesses. If you look at the construction trades – where do plumbing companies set up? Where do carpenters set up? Where do a lot of those supply companies set up?

We also have smaller tenants that have their own online distribution. Maybe they sell a product in retail stores, but when you don’t wanna take it home and you order it, it comes out of one of their spaces in a project like ours. So in that respect, we are the last spoke in that big distribution network of online shopping.

We have medical testing facilities. Some of our projects have dialysis centers, because they’re easy for people to walk in and out of. They’re single-story, there’s no elevator. So any small business that you can think of, from a bakery, to Joe’s pool supply are housed in our properties.

Joe Fairless: I’ve got a lead on a deal for you. I’d like to send it to you, but I’m not quite sure of your criteria. What is it?

Rich Kent: Our criteria – the first major filter is it needs to be in a dynamic, metropolitan area like Dallas, like Atlanta. We find that you need at least 1-2 million people in a metropolitan area to really mitigate a lot of your lease-up risk. That’s number one.

Number two – multi-tenant and in the flex category is a little bit of inside baseball, but if a project is near an airport, let’s say, we like to see it have more a percentage of warehouse space, because after all, why something by the airport? They’re probably in some type of delivery service.

If it’s in a more affluent, residential area, we like to see a higher percentage of office, and that’s because people that live in those areas don’t like to commute downtown if they can avoid it. Maybe they’re an escrow company, maybe they have a law firm, so they will pay up for office space in their submarket if it’s near their house. So it depends on where something is.

We like to see 3-5 year leases. As I mentioned, that gives us the ability to adjust rents to the market in tight-growing markets. That’s another thing – we like to see occupancy at least 90% and stabilized. We don’t worry so much about new construction, because I just mentioned they’re really not building it, but those would be the major factors.

Second, we target maybe 8 to 25 million dollars in purchase price. That’s pretty key, because we like to be above some of the local buyers in the market, the so-called mom-and-pop buyers, but we wanna be underneath the institutional radar. Once you get over 25-30 million in asset size, now you’re competing with some of the big institutions, and their cost of funds is a whole heck of a lot lower than ours. We also like to get at least an 8% cap rate going in, so that we could pair investors anywhere from let’s say a 6,5% to an 8% cash-on-cash from day one. So in other words, we like stabilized; we don’t like a lot of lease up risk. Our feeling is at this point in the cycle, if this type of property has a lot of leasing risk, in other words it’s 30% empty, there’s probably a problem that we can’t solve.

Joe Fairless: Like what?

Rich Kent: Well, we were looking at a property – I think it was in Phoenix. It was a really nice property, it seemed to have a pretty good location, but it had about a 40% vacancy rate. So we’re asking ourselves, “Wow, that seems pretty high.” So we talked to one of the property managers in the area and he said “Yeah, nobody wants that project. They’re all going across the street to the other project.” Oh, okay…

So in other words, there’s always a reason, just like you’d find in the multifamily space – why isn’t somebody going into a certain project? There’s always a reason, and that reason is not usually something we could solve, because we’re in a good market right now. Now, if it was 2008, you could just take a dart and throw it at anything and probably make money on it. So we’re sensitive about how a project has done.

Joe Fairless: Even with purchasing a 90%+ occupancy I’m sure there’s been a challenging property that’s — maybe the tenants weren’t what you thought they were or maybe the economic occupancy wasn’t what you ended up wanting it to be. Can you tell us about a property like that?

Rich Kent: You bring up a really good point. When we buy a project, we do extensive due diligence. But a buyer will never know 100% of what’s going on with the project. We interview tenants, we do all of the appraisals – environmental, physical needs reports – but usually in that first year we’ll find out something we didn’t know, and we expect that, and that’s why we always build a very healthy amount of reserves… It’s a known unknown, let’s just say.

So we just bought a property down in Tampa. Well, we actually bought of two of them and we crossed them in one transaction with one loan. Two great projects, but they were at 88% occupancy in a market that’s about 94% occupied, so we knew there were some problems with the property, and we knew what the problems were.

The current owner that we were buying from was not doing any capital improvements and not fixing deferred maintenance. So one thing that we were a little bit surprised about on that is how upset some of the tenants really were. We lost some tenants, we asked some other tenants to leave, because they weren’t paying their rent or they were behind… But we went in there and we made millions of dollars of capital improvements. We improved the property, we weeded out the bad tenants, and now we’re actively re-leasing the space.

That would be a scenario that does occur and we expect it to occur, and we reserve around it. But to your point, we don’t know what the mindset is of all of the tenants, and we never know when we buy it, but over time, in a good market, we’re able to improve not just the project, but the credit-worthiness of the smaller businesses in the project, because we just look for more credit-worthy tenants.

Joe Fairless: If you hadn’t focused on multi-tenant industrial properties that are in the flex category, what would you have focused on?

Rich Kent: That’s a difficult question, but let me answer it like this. Some of the best advice that I could give people is really look at replacement cost. That’ll tell you whether you’re gonna have competition from new development. So while I really like multi-family, in a lot of markets, like the market that we’re based in, apartments are [unintelligible [00:16:15].04] and as a result there’s new construction all over the place.

I look at retail, and if it’s not a grosser-anchored center, I wonder about the future of retail with online purchases. I know myself, I use Amazon. I don’t like to go to the mall. Suburban office is another product, and the TI/LC (Tenant Improvements/Leasing Commission) in suburban office are maybe ten times what ours are in the industrial space. You’re looking at $20-$30/square foot to [unintelligible [00:16:45].23] maybe $3-$5/square foot.

I’ve always like mobile home parks, but again, they’re [unintelligible [00:16:53].03] So it’s almost like a process of elimination, that we think we picked a really good niche. Now, within our niche we do see some possibilities. Let’s just call it a vertical integration, if you will.

We have a project that we bought in Atlanta, multitenant industrial. We would have bought it even without the concept that we went into it with, and that was to take some of the vacant space in that project and turn it into what we call creative industrial space. Now, everybody is familiar with creative office space, because that’s what the millennial market wants. They want that open area, they want a pool table, they want a little bar, a little waterfall… Well, in this project we are doing that with industrial space, which lends itself to that type of refitting very nicely.

You could take the concrete floors and glass them, you could take out the T bar in the ceilings and make that industrial ceiling look pretty cool… So we do see an opportunity in certain markets, where there’s a large millennial population, to convert some of our make-ready units to what we call collaborative industrial space.

We also see some opportunities in potentially buying maybe abandoned factories, or maybe older industrial properties, and creating training facilities. We know there’s a way with robotics — everybody says robots are coming; the reality is robots are already here, and a lot of people are probably gonna get displaced by automation and the 3D manufacturing.

So we see a big opportunity in creating facilities that are aimed at retraining of large numbers of the population for new skills, in robotics perhaps, or 3D printing. So there’s those kinds of opportunities.

Joe Fairless: When you venture into something like buying an abandoned factory and creating a training facility, how do you test that concept before jumping in and putting some money at risk?

Rich Kent: That’s a good question. What we would look for – and again, this is on a drawing board, and I hope I’m not giving a lot of people a great idea here, but–

Joe Fairless: Well, you are giving a lot of people a great idea, but there’s a high barrier to entry, that’s for sure.

Rich Kent: There really is. Don’t try this at home. There’s a lot of nuances in industrial, and I could talk about that in a minute. A lot of the projects we have purchased, we have purchased from multifamily operators that thought they can get some extra yield in industrial and they didn’t understand what they were buying.

But to answer your question, I think what you’re gonna find is a lot of cities, a lot of municipalities are very concerned about what could happen to the labor force in their markets as robotics take hold. So if we could find cities that have a program, that are teamed up with universities for recurrent training type of operations and partner with some firms that actually provide training, our purchase of that factory — [unintelligible [00:19:56].28] In other words, we would do it if we had the tenant and all the component parts to go into it, and we think we could put that together.

Joe Fairless: Based on your experience, what is your best real estate investing advice ever?

Rich Kent: Like a single phrase? Okay, well let me answer it like this… The old adage is “Location, location, location.” When it comes to income-producing properties, I would say the best adage is “Cashflow, cashflow, cashflow.” Concentrate on cashflow. It’ll tell you what the project is worth, it’ll tell you what you’re gonna yield on it, it’ll tell you what kind of loan and what kind of debt service it could cover.

So to us, if you think about the type of product that we buy, it’s pretty boring. It’s single-story concrete tilt-up. There’s no soaring glass and steel structures, but it cashflows. That’s the key.

Joe Fairless: When you look at the underwriting for a deal – I know that’s a whole long conversation, but from a high-level, how do you assess the numbers on the type of property you buy?

Rich Kent: The first thing is we’ll look at historical operating statements from the seller, and we only care about the operating statements by looking at the levels of expense – what the taxes are gonna be, what does it cost you to turn on the lights, what utilities, and that kind of thing. So we’ll look at those historical expenses and we’ll conflate those with some inflation and some of our experience, because typically we’ll buy in markets that we already have property, so we know what it takes to operate these properties.

But when we look at the income line, what you really wanna look at is you wanna look at the rent roll. What is in place right now? And not just the rent roll… What you wanna get are some of the bank statements to see what the collections are. What money is actually being collected for maybe the last 3-6 months, because that’s gonna tell you what that upper income level is.

So now you start to put that together in commercial – and certainly in industrial – you need to have the program Argus, which will run out your expected TI’s and Leasing Commissions every year, and you need to really pay attention to those and put in very conservative assumptions… And they’ll vary, but it’ll compute what your rollover risk is, what are the probabilities of renewal. You really need to understand those numbers before you get down to the NOI number.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Rich Kent: Fire away!

Joe Fairless: Alright. First though, a quick word from our Best Ever partners.

Break: [[00:22:38].23] to [[00:23:15].29]

Joe Fairless: Okay, best ever book you’ve read?

Rich Kent: I’d have to say the best ever book I’ve ever read – and that’s a tough one – I would say Siddhartha, by Herman Hess.

Joe Fairless: Best ever deal you’ve done that we have not talked about?

Rich Kent: Well, I kind of like the deal we’ve just bought in Atlanta, called Northwest Business Center. It had every element that I’ve talked about, and it’s in a great area of Atlanta that’s starting to boom right now.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Rich Kent: Well, it’s hard to narrow that down to just one mistake. [laughter]

Joe Fairless: Maybe on the last deal you did, the Atlanta one. I’m sure there’s one thing you’d rather have done differently if presented a similar opportunity in the future.

Rich Kent: Well, we’ve only owned it for about a month now, so I’ll have to get back to you on that. It’s really hard to say… Having been in this industry a long time, I would say just generally the biggest mistakes are not remembering that these markets are cyclical, and when there’s good times, like there’s good times right now, you need to tighten up your underwriting, because it’s not always gonna be good times, and you’re starting to see people do some crazy things… Don’t do it.

The mistakes that I have made in the past – I didn’t think the market could crash as bad as it did in 2008, and you can’t think that’ll never happen again. You have to be prepared for that.

Joe Fairless: What’s the best ever way you like to give back?

Rich Kent: That’s a really important question… Recently, my girlfriend and I filed the paperwork for a non-profit, and we call it Aristotle’s hand. What we see is there’s a lot of kids in inner city schools that are never going to college, but really could benefit from learning a vocation. We’re setting up a scholarship program to be able to get that vocational training that all of those kids are really gonna need for the future.

I think vocational training is a really big hot button. It certainly is with me right now… And I see that in our industrial properties – people are out there and they need skills, and we’re gonna give back by helping some of these people get those skills.

Joe Fairless: How can the Best Ever listeners learn more about your company and get in touch with you?

Rich Kent: Avistone.com. They can find all of this right up there – what we do, how we do it and who we are.

Joe Fairless: Rich, I love our conversation because I love learning about an asset class I know close to nothing about, and you did a great job educating me and I’m sure some of the Best Ever listeners on what you look for, why you look for it, why you’re buying what you’re buying, and business opportunities, not only now, but what you’re looking for in the future.

Great stuff, thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Rich Kent: Thank you so much.

JF1318: Bringing Advanced Technologies To Your Real Estate Biz with Victor Lund

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Victor is a founding partner of WAV Group, they are the leading real estate technology media portal in the US. Focusing mostly working with the large brokers and firms, they have great systems and different technologies to make their companies run more efficiently. Without a doubt every investor can pick up some of the nuggets that Victor drops in this episode. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Victor Lund Real estate Background:

  • Founding partner of WAV Group and CEO of RE Technology.
  • Provided research, strategic planning and analyst services to MLSs, large brokerages, technology firms, and investment banks
  • RE Technology, the leading real estate technology media portal in the US with more 2 million visits a month
  • Published author of an body of work that understands the role of technology in real estate.
  • Based in San Luis Obispo, California
  • Say hi to him at http://waves.wavgroup.com/
  • Best Ever Book: Othello

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing?  Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Victor Lund. How are you doing, Victor?

Victor Lund: Great, Joe. Thanks for having me today.

Joe Fairless: Yeah, my pleasure, nice to have you on the show. A little bit about Victor – he is the founding partner of WAV Group and CEO of RE Technology. He’s provided research, strategic planning and analysis services to the MLS large brokerages, tech firms and investment banks. Published author of a whole bunch of stuff, and understands the role of technology in real estate, so that’s where we’re gonna keep our focus for today.

With that being said, Victor, do you wanna give the Best Ever listeners a little bit more about your background and the things that you’re working on?

Victor Lund: Yeah, sure. We’ve been a consultant in the real estate industry for 20 years. We work with a lot of people in private equity around their strategies related to their investments in real estate, and provide some pretty excellent insider advice — not insider-insider advice, but inside real estate advice, because we’re working in the field with the largest brokers in America, franchise organizations, the technology companies that serve them…

It’s been a pretty incredible run in the last 4-5 years as we’ve pulled out of the recession in terms of the amount of investment that is going into these companies. We’ve seen [unintelligible [00:03:37].21] go public, we’ve seen the launch of the Broker Public Portal, which is a project that we work on to help real estate brokers return the consumer to their property search solutions and things like that. Anyway, we’re seeing a lot of activity, we’re really thrilled.

Joe Fairless: What do firms hire you to do in the real estate world?

Victor Lund: We do a lot of strategic planning. Real estate brokerages seem like a pretty commonplace thing, and they all do the same thing, but actually they struggle a lot to differentiate themselves… So we kind of pick apart their business model and help them deliver a solution to a specific target audience where they can  really be successful. When you see differentiation in the marketplace between Sotheby’s and Coldwell Banker, and how is Keller Williams different and things like that, we’re kind of the intel inside behind how a lot of these decisions are framing up their positioning in the marketplace, and frankly how they manage the service delivery to the consumer.

Joe Fairless: For a Best Ever listener who has a brokerage not on the level of Keller Williams, but also not just he and his wife and a dog, but somewhere in between, and they’re looking to differentiate and really deliver on that differentiating value proposition – how would you approach that with them?

Victor Lund: Truthfully, I’d tell them to consolidate. The cost of operating  a small real estate brokerage business today is extreme. The expertise that is required to manage your company in this complex environment that’s driven so much by technology and technology adoption can be paralyzing. You spend so much time just trying to get everything set up and not enough time selling real estate.

The costs are variable. An independent small firm, which really in today’s parlance really operates like a real estate team, they may be looking at landed cost of service that’s 25 times more expensive than if they operated their brokerage as a team within a large broker.

We don’t see the small broker as somebody who has a lot of air in the industry today. Their market share is negligible, and their cost of doing business is extremely high, and their liabilities are high.

Joe Fairless: So from your standpoint it makes more sense to consolidate, so join a larger brokerage, versus trying to build something on your own, something to the level of a Keller Williams or a notch below it.

Victor Lund: Yeah, I mean, the people that make money in real estate are the people that are representing the buyer and the seller – primarily the agent. The average split with the broker is gonna be somewhere around 70/30 or 80/20, with the real estate agent or team capturing the larger share, the 70%-80%, or sometimes 90%. if you’re a top-producing agent, you might 90% of the commission fee on a transaction. The broker is living on 10%.

Relative to those basic economics, it’s far more advantageous to just leverage the services of a larger firm, leverage their brand, leverage their digital marketing experience, leverage their transaction management, enjoy the benefits of the E and O insurance they’re able to buy to cover the liabilities on these transactions… It just makes more sense to be part of a larger organization and focus your time on representing the customer, where you get paid the most.

Joe Fairless: Interesting. I appreciate you mentioning that, I didn’t’ see that coming. Now let’s do a similar but slightly different hypothetical situation… I am close to a Keller Williams level with my brokerage, and I come to you and I’m like “Hey, Victor, please help me figure out how I differentiate from the other brokerages of the world.” What’s your approach there?

Victor Lund: Well, Keller Williams – first of all they’re a franchise, so they’re not a brokerage; their mantra as a franchiser is to align themselves as a training organization that helps brokerages manage themselves more effectively by enjoying the umbrella of a strong franchise corporation, as well as providing incredible training to real estate agents.

If you were to ask Gary Keller “How do you define Keller Williams’ positioning in the marketplace?” he would say first and foremost they’re a training company.

RE/Max is a little different. RE/Max is a company that is pretty highly focused on being able to allow brokerages to operate as efficiently as possible. I think the [unintelligible [00:08:00].06] of Coldwell Banker and Sotheby’s and ERA and Century 21 and Better Homes and Gardens Real Estate are really incredible branding agencies.

Each of them define themselves a little different, and I think all of them are trying to contemplate the emergence of companies like Redfin that have gone public. They dominate the online search space. And there’s a variety of new models coming on to the market… Companies like Opendoor that have said “Hey, if you wanna sell your home, we’ll buy it.”

So there’s like this emerging trend where brokerages are owning the inventory that they sell, they’re not just acting as an intermediary during the transaction.

Joe Fairless: Okay, so those are different ways that some of the brokerages like RE/Max, Keller — or you said that’s not a brokerage, it’s a franchiser… But those are different ways that real estate companies are doing it. But now if I were a company and I were to come to you, what is your process for identifying the strategic planning, or at least the differentiation? What I’m basically trying to get at is, for listeners who are listening to this and they’ve got a company, what’s the thought process, what are some questions that we or they should ask ourselves when thinking through how to differentiate in the marketplace?

Victor Lund: It’s pretty standard stuff, and it doesn’t really matter whether you’re in the real estate business or any other business. You have to say, “First and foremost, who am I and what do I enjoy?” Sometimes companies get distracted trying to be something they’re not, or trying to be people they’re not. It’s hard to take somebody with a middle class disposition in life and get them to sell luxury, or try to get somebody who grew up in luxury to try and help people be first-time homebuyers in a low-end market. You have to be who you are.

We try to spend a lot of time helping companies to answer that question – who are you? What’s your persona? What kind of people do you relate with best when you’re delivering your service? Then we start to look at market sizing. We say “How many of those people are in the market? What are their personas like? Where do they go? What do they do? How can you engage with them in the best possible way?”, looking at what we call like a surround sound of engagement. Some of it is digital, some of it is in person, some of it is print.

There’s enormous opportunities to leverage big data, to do reverse prospecting. You can pick a neighborhood or an area where you have a lot of customers and you can actually use data to find out who’s most likely to buy or sell next, and use your marketing efforts to align with that person and to acquaint them with you and your services. All of that pre-planning uses a blend of self-identification along with data and research to kind of come together with a plan that should be effective for you.

Joe Fairless: That’s great, and I appreciate you walking through that. Let’s pretend real estate went away tomorrow; no more real estate on the face of this earth. I have a feeling your company would still thrive, because what you’re doing can be applied to any industry, from the questions you ask and how you approach things. Is that accurate?

Victor Lund: Yes, absolutely.

Joe Fairless: But you mentioned you use data to see who is most likely to buy or sell next – can you elaborate on how to do that?

Victor Lund: Sure, there’s public record data that is event-driven, and I think all but seven or eight states in the U.S. are what we call public record states. My transaction when I bought my home (and other properties that I have) is part of the public record, so you know when I bought it and you can apply some algorithmic assumptions about what trends are available to understand when people move. Well, people tend to move between every seven and thirteen years.

Understanding that, obviously you’re not gonna spend a lot of time engaging people who just bought or who just sold, unless there’s another type of event. If you look at a big data event like file for divorce, or a death, obviously there’s probably a real estate transaction in your future if that’s a part of your future. For most people, real estate is a primary asset and it’s gotta be mitigated along with the estate under any of those circumstances.

But generally speaking, somebody who just bought their house, they probably have a pretty narrowed debt-to-equity ratio. You probably don’t wanna be prospecting on people that are upside down in their home loan; you probably don’t wanna be prospecting with people who have super low credit scores. These are people who may be ambitious to buy or sell, but aren’t gonna be funded through a bank, and as we know, 80% of all properties in America are bank-owned. So those are some ways. There’s more.

Joe Fairless: When you speak to real estate investors… Let’s say you’re at a local meet-up – I don’t know if you attend or not, but let’s just say you’re at a local meetup and you’re speaking to an investor, what do you say you do, and then what’s the typical follow-up question that they have for you?

Victor Lund: We tell them that we’re consultants, and when we speak to real estate investors, a lot of the conversation is usually a lot of head-nodding. We’re seeing a recapitalization in America on who owns property, and we’re seeing that in a lot of communities property owners are moving away from individual investors and more towards institutional investors.

Frankly, the idea of owning a home just isn’t right financially for a lot of people. It’s very expensive to own a home, and there’s an attitude among the millennials that they would rather rent than own. There are some tax advantages – REITs, for example, have some tax advantages when they own massive amounts of property; so we’re actually seeing property moving away from individual home ownership and more toward investor ownership, and that’s a trend that we see extending across America today.

Joe Fairless: And for how long?

Victor Lund: I think it’ll need some kind of inflection point relative to legislated standing. Obviously, there could be impacts, like if interest rates start getting out of control, then institutional investors aren’t going to want to invest in real estate. Today, the capital markets make investing in real estate virtually interest-free… So it’s a very highly incentivized environment for investors… So in a high market for interest rates, you’ll probably see them move away.

Similarly, if the tax advantages — there was a tremendous amount of discussion around the mortgage interest rate tax deduction, and to some extent it was a little gutted by the recent passing of the Federal Tax Law. That could play a major impact as well. If you remove the tax advantages to home ownership, that could also create a variety of shifts, and I think those shifts are gonna happen differently in rural areas versus cities, but… Those are the types of things that are gonna be more disruptive to real estate than anything.

Joe Fairless: What is your best advice ever for real estate investors?

Victor Lund: Keep doing it. I think we saw during the meltdown that people who were too overleveraged, taking too much risk, that were too concentrated in real estate, had poorly balanced portfolios… You need to weigh your portfolio. A lot of the investment that we’re seeing in real estate today is as a result of the run-up in the stock market, thankfully, which just corrected in the last couple of days. But generally speaking, having real estate as a part of portfolio, what’s been referred to since the renaissance as to land banking – land banking is a very good place to put your money. It’s not where you should put it all. You need to have a diversified portfolio… I think I’m preaching to the choir here, but real estate is a very, very good investment, and it’s tangible, unlike Bitcoin per se.

Joe Fairless: Bitcoins come up on the last three interviews that I’ve done, it’s so funny… With your experience and with the team that you have in place for the consulting, what has been the toughest challenge that you all have worked on as a team?

Victor Lund: I think it’s change management. The average real estate agent is 57 years old. They’re in their second career. Computers are not native to them; they’ve learned it somewhere midway through their career. I have a 15 year old daughter who has 30,000 followers on YouTube and 30,000 followers on Instagram. She’s 15; she’s so advanced — like, there’s very few real estate professionals who even know how to use those platforms, much less develop an audience that’s engaging.

Some of these digital things that real estate agents have to do in order to keep up with the millennial buyer today – it’s a big stretch for them. It takes a lot more handholding, a lot more coaching, and it’s challenging, but those that invest the time to learn it and they get it, they’re accelerating. Interestingly enough, when you ask millennial buyers who they would rather use as a real estate agent, they would rather use somebody that’s their parents’ age, somebody that has a lot of experience, than use somebody that’s young and hipster and knows how to use all of their stuff… They don’t have confidence in their peers as much as they do the grey hairs.

Joe Fairless: Huh. Well, we’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Victor Lund: Let’s go!

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [[00:17:17].27] to [[00:17:50].10]

Joe Fairless: Alright, best ever book you’ve read?

Victor Lund: Othello.

Joe Fairless: Best ever deal you’ve done? You said you’re an investor as well, right?

Victor Lund: Yeah.

Joe Fairless: Okay… That wasn’t your first and wasn’t your last.

Victor Lund: Shopatron.

Joe Fairless: What is that?

Victor Lund: Shopatron is a company that provides a service to brands like Callaway Golf, where you can go to callawaygolf.com and buy a golf club… It gets delivered through Callaway’s local retailer.

Joe Fairless: Okay, you invested in the company?

Victor Lund: I did.

Joe Fairless: What’s a mistake you did on a transaction, or just a business in general?

Victor Lund: Not being aggressive enough. Lots of opportunities where I didn’t go out and leverage the capital markets to raise money; I tried to do it all myself, and I grew the company too slowly, and I missed the opportunity.

Joe Fairless: Best ever way you like to give back?

Victor Lund: We give back on an annual basis and a persistent basis to women and families who are getting out of abusive situations.

Joe Fairless: And how can the Best Ever listeners learn more about your company?

Victor Lund: There’s a wavgroup.com. You can subscribe to our newsletter, our blog… We have a tremendous volume of reports there that you mentioned earlier today, and we’re always happy to answer any calls or questions that people have. Thanks for having me on, Joe!

Joe Fairless: Yeah, I really enjoyed it, and thanks for being on the show. I enjoyed learning about your company’s approach, as well as from a differentiation standpoint, questions to ask ourselves… 1) Who am I and what do I enjoy? 2) What kind of people do I relate to best when delivering my service? Then doing some market sizing, and then as you call it, the surround sound of engagement… And then from kind of a one-off thing, a couple tactical ways to use data to see who’s most likely to buy or sell next; 7-13 years, people tend to move then. Divorce, death filings certainly to take a look at… And then lastly, the shift that millennials are making for the industry where they’re not buying as much, and the two things that could change that in the future – one is the interest rates going out of control, as you mentioned; two would be the tax advantages being further sliced up.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Victor Lund: Thanks, Joe.

how to increase your net worth

JF1261: Playing Defense To Increase Your Net Worth with Tim Rhode

Listen to the Episode Below (22:16)
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Tim helps people keep as much money as possible, paying attention to what is going out, what he calls “playing defense”. He is also an investor with a pretty extensive background. We’ll not only hear an amazing real estate investing story, but also receive advice on how to maximize our current assets. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Tim Rhode Real Estate Background:

-Real Estate Investor and Life Coach at 1 Life Fully Lived

-Founder of 1Life Fully Lived and the co-founder of Gobundance

-Has sold real estate for approximately 18 years and sold over 2,500 homes in that period

-Hosts conferences twice a year for those looking to up their game in real estate investing

-Based in Portola, California

-Say hi to him at http://www.1lifefullylived.org

-Best Ever Book: Richest Man in Babylon

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Tim Rhode. How are you doing, Tim?

Tim Rhode: I’m doing great, Joe. Thanks for having me on.

Joe Fairless: My pleasure, and nice to have you on the show, my friend. A little bit about Tim – he is a real estate investor and he is a life coach at 1Life Fully Lived. He’s the founder of 1Life Fully Lived and the co-founder of Gobundance; I’ve got some friends in that group.

He has sold real estate for approximately 18 years and sold over 2,500 homes during that period. He is based in California. With that being said, Tim, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Tim Rhode: Sure. I am the founder of 1Life Fully Lived, and also one of the founders of Gobundance. Got off to a late start in life, found my niche selling real estate, sold a lot of homes from 25 to 40. I think what I did different than most is we really focused on defense. A lot of people don’t look at what’s going out every month, and we looked at what’s going in, how can I have more money coming in, increase our offence, how can I live within my means, play good defense, and then how can I take what’s left over and invest it wisely.

I did a pretty good job at that and I was able to retire from working at 40, and then was kind of a ski bum for ten years, just doing what I call “getting the goods in the woods”, and kind of doing less investing and more switching over to what I call water skiing in other’s wake; let them do all the work and I just invest in what they do, and that freed up my time so I was able to do what I love best, and that’s help others find their best path. We do that through 1Life Fully Lived, and on a mastery level we do that in Gobundance.

Joe Fairless: You mentioned really focused on defense – can you elaborate on that?

Tim Rhode: Sure. What I find is a lot of people make a lot of money, and what they don’t do as much as their incomes increase is really focus on what’s going out, and a lot of them have leakage. A good example is I coached a lady who made a million a year for 15 years, and I coached her three years after she had made all that money, and she had little to show for it. And I coached another that made like 600k, 700k a year and spent somewhere between 500k and 800k; she just wasn’t sure… And when she met with me, she brought up this big ol’ paper bag of all these receipts, like I was gonna go through her receipts and figure out where her money went. They just don’t look at where their leakage is, and then consequently two things happen – they don’t get anywhere, and when the downturn comes and they have a lot of debt, they’re not able to downsize quickly and be nimble and manage themselves when the market inevitably turns.

Joe Fairless: When someone like that comes to you, what’s the process that you work with them on?

Tim Rhode: The first thing is taking an analysis of where they are, just stopping and looking at what’s coming in and what’s going out, what’s left to invest… The best thing for this is Robert Kiyosaki’s CASHFLOW game. Have you played that, Joe? Are you familiar with that?

Joe Fairless: I’m definitely familiar with it. I think I’ve played it; I know I’ve seen it so much, I feel like I’ve played it if I haven’t.

Tim Rhode: So in that game and in Gobundance, our mission is to get out of the rat race and onto the fast track, and I told you I was able to retire at 40 and be a ski bum – that’s what it was for me, that’s what I’d love to do, and everybody has dreams of what they wanna do, but few ever get the opportunity to do that because they’re not doing what Robert Kiyosaki talks about in that game, and that’s to have your passive income out-stretch what it costs you to live on a monthly basis, and when that happens, you’re free to do what you want.

So I’m sure for your listeners, a lot of them are either buying investments, flipping homes, trying to get to that road of financial freedom… The piece that I tell most of the people I know that wanna get there is watch your defense. And like I said, that first starts with an audit of where you are, and then look at where can you increase your income streams, how can you invest wisely, and how can you avoid critical mistakes that I saw a lot of people make around 2006-2008 and get wiped out.

Joe Fairless: What are some of those mistakes that you saw take place and then what do you do to mitigate that risk from it happening?

Tim Rhode: I think one thing is to track trends and to just look at — like, I was a real estate investor in the Central Valley of California, and in 1997 there was very, very little inventory, and I could tell our market was just about to take a turn, because I could see an increase in the amount of buyers looking to buy. And then around 2005 it was just crazy; there was no inventory whatsoever, and everyone was looking to buy.

So in 1997 there was tons of inventory with no buyers, and all of a sudden you could just see some buyers trickling in and the markets starting to change, and that’s when I went on a buying spree and was pretty active for about 8 or 9 years. Then we had the foresight to sell right at the top in 2006, and make some exchanges into triple net lease properties and easy to manage cashflow properties, and that kind of set me up to where I am today, where when the downturn came I didn’t have to worry about it, but I saw people not heeding the warning signs, and even when things were already dipping, borrowing more money to buy more on the dip. That didn’t turn out too good.

Joe Fairless: That actually is a perfect segue into the question I was gonna ask you next, and that is when you were 40 and you spent the next 10 years as a ski bum after you retired, specifically what investments were paying for you to go be a ski bum?

Tim Rhode: My old real estate office is rented out to an enterprise rent-a-car on a triple net lease; I have a building leased to AutoZone… I started a syndicate with three of my friends – David Osborn, Pat Hiban and I were the ones that started Gobundance, and then our good friend Andrew Cushman, we started a syndicate buying apartments in the South called DAPT, and subsequently bought I think 12 or 13 apartment complexes down there. So all of my investments are either passive, or I’m investing in other people’s — like, I invest a lot in my buddy David Osborn’s bad debt funds, and things like that where they’re doing all of the work, and candidly, I spend about 3%-5% of my time on investing. I don’t work, except my work is my non-profit, 1Life Fully Lived, and that’s where I put the bulk of my time and energy, and what I call “getting the goods in the woods.” I live in the mountains on three acres, we’ve got a big ol’ mountain called [unintelligible [00:09:16].10] in my backyard and I spend a lot of time going up and down that, and playing disk Frisbee; this morning I was out ice skating on the river.

So these are the fruits of things when you’re younger, and discipline. What I’m saying is if you want the goods, you’ve gotta do the shoulds.

Joe Fairless: That is true, I like that philosophy. And the approach that you take is you mentioned investing in other people’s funds or the work that they’re doing – then you’re a passive investor and you let them go do the work, and then you’re receiving the fruits of their labor as they are, as well… So how do you identify the deals that you will passively invest in?

Tim Rhode: First of all, I wanna say for anybody that’s in the trenches and working hard today and you’re on your way, this is kind of like the step three of all this. Step one is increase your income and do that audit I was talking about, so you see where you are. Step two is getting in the game and hitting singles and doubles, and every now and then a grand slam, and I’d love to talk about one deal I did back in the day that turned $6,000 into $6,000/month. When you’re in the trenches and you’re working hard and you’re in your 20s, 30s, and for some of you even in your 40s, and some of you even in your 50s candidly, the best thing you can do is do the work yourself and be in the trenches. There’s nobody you should trust more than yourself.

That said, the people that I invest in are seasoned investors that I know, like and trust, and I know they know what they’re talking about, and I know they know what they’re doing by their track record. So I look at a hundred packages every year of people that want me to invest in their deals, and I do do some things and I do some notes for some other friends on their investments, but they’re typically somebody that’s right in my circle that I’ve gotten to know, I’ve gotten to watch and I see that they’re gonna be there tomorrow.

Joe Fairless: Is that the main thing for you, the trust factor and the comfort level with the individual?

Tim Rhode: Yeah, I’d say the three things are the trust factor, comfort level — that’s the same in my book pretty much, but what’s their talent and then what’s their vehicle? If you have somebody that’s super sharp but is fishing in the wrong place… California is a really tough place to invest in, so most of the stuff we’re doing is like apartments in the South… And as I said, David’s bad debt fund is stuff all over the country. But they can be smart and talented and in the wrong at the wrong time and still lose money, so I think timing has a lot to do with all of this also.

Joe Fairless: Let’s talk about that deal that you mentioned – $6,000 to turn it into $6,000/month.

Tim Rhode: This was when I was listing and selling real estate and just transitioning into a realtor, and it was also during a time in Northern California when things were going kind of nuts. There was a timeframe between ’97 and 2005 when things pretty much quadrupled. So I think it was around 2001 I bought a property that somebody called me over and just wanted enough so they could buy a new home, so I gave them $6,000, took over their loan subject to, started making the payments on it, held it for about a year and a half; our market had increased and I’d bought it under value, and right around about a year and a half later I saw a piece of land in the path of growth right near I5, which runs from Mexico to Canada, and it ran right through me [unintelligible [00:12:40].15] California, and I knew that there was a new Hampton Inn coming in, I was tracking the trends in our area, I’m reading the paper, I’m seeing what’s coming in, I’m seeing what’s the news stuff, and I saw a property that had sat there for some time, right near I5, and it wasn’t worth it, wasn’t worth it, wasn’t worth it, and all of a sudden it was undervalued because a Hampton Inn was coming in, and a commercial strip center on the other side of it.

So bottom line is I bought it for 360k, I took the property that I had paid 6k down, I turned that into 120k, used that as my down payment on the 360k, and sold that three years later for a million eighty.

I took that property that I sold for a million eighty and I exchanged it for my AutoZone in Knoxville, Tennessee, which brings me in 6k/month. So in two steps I bought the house for 6k down, and I took the 120k I made out of the house and bought the property for 360k that I sold for a million eight, and then — actually, there were three steps. And by doing that, I took the 6k into 6k/month for 20+ years. That’s what you can do with real estate, that you can’t do with many other investments.

Joe Fairless: What’s a deal that you’ve done that’s flopped?

Tim Rhode: My two biggest mistakes aren’t that flopped; they’re deals I didn’t do. One of them I had in escrow, it was a 25-unit apartment complex and it was right during that timeframe when everything was going up, and I was really busy and I’m selling a lot of real estate, and I’m buying a lot, and I had this 25-unit under contract and it wouldn’t appraise. I was close to my 30-day contingent period and I went to the seller and asked her if she’d [unintelligible [00:14:27].08] 10% mark, because I was having trouble getting a loan… And the thing is that I had the extra 10%, I was just busy and didn’t really think about it. And she said “No. Why don’t you back out? We have another buyer.” And I backed out.

I think I was buying that for like a million and it was probably worth three million within a few years. So that was one, and another one was the piece of property I owned right near the freeway; I owned it for like seven years, I sold it, I took back a note on it, and six months after I sold it, I looked up and there’s a freakin’ billboard on it. [laughs] Yeah…  So I have a note with the guy and I ask him, “Alright, give me the news… How much did you pay and how much does it bring in?” It cost him 60k and he made 2,5k/side. So I would have made my money back in a year and then had the income coming in for perpetuity.

So honestly, I haven’t made too many mistakes with real estate, knock on wood…

Joe Fairless: That didn’t sound like wood, that sounded like glass.

Tim Rhode: Oh, I had a bowl on it.

Joe Fairless: Oh, okay… [laughs]

Tim Rhode: Very good ears, Joe! But those two really stuck in my craw. It’s good to have stuff like that, mistakes that you analyze, and those keep you from making the next mistake.

Joe Fairless: What about on a transaction, what’s a mistake you’ve made on an actual transaction that you either lost some money or lost some time? Outside of those two things where it was missed opportunity, but something more that hits to the bottom line.

Tim Rhode: I sold a lot right at the right time; I would say jumping back in heavily in 2009-2010 up here in Reno, Nevada… If I would have — how can I put it…? If I would have just got off my butt and worked a bit, I could have done really well. But there was a lot of opportunity there, and all over the country, actually. So I’ve just chosen to not play full out in that realm.

Joe Fairless: Okay… Still a missed opportunity, not necessarily a tactical mistake, but I’ll let you off on that one. We’ll keep on rolling. If you think of a tactical mistake you’ve made on maybe a transaction where you’ve lost money on the bottom line…

Tim Rhode: Okay, I can think of one. The same place I didn’t put the billboard, I was the agent when I bought it and I missed that all six units were on one meter, so I was gonna have to pay their electric bill. That one was big.

Joe Fairless: There we go.

Tim Rhode: And what’s funny is I told myself — my wife said “How could this happen?” I said “I know, if I wasn’t my agent, I’d sue me.” [laughter]

Joe Fairless: Is there a  way that she could have sued you?

Tim Rhode: [laughs] She did! …nah, I’m just kidding.

Joe Fairless: What is your best real estate investing advice ever?

Tim Rhode: Get in the game, run your hits out. You’re always looking — you’re gonna do it, you’re gonna do it, you’re gonna do it; you’re looking for what’s wrong, and then if you don’t find it, pull the trigger. But I’m in, I’m in, I’m in, and then if I find something that takes me out, I’m out.

A couple others is buy it right or don’t buy at all, and the biggest thing I’d say is two rules – rule number one, always look for win/wins. Rule number two, I’m not a victim. I’m gonna do my homework. And please don’t try to scam me, because why would you? I’m gonna offer so much value to you; I’m gonna find you more than a win/win… But when you guys are out there analyzing stuff, rule number one is always look for a win/win, maybe in a partnership, maybe in a deal, but really do your homework and think “I’m not a victim, I’m gonna do all my homework and make sure everything’s on the up and up.”

Joe Fairless: Good philosophies for life, as well. We’re gonna do a lightning round… Are you ready for the Best Ever Lightning Round?

Tim Rhode: Boom, let’s go, Joe!

Joe Fairless: Alright, let’s do it! First though, let’s hear from our Best Ever partners.

Break: [[00:18:18].03] to [[00:19:08].27]

Joe Fairless: Okay, Tim, best ever book you’ve read?

Tim Rhode: The Richest Man in Babylon, I’ve read it 15 times. It’s my financial Bible.

Joe Fairless: What’s one takeaway that you got from it that you applied towards your business or life?

Tim Rhode: I just love how they had the community in ancient Babylon where all the wise people come together, and whether you’re a master or whether you’re a slave, everybody learns from each other. That’s the community we’ve created with 1Life Fully Lived.

Joe Fairless: Best ever deal that you’ve done that’s  not your first and not your last?

Tim Rhode: Buying a piece of land right outside of town – not the one I’ve described – that I bought for 50k and sold for 1.2 over like a ten-year period.

Joe Fairless: Did you do anything to it?

Tim Rhode: No, I actually just held on to it and it was land in the path of growth. That goes back to studying trends. They put in a new wing of the hospital that backed up to my property, and the ship came in. I was just kind of waiting for it to come.

Joe Fairless: What’s the best ever way you like to give back?

Tim Rhode: Well, everybody that knows me knows that I run a charity called 1Live Fully Lived. I probably work 60 hours a week on it.

Joe Fairless: And what’s the mission of the charity?

Tim Rhode: To help people dream, plan and live their best lives. Our target is 12 to 21 year old inner city kids, and we have workshops and conferences… We have one with Robert Kiyosaki coming up in 2018, where he’s gonna be with 25 of us, helping us… Robert Kiyosaki, David Osborn and Garrett Gunerson helping people increase their cashflow and play the real estate game better, so we can help inner city kids get theirs.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on or get in touch with you?

Tim Rhode: Join the 1Life Community on Facebook (https://www.facebook.com/1lifecommunity/), check out 1lifefullylived.org, and our YouTube channel, and then you can get a hold of me at Tim@TimRhode.com.

Joe Fairless: Tim, thank you for being on the show and talking about your approach to investing and life in general; the three steps that you laid out, regardless of where we’re at… Step one, if it’s the beginning, then first do an audit of your expenses going out the door, figure that out, and then increase your income. Then two, hit singles, doubles and sometimes grand slams. You’ve certainly described a couple grand slams that you’ve hit. And then three, get into the passive aspect of things. Then you talked about what you look for as a passive investor in terms of the deal evaluation and the sponsor evaluation.

Thank you so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Tim Rhode: Thanks, Joe. I really appreciate it. And go get ’em, listeners!

Best Real Estate Investing Advice Ever Show Podcast

JF1054: Getting Paid to Raise Capital Without Being a Broker-Dealer – With Amy Wan

Listen to the Episode Below (28:33)
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A question we hear all the time, “how can I make money from connecting syndicators with high net worth individuals”? Well Amy Wan is here today to answer this question specifically. The issue is making sure you are not doing what a Broker-Dealer does. We’ll hear today how to separate yourself from looking like a Broker-Dealer. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Amy Wan Background: ‎
-Founder & CEO of Bootstrap Legal and former partner at Crowdfunding Lawyers
-In 2014, named one of 10 women to watch in the legal tech by the American Bar Association Journal
-Formerly was General Counsel at Patch of Land, advised the company on its $23.6M Series A funding round
-Holds an LL.M. in Public International Law from the London School of Economics and Political Science
-Based in Los Angeles, California
-Say hi to her at www.bootstraplegal.com

Click here for a summary of Amy’s Best Ever advice: 4 Legal Ways to Get Paid Raising Money for Apartment Deals

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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

Today we are going to answer a burning question that I get so frequently because of the business that I’m in and because of the market and how much opportunity there is. Here’s the question, Best Ever listeners – we have an expert to walk us through the process of how to answer this question correctly… Here’s the scenario (and then we’ll come up with the question).

The scenario is I know people who have money. I also know people who do syndications. How can I raise money for the syndicator and get compensated for it? Basically, we’re looking for creative ways to get paid to raise money, without being a broker/deal. With us today to walk through the entire process, Amy Wan. How are you doing, Amy?

Amy Wan: I’m good. How are you, Joe?

Joe Fairless: I am doing well, and I am smiling ear to ear, because I get this question so frequently from Best Ever listeners and from people on Bigger Pockets and everywhere else… I’m really looking forward to diving in.

A little bit about your background for the Best Ever listeners, before we dive in. Amy is the founder and CEO of Bootstrap Legal; she’s also a former partner at CrowdfundingLawyers.com. She knows crowdfunding law. In 2014 she was named one of the top 10 women to watch in the legal tech field by the American Bar Association Journal. She’s based in Los Angeles, California. Say hi to her at her website, BootstrapLegal.com.
With that being said, Amy, take it away, my friend. How do we approach this topic?

Amy Wan: Sure, so there’s definitely a lot of people out there who are able to get compensated somehow for helping other people raise money, but there’s a number of different ways to do it, and there’s also a number of different things you have to look out for.

Before I launch into explaining this entire [unintelligible [00:04:30].02] of law, I just wanna put out there I’m an attorney, so I have to put out a legal disclaimer that none of this is legal advice… It’s all educational, and I’m not necessarily recommending any courses of action. Whatever you do, you should always go and talk to your attorney who’s helping you out and representing you before you launch into this, because they’re gonna be able to look at the specifics of what you’re trying to do.

Broker dealers are people who have a license and they make a lot of money to sell securities of other people. Usually, the way they do this is they’ll take a commission – like, I’ll take 7% commission for whatever capital I’ll bring in. That’s also how a lot of investment banks get paid. But the truth is being a broker dealer is really difficult, especially if you’re not really in the business of doing this every single day and you don’t wanna deal with all the compliance.

Now that we’ve talked about what a broker dealer is, I know that a lot of your listeners don’t want to be broker dealers; they just happen to see people who might have a really good network of investors or of people who have a lot of money. So let’s talk first just a little bit about what it means to be a broker dealer, just so people know whether or not they have to be one.

There’s basically about four things that the regulators look at when they are determining whether someone is engaging in unlicensed broker dealer activity. Those four things… The first thing is actually THE most important – are they taking transaction-based compensation? Transaction-based compensation is basically payments based on the transaction amount, how much money they’re bringing to the table. If you’re not bringing transaction-based compensation, it’s not to say you’re not a broker dealer, but it makes it a lot less likely. Commissions (straight up commissions) – that’s definitely transaction-based compensation.

The second thing is whether or not the person who’s helping the other person raise money – are they soliciting or going out and trying to find potential investors? The third thing is “Is that person providing advice or engaging in negotiations? Are they helping to structure this deal in any way?” [unintelligible [00:07:17].00]

Then the last one that the regulators look at is do they have previous securities deals experience or history of disciplinary action? So was this person formally a broker dealer or are they regularly involved in the sale of securities? Because if they are, they’re probably a broker dealer. If this is like a one-off thing, it makes it less likely.

Joe Fairless: So these are the four questions that are asked to determine if someone has engaged in unlicensed broker dealer activity, correct?

Amy Wan: Yes.

Joe Fairless: The first question is “Are you taking a transaction-based compensation?” Two is “Are you soliciting…” — what was that?

Amy Wan: It’s whether or not you’re soliciting potential investors.

Joe Fairless: Okay… Which you must have to do if you’re talking to people, right?

Amy Wan: Oh, there are ways to do it, Joe. [laughs]

Joe Fairless: Alright, so we’ll get to that. Okay, so “Are you soliciting potential investors?” The third is “Are you helping structure the deal?” Let’s just use a hypothetical example with something that people might come across, and that’s an apartment community deal… So that would be “Are they helping structure…” — is that the transaction of the deal itself with the seller, or is that the structure of the compensation and the waterfall stuff with investors?

Amy Wan: It’s the latter. Whenever you’re buying or selling property, that’s not necessarily a security. When we’re talking about broker dealers, we’re only talking about selling securities. That’s when you’re going out and you’re trying to find passive investors and offering them a return on investor.

We’re not talking about buyer or selling property, we’re talking about basically fundraising… That’s what all of this is.

Joe Fairless: Okay. And then the fourth is “Do they have previous securities experience?” or “Were they previously a broker dealer?” or “Did they get in trouble previously with this process?” Okay, got it.

Amy Wan: Cool. So now that we have the fundamentals down, I think what your listeners are really interested in is how do we get some form of payment while helping people bring investors or raise capital without getting in trouble and without having to become a broker dealer or some sort of other licensed person who can do this?

Joe Fairless: Do you know what it takes to become a broker dealer, what the process is and how much studying or what tests you have to take?

Amy Wan: Sure. You have to take some of the Series exams; it kind of depends on what exactly you want to be doing. A lot of people will take the Series 7, they’ll take the Series 63… Once you pass the tests, you’ve got to change your license at a broker dealer shop. Suffice to just say that basically over the last couple years it’s become a lot, lot harder a) for broker dealers to make money, and b) for broker dealers to keep up with compliance.

It’s not to say that people shouldn’t become broker dealers. There’s still a ton of them out there today, but if you’re just like one person, or a small team of people who only want to just do this one off, I would really reconsider getting into this business, because you really need to have a full-on chief compliance officer, you really should have actively [unintelligible [00:10:48].19] It’s engaging in the stuff that Wall-Street engages in, so if you’re not equipped to do that, you just need to make sure you’re not inadvertently gonna do something that’s gonna get you in trouble.

Joe Fairless: So basically the 99.99% of everyone listening would not want to become a broker dealer, I’m guessing… So now how do we get some sort of payment while helping people raise capital without being a broker dealer?

Amy Wan: Perfect. Okay, so there’s a couple of methods that I see pretty commonly — and again, whatever you do, if you’re gonna go down this road, just do me a favor and check with an attorney first.

Joe Fairless: Are you someone they can check with?

Amy Wan: I can refer them to people that they can check with.

Joe Fairless: Got it.

Amy Wan: So one of the things you might wanna consider is if you look at the definition of broker dealer, it’s someone who’s engaged in selling securities for other people. The question is “Well, what if you are not selling it for others? What if you’re selling it for yourself, the issuer?” What if you, Joe Fairless, who wants to help people raise money – what if you become a member of the management (if this is an LLC scenario) or you become part of the general partners?

If you become part of the issuer – and what that means is you’re not just raising money, you need to be doing other things that are a little bit more day to day… But if you are part of the management or the GP or whatever it is who’s the active sponsor, then suddenly you’re not selling securities for others, you’re selling securities for yourself. Issuers are allowed to sell securities for themselves generally, so what I’ll see a lot of my clients do is maybe they’re a team of two real estate syndicators, they’re working on multifamily, and “Hey, this guy happens to know a lot of people who love to invest in student housing, AND he’s a student housing expert.” If they’ll team up with him on that particular project, they’ll give him a piece of the management (or whatever it might be). So he’s a part owner, he’s part of the issuer.

Maybe the guy helps them set up their bank account, maybe he advises them on what strategies they should use for student housing, or any other area that maybe he can contribute. Maybe he’s helping out with property management, or helping with the monthly distributions… Something that’s not purely just the raising of capital. If he is involved actively in some of the day-to-day AND he’s raising capital, suddenly we’re not raising money for other people, we’re raising for the money for ourselves, and that’s okay.

Joe Fairless: Now, what if the agreement is that he will be on the GP side and he’ll advise on things and bring capital, but what if he doesn’t bring any capital? Is there are recourse for them to say “Oh, actually I don’t know… I don’t think you should be on the GP side now.” [unintelligible [00:14:05].00]

Amy Wan: Usually when I see this happening, it ends up being a very fluid process. I think this comes down to a negotiation between those parties of what role this person’s going to play. You shouldn’t really have it that black and white where “Oh, you don’t bring in money, you don’t get to be a part of it.” You really shouldn’t. You should have them doing a little bit more than that, at the very least adding value or contributing in some way. I won’t say that I haven’t seen it, but then I would say they’re a bit too close to the line.

I think law is not a black and white thing, it’s a grey spectrum. There’s things that you can do that are closer to the edge and things that are closer to safety. So that’s number one, making yourself actually part of the company, so you’re not raising money for other people.

The second thing is very closely related, where for example let’s say hypothetically they’re structuring a syndication, you have (let’s say) two classes of ownership interest. You’ve got class A, which is your investors, and class B, which goes to yourself, the manager, or whatever it might be.

Same concept, expect that this time instead of them being a part of the management, they’re not actually a part of the owner or the issuer anymore, they are a separate entity. You are giving them some of the class B shares, even though they’re not actually part of the management.

The interesting thing here is if we revisit the definition of a broker dealer, they’re looking at transaction based compensation. If you give a guy maybe 5% of whatever the class B interest is, if you make it not transaction-based compensation — maybe he gets 5% regardless of whether he brings in a million dollars or a hundred thousand, that starts looking a lot less like being a broker dealer… And then again, just as with the last example, even if they’re not a part of the management, it’d be nice if they could provide some sort of additional service. Maybe it’s them personally guaranteeing the loan. So even if they’re not bringing capital, they’re helping you get capital from the bank, because they’ve signed the loan documents.

Now, if we’re getting into more creative strategies other than that, you could charge a finder’s fee, but when you charge a finder’s fee you have to be careful about how you charge it… And remember, we don’t ever want to tie the compensation to the amount of money raised.

I see sometimes people are charging finder’s fee, but it’s a flat fee; it’s not based on how much ends up actually converting into an investment… And remember one of the things I talked about earlier, about soliciting investors. When we’re soliciting investors, what we don’t wanna do is to pre-screen or to recommend an investment or anything of the sort. But if it’s a mere (let’s say) e-mail introduction to someone who’s just interested in learning about multifamily apartments generally, and the person happens to know that this guy also happens to be interested in investing in real estate, that on its face is okay.

Now, we don’t wanna be saying “Hey, Joe has this amazing 100-unit apartment complex that he’s raising five million dollars for now… You should take a look at this” – you don’t wanna say that. We’re just doing soft introductions.

Then the last method that I see a lot – and again, we’re not tying this to the amount of money raised – is people who basically negotiate with the issuer to become their consultant. They’ll sign a consulting agreement. The consultant has to do a number of things; one of them could be going out and helping trying to raise capital or make those introductions… But it has to be that this consulting agreement is not merely for raising; what we’re paying the consultant is not based on how much capital this person brings in, and as is the general theme here, they should have some sort of other job, too. Again, whether that’s — I don’t know… If they’re a CPA, maybe they’re the chosen auditor of the books, or something like that… But it really shouldn’t just be the raising of capital.

Joe Fairless: Could that job be e-mailing their investors that they brought into the deal every month, about the status of the project?

Amy Wan: It could be, yeah. Investor relations. The latter two strategies that I talked about – the finder’s fee, the consultant fee – that usually is more so like cash payment upfront or something like that, whereas the first two I talked about it’s usually not monetary compensation upfront, but rather it ends up being that they get paid on the backend. Let’s say if it’s a multifamily syndication with a 5-7 year life or timeline. When the property is disposed of in 5-7 years and they’re selling it and paying back their investors – or honestly, even during operations, they have rental income – that’s when the person is getting paid, and they get paid just as the manager or the GP gets paid. So it’s not cash up front, it’s cash later down the line.

Joe Fairless: On option number two, give a class B interest – assuming there’s class A/class B or GP, LP – will you explain that for me one more time?

Amy Wan: Basically, I would say actually a majority of the clients that I used to work with, whenever they did a syndication, if it’s a smaller syndication and not a huge shop, they’ll choose a two LLC structure where one LLC [unintelligible [00:20:36].20] and one LLC is the manager, and the manager usually gets all the class B units.
Let’s say in the actual LLC that holds the assets 70% of the LLC is owned by investor members as class A units, and the other 30% is owned by basically the manager, affiliates of the manager or whoever’s helping out a little bit more on the management side. Of that 30%, sometimes I see people saying “Okay, so of the manager’s 30%, we will take 28% of it and 2% we’re gonna allocate to this individual for helping us on these specific things.”

Basically, option A and B are very similar, except that in the former they actually become part of the sponsor, and in the latter, they’re a little bit more removed, but are still doing things that add value.

Joe Fairless: This is crystal clear. I’m incredibly grateful, and I know a lot of the listeners are as well, because now every time I get this question I’m going to give them a link to this interview. I have a feeling this is gonna be a popular one. Anything else that we haven’t talked about as it relates to the subject of “How can we become compensated for helping people raise capital without becoming a broker dealer?”

Amy Wan: You know, what I’m about to say is a little bit more obscure, but lately I’ve actually been getting a relatively more frequent number of calls of people asking about AngelList [unintelligible [00:22:31].26] AngelList is basically a tech startup; it’s like a futuristic venture capital firm. They are not a broker dealer; I actually don’t even think they’re a registered investment advisor [unintelligible [00:22:43].15] but they make a lot of money off of helping startups get fundraising. Their founder – he’s invested in companies like Uber, and all sorts of vague unicorn startups.

The way they’re structured is really interesting… They do not make any money on the front end; what they do is they make it on the back end. They use syndicates to basically fundraise. Angel investors in their network who see a lot of deals every day will basically bring a deal to AngelList and say “Hey, I wanna invest in this deal, and on AngelList I have a lot of backers who every time I invest a certain amount of money, they will back my investment, so the investment kind of snowballs”, and it kind of helps them diversify a little bit.

What the angel syndicate gets is a carry; he gets a portion of what the end return is for the investors, for his services. He manages the investors, he manages the relationship between him and the startup, and then communicates what’s going on to the crowd of investors.
AngelList also takes a carry, which means they get paid on the backend. I think it’s like 15%-20%; I don’t know about the numbers anymore.

I’m starting to hear a lot of people who are trying to or thinking about adopting this model in real estate, because I guess a lot of investors only know how to invest in multifamilies, but they might not know how to invest in hotels, or something like that.

That’s really interesting, and it’s another way that people are looking at to be able to help people raise capital based off of their networks or someone else’s network without having to themselves become a broker dealer.

Joe Fairless: You’re gonna laugh, but can you repeat that, but dumb it down for me, exactly what you just said?

Amy Wan: Okay, so basically if people want to for example google the SEC no-action letter, that basically is another way for people to be able to utilize their network, get paid something off of the transaction without being a broker dealer. It is a little bit more complex, it is for someone who is specifically interested in making this their day-to-day job, but it’s something I think worth looking at.

Joe Fairless: There’s the takeaway – we will google “angellist SEC no-action letter”, and for anyone who wants to dig in deep, then that’s the starting place, right?

Amy Wan: Yeah.

Joe Fairless: Sweet. Alright, Amy, anything else that we haven’t mentioned that you think it’s relevant to bring up on this topic?

Amy Wan: Nothing other than before you do anything, go run it by your attorney. [laughs]

Joe Fairless: How or where should the Best Ever listeners go to get in touch with you and learn more about Bootstrap Legal?

Amy Wan: They can go to my website – it’s BoostrapLegal.com – and they can always feel free to contact me personally. My e-mail is amy@bootstraplegal.com, or they can find me on LinkedIn.

Joe Fairless: Amy, this has been such a practical exercise… An interview for all of the Best Ever listeners who are focused on bringing in more capital into their deals or partnering with other people to do deals. The question is “How can we get some form of payment or compensation while helping people raise capital without being a broker dealer?” You gave us four options:

1) Become the issuer, so basically, be on the general partnership side. There’s a lot of disclaimers in between all of these, and I won’t say them all (there’s a transcription of this episode, fortunately).

2) Give class B interest.

3) Charge a finder’s fee, but make sure (I will mention this disclaimer) not to tie the compensation to the money raised.

4) You can negotiate with the issuer to be a consultant, and again, make sure that there is not a transaction or amount raised tied to this compensation.

Overall, if you are on the general partnership side and you’re getting compensated, make sure that you do have additional responsibilities, albeit it could be as simple as sending out a monthly e-mail to investors, so investor relations with deals.

Did I summarize that — I know I didn’t say all the disclaimers, but is that basically the gist of it?

Amy Wan: That’s it.

Joe Fairless: Okay. Amy, thanks so much for being on the show. Did I mention this was a Situation Saturday? I don’t know if I did… I hope you have a best ever Saturday, and we’ll talk to you soon.

 

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Jillian Michaels Interview by Joe Fairless

JF1050: Morning Routines, Her Best Tip for Accomplishing Your Goals, and More of your Questions Answered With Fitness Expert Jillian Michaels!

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Our guest today is none other than the fitness icon Jillian Michaels. She was nice enough to share some of her Best Ever Advice with us, I highly suggest you make the most of it with pencil and paper ready! Jillian answers many of our listeners own questions along with sharing some of her personal life with us. What a truly inspiring and genuine person, she backs up all of her talk by staying committed every single day to her goals and family. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Jillian Michaels Background:
-World’s leading fitness expert, renowned nutritionist and successful entrepreneur
-Launched new Jillian Michaels fitness app, with hundreds of fully customizable workouts
-International community of followers exceeding 100 million
-8 New York Times bestselling books, an award-winning podcast, The Jillian Michaels Show,, and keynote speaker
-Based in Los Angeles, California
-Say hi to her at www.jillianmichaels.com


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TRANSCRIPTIONS

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluff. We’ve spoken to Barbara Corcoran (Shark Tank), Emmitt Smith (Hall of Fame running back) and a whole bunch others.

With us today, I’m so pleased to say we’re speaking to Jillian Michaels. How are you doing, Jillian?

Jillian Michaels: Hey! Good, how are you?

Joe Fairless: I am doing well, and guess what I just got done doing?

Jillian Michaels: What?

Joe Fairless: I got done doing an advanced ab circuit for six minutes on the Jillian Michaels fitness app, and my blood’s pumping and my abs are burning.

Jillian Michaels: [laughs] Good, that’s what I wanna hear.

Joe Fairless: I love that thing. I just got married; my wife is a personal trainer, and she actually told me about it so I downloaded it, plus in preparation for our conversation, and I love that thing. Props to you on that app.

Jillian Michaels: Oh, thank you. I appreciate it. Are you gonna be doing the dad bod program in there any time soon you think?

Joe Fairless: I did… I have all the pictures. The dad bod one was the one that spoke to me, so yeah, I picked that one.

Jillian Michaels: Right… [laughter]

Joe Fairless: I want those fly abs, but I really want those big muscles, so yeah, I picked that.

Jillian Michaels: Today we’ve got a little bit of time and I thought the best way to approach our conversation with you is not for me to come up with questions, but instead I asked the Best Ever listeners to come up with questions that they had for you. I actually got some questions from Best Ever listeners around the country; whenever I announced a couple weeks ago that we’d be having a conversation, I got a bunch of responses, so I’ve got some questions. We’ll just roll with this if that works for you.

Jillian Michaels: Yeah, of course.

Joe Fairless: Sweet. So I’ll warm you up, because some of them are more in depth, so I’ll warm you up with maybe a quick one… This is from Andrew from Mesa, Arizona – “What’s your morning routine?”

Jillian Michaels: Well, obviously it involves the kids. I’m woken up at the freakin’ crack of dawn by two crazy kids wanting to eat and play and get ready for their day, so… It involves first getting woken up and having coffee; I have to have my coffee immediately. There’s a coffee company that we invested in called Lucky Jack actually, that I love so much we actually bought the company. So I have coffee, then I prepare my munchkins breakfast, they get dressed, and myself or Heidi takes them to camp or school. Then I come home and start my workday, usually. So it’s pretty kid-centric in the morning.

Joe Fairless: Two follow-up questions on that. One, coffee – what are your thoughts on caffeine?

Jillian Michaels: Caffeine – I’m a huge believer; up to 400 milligrams a day. I think (like anything) the right amount and proper quality is gonna be critical. Even if you have too much vitamin A, too much vitamin C, caffeine in the right dosage and the right quality has been shown to inhibit type II diabetes and improve insulin resistance. It’s literally improved cognitive functions, theoretically it helps to prevent Alzheimer’s, it helps to inhibit pancreatic cancer, it’s a performance enhancer in the gym… But if you do too much of it, then it taxes your adrenals, it releases stress hormone… And it’s also the quality of the caffeine.

If you’re getting it from coffee, this is where cold brew and organic is really important, because hot coffee has a lot of [unintelligible [00:05:37].08] and oils and is very acidic, whereas cold brew pulls out the bad oils… Hot coffee can lead to higher levels of LDL bad cholesterol, but if you have it cold brew, it strips out the bad oils and it’s less acidic on the stomach and the teeth and what have you.
You also have to make sure that the coffee is organic, because coffee is the second heavily sprayed crop in the world with pesticides and chemicals, second only to cotton. So it’s very important that when you have coffee, you have organic coffee, preferably cold brewed coffee. Even if you have it hot, the process of brewing is much better for you.

Joe Fairless: The second follow-up question – how old are your munchkins and what’s typically served to them for breakfast?

Jillian Michaels: Five and seven, and they go through their phases, you know? Right now they like Nature’s Path pumpkin waffles, so I’ll give them that with a little bit of grass-fed butter and a drizzle of honey or organic maple syrup. They’ll have turkey bacon, they’ll have eggs, because we have a farm, so we have [unintelligible [00:06:40].01] chickens, and everything… So they’ll have farm eggs with cheese in it, sometimes they have granola – they like this Love Crunch granola on Greek yogurt…

They kind of mix it up. They’re pretty typical. No Lucky Charms, none of that garbage.

Joe Fairless: Alright, now we’re gonna switch gears… This is Osh from Cincinnati, Ohio. He asks “What’s the one thing you could change about yourself to make you even more successful?”

Jillian Michaels: Patience, man. That’s the key, which is also tied up with impulsivity. You have to constantly [unintelligible [00:07:11].25] it’s not personal, it’s business, and you’ve gotta manage your patience and your emotions and your impulsivity. Luckily, when I know that I’ve had it with someone or something, I literally just hand it over to my business partner, who has great patience and diplomacy, and I’m like “I can’t. I’m gonna just roast this person. I’m handing the ball over to you.”

Joe Fairless: Thinking back and as objectively as you can look at it, would you have achieved what you have achieved if you had more patience along the way? And I ask that because sometimes I think that if you had approached it differently, then you wouldn’t have accomplished what you had, because you were in some cases impatient.

Jillian Michaels: I would say no to that one. I think the patience would have allowed me that more persistence with certain issues, or better tolerance of unethical individuals we work with that still have power and control… So I think that that could have helped. If I was to look back on mistakes that I’ve made, it would have been not fighting harder. I do think this is predominantly a female thing, I hate to say, but as a woman they constantly ignore you, they yes you to death, they ignore you, they yes you to death… Then you end up throwing a tantrum trying to get your way, because you’ve tried a million other directions or a million other avenues to get you them to listen, and then you’re difficult, you’re a bitch and all that stuff.

So the one thing that I wish I had done in these instances, where there were times I knew decisions were bad, choices were poor, and I thought “Well, they probably know more than me. They’re a producer after all, or they’re a buyer at this big bucks store, so they probably know better than me”, and then what happens is the project doesn’t work, and everyone blames you anyway. So that’s where you think, “You know what? I should have fought. Who cares if they called me a bitch? If it worked, then we would have continued working on the project anyway”, and instead I allowed these things to go on, even against my better judgment, and it doesn’t work and they never wanna speak to you again because nobody wants to be the owner of a failure, right? Success has many fathers, failure is an orphan.

So I would have fought harder and not cared so much what people thought, and I would have been more patient in working certain deals, and having a bit more diplomacy instead of being like “I don’t care. These people are bad people, I don’t wanna work with them”, whereas my business partner is like “You know what? We need to find a way to work around them.”

Joe Fairless: I love that. Kathy from Atlanta asks “Who do you look up to and why?”

Jillian Michaels: In truth, I find my inspiration in what I call “regular people” in that they’re not privileged, they haven’t been given great advantages to success. To see them overcome obstacles and adversity is very inspiring to me. It’s one thing when you’ve been given tremendous privilege and access, and when you have, I think that the person to whom much has been given, much is required (right?) it’s your job to spread the wealth and make the world more fair. But when I see everyday people overcoming obstacles against all odds, that’s really where I find my inspiration and most of my respect goes. Because it’s easy to be successful when you’re standing on the shoulders of previous generations or nepotism and you’ve been given an unlimited amount of money to make mistakes and to find your way… So that’s really where I find most of my inspiration.

Joe Fairless: Erik from Cincinnati asks “What’s the biggest piece of advice you gave to someone or even yourself that helped remain disciplined and on track with your goals?”

Jillian Michaels: I really help people establish their Why, and I think this has become such a component of mainstream pop culture nowadays… But many years ago I had read a book called “Man’s Search For Meaning” by a guy named Viktor Frankl and he was actually a Holocaust survivor who had kind of taken a Nietzsche quote, and it was like “If you have a why to live for, you can tolerate any how…” – the work associated with the goal.

To me it’s like work with a purpose becomes passion, but work without purpose becomes punishing. So you have to help people find their purpose, because you may never love working out; you may never love putting in 12-hour days at the office, you may never love the sacrifices associated with what you want to achieve, but if you’re passionate about what you want to achieve, it’s worth it. I think that’s the most important thing.

Joe Fairless: And what do you wanna achieve?

Jillian Michaels: My goals are very diversified. Obviously, I have goals for my family and my kids and what kind of parent I wanna be and for how long… The longevity and the quality of my ability to parent my kids, and in fact, my son is home right now with chickenpox, which is why I had to take my daughter to camp today… If you happen to hear that in the background [unintelligible [00:12:12].25] being around for my kids and being an active parent with my kids. That’s important to me for years and years to come.

Also, on a professional level it’s about being a platform and a channel for up-and-coming brands and personalities that I think present affordable and accessible alternatives to better for you options, whether it’s food or boutique fitness, or healthy supermarkets online that thrive, that beat the food desert issue and the affordability issue, and petition to make food stamps available for healthier products… To me, when I look at my brand, it’s “How do I use this platform that we’ve built to shepherd (if you will) young and up-and-coming brands that I think are doing great things in the world?” That’s my business goal now.

Joe Fairless: And then on business goals, Maureen from Auburn, Maine asks “What advice can you give busy moms on how to manage and schedule their time with entrepreneurial endeavors and family?”

Jillian Michaels: I call it the 12-hour rule. My thing is that if you can cut out 12 hours a week for just you, then you can make it work. It will never be perfect, and I think that’s tough, because as Americans we get into this rugged individualism, and “all or nothing”, “perfect or not at all”, and I find the people who are motivated have that mindset, which is really dangerous, because it’s impossible if you have kids; it’s an impossibility, and you’ve gotta get into the “good enough” mindset and you’ve gotta have more patience.

So if you’ve got 12 hours a week – if you’re awake 16 hours/day, seven days/week, the math on that is like 112 hours a week or something of that nature that you’re awake. Let’s say you’re putting in a 60-hour workweek. Now you’re left with like 50 hours, and you take 40 of them and they’re all about your family and your kids, you can still find 10 hours to focus on you (10-12 hours) and you have to schedule it. So over the course of the month, that means you’ve got time to get your hair done, your roots done, your haircut; you got in time for the manicure, pedicure. You have four half-hour workouts in a week; you manage to get that date night in with your significant other where it’s just quality alone time; you’ve got a girls’ night in, or a boys’ night out, and that is the number – it’s 12 hours a week.

If you spread it out over the course of the month, one week is your checkup, the next week it’s your hair, the next week it’s the manicure/pedicure, it’s the massage that you needed, it’s the four and a half hours of exercise, it’s the food prep for the rest of the week… And you’ve gotta appreciate that it doesn’t happen all at once; it’s a slow and steady burn of moving yourself in the right direction. That’s what I do, and look, I owe people answers on things right now… I go “Okay, my deadlines for that” — i put them in order of priority and I’m like “My deadline to get back to you on this book proposal is gonna be Tuesday” and I paste it out, I put them in order, and prioritizing and communication is key.

Joe Fairless: And the last question – this is from Steve in Los Angeles… “Do you use visualization, and if so, how do you feel it has led to more opportunities in your life?” Talking about the law of attraction…

Jillian Michaels: In truth, I don’t necessarily know that I believe in the law of attraction in that it’s like “Think money and money will come.” I do think that focusing on your goals is important, because it allows you to visualize what you want, which I think is gonna generate positive emotion towards it, and that positive emotional connection is gonna help push you through the work and the sacrifice associated with the goal. So I think there’s benefit there.

But you also need to educate yourself about the goal, chart a very deliberate and specific roadmap of informed actions to take towards the goal in order to find inevitable success and learn from the mistakes along the way. But when you get into — the law of attraction makes me a little nervous in that it’s like “Oh, I just focus on it and it comes?” That’s total BS. Complete scam. That whole book The Secret is a total scam, and it really bothers me and I think it’s done a massive disservice to so many people in the world.

Joe Fairless: Well, Jillian, thank you for being on the show, from talking to us about the 12-hour rule for how we juggle priorities, which you are right now – I mean, you’ve got one of your kids with chickenpox and I appreciate you taking some time to talk to us – to identifying what our purpose is… And one of the things that really stood out to me was the patience aspect, where you mentioned if you had more patience at times then you would have more persistence; the patience and persistence connection, I had never thought of.

Thanks for being on the show. I hope you have a best ever day. Where should the Best Ever listeners go to learn more about what you’ve got going on?

Jillian Michaels: I would just say you can go to my social media channel – which is my name, of course – or go to JillianMichaels.com and you can check out the app; it’s available on iOS and Android, and it’s pretty much the hub for everything that we do that’s Jillian Michaels brand-based. So I’d just say JillianMichaels.com.

Joe Fairless: Jillian, thanks for being on the show. Have a best ever day, and we’ll talk to you soon.

Jillian Michaels: Thank you, you too!

Best Real Estate Investing Advice Ever Show Podcast

JF1012: $6,000 POCKETED from His Property Manager and How He Dealt with Fraudulent Activity #SituationSaturday

Listen to the Episode Below (20:39)
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It’s unfortunate, but there are property managers out there that will take money from your wallet…even inadvertently. Because it’s a thankless job, many things can go wrong, and you may be the one taking the loss. Hear about our guest losing big money to his property manager in what he did about it.

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Marco Santarelli Real Estate Background:

– Founder and President of Norada Real Estate Investments
– Host of the Passive Real Estate Investing show, where people like you learn how to build substantial passive income while creating wealth
– Creator of DealGrader™ – a scoring system that measures the investment quality of a real estate investment
– Purchased his first real estate investment at the age of 18 and is licensed broker in California
– Based in Orange County, California
– Say hi to him at http://www.noradarealestate.com/

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

I hope you’re having a best ever weekend. Because it is Saturday, we’re doing a special segment called Situation Saturday, where we talk about a specific challenge that our Best Ever guest had and how he/she overcame it. Today we’re speaking to a he, so how HE overcame the situation.
We’re gonna be talking about, well, if you have a challenge with a property manager that is ripping you off; in this case, the property manager had stolen six thousand dollars in collected rents in one month from today’s guest. How are you doing, Marco Santarelli?

Marco Santarelli: Hey, Joe. I’m doing great, how are you doing?

Joe Fairless: I’m doing well, nice to have you back on the show. Best Ever listeners, you can hear Marco’s Best Ever advice by simply searching Marco Santarelli at BestEverShow.com, and you’ll be able to hear his episodes.

He is the founder and president of Norada Real Estate Investments. He is the host of a wonderful show called “Passive Real Estate Investing”, where people like you learn how to build substantial passive income while creating wealth. He is the creator of Deal Greater, which is a scoring system that measures the investment quality of a real estate investment. He is based in Orange County, California.
He bought his first rental property at the age of 18. You can hear his story, again, on a previous episode. We’re gonna focus today on this challenging situation. But you know what, before we do that, Marco, do you wanna give the Best Ever listeners just a refresher on your background and your current focus?

Marco Santarelli: Sure, Joe, and thanks for having me back on the show, I’m very honored. Just real quick, I jumped into real estate investing at the age of 18; I just knew that real estate was a wealth creator just by looking at other people around that were quietly and slowly creating some amazing wealth. So I just literally jumped in, bought a property, fixed it up, put a sign out in front, took some applications, screened some tenants… I had no idea what I was doing. I was kind of going based on gut instinct, but I leased it, managed it for several years, and then ultimately I ended up selling it, which was my biggest regret, because it was about a $40,000 property at that time, many, many years ago, and it’s about a $400,000 property today. If there’s any takeaway here, it’s “Never sell your portfolio.” Yes, you can transfer the equity and do a 1031 exchange, but never sell. Keep the equity and keep building cashflow.

Fast-forward to 2003-2004, again, to make a long story short, I kind of jumped back into real estate investing full-time at that time, and this will segue into what we’re talking about today, by the way… But I jumped back into real estate investing full-time, and I noticed a need that investors all around me were spending lots of time and money educating themselves and doing a good job of it, but they still weren’t pulling the trigger. At the end of the day, unless the rubber meets the road, you’re not gonna build a portfolio and create wealth for yourself or create financial freedom. So the entrepreneurial mindset is “Find a need and fill it.” Well, the need at the time was helping these investors that wanted to build real estate get into it. That’s how the business was born.

I mention that because that only came to be because I was out there doing it. I was out there finding the deals, negotiating them, putting them together and buying real estate for myself. I bought a lot of property in a very short period of time and I learned a lot from it, but at the same time I made a lot of mistakes.

Joe Fairless: What we’re gonna talk about today – it might be a mistake on your part, but certainly when someone is committing fraud or just stealing from you, then most of the onus is on them for what was going on. Tell us the story… I gave the little teaser of how at one point you had $6,000 in collected rent stolen in one month; can you give us the back-story and just tell us what happened?

Marco Santarelli: We put a lot of trust in our property managers within our company, and on the podcast I always half-jokingly say that “You live and die by your property manager.” The reality is that property management is a thankless job. It’s very important, and you really need to think of your property manager as an asset manager, not just a property manager… Because they’re managing your assets, so it is a critically important position. When you hire them, you need to hire them well.

Well, I kind of side-stepped this whole thing in choosing the right person. I had built trust in a real estate agent in the [unintelligible [00:06:56].17] back in 2003-2004 that I used extensively to help me find and source deals. She kept bringing me opportunities and I really put her to work; I was submitting lots of contracts, a lot of offers on properties to try and find the right deals at the right price that work for me.

She was very helpful, and I grew to know her and trust her, so I took it for granted that she could help me and do a good job in the management side of things. The problem was that she was a full-time real estate agent and a part-time property manager. Yes, she was licensed, yes, she was qualified to do it, but she wasn’t an experienced real estate investor and I don’t think she made a heck of a lot of money as a real estate agent, because for the most part I was buying 40k, 50k, 60k and 70k properties. Real estate commissions are not very large when you’re only making 3% of the sales price.

Anyway, I hired her as my property manager, and she was managing dozens of units for me. Because I was in low-income areas, the tenants paid cash. It was either a money order or cash, so she was collecting cash. You can imagine that when you start to stack up hundreds of dollars or thousands of dollars every month in collecting rents, it starts to look pretty enticing.

If you’re not making as much as you’re collecting in rent for other people i.e. your client (me), I think the temptation starts to grow on you. I didn’t find this out early on, but it started to grow suspicious and become fishy as the months rolled by where I was getting less and less in rent and there were more and more defaults or late payments… So I started to question things and I started to fly out and check on things a little more often. What I came to find out is that 1) those money orders were being given to her nameless or made out in her name. I don’t wanna say her name, but she basically was telling the tenants that “You need to make them out to our company, or the property manager on behalf of the landlord.” Well, no, that’s not what you should be doing, but she did.

Where this all came to a head is in one month where I had my largest collection of rent – and she literally told me this on the phone, she said “I’ve collected $6,000 for this month”, and I said “Great, let’s send it to me…” She told me that she put it in a UPS overnight envelope, dropped it off at the UPS store and I should have it the next day or in two days.

Well, it never showed up. Days went by and still there was nothing, so I called her and I said “Are you sure you dropped that off? Are you sure you mailed that?” and she claims that she did. I can’t believe what she said, because I wasn’t there. Long story short, all I know is that she claims to have dropped it off at the UPS store and went back to double-check and make sure that it was sent. The fact is that either she took it, which is what I have come to believe, or she dropped it off at the UPS store and one of the employees knew what was in the envelope and stole it.

Basically, I lost thousands upon thousands of dollars of rent over the course of a number of months, only because it was theft; it was nothing more than theft.

The bottom line here is you need to work with a professional full-time property manager that is ideally in or part of a bigger company. If you’re dealing with a real estate agent and/or a part-time property manager, it could lead to trouble because there’s no accountability, there are no checks and balances. If you are dealing with a property management company, even if it’s just a company of three people, at least you will have systems in place, you’ll have people that you can contact and they can report back to you. I think that’s the lesson learned here with this mess.

Joe Fairless: So the two takeaways that you mentioned – full-time, not part-time, and part of a larger company. The full-time versus part-time – that makes sense; part of a larger company – that makes sense. Any other tips for the listeners as you look for property managers, how to find the best property managers?

Marco Santarelli: Definitely, and you really hit some key words there… Full-time, not part-time. Professional, meaning that this is what they do as their profession, their living; they’re not part-time this and part-time that. This is really what they do as their career, their profession; this is their expertise. In many states, they need to be licensed in order to do that, so that’s one qualification criteria right there – do they have their real estate license? Whether it’s an agent’s license or a broker’s license. If it’s a one-man show, that probably won’t be your best way to go, because you have no redundancy; there’s a single point of failure. If this person gets sick or gets hit by a bus, what happens? You have no one to contact, you have no one collecting rents; you have one single point of failure, so you need a company that has redundancy.

Here are some tips for finding or hiring that best property manager; for your Best Ever listeners, here’s a way to find the best manager. One thing you wanna find out is how many properties they are managing. If they’re only managing one, two, three, five or ten, this is very much a part-time endeavor. But if they’re managing 100, 200, 300, then you know it’s a serious business. You wanna stick to companies that obviously do this day in and day out and have the network of people in place to manage your property.

The second thing you might wanna find out or ask them is do they own any rental properties themselves? Now, this can go one of two ways… It’s kind of like section 8 – people either love section 8 tenants or they have section 8 tenants. The property manager, if they own their own rental property, then they understand what being a landlord is like and what they would expect as a property manager. They have expectations, so they might be delivering and giving you the service and the communication that they would want as an investor.

The flipside of that, which is arguable, is if they own their own portfolio of properties and they have a vacancy and you have a vacancy, is there a conflict of interest there where they’re going to fill their vacancy first over yours? So that’s up to you to decide whether it’s a good thing or a bad thing whether they own rental properties themselves or not.

A critical component is “Do they inspect or visit those properties on a regular basis?” I think most management companies will go once per year, but if they make it a routine to go once a quarter or once every six months as just either a scheduled inspection or a random inspection where they just drop by just to even look in the door and just say “Hey, I’m just in the neighborhood, I wanna see if everything’s okay.” They can look through the door, maybe they can just say “Do you mind if I come in and just take a quick look around and just make sure everything’s okay?”

Those inspections just keep the tenants on their toes, but it also allows you to find out through the property manager the condition of the property and the tenants and just to make sure things are running smooth.

Kind of a more intangible thing is “Does your property manager try to make you happy? Are they going out of their way to accommodate you and to make sure that they’re meeting your needs and expectations?” If they don’t have time to talk to you or they’re rushing you off the phone or their e-mails are very short, that’s not a good sign. It shows they don’t care enough to take care of you the right way, or maybe they’re too busy for their own good. So when an issue does come up, are they spending the right amount of time to address your needs and concerns and the problems that you’re having with your property? So it’s all about customer service. You wanna make sure that they’re keeping you happy.

This is a very basic one, but do they have systems in place? A lot of property management companies today have cloud-based software, propertyware where income and expenses are reported, notes on your account is captured and reported and you don’t need to call the property manager; you can just literally sign in from any web browser and just see the state of your property and see what the accounting is like and what expenses were made over the last month or the last year. If they don’t use systems, they’re really behind the times, because you have to have these online tools to operate today.

Then just a couple more tips… Their fees – most management companies are 8%-10% of collected rents; 10% – you can call it the street rate, if you’re just walking off the street. But generally, they’re going to be around 8%-10%, and they’re negotiable, especially if you have a larger portfolio. If you have many units, that rate could be driven down. But the important point here is make sure that the percentage that they’re charging you is on collected rent, not on scheduled collections… Not what is expected to be collected, but actually what they actually collect. Then there’s motivation to perform, and if that property is not performing – in other words, if you’re not collecting rent every month, they’re not making a profit.

Joe Fairless: Do they actually try to do a fee off of scheduled rent, not collected rent? I’ve never heard of that.

Marco Santarelli: Yes, some of them do. You have to read the agreement very carefully before you sign a management agreement with a property management company. Fortunately, most of them do it off of collected rent, but some of them will do it on what is expected. If they sign a one-year lease with a tenant and the tenant is paying fine for eight months and then the ninth month comes along, the property management company still expects to be paid, and they’re gonna take it out of your account if they have to, or they’ll collect it once they do collect rent from the tenant going forward. In other words, they always get paid, but you might not get paid. You don’t wanna be in that situation, definitely not.

My seventh tip would be… I guess just know how they’re going to address maintenance issues. Do they have in-house maintenance staff? A lot of them have in-house handymen that can handle most maintenance issues, a lot of them will outsource it. But it’s really more of understanding how they handle it and are they charging you a fee?

It’s not uncommon for them to tack on let’s say a 10% maintenance management fee on top of whatever that bill is on the maintenance issue. So it’s not that that shouldn’t be there, it’s just know what it is before you get into a management agreement.

Joe Fairless: Those are seven tips that will help us, for sure, identifying the right property management company and the wrong property management companies and choosing the best one. Then on top of that, I love the thoughts on the full-time management manager who is working for a larger company, so there’s more accountability.

Marco, where can the Best Ever listeners get in touch with you?

Marco Santarelli: There’s two websites. If they want more information on real estate investing, especially on the passive side, it’s just our podcast at PassiveRealEstateInvesting.com, but all of our properties that are in markets all around the country are on NoradaRealEstate.com.

Joe Fairless: Awesome. Well, the seven ways to screen a property management company… One – how many properties are they managing? Two – do they own any rental properties? Again, you said that could go either way. Three – do they inspect properties on a regular basis? Four – are they gonna meet your expectations? First you have to define what your expectations are – responsiveness, the level of communication you expect to receive, and then are they going to reach those expectations, exceed those expectations? Five is what software do they use? I’ve had management companies that have no software or old-school software, and it was a hot mess; you’ve gotta make sure they have the right software, maybe get some sample reports that they will provide you.

Six – the type of fees. Holy cow, if anyone tries to charge you off scheduled collected, not actually collected rent, run the other direction. Then lastly, how they handle maintenance and the fees that are charged. Make sure you’re budgeting into that. And we already talked about the full-time manager working at larger companies. These by no means are absolutes, but certainly if you follow them you’re going to mitigate the risk for having a bad property manager, one who takes $6,000 or $8,000, or whatever that number is — I think it’s $6,000 in rent, or it just disappears… Regardless of whatever happened to it, it just disappeared either way.

Marco, thanks for being on the show. I hope you have a best ever weekend. I always enjoy having a conversation with you. We’ll talk to you soon.

Marco Santarelli: You too, Joe. Thank you.

 

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Best Real Estate Investing Advice Ever Show Podcast

JF995: Defer Your Taxes with the 1031 Exchange!

Listen to the Episode Below (25:29)
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You may have heard that you can defer your taxes that are due when you sell a property, also known as capital gains tax. That’s exactly what you are going to learn today! One of the difficult pieces of this would be finding an alternative property to defer the taxes. He’s definitely got the solution!

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Leonard Spoto Real Estate Background:

– Oversees sales and marketing operations for Asset Exchange Company
– Frequent keynote speaker and accredited course instructor on the subject of 1031 Tax Deferred Exchanges
– Presented his real estate and tax workshops to over 20,000 Realtors, lenders, title professionals & investors
– Based in San Francisco, California
– Say hi to him at www.ax1031.com
– Best Ever Book: Olivia the Pig

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advice on defering taxes

 

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

With us today, Leonard Spoto. How are you doing, Leonard?

Leonard Spoto: I’m doing great, Joe. Thanks for having me on your show.

Joe Fairless: Yeah, nice to have you on the show, and looking forward to diving in. A little bit about Leonard – he oversees sales and marketing operations for Asset Exchange Company. He’s a frequent keynote speaker and accredited course instructor on the subject of 1031 tax deferred exchanges, and he’s based in San Francisco, California. With that being said, Leonard, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Leonard Spoto: Absolutely. I’ve been doing this for about 15 years. We are a 1031 exchange accommodator. We work with real estate investors who are using section 1031 within the tax code to defer capital gains taxes. When you do an exchange, when you defer taxes on the sale of your investment property, you have to work with a neutral third party to facilitate the process, and that’s what my company does. We prepare all the legal documents that are required, we make sure that our clients are in compliance with the tax code, and we actually hold sale proceeds until the investor or our clients find a suitable replacement company to invest into. So we’re an accommodator.

Like I said, we’ve been doing it for about 15 years. We do all types of different exchanges, from really simple, standard delayed exchanges to more complex reverse and construction exchanges.

Joe Fairless: Let’s talk 1031 2.0, next level stuff. Let’s assume that our listeners know what a 1031 is and the main components to it… What can you tell us that you would tell more sophisticated people and educate them on topics as it pertains to 1031s?

Leonard Spoto: There’s a few things, kind of next-level 1031 exchange stuff… Like I said, either standard delayed exchanges, one of the things that we work with most of our clients on where they sell a property and then buy a replacement property in that order. But as you and your listeners probably, right now one of the biggest challenges in the real estate market is finding good, suitable replacement property. I don’t care what market you’re in, whether it’s here in the West Coast or where you’re sitting on the East Coast, Joe, there’s just not a lot of inventory and the good properties are getting gobbled up quickly. So one of the challenges that a lot of our investors have is if I’m gonna put my property up for sale and I’ve got a limited time to reinvest, I may not want to actually sell because I might not have enough time to find a suitable replacement property within that very tight timeframe. So a lot of our more sophisticated investors are asking us about what’s called the reverse exchange.

The reverse exchange allows an investor to buy a replacement property first. As the name implies, you’re doing an exchange, but in reverse. You’re buying a replacement property first, and then you have 180 days to sell; provided that property sells within 180 days, that sale will be tax deferred.

Now, these exchanges aren’t for the beginner investor, they’re not for the unsophisticated first-time investor because they are a lot more challenging. When you do a reverse 1031 exchange, you can’t actually own the new property that you plan on buying AND the old property at the same time. An exchange is going from one to another; you can’t just go out and buy something and call that a reverse.

With a reverse exchange, we actually become the buyer for you. We are signing your contract, we become the buyer for that property, and we warehouse the purchased property until you can get yours sold.

Joe Fairless: You become the buyer for the property that I’m going to buy?

Leonard Spoto: Yes.

Joe Fairless: Okay. Do you put up the funds to buy the property that I’m going to buy?

Leonard Spoto: Yeah, good question… We don’t. I’m not in the business of giving you money and buying property for you, so what happens is… Think about it – you haven’t sold anything, right? And you don’t necessarily have that big pile of cash that most exchangers have, because the building you wanted to sell hasn’t sold yet. We do not buy the property for you with our cash, you’ve gotta do it. And the challenging thing about reverse exchanges as well is, let’s say you do have enough for a down payment on the property you wanna buy. So you’ve got $200,000 in your piggy bank and you’re gonna go out and buy a million dollar property. You plan on getting a loan from a traditional lender like Wells Fargo or Bank of America, and then you tell the lender “Well, by the way, I’m gonna borrow $800,000 from you, but Asset Exchange Company, the 1031 exchange company, is gonna be the buyer.” You can imagine how that goes over like a lead balloon in the underwriting department at that bank.

So getting a loan on a reverse exchange is tough, so most of the reverse exchanges we do are with clients either paying all cash, clients using non-traditional lending sources like private money lenders, or if the seller of that property is willing to seller-finance the deal. If one of those things are available to a client, then the reverse exchange might be an option. And to be honest with you, 90% of the reverses that we facilitate are with clients who are just paying all cash. They’ve got a big, giant lump of cash maybe that they can use from the stock market or just a big piggy bank that they’re able to access, and they’re able to buy a replacement property without getting a lender involved. It’s an all-cash purchase, we become the buyer, we sit on that property as the owner until there’s sells. Once they get their property sold, then we transfer the new property to them.

Joe Fairless: That’s an interesting concept. What type of documents — I know you’ve got all the documents, so that’s why I’m curious… What type of documents do you have in place for your client and you? Because they’re putting up the money, but you’re the owner.

Leonard Spoto: Obviously, there’s a pretty lengthy agreement that we all sign, and we are the owner in exchange — as what’s called an exchange accommodating title holder, only it’s not in our interest to become the owner of that property for the long term. We’ve got a pretty iron-clad agreement that specifies that as the client completes the exchange by either selling their relinquished property or exceeding the exchange timeframe, which most of your listeners probably know is 180 days… When one of those two things occurs – either they complete the exchange by selling their property, or going beyond the 180 days, the property we are warehousing for them automatically transfers back to them.

So we’re not in the business of obviously owning property; we only go on title for the accommodation of the reverse exchange. In fact, when we are on title to that property, we also entered into a triple-net lease with the client who’s doing the reverse exchange, and that lease will give the investor (the exchanger) all the burdens and benefits of ownership. So even though I’m on title to facilitate the reverse exchange, if there’s tenants in that property that you were buying in the reverse, you are gonna deal with those tenants, you are gonna collect the rent from those tenants. If there’s leaky toilets, you’re gonna go out and fix them. I’m not in the business of managing those properties for you. We are only on title in name and only for that reverse exchange.

Joe Fairless: And only for 180 days, right?

Leonard Spoto: For only up to 180 days. Hopefully a lot less, because hopefully it takes you a lot less time to actually get your relinquished property sold.

Joe Fairless: So the reverse exchange would make the most sense if I have cash or access to cash via a private money lender or seller-financing, and I am concerned about finding a replacement property or I have identified my property, I need to buy it now, but I haven’t sold the property I’m exchanging it from.

Leonard Spoto: Yeah, that is correct. Sometimes people get forced into a reverse exchange. You did your homework, you got your property on the market to sell, you had a buyer that came in, the buyer looked great, so you went out and made an offer to purchase something. You got into contract to purchase, you’re gonna time it so that your sale closes today, your purchase closes tomorrow, but then all of a sudden, that buyer for the property that you are selling all of a sudden just disappears, they go away for whatever reason. Now you find yourself in contract to buy something, you thought you had a buyer for the property you’re selling, but that guy took off, so you’re forced into a reverse exchange – not an ideal scenario, but that is something that happens as well, where people find themselves in a reverse exchange.

Joe Fairless: Let’s talk about some stories that you’ve either experienced yourself or heard from others, where a 1031 didn’t go according to plan and it went sour. Can you tell us a couple stories of what you’ve come across?

Leonard Spoto: Within the last 3-4 years, the biggest reason why an exchange goes sour is because they simply can’t find a suitable replacement property in the timeframe. When you’re doing an exchange, if you sell a property you have 45 days to identify what you’re thinking about buying and a total of 180 days to purchase and close on that replacement property.

So the biggest challenge in today’s market is finding that property within those 45 days, because it has to be identified within 45 days. We’ve had clients who sold their property, went to Hawaii for 2-3 weeks to celebrate the sale, came back and said “Jesus, there’s nothing on the market. What am I gonna do?!” That’s just poor planning, and exchanges blow up all the time because people just fail to plan properly.

That’s one thing – you’ve gotta do your homework if you’re gonna get into the 1031 exchange. There’s a lot at stake. My clients routinely have tax liabilities of hundreds of thousands of dollars; occasionally, those tax liabilities can get into the millions of dollars for some of our big clients… So if you are not doing your homework, you’ve got a lot at stake if the exchange fails. The government’s gonna come in, and in high states like California where we operate out of, you’re looking at about a 33% effective tax rate between state and federal government. Like I said, it can be hundreds of thousands of dollars, sometimes millions of dollars for our clients. So the biggest mistake some of the clients make is just not planning properly.

Now, there are occasions where people plan properly, they know what they’re gonna buy, they go out, they get into contract on something within the first 45 days, but then of no fault to themselves are not able to purchase something… Whether the deal falls through, maybe the financing falls through… Those are somewhat unavoidable, but in those cases what we always counsel our clients to do is have a backup. You’ve got your first choice, you think it’s a slam-dunk, but it’s always smart to identify a backup property, do some research, find out what else is on the market that might be a suitable option if your number one choice does not come through. Have a backup.

I’ve seen clients who just don’t do that. They only nominate one property on day 45, they’re already in contract on it, they think it’s a slam dunk, and then something happens. So it’s always good to make sure you’ve got a backup there.

Joe Fairless: And just a point of clarification… Do the 45 days run concurrently with the 180 days?

Leonard Spoto: Yeah. Day 45 is within the 180 days. You close escrow on your sale – that’s day zero. The first 45 days are what’s called “the identification period.” On day 45, no later than midnight of day 45 you have to submit your identification letter, stating in an unambiguous manner the properties you’re considering acquiring, and then you’ve gotta purchase and close on at least one of those within the total 180-day period.

Joe Fairless: Obviously, once our property that we’re selling is under contract, and maybe even a little bit before if we put it on the market, then we should be identifying the property; that way we’re not tightening that window unnecessarily.

Leonard Spoto: Absolutely. One of the things that my clients do, especially on the bigger deals, is they will get into contract to sell – you’re gonna sell a five million dollar apartment building, you’re gonna close escrow, and that triggers the timeframe, the beginning of your exchange. Some of my more sophisticated clients, they will work with the buyer to have a flexible close of escrow date. So instead of closing in five days with the all-cash buyer from overseas who’s anxious to get ownership of this property, they say “Yeah, I’ll sell you this property, but I don’t wanna close in five days. In fact, I want to close in 30 days with the option to extend another 30 or even 60 days, so that I have time to find that replacement property for my exchange.”

Joe Fairless: Does your company get compensated more if it’s a higher price point for the property that is being exchanged?

Leonard Spoto: Good question. No, we don’t. We just charge – and most exchange companies throughout the country are like this – a flat fee on the sale side and a flat fee on the purchase side, and the exchange fees are really reasonable. Our company has $750 on the sale and then $250 on the purchase, so most of our clients are selling one, buying one, and they’ll simply pay a $950 fee.

Joe Fairless: Obviously, you all must make money another way. I”m guessing that it is by investing or making dividends on the money that’s sitting in the exchange account?

Leonard Spoto: We are not allowed to actively invest funds; the funds have to be held in a cash-equivalent account, so that is a money market account. We currently keep the float on those funds as part of our fee. In higher rate environments, 5-7 years ago when money market accounts were yielding 5%, that yield was split with the client, but right now it’s less than 1%, so the entirety of that yield is taken as part of our fee as well.

Joe Fairless: With the exchange, is there anything else that we haven’t talked about that’s 2.0 level that you wanna mention?

Leonard Spoto: With some of the more sophisticated investors, one of the biggest issues right now is what we call in our industry a “drop and swap.” Many times investors will pool resources to go out and buy a large property. Let’s say you’re gonna buy a ten million dollar apartment building… Very few individuals will just do that on their own; they’ll typically bring on partners. And when you bring on partners, if you form an entity to own that property, such as an LLC or a partnership, it’s very important when you sell that property that the taxpayer who’s on title is the taxpayer that does the exchange. So if you have a multi-member LLC, the LLC will become its own tax-paying entity. The LLC is actually the entity that’s selling the property and the entity that’s eligible to do the exchange. So LLC will sell the property, LLC does an exchange and LLC has to buy the replacement property to complete the exchange.

Now, that works well provided the members of the LLC all wanna go forward together. Now, 9 times out of 10 though, when a property sold after X number of years, a lot of the members will wanna take some cash, do their own thing… It’s very rare that all the members wanna go forward together after X number of years of owning a building together. But what happens is you can’t go out and just take your cash and do your own exchange if other people are gonna pay taxes, because you don’t have several taxpayers on the title, you only have one – an LLC.

So one of the big issues with our more sophisticated clients is planning for an exchange a year or two prior to the actual sale. You’ve gotta get that LLC off title, you’ve gotta get the individual members of the LLC on title as tenant in common owners, so that they are taxpayers on title to the property, so that when it comes time to sell it, they can take their proceeds and exchanges their own taxpayer, or pay taxes, if they so choose. So planning on an exchange a year or two in advance is gonna be very helpful, because what you don’t wanna do is get an escrow to sell a property and be ready to close in two weeks, and all of a sudden learn that some of the members wanna cash out and pay taxes and some of the other members wanna do an exchange, because then you’ve got a big problem.

Joe Fairless: That makes sense. The drop and swap is referring to the switch from the entity that was previously to tenants in common, correct?

Leonard Spoto: That’s correct.

Joe Fairless: Another way to do that – to simply buy out the members in the LLC’s ownership interest and then allocate accordingly for whatever they would pay in taxes…?

Leonard Spoto: Yeah, you could do that. So if you have an LLC that owns let’s say a five million dollar building and you’ve got one member who doesn’t wanna do an exchange and several who do, the people who do want to exchange could simply buy that guy’s shares of the LLC. That would be a taxable event, but it gets the non-exchanger out of the deal, and then the rest of the group can then go forward with the exchange… That is another way.

Now, a) you’ve gotta have the funds to be able to pay that guy out, so if liquidity is an issue, that might not work. But the other thing is that now you also still have an obligation to replace the full value of the exchanged property.

Joe Fairless: That LLC is still on the hook for 100% of the taxes, even though you bought someone out.

Leonard Spoto: Exactly. So the LLC eventually, if it does cash out, is still on the hook for 100% of the tax liability.

Joe Fairless: Based on your experience as a 1031 exchange expert, what is your best advice ever for real estate investors?

Leonard Spoto: Plan. Especially in today’s market, due diligence is important, doing your homework is very important; building the right team to support you during the process is very important, so planning, planning, planning. You only have a window of 180 days to get these deals done. And as I mentioned, inventory is tight all over the country, so the sooner you start planning for your exchange, the higher chance that it will be successful.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Leonard Spoto: I am.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [[00:21:49].15] to [[00:22:37].15]

Joe Fairless: Best ever book you’ve read?

Leonard Spoto: Best ever book I read? That’s a tough one… I’m gonna have to pass on that, I can’t think of anything off the top of my head. [laughs] I’m sorry, Joe… The only books I read right now – I’ve got a two-year-old and a five-year-old, and the only books I read are Olivia The Pig and Humpty Dumpty, so we’ll go with Olivia The Pig.

Joe Fairless: I’m going to include that in the notes… That’s probably the biggest smile that I’ve had on my face while typing the book that someone says. Olivia The Pig – alright,  done. Best ever way you like to give back?

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

Joe Fairless: What’s a mistake you’ve made on a business transaction or just in business in general?

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

Joe Fairless: Where can the Best Ever listeners get in touch with you?

Leonard Spoto: Two ways – telephone is 877 471 1031, and then we’re on the web at ax1031.com.

Joe Fairless: I’m a big fan of your phone number.

Leonard Spoto: It’s easy and it’s appropriate.

Joe Fairless: [laughs] Well, Leonard, thanks for being on the show. We went over a lot of information in a very short amount of time, and that’s exactly how I like to do it. You were really informative, from drop and swaps, which pertains to my business (multifamily syndication and large deals, as well as other syndications) and reverse exchanges, which is a potential solution to not finding the replacement property in time; do the reverse exchange… Gotta have access to cash, and you need to plan accordingly if you aren’t gonna be within that 180 days. And the plan-plan-plan advice that you have  – that’s pretty straightforward and it’s something that we need to pay attention to the business model in advance. That way something like a 1031 exchange where we don’t find a property – that doesn’t happen because we’re planning and preparing prior to that. So thanks for being on the show, I hope you have a best ever day, and we’ll talk to you soon!

Leonard Spoto: Thanks a lot, Joe. Thanks for having me.

 

 

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JF971: Why and How to COMMIT to EXTREME Wealth #SkillSetSunday

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Want to be, hope to be, or wish to be wealthy? Why not just commit to be wealthy? It starts with your head. Our guest is about to lay the basis for having a mentality of extreme wealth!

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John Bowen Real Estate Background:

– Founder of four multi-million dollar businesses, including CEG Worldwide and AESNation.com
– Host of Accelerating Entrepreneurial Success Podcast
– Founder of Financial Advisor Select, an organization that matches customers with vetted financial advisors
– Author of more than 15 books and a regular columnist for The Huffington Post and Financial Planning
– Based in San Martine, California
– Say hi to him at http://www.aesnation.com

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extreme wealth

 

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate podcast. We only talk about the best advice ever, we don’t get into any fluff. We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad and a whole bunch of others.

With us today, John Bowen. How are you doing, John?

John Bowen: I’m doing fantastic, Joe. I really appreciate the invitation and I look forward to helping your listeners be even more successful.

Joe Fairless: Well, that is a wonderful thing, because I would love for my listeners (and myself) to be even more successful.

John Bowen: This is one that we’re all aligned. You can’t be too healthy or too wealthy.

Joe Fairless: Exactly. It reminds me of one of my favorite book, Crucial Conversations, where you start out with a mutual purpose, and then you build up from there, which you just did… So I love that.

A little bit about John – he is the founder of four multi-million-dollar business, including CEG Worldwide. He’s the host of Accelerating entrepreneurial success podcast, he is the founder of Financial Advisor Select, which is an organization that matches customers with vetted financial advisors. He’s authored more than 15 books and is a regular columnist for The Huffington Post. You can say hi to him at his website (it’s in the show notes page) and he’s based in St. Martin, California. With that being said, John, do you wanna give the Best Ever listeners a little bit more about your background? And then we’ll dive into the focus of our conversation.

John Bowen: Well, Joe, my whole professional career is in financial services, but I grew up in a small town upstate New York, and my parents were entrepreneurs. My dad and my uncle owned a cast iron foundry, and I was always being groomed to be a key part in it and ultimately take over. I can still remember a call in my junior year I got from my dad… I was kind of the rich kid in the small town, and in my junior year I got this call, and I’m waiting, because my dad every year would give me a call before the summer break to tell me what job I was gonna get. He was one of those big believers, hard knot, so he would give me the worst jobs, but I thought this year I might get an air conditioned office job, and he calls me up and he goes “John, I’ve got some bad news…”

The founder, which had been employing 400 people, is going under, and I’m gonna go get a job because we’ve got nothing. Your uncle is gonna wrap it up and go through bankruptcy, and your mom and I have decided to get a divorce, and you don’t have a summer job. That was a turning point in my life, Joe, because I remember taking a step back, and I go “Dad, are you gonna be okay?” and he said, “I don’t know.” That was when I committed to being in the financial services; I had the  privilege of being a financial advisor to really almost every walk of life, but mostly business people, real estate investors like your listeners… I’m in Silicon Valley, so high tech has been a big part, and then at one time I had a [unintelligible [00:05:07].20] business as well.

We had 600 of the highest profile — I mean, most of your listeners would know well over half the clients’ names, and we had the largest collection of NFL quarterbacks, for instance.

I saw over and over again, Joe, and you know this from your real estate experiences, people make costly mistakes along the way and they don’t need to. If we’re gonna build personal, really serious wealth, then we gotta stop those mistakes.

Joe Fairless: Yes, we do; we’ve gotta stop those mistakes. You had mentioned something before we started recording, that your group has been doing a study, all in an effort of both stopping mistakes and also creating long-term wealth. Can you tell us a little bit about the study?

John Bowen: You might know Dan Sullivan of Strategic Coach, Joe Polish of Genius Network… Dan is one of the most successful entrepreneurial coaches; Joe is more of a marketing mastermind, he’s got a mastermind group… Probably one of the most successful in that. And the three of us got together, and I can make available, Joe, it’s at our website, AESNation.com, we have The State Of The Entrepreneur. We did a big study of 3,500 successful business owners, and we look and said, “Okay, how are you being successful? What’s working? What’s not?”

We saw their big financial concerns number one was making smart decisions about their money; whether it’s traditional financial assets or real estate assets, they wanted to do that. They also wanna mitigate taxes, take care of the errors, protect the assets from litigation and divorce, and charitable.

We did that study, and that got us on a journey of going deeper and deeper. What we found was that 88% of the business owners, quite honestly, are disappointed in their professional advisors – financial advisors, accountants, attorneys, in they’re not being proactive; they’re missing the solutions. So what we do is we coach financial advisors, we train the top tier wealth managers on the [unintelligible [00:07:14].20] of what the super rich (people with 500 million or more) are doing.

My partner in this is a guy Russ Alan Prince, who’s written 50 books, writes for Forbes, has a whole bunch of millionaires, consulting engagements, family offices, that type of thing. And what’s been missing so often, Joe, is there’s so much of this — what people who have, for the most part, unlimited resources and access to talent and solutions, they have that, and so many of us as individuals don’t. But you can bring those down now, because the networks, the cost of technology has brought them down, so that really more average folk can do this, and it accelerates your success, your ability to build that personal wealth up.

One of our goals is to have everybody that really wants to build wealth to become seriously wealthy. We define that as 20 million dollars financial assets, personal – not in your business. I would count real estate as a business. You know, it’s never quite passive; there’s a little work involved in this stuff, but building those passive assets so you can fund whatever quality of life you want… When you have 20 million, there’s enough for private jet money.

Joe Fairless: You mentioned you all did a study on what people who have 500 million or more are doing… What are they doing?

John Bowen: One of the things that’s kind of interesting in all this is they are going ahead and they’re being very deliberate about building their wealth. When we think of it, the whole process of this – I’m gonna pull up so I get the seven rules right in order for you here… So when we did the study of the 500 million and above, what we found was there’s seven things they do; I’ll just go through them fairly quickly, because of our time.
Number one is a commitment to extreme wealth. This is that mindset, Joe, that you talk about… You have to decide that you wanna do it, because it’s gonna take a fair amount of work. Second is engage in what we call “enlightened self-interest.” Capital markets work because of enlightened self-interest. Whether you voted for president Trump or not, he wanted to put America’s self-interest first – it’s that type of thing. Those people are doing it.

Now, what’s key – and I’ll come back to that – is you’ve gotta take care of everybody, but the first rule is commit to whatever your number is that you wanna build; number two, engage in enlightened self-interest, and number three – and this is a big one, and this is one of the reasons, Joe, I’m sure you’re involved in real estate – is put yourself in a line of money.

If I’m gonna look at the largest wealth that’s being built around the world, it’s coming from business owners. It’s coming from real estate. Those are the two drivers of wealth out there. Number four – and this is a key one – is you pay everyone involved. One of the things – you think so often that the people that are building these huge net worths, that they’re cheap… They’re not. They’re very deliberate on who they hire, they work with the top talent, and they make sure they’re taken care of. And then they are big networkers.

One of things… I spent over a hundred thousand a year in mastermind groups. Why? The old line of “Your network is your net worth.” It’s not networking, it’s the network that you build, and they are unbelievably connected, and it’s connected deliberately on creating value that can result in economic gain.
Number six is they’re fine failing. I’m in Silicon Valley; it’s fail quick, fail fast. But they use failure to refine and refocus.

And above all, rule number seven is stay focused on that extreme wealth. We go in a lot of detail… We’re actually just finishing a book, so I’m pulling up that book that we’re writing. This is on those at the high level, that we see.

Joe Fairless: “Your network is your net worth” – is that number five?

John Bowen: Yeah, number five.

Joe Fairless: Okay. Enlightened self-interest, number two – what does that mean exactly?

John Bowen: There’s a lot of nice people out there, and what you wanna do is you wanna be deliberate in what you’re doing; you wanna define your own criteria for success. Joe, you and I define our success differently. There’s no one right or wrong answer. We’re at different times in our lives, and all that stuff. Everyone has to define it for your own, and then what you wanna do is you wanna determine what your counterparty – whoever you’re gonna do the deal with, you’re negotiating with, you’re partnering with – what is their criteria for success, too? And then you’re gonna find that and leverage it to use it.

Joe, if we’re looking to create economic glue, and we’re gonna do a deal together… I’m the first to make sure that whatever I’m doing is going to be aligned for my success criteria, then I’m gonna try and gain a better understanding of what you want to accomplish; can I help you advance what you want to achieve, and will that move me toward my success? Then I’m gonna go ahead and negotiate in good faith to have that happen. That’s really what it’s all about.

You never wanna burn the counterparty, whoever you’re working with, because we’re in it for the rest of our lives. You wanna make silence, and one of the things you’ll find about billionaires is they’re silent a lot. They’re letting you do a lot of the conversation, and one of the biggest risks of all is so many people negotiate with themselves; they’re going through all these mind games. What we wanna do is hear from the counterparty how we can we help them be successful, and then how can we design it to achieve that mutual success in our own enlightened self-interest.

Joe Fairless: I’m gonna go through the seven, and I’m going to elaborate on how I interpret them, and then feel free to correct me or elaborate on what I mention, just so I can make sure I’m understanding.

One – commitment to extreme wealth. We need a quantifiable goal. You mentioned earlier you define seriously wealthy as 20 million dollars personally, not including real estate owned property. Is that correct?

John Bowen: That’s correct. Liquid financial assets. And real quick – what’s your number? That’s what we’re asking. Commit to extreme wealth – just determine whatever that means to you. For some people it’s a million dollars, for some people it’s a billion. It’s everywhere in between.

Joe Fairless: Okay, good. So it’s quantifiable and it’s personal. Two, engage in enlightened self-interest. You need to know what you want first, and then you need to structure the partnerships accordingly, so that you can get what you want, as well as identifying what your partners are seeking, and have alignment there.

John Bowen: Yeah, you wanna gain the advantage in negotiating and use that leverage, but make sure both parties win.

Joe Fairless: Put yourself in the line of money. Earlier you mentioned real estate and business owners; so the number one way according to the research you’ve done with 500 million net worth individuals or families and above is they’re making their money either in real estate and/or as a business owner…

John Bowen: Let me just give you a number. People with 25 million or more of financial assets, 9 out of 10 made it being an entrepreneur (business owner). And even at a million dollars in financial personal assets, one out of three made it as a business owner. Now, I’m counting, Joe, real estate as a business in that definition, too. That is really important. What we have is an opportunity here…

Once we know that’s where the money is — it’s like, you and I could decide to be social workers; we could make a huge difference in the world doing that, but we’re never gonna become wealthy. That’s not in the line of money.

Joe Fairless: I think the majority of the listeners are shaking their head and saying, “Hell yeah, that’s why I do it, baby!”

John Bowen: If you’re gonna be successful, you wanna be successful on purpose, and this is a big one… We find so many people — if you’re gonna do a nine to five job and you’re gonna do it well, you can have a great life; I don’t wanna ever say that — it’s different things for different people, but you’re not gonna become extremely wealthy, you’re not in the line of money. Unless you have an equity ownership, you’re not in the line of money.

Joe Fairless: Number four, pay everyone involved… And really, it’s pay everyone involved who has a high area of expertise in their field very well, correct?

John Bowen: Yeah. You wanna motivate that talent to be inspired… One of the things I love – I’ve got about 50 people in my companies; I have a virtual business in place… I love getting up every morning knowing 50 fellow entrepreneurs are really working hard to try to help me be even wealthier. Now, I am paying them well to do that as fellow entrepreneurs, too. This is at alignment. That’s that economic glue I was talking about.

Joe Fairless: As far as the compensation for other team members – are you heavy on incentives, or are you more on salary, or is there an approach you take?

John Bowen: I’m not big on salary. You wanna build something – particularly the key talent, you’ve gotta provide an opportunity for them to be successful, too.

Joe Fairless: Number five – network is your net worth, it’s self-explanatory there. Do you make a concerted effort to identify the closest people around you? Because I’ve heard some people say “Hey, you should have six people who are in your closest people, and those six people will be able to determine your net worth based on the average.” Do you look at it as granular as that?

John Bowen: No, Jim Rohn, a great motivational speaker – his was five, he always said. I think in today’s world, you can have high network and loose ties, both personally and in business… But what we find is there are very few networks that are bigger than about a hundred. I have LinkedIn, I know the number – I have over 5,000, and I think about the same on Facebook… I don’t have 5,000 friends. I have a database with between business owners and advisors of around 400,000. I’d like to believe everybody knows who I am, or they wouldn’t be on our database, but that’s not a network.

The network is somebody that I can get on the phone, and we can have a conversation and create value together in our collective, enlightened self-interest, and we’re gonna maintain that relationship over time. We see at the most it’s usually about a hundred people, and more typically we’re seeing somewhere between 10 and 50. But these are not your best friends’ network; these are business people that you’re working with, that are going to help you advance to whatever your number is, but you’re gonna do it with them as well.

To me, this is probably one of the most important things. A lot of it is strategically stumbling, I call it. You and I are just meeting, we were introduced by Jessica Rhodes of Interview Connections, and this is a great way, I found — I do podcasts because I love  meeting the people who are doing podcasts, like yourself, are drivers, and so often out of this type of things conversations happen; it could be we develop synergies, we may not. Putting yourself out and then really watching that network to create value is so important.

Joe Fairless: Is there a particular tactic/approach you use to stay in touch with someone that you desperately want to stay in touch with after you were introduced to them?

John Bowen: What I do is I try to create value. When I meet them, I’m always looking to see what the value is. I’ve had the privilege of starting a number of businesses and I’ve been pretty successful and I have a bit network. There’s almost always something I can do, a quick connecting there, and then following up – I make sure that I follow up within two days of any event that I’m doing, and then three weeks later.

I don’t know what the benefit will be down the road, but I know this is a cool, talented, knowledgeable person I want to stay in touch with. I’ll also include them if I can help them on my networks, bring them out and share them, whether it’s virtually in some of the events I do, or live events… And then things happen.

Joe Fairless: Number six, did you say “refine failing”? Did I write that down correctly?

John Bowen: Failure to refine and refocus.

Joe Fairless: Okay. Will you elaborate?

John Bowen: The key here is “I screwed up. I tested something.” The nice thing in today’s world, the cost of testing anything has gone way down, whether you’re creating products, the ability to 3D print, whether you’re doing it electronically, the internet, buying a few ads digitally… It’s very low cost. Good business people always mitigate risk; we’re not big risk-takers. But what we wanna do when we fail – we wanna fail quickly, and then how do we avoid making the same mistake repeatedly? And more importantly, doing an autopsy so we can see “Is there some value here that we can capture and tweak it, refine, it refocus it to create value?”

Joe Fairless: Can you give an example of your own business, how you’ve used failure to refine, refocus and then ultimately come out ahead?

John Bowen: I had a business coaching top financial advisors, and we have about 500 advisors in our one-year coaching programs. Of those 500, 200 are in a mastermind group. They pay anywhere from 18k to 24k/year. These are the top wealth managers, not only in the U.S., but around the world. I have a great guy, he’s one of my key educational development people, PhD from Berkeley, and Dr. Bob came and goes “John, you know what? We should teach the next tier down, how to get to the level.”

The average income in this group is about $700,000; very successful individuals, many making over a million a year… Targeting kind of the $200,000 threshold. I said, “Okay, I’ll give it a shot…” I had some concerns, both with the branding and positioning, as well as how hard it is — successful people are easy to coach, because they just take the ideas, run with it if it works, and they continue, and it’s great. People who are unsure of themselves and don’t have that confidence – much more work.

We ran a pretty big project for our company, Bob and I. Did it work? The answer: marginally. We said, “Do we wanna do it again?” “No.” Why? Because it was so much more effort than working with the top tier. We only have two solutions for our company for our financial advisors: one coaching program and a mastermind group. There’s all kinds of temptation to do more, and I can tell you, Joe, we tested a whole bunch of things, we came back – and we’ll probably test some more things down the road, but it’ll always come back to “Fail quick.”

Joe Fairless: And then number seven, stay focused on extreme wealth. So number one, we committed to extreme wealth, and then number seven, we’re staying focused. What’s a tool or technique to stay focused on our original plan?

John Bowen: It’s always keeping number one in place. One of the things I like to do, Joe, is to take a look, from the standpoint of “Where are you spending your time, your money and your energy?”, because really time isn’t a finite resource, it’s energy. And take your calendar – I’d encourage all your listeners to take their calendar and look at it for a week. We can really get caught up in going ahead and thinking because we’re so busy, we’re doing well; what I find over and over again (and it’s one that I struggle with, too; and many business owners and entrepreneurs do) is it’s so easy to lose track of what’s working and get defused… And as we get defused, boy, we’re in trouble. So it’s focus, focus, FOCUS.

Joe Fairless: Well, I love this title — it’ll definitely be a title: Seven Ways 500 million dollar net worth individuals…

John Bowen: We call them The Money Rules – How To Join The Ranks Of The Super Rich.

Joe Fairless: Yeah, how they build wealth… Or the Money Rules, even more succinctly. Anything else that you wanna mentioned that we haven’t talked about as it relates to that topic?

John Bowen: I think the big thing to think about is we live in a great world; it’s a time of abundance, it’s not a zero-sum game… For you to become wealthy, somebody else doesn’t have to lose money. We can create wealth. In financial markets it’s really easy; in the first 40 days of the president Trump, I think we’re approaching two trillion dollars of value created. Nobody was taken money from, it’s that value.

Now, what we wanna do then is not only create that value – and you can go to our website and download the book The State Of The Entrepreneur, get on our mailing list so you get access to this stuff… But what happens, Joe, is it’s what you get to keep and making those smart decisions along the way.

Joe Fairless: John, where can the Best Ever listeners get in touch with you or your company?

John Bowen: The best place for business owners and successful entrepreneurs – we have a website called AESNation (Accelerating Entrepreneurial Success) and we are launching a whole bunch of new books, and stuff. At the time of this recording, we’re a couple months away from — everything’s gonna be launched in June 2017, but there’s a bunch of resources there, too… I’d recommend everybody download the book that I wrote with Joe Polish and Dan Sullivan, called The State Of The Entrepreneurs. You can see how you’re doing, and then there’s a scorecard where you can look at “Are you really maximizing your personal wealth?” and if not, how you can get a second opinion to see how you can accelerate it even more.

Joe Fairless: John, it’s been interesting and educational talking to you. I appreciate you spending some time with us and walking us through the money rules, the seven ways 500 million dollar net worth individuals approach building wealth. I won’t go through all seven again, because we just walked through them. A lot of lessons within those seven…

Thanks for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon!

John Bowen: Thank you very much, Joe.

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JF951: The Big Boy Passive Approach to Investing

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Accredited investor? This episode is for you! Our guest only works with accredited investors who want to inject capital into a passive machine that renders returns! Realty Shares executive will walk us through the types of opportunities they offer and who’s investing, so learn about debt raising an equity raising and turn up the volume!

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Amy Kirsch Real Estate Background:

– Director of Investor Relations at RealtyShares
– Over 10 year of financial services experience
– Worked in wealth management for Merrill Lynch, Dearborn Partners, and JP Morgan’s Private Bank
– Based in San Francisco, California
– Say hi to her at www.realtyshares.com
– Best Ever Book: Shantaram

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad, a whole bunch of others… With us today – Amy Kirsch. How are you doing, Amy?

Amy Kirsch: I’m doing well.

Joe Fairless: Nice to have you on the show, and looking forward to getting to know you a little bit. Amy is the director of investor relations at Realty Shares. She has over 10 years of financial services experience. She worked in wealth management for Merrill Lynch, Dearborn Partners and J.P. Morgan’s private bank. Based in San Francisco… With that being said, Amy, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on?

Amy Kirsch: Absolutely. Thank you so much for having me today, it’s great to be here with you. I had been working, as you mentioned, about a decade in wealth management, and I learned a bit more about real estate crowdfunding. I was very excited about the opportunity, got to know Realty Shares a bit more, and just was very excited about all they were offering to investors, the opportunity to invest in a whole new way, and that’s what brought me over here.

Joe Fairless: Cool! So what do you do? What’s investor relations mean?

Amy Kirsch: I work with investors pretty much all day long, answering their question, helping them to understand real estate better, helping them through both the sales and the relationship process as they go through in any investments that they have with us on the platforms.

Joe Fairless: Can you get a little bit more in detail as far as maybe what are your specific responsibilities, what are some challenges that you came across, things like that?

Amy Kirsch: We have a team of seven; as we’ve grown, our investor base has become several thousand, so as you can imagine, we have all realms of the spectrum of investors. We’re guiding them, and often times just introducing them to real estate investing, and helping them to understand what it might look like if they did purchase a piece of an investment, what the returns would look like, what the risks are inherent in this sort of investing… That would be the introductory part.

Then, over the life of the investment, keeping them updated, helping them to understand if things are going well, if they’re not going well, if they are payoffs, and keeping them informed over the life of it. So it’s really a combination of both a sales and relationship management role for me and my team, and we have probably a thousand inbound questions a week from various investors that we’re responding to, which really completely range from about the company to about a specific investment. Anything you can imagine, we’re answering it pretty much every day.

Joe Fairless: A thousand inbound questions a week.

Amy Kirsch: Oh yes, easily.

Joe Fairless: Seven people.

Amy Kirsch: Seven people, a thousand questions.

Joe Fairless: Sounds like a blog post title, right?

Amy Kirsch: [laughs] A little bit, yes.

Joe Fairless: Seven people, a thousand questions a week… Everything from guiding them as far as the pros and cons of real estate, and then also working with them and communicating with them throughout the investment. This is interesting stuff, because you basically do what I do, and I’d love to learn more because you’re doing it on a much higher volume than I’m doing.

Let’s talk about who you’re speaking to. Are they all accredited investors?

Amy Kirsch: They are. Everyone that’s on the Realty Shares platform right now is an accredited investor. We have non-accredited investors asking us questions, and we’re hoping that we’ll be able to show them an offering sometime in the near future, but for now we’re only working with accredited investors.

Joe Fairless: Okay, so they’re all accredited investors. It sounds like you’re at the front end of the deal before they sign up to fund a portion of the project or you guide them in real estate investing. Are you giving them input on the actual investment itself, or the pros and cons of investing in real estate?

Amy Kirsch: A bit of both. As I mentioned, we have people who have never invested in real estate before in the platform, so they often have more rudimentary questions… They haven’t seen a waterfall before – what will that mean for them? What does a preferred return look like? Those kinds of questions, trying to understand the sponsor a bit more and the ABCs of real estate… So we’re talking about the platform at large, and then also specific investments, helping them to understand… Honestly, we can get into “What is the difference between debt and equity?” We answer that question all the time.

Joe Fairless: So your role is both the particular investment, as well as just education in general, on real estate?

Amy Kirsch: Absolutely. It’s absolutely a combination of both, and we really take a lot of stock in making sure investors are educated. We want them to really understand what they’re investing in prior to getting into an offering.

Joe Fairless: You said one of the common questions that’s asked is “What is the difference between debt and equity?” What’s your response to that?

Amy Kirsch: Wow, you’re getting me on my toes here… [laughter] [unintelligible [00:07:03].19] like you’d see at a bank, where you’re receiving… You’re acting like the bank; you can expect an interest rate payment monthly. It looks like a balloon mortgage, where you can expect a principal after the life of the loan. So that’s how I explain debt.

On the equity side, you look more like a business owner. You’re participating in the upside or the downside participation of the property, and should things perform well, you’ll have unlimited upside. Should things go poorly, you will part-take in that as well. With that comes a lot more risk, but a lot more reward, whereas on the debt side you know exactly what the outcome is likely to be, because there is a stated interest rate and you’re not gonna earn any more than that.

Joe Fairless: Are they secured the same way with debt and equity?

Amy Kirsch: That’s a great question. The debt is secured by a first lien loan, where should something go wrong, we’re able to foreclose on the property. If our assumptions are in line, then we should be able to fully recoup all investor money. On the equity side there is no lien on the property. Our measures are a bit different in what we could do should something go wrong. We would maybe able to kick out the partnership, we may be able to take over the property… It truly depends on what the underlying property is.

Joe Fairless: Okay, it makes sense. After I did my first deal, I was talking to some people and they were like, “Did you raise debt or equity?” I was like, “Um, I just raised money. I have no idea.” [laughs] I was so stupid at the time. I had already done one deal, that shows how green I was at the time… And people like you have educated me along the way, thankfully.

Amy Kirsch: Yeah… Like I said, it’s important for investors to understand the worst-case scenarios, just as it is the best-case scenario, when people are first participating in real estate, and we encounter a lot of people like you.

Joe Fairless: What are the most common risks? I mean, sure, there is about 20 pages in a PPM that outlines some obscure risks… But what’s the most practical couple risks that could come up in a real estate investment?

Amy Kirsch: I think the risks are a bit different for the different types of products, like I mentioned before for debt… And truly, our debt holders are often a little bit less experienced than our commercial, which can be great and bad, because we have that foreclosure opportunity should something go wrong. But what would happen there is that the sponsor (or the borrower, in this case) is not able to execute, and what happens then? They’re not able to sell it for the price that we thought, so they can’t pay off the loan in full. That would be the risk there, often times.

I think almost all of the time we have personal guarantees on our debt, so if they do not return money in full, then we can pursue them personally. So I think that’s a risk – the sponsor is not able to execute. A more likely risk is that the market turns around, so the market isn’t able to deliver what we had expected.

Joe Fairless: Let’s talk about equity, going into an equity example. I really think this applies to both debt or equity, it doesn’t really matter how it’s structured. Let’s just say the borrower isn’t able to execute and perform under business plan, and let’s just say – because I know you do different asset classes – it’s a single family house. What is a common reason, based on your experience, that they’re not able to execute the business plan? What do they overlook or not account for most of the time?

Amy Kirsch: I wanna start by saying that we have done – I believe the number now is 550 deals, and in that time we’ve had under ten where we’ve had significant issues with borrowers or sponsors on any side of the fence, debt or equity. So what we’re talking about now is very rare… But to your point, the reason I think sponsors most often don’t execute is simply from inexperience. They thought costs would be X, and they ended up being Y, and they were significantly more. I’d say that that’s what most often accounts for not being able to execute, and the way that we try to avoid those sorts of situations is by our due diligence process upfront, where we account for track records and look for the kind of experience that they have in the past, both with either their current company or in the past, as well as getting to understand what their business plan is.

Joe Fairless: Yeah, thanks for putting it into perspective. I was curious about why it wasn’t working, but thanks for giving some context as far as “Hey, this isn’t happening very often.” But as I know you know, that’s just a question that comes up for all of my deals – “Hey, what are the risks here?”, so I was just curious how you discuss those.
Now, on a different path, what’s the most common reason why an investor doesn’t decide to invest with you all?

Amy Kirsch: You know, I hadn’t thought about that too much. I’d say the most common reason is because the parameters of the offerings that we have in a marketplace at that time don’t meet their investment objectives. That’s most often what — the hurdles often find upfront that we’re often able to overcome are the inexperience of the investor… So getting them to understand (as we’ve talked about earlier), educating them properly. But I’d say that’s most common – they’re looking for a 12-month offering, and we’re showing something that’s 8 years; they’re only looking for debt, we have equity…

Mostly, what we find is people take a month or two to review the platform if they don’t have any real estate experience, and then they invest after, in 30-40 days.

Joe Fairless: One thing I’ve found with investors who don’t invest is they wanna be active and not passive. They want control, they want to have their hands in it, they wanna be more involved, and I’m just not set up that way. They are passive too when they invest in your stuff, right?

Amy Kirsch: Yeah. We have heard that from investors before, but I hadn’t really thought about that as a common objective. What we find more often is that people are tired of being actively involved in the investment process. They don’t wanna manage the property, they wanna do it, so that’s why they’re coming to us. But I could see it on both sides… If they do wanna have a heavier hand in the process, we don’t offer that as well.
For pretty much everything else, if you are looking for passive investment, you can come to us and get whatever kind of offering you’re looking for.

Joe Fairless: You’ve just hired employee number eight on your team, congratulations! What do you wanna make sure that they know?

Amy Kirsch: What’s very important to us is that we went through a broker-dealer, and compliance is extremely important to us. Making sure an investment is suitable for an investor is, from day one, what we’re talking about. The second thing is getting — some of the members of my team have real estate knowledge, some don’t, so getting them up to speed on what kinds of deals we’re offering… We work very closely with the investments team, so working together with them to get a really good understanding of what we’re offering to investors – those are both imperative to being successful on the team.

And of course, being able to be patient, getting the same question over and over again. That takes a lot of… You have to be steadfast for that.

Joe Fairless: Yes, especially if you’ve got a thousand coming in per week. As far as the compliance goes, maybe I’m not thinking of it properly, but isn’t that already set up through your software, so if they come to you and your team, then they’ve already been qualified through the software?

Amy Kirsch: To a certain extent they are qualified up front; a part of it is qualification, but the other part is suitability, so making sure they’re an accredited investor is just 50% of the equation. We have investors that make very substantial investments with us – half a million, a million dollars concentrated in a deal. With that comes a lot of risk, simply because of concentration risk. So if they’re making a million dollar investment but they have 50 million dollars, we’re less concerned about that than if they are making a single one million dollar investment and they have two million dollars.

We’re really just trying to understand the objectives of the investor, and that they are properly suited for that particular offerings. That’s what we’re focused on when we’re reviewing deals or reviewing investors. It’s very important.

Joe Fairless: What would be the pros and cons when comparing investing in a crowdfunding platform like your company, versus a syndicator who has his own company, like mine? So if an investor were to come to you and be like, “You know what, Amy? I’ve got 100k and I wanna invest in one thing. I’m trying to decide between the deal that Joe’s got, where I know I can go directly to him and he is a one-company thing, versus a crowdfunding platform like yours.” What are you saying that would be a pro over what I’m offering?

Amy Kirsch: The largest pro is that we’re gonna have a more diverse set of offerings, because we’re dealing with sponsors all over the country in diverse product sets. So while a syndicator may specialize in a particular asset class or a particular geography, we’re gonna see that same thing repeated over our offerings, 20-something million dollars worth of opportunities over the course of a month, with a very diverse background of sponsors, geographies, asset classes, product classes. I think that’s a major differentiation you’ll see, and we’re being a low-fee provider… So with some of that relationship where you know the syndicator probably a little bit better, maybe you’re willing to pay a bit of a premium for that. We offer pretty low fees to our investors across other crowdfunding platforms, or one of the lowest.

Joe Fairless: And what are your fees?

Amy Kirsch: We charge 1% asset management fee across the board, and that goes to investors. On the sponsor side we charge in origination fee between 3% and 4% on equity and 2%-3% for debt.

Joe Fairless: And you don’t take any cut of the deal?

Amy Kirsch: We don’t take any cut of the deal, we take no participation fees.

Joe Fairless: So 1% asset management fee, and 3%-4% on debt that’s paid by the sponsor.

Amy Kirsch: Right.

Joe Fairless: And did you say something else? Was there another fee? Or is that it.

Amy Kirsch: Just the 1% asset management fee that’s charged to investors annually, as we provide the services… For updating you, K1’s, managing the property after the fact, after you’ve invested.

Joe Fairless: Those are very good fees.

Amy Kirsch: Yes.

Joe Fairless: What’s the plan for your company from this point forward?

Amy Kirsch: The plan is to expand what we’re currently doing. We have a lot of opportunities to grow in the various marketplaces that we’re in; I think that’s very important to us. The other thing that we’re really focused on is automation and tech. We’re a financial technology company; a lot of what we bring to the table is breaking down a business that’s pretty archaic and bringing it to the future. I think both of those things are what we’re really focused on, and we’re really excited about some of the new expertise that we’re bringing into the marketplace in 2017. Those are our two major focuses.

Joe Fairless: What is your best real estate investing advice ever?

Amy Kirsch: I would say… Let me think about this for a second. My best real estate investing advice ever is to think about your investment objectives and diversify. If you execute in that regard, I think you really have a great shot at being very successful in real estate investing.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Amy Kirsch: Oh, sure! I guess so…

Joe Fairless: [laughs] Well, we’re doing it either way, so I’m glad that you guess so. First though, a quick word from our Best Ever partners.

Break: [[00:18:32].03] to [[00:19:13].14]

Joe Fairless: Best ever book you’re read?

Amy Kirsch: Shantaram.

Joe Fairless: What’s that about?

Amy Kirsch: It’s about a criminal who gets lost in India. I was just there, and it was so incredible to see what he had — just kind of hiding throughout the streets of Bombay. It’s the coolest book ever and it’s based on a true story.

Joe Fairless: Shantaram… Okay, cool. Best ever personal growth experience and what did you learn from it?

Amy Kirsch: That would be moving from traditional wealth management into the fintech space. It is kind of exciting to go from the most archaic business of all time into breakthrough measures of doing everything. I’ve learned so much in the last two years… More than I have in the previous ten in the same(ish) industry.

Joe Fairless: What’s one specific thing you’ve taken away from it?

Amy Kirsch: That you don’t have to think small; there doesn’t need to be so many levels of red tape, and if you’re working with the right people, you can get a lot accomplished in a short period of time. You don’t have to do things the way they always have been done just because that’s what people say needs to happen.

Joe Fairless: Are you an investor? Do you invest in real estate, too?

Amy Kirsch: I do… I own property, but we’re limited from doing it on the Realty Shares platform.

Joe Fairless: Oh, of course. [unintelligible [00:20:26].10] Well, best ever deal you’ve done personally on a real estate front?

Amy Kirsch: I have flipped out of apartments in Chicago, and I think that’s because that’s where I’ve lived, and I’ve been successful in that regard.

Joe Fairless: Best ever way you like to give back?

Amy Kirsch: Part of the reason that I was in India was that I’m involved with a national philanthropic organization that gives money all over the world to help people recognize that they can be successful. This particular group gave money to women in India to help them be independent, so that their kids could go to school. It’s called the Gabriel Project and I’m really happy to be associated with it. It’s just doing wonderful things for empowering women in a very impoverished area.

Joe Fairless: Thinking about some of the deals that you’ve personally done, what’s been a mistake you’ve made on a particular deal?

Amy Kirsch: I think one of the things I’ve learned is to not be too emotional. This goes to investing in general, but very particularly with real estate. You can get too involved, hold on too long… Something I’ve learned over time is to try to be less emotional when it comes to any kind of investing. I was investing in the markets in 2008 – not in real estate – and then found that some of my clients as well were making decisions because they couldn’t see through the trees… I think that’s good to overall investment advice.

Joe Fairless: Where can the Best Ever listeners learn more and get in touch with you?

Amy Kirsch: They can come to RealtyShares.com, or e-mail us at invest@realtyshares.com. We answer a thousand questions a week, so we’d be happy to answer a couple hundred more.

Joe Fairless: [laughs] Pile them on, baby! Well, Amy, thanks for spending some time with us talking about your role and the challenges you come across, as well as your responsibilities, from you and your team — what were you gonna say?

Amy Kirsch: I just wanna say thank you so much! It’s so exciting to talk to others in the similar space, and it’s just great to be here!

Joe Fairless: Yeah, especially with your particular role… It fascinates me, because I’m doing similar things to what you’re doing, but not on your volume – by no means am I doing the volume of a thousand inbound questions/week; that’s insanity. But because you’re doing the volume, it’s interesting to hear the varying degrees of questions, from what is a waterfall and preferred return, to the difference between debt and equity, all the way to the risk associated to it, and maybe more sophisticated things like “How is my money secured if this scenario does happen?” and you talk through all that… As well as your focus on compliance when you hire a new team member, and just getting them up to speed on the business model and the different opportunities.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon!

Amy Kirsch: Thanks so much, Joe.

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JF 928: How He BOUNCED Back after Losing MILLIONS #SituationSaturday

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He lost over a million in cash, and it didn’t come back…at least not in that deal. Hear the son of previous CEO of Odesk share his account of losing money, transforming his mind, and bouncing back from loss to prosperity.

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Jeff Slayter Real Estate Background:

– Best Selling Author, Trainer, Speaker, Entrepreneur:
– The Next Wave of Human Potential & Business Psychology
– Built multimillion-dollar corporate training company Speaker to over three million people from twelve different countries – Shared the stage with other thought leaders like Sir Richard Branson, Robert Kiyosaki, and Tony Robbins
– Based in San Francisco, California
– Say hi to him at http://www.JeffreySlayter.com

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JF912: How to Buy SIGHT UNSEEN

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Trust others? Well you’ll have to if you buy a property sight unseen! You also need to know then numbers extremely well. Hear how he’s doing it and what his strategy is now!

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Fat Taylor Real Estate Background:

– Professional photographer and video producer
– Real estate portfolio includes a condo that he lives in & three unit in Michigan and two single families in Louisiana
– A hands-off investor, bought two of his properties sight-unseen, and three years later hadn’t been to either one
– Currently on a three and a half month trip around the world with his wife while she is pregnant with their first child
– Founded and eventually sold a functional fitness lifestyle and entertainment blog.
– Based in Long Beach, California
– Say hi to him at http://www.AdamTaylorPhotos.com
– Best Ever Book: Secrets of the Millionaire Mind

Click here for a summary of Fat’s Best Ever advice: http://bit.ly/2mjptYF

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

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Joe Fairless's real estate podcast

JF908: How to be INCREDIBLY PERSUASIVE #SkillsetSunday

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Dr. Phil and Montel have had him on a their shows, he is extremely persuasive and you will hear how he does it! You can use this in your real estate business, and of course in your life!

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Ross Jeffries Real Estate Background:

– Author, writer and television personality
– Featured on programs as The Dr. Phil Show, The Montel Williams Show and self-described speed seduction expert
– Works with high-powered entrepreneurs, salespeople, and professionals to teach them his persuasion blueprint
– Over 30 years experience in teaching his technique in persuasion and featured on CNN, Fox, NBC, and more
– Based in San Diego, California
– Say hi to him at http://www.persuasionmasterysystems.com/free

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

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real estate pro advice

JF883: How to Buy Investments with ZERO Debt

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That’s right, no debt! How does it work? You’ll have to tune in and take notes. He also covers why if he doesn’t have the right property manager, he won’t buy the deal.

Yousif Abudra Real Estate Background:

– Managing Director of BENA Capital, a private equity real estate investment fund
– Responsible for the sourcing and execution of investments, raising fund capital, and investor relationships
– Investments are 100% equity based and do not utilize any interest-bearing debt
– Previously, he was an investment banker and consultant for $10MM-$1B businesses
– Based in San Jose, California
– Say hi to him at www.bena-capital.com
– Best Ever Book: Investing in Real Estate by Gary Eldred

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

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real estate pro advice

JF868: How to SNAG Deals from BROKERS and What Questions to Ask

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Real estate investors should not look at brokers as competitors, but resources rather. Today’s guest was able to find commercial properties by speaking with the ultimate gate keepers, brokers. In fact attached to the show is a link where you can check out the questions our guest asks the brokers in an area he wants to invest in, he looks for brokers with multiple listings. Hear his story and how he jumped into multi family investing.

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Andrew Cushman Real Estate Background:

– Principal/Manager at Vantage Point Acquisitions, LLC
– Full time multifamily investor
– Purchased 1,566 units in the last 5 years
– Chemical engineer for 7 years before quitting job in 2007 to flip single family houses full time
– In 2011, purchased first apartment complex, which was 92 units, 2,500 miles from where he lived
– 20 questions to ask a property management company: http://bit.ly/2jsVxHZ
– Based in Los Angeles, California
– Say hi to him at http://vpacq.com/
– Best Ever Book: How to Win Friends and Influence People

Click here for a summary of Andrew’s Best Ever Advice: http://bit.ly/2jLP3Bf

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

Questions to ask property management companies when searching for an investment property: http://bit.ly/2jsVxHZ

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JF860: CREDIT CARDS are OKAY to Use as Leverage If…

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“Credit cards always get you in trouble,” said your mom, dad, or even a financial advisor… But today’s guess is about to disrupt that thought. He used credit cards and it worked well for him. Learn how you can use credit cards as your venture capitalist and how to mitigate risk by not using any of your own money.

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Sensei Gilliland Real Estate Background:

– CEO of Black Belt Investors, an education, consulting and investment firm
– Featured on the cover of Real Estate Wealth Magazine in 2013
– Over 2 decades of real estate investing experience
– Specializing in creating cash through quick-turn real estate investing
– Honored as one of the top martial artists in the U.S. for five years in a row
– Based in Mira Loma, California
– Say hi to him at https://blackbeltinvestors.com
– Best Ever Book: The Bible

Click here for a summary of Sensei’s Best Ever advice: http://bit.ly/2iloT6u

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

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real estate pro advice

JF847: How He’s on Track to Flip One Home PER WEEK in 2016!

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He’s new, but he is a matchmaker extraordinaire connecting investors and sellers together. In fact, his forte is just to connect whole sellers to fix and flip entrepreneurs while being in the middle. Yes, those were wholesale deals. Turn up the volume and grab a pen and paper and let’s see if you can flip one house per week in 2017!

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Amir Suleman Real Estate Background:

– Acquisitions Director at Clear Vision Investments, a real estate investment group
– Flipped 37 homes in 2015 with a gross income of $423k
– On track to flip 52 properties this year, which is about 1 per week
– Has only 1 requirement in being a self employed investor, just do it!
– Did not complete high school or college and broke by age 32, but hear his comeback story
– Based in Irvine, California
– Say hi to him at https://www.instagram.com/realestatepd/
– Best Ever Book: The 48 Laws of Power by Robert Greene

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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real estate pro advice

JF845: How to Identify and CRUSH Fear Barriers #SkillsetSunday

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Fear paralyzes young and hungry entrepreneurs. Not knowing how you are going to last in your niche is scary, but today’s guest is about to show you how to conquer that fear. Do what you do and do what you love without being afraid of failure.

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Dave Daley Real Estate Background:

– Entrepreneur, Keynote Speaker, Author, The Monster Motivator! At ‎Dave Daley Enterprises, LLC
– Creator of the Knock Out Fear in the First Round program
– The Monster Motivator is his popular speaking leadership series that business book him all year around
– Built and sold three companies in three very different industries
– Based in San Diego, California
– Say hi to him at www.davedaleymm.com
– Best Ever Book: What to Say When You Talk to Yourself by Dr. Shad Helmsetter

Click here for a summary of Dave’s Best Ever Advice: http://bit.ly/2hOxpQ6

 Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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real estate pro advice

JF842: His First Property Purchased in High School, Financial Planning, and Why He Feels a Need to Share His Knowledge of Wealth

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He was 17 and in high school when he bought his first place! As financial planner assisting others invest millions, our guest feels empowered to share a financially fit message to the world. He even wrote a book! Tune in!

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Adam Torres Real Estate Background:

– CEO of Century City Wealth Management LLC, a firm dedicated to the needs of families, organizations, foundations and public funds.
– Featured in major publications such as Forbes, Investor’s Business Daily, and The Street
– An international speaker and upcoming author
– Based in Los Angeles, California
– Say hi to him at www.centurycityview.org
– Best Ever Book: Rich Dad, Poor Dad by Robert Kiyosaki

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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real estate pro advice

JF841: Million Dollar Relationships, Helping the Homeless, and Wholesaling Apartment Complexes

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Real estate is honestly about who you know and marketing, and that’s exactly what our guest did. He started off just by showing up and looking the part. He later found opportunities to help the homeless, wholesale properties, and even apartment complexes! Hear about his deals!

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Brian Collins Real Estate Background:

– President/Founder of BPC Investments & Development LLC
– Began buying and selling real estate in 2007, specializes in rehabbing houses that are abandoned or foreclosed
– Consulting to over 200 investors about system discovered and teaching strategies
– Based in Los Angeles, California
– Say hi to him at www.bpcgroupllc.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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real estate pro advice

JF838: How to Form a SUCCESSFUL Pitch #SkillsetSunday

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When pitching you need to understand your audience, the problem you’re solving, and tell a story. Our guest shares his best advice on how you can get started intriguing others to learn more about your product or service, and stop being invisible or insignificant.

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John Livesay Real Estate Background:

– Hosts The Successful Pitch podcast, with investors from around the world
– Funding strategist helping start ups craft a compelling message to get investors and advertisers
– Partners with Judy Robinett in Crack The Funding Code, which gets founders funded fast
– Pitch Mentor at Startfast.net, the number one accelerator in Upstate New York
– Author of The Successful Pitch book
– Based in Los Angeles, California
– Say hi to him at sellingsecretsforfunding.com

Click here for a summary of John’s Best Ever Advice Part 1: http://bit.ly/2hSj0i4

Click here for a summary of John’s Best Ever Advice Part 2: http://bit.ly/2hXcG9d

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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real estate pro advice

JF834: Cheap Boise Developments and an Apartment Services AUTHORITY

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Thinking about developing some 4 Plexes? You may consider Boise Idaho of all places, the cost for building is worth it when you see the rents. Hear how our guest developed the most widely published magazine on apartment servicing and how he is helping others cut costs and earn more.

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Dan Faller Real Estate Background:

– President and Founder of the Apartment Owners Association of California
– Founded in 1982, AOA has become one of the largest apartment associations in the United States
– Publisher of the Apartment Owners Association News and Buyers Guide, the most widely circulated monthly apartment industry magazine in U.S.
– Servicing landlords for over 25 years
– Based in Los Angeles, California
– Say hi to him at www.aoausa.com
– Best Ever Book: The Bible

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes and Stitcher so you don’t miss an episode!

Best Ever Show Real Estate Advice from experts

JF825: The “Investor’s Inspector” Help You See EVERYTHING with a New App

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And idea was brought to life when a costly mistake occurred on a transaction that could have been avoided with the right inspection process. Dubbed as the “investor’s inspector” our guest has created a mobile application for his team to thoroughly inspect the property using a smart phone that is not even available to the public. Hear how he does it and how it can benefit your business!

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Michael Brown Real Estate Background:

– Partner and co-founder of “The Bottom Line” the first all digitally captured building inspection
– Currently partnering with international asset manager and flipping properties in Southern California
– Based in Anaheim, California
– Say hi to him at 714-587-0486
– Best Ever Book: Think and Grow Rich by Napoleon Hill

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple.

Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice from experts

JF818: Tom Ferry’s Approach to Systems, Coaching, and EXPLODING Your Brand and Real Estate Business

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Tom Ferry, The world’s number one real estate coach is here to share his best advice ever! He shares his knowledge of systems, having teams instead of being a solo entrepreneur, the markets, starting a coaching firm, being a consultant, and how to identify the needs of an individual and help them excel! This is an episode and you cannot miss!

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Tom Ferry Real Estate Background:

– ‎CEO of Tom Ferry – Your Coach, an International Real Estate Coaching and Training Company
– #1 Real Estate Coach and Speaker, NY Times Bestselling Author of Life! By Design
– Over 10,000 hours of personal coaching experience
– Based in Orange County, California
– Say hi to him at http://www.TomFerry.com
– Best Ever Book: Bold: How to Go Big, Create Wealth and Impact the World
– Zillow Group Report – http://www.zillow.com/research/zillow-group-report-2016-13279/

Click here for a summary of Tom’s Best Ever Advice! – http://bit.ly/2gCUovV

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice from experts

JF817: How to DIVERSIFY Your CASH and Stay Passive #SkillsetSunday

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Putting all your eggs in one basket can be very dangerous in real estate investing, so today you’re about to hear a plethora of ways to push your money into passive passive cash flow systems. From mobile home parks to multiunit syndications you’re going to know what’s a good deal and what’s not a good deal.

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Jeremy Roll Real Estate Background:

– Co-Founder of For Investors By Investors (FIBI) and Advisor for Realty Mogul
– Manages a private investor group of over 1,000 investors
– Currently an investor in more than 50 opportunities
– Passive cash flow investor for over 14 years
– Based in Los Angeles, California

Click here for a summary of Jeremy’s Best Ever Advice: https://joefairless.com/importance-diversification-passive-real-estate-investing/

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

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Best Ever Show Real Estate Advice from experts

JF806: How He Adds $30,000 Equity to a Cheap Home by Doing This One Thing

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Adding value to a property can be extremely difficult, but our guest does it with one simple tactic. He uses many investing strategies including the famous BiggerPockets BRRR strategy. Here why he is anti-property manager and decides to make big cash as well as the passive income.

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David Greene Real Estate Background:

– Realtor at Keller Williams Realty and a successful real estate investor
– 8 years experience buying, selling, managing, and renovating properties
– Purchased first investment property at 25 years old
– Offers coaching for real estate investing
– David is also a full-time police officer
– Based in San Francisco, California
– Say hi to him at http://www.GreeneIncome.com
– Best Ever Book: The Richest Man in Babylon

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Click here: http://www.adwordsnerds.com to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF791: Why You Shouldn’t Always Trust Your Gut When Deal Making

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Yes, trusting your gut is a good piece of advice, but not when your eyes are bigger than your brain! Our guest was suckered into a deal without considering all due diligence, and wound up in a Ponzi scheme! Hear how she now evaluates every detail before completing the transaction!

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Gabrielle Dahms Real Estate Background:

– Real Estate Broker at Premier Properties
– Came to real estate from a marketing background
– Real estate license since 2001 and broker’s license since 2013
– Based in San Francisco, California
– Say hi to her at http://www.sanfranciscoresidentialhomes.com
– Best Ever Book: One Writer’s Beginnings by Eudora Welty

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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Best Ever Show Real Estate Advice from experts

JF785: Door Knocking to $20 Million in Sales Volume and How He Built a HUGE Following

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While being on track to rake in $20 million in sales volume our guest also purchases about three homes a year! Ex pro basketball player has found a competitive niche in real estate and is claiming even a larger team of sales professionals, hear how he built such a great following!

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Bryan Casella Real Estate Background:

– Broker Associate at I Heart Real Estate Inc
– 3 years in the real estate business, on track to sell $20 million in volume this year
– Ex-professional basketball player in Europe
– Based in Los Angeles, California
– Say hi to him at http://www.bryancasella.com
– Best Ever Book: How to Develop a 6 Figure Income by Mike Ferry

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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Best Ever Show Real Estate Advice from experts

JF770: ATTENTION Expert Investors, It’s Time to DEVELOP!

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You may hear that you shouldn’t choose the reward over risk in real estate, you are about to learn how to mitigate your risk even better. Our guest is a pro The product that allows you to understand your risk in developing and better negotiate the transaction and process with your partners. This is a must listen!

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Brian Barbuto Real Estate Background:

– CEO of Infobrij LLC, a private equity firm for commercial/residential real estate investors/sponsors
– He has 40 years in Real Estate Development
– Has has designed an innovative investment model that is poised to change the way real estate investing is done
– Completed over 1,000 residential units and worked through over $100M in real estate project funding
– Based in Orange County, California
– Say hi to him at www.infobrij.com

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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JF768: What You CAN and CAN’T Do with Self Directed IRA’s #skillsetSunday

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You’ve wondered what you could and couldn’t do, now you will know! Cure all your doubts about this this peculiar little entity and hear why you should have one. You can’t miss this one!

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Kaaren Hall Real Estate Background:

– President, uDirect IRA Services, LLC
– Helped thousands of Americans invest their IRA into real estate, land, private notes & more
– Educating individual investors and professionals is the cornerstone of uDirect IRA
– Based in Orange County, California
– Say hi to her at www.udirectira.com

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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JF753: Why Buying a 92 Unit Apartment Building WITHOUT a Final Walkthrough is a Bad Idea #SituationSaturday

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The one thing she failed to do before buying a 92 unit apartment building was so simple, yet extremely important…a final walkthrough. Hear what she missed and who’s money was at stake.

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Kathy Fettke Real Estate Background:

  • CEO of Real Wealth Network based in Walnut Creek, California
  • Author of best-selling book, Retire Rich with Rentals
  • Active real estate investor and agent and host of the popular podcast, The Real Wealth Show
  • Been named a Top 100 Most Intriguing Entrepreneurs by Goldman Sachs two years in a row
  • Say hi to her at www.realwealthnetwork.com

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

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JF733: How to Use Social Media to Build Relationships and CRUSH IT!

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Are you utilizing your social media the right way? Think you could improve it? Today’s show is for you, our guest is a pro and has helped big companies grow stronger relationships on Facebook, twitter, Instagram, and other social media platforms. Be sure you tune in and go to her webpage to get a free gift.

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Katie Lance Real Estate Background:

– CEO of Katie Lance Consulting
– Clients of hers are Remax, DocUSign, and others
– Say hi at katielance.com
– Based in San Francisco, California

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

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Best Ever Show Real Estate Advice from experts

JF721: Why Probate is a RICH NICHE

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Today’s guest has connections with a big real estate icon Than Merrill, and today is sharing one of his favorite lead sources, probates! Hear about his strategies in acquiring creative real estate deals especially the probate opportunities he runs into.

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Ralph Plumb Real Estate Background:

– Entrepreneur at Mind Protein
– Began with Than Merrill in Connecticut
– Based in San Diego, California
– Say hi at http://mindprotein.com
– Best Ever Book The E-Myth by Michael Gerber

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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Best Ever Show Real Estate Advice from experts

JF720: Appraiser and Realtor Couple Make $8.5 MM Rental Portfolio

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A couple gets together to flip houses, and they created a podcast named the Spouses Flipping Houses show! He is an appraiser and she is a realtor and the rest is history. Hear how they build their large portfolio working together and how they were able able to secure financing, this couple is one to follow!

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Doug and Andrea Van Soest Real Estate Background:

–   Founders of Spouses Flipping Houses Show
–   Have 57 doors and have done over 300 deals
–   Based in San Diego, California
–   Say hi at spousesflippinghouses.com
–   Best Ever Book: Love Does by Bob Goff

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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real estate advice podcast

JF660: How He Netted $100k from a BANDIT SIGN!

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Our guest has been through some hard times, all while he was young. Press play and hear his story as he shares his struggles in high school and college and see what he has made of himself today! He has multiple streams of income and is growing rapidly!

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Matt Aitchison Real Estate Background:

    – CEO of Vault Investment Properties
– Podcast host of Millionaire Mindset Podcast
– Based in Sacramento, California
– Say hi on Facebook or Instagram
– Reach him www.millionairemindcast.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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real estate advice podcast

JF658: A High Level Investing Strategist Covers the MOST Important Market Indicators

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Today’s guest is scholar from Harvard, an author, a startup advocate, and investor. He has a track record in systems development in real estate business. Hear his take on extracting value in any market.

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Stephen Roulac Real Estate Background:

    – CEO of Roulac Global
– Writes textbooks for Harvard and other Ivy League schools
– Author of The Property Knowledge System http://www.thepropertyknowledgesystem.com
– Based in San Francisco, California
– Say hi to him at 415-451-4300

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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Best Ever Show Real Estate Advice

JF646: How He STOLE This Deal Off of LoopNet

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Most people don’t try to browse through LoopNet as it’s known to be saturated with high priced multi family and commercial properties… little room for an investment. Today’s guest had his eyes on one, a 22 unit, and got it for a huge discount! It wasn’t that easy though, here are the struggles of our guest and how he prevailed!

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Bill Manassero Real Estate Background:

– Founder of Old Dawgs REI Network blog and website
– Acquired a 22 unit in Indianapolis
– Served as a missionary in Haiti
– Based in Orange County, California
– You can reach him at http://olddawgsreinetwork.com/

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice

JF642: All You Need to Know about Real Estate Syndications #skillsetsunday

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Today’s guest is an attorney who specializes in the creation and legalities of a proper real estate syndication. He speaks of the private placement memorandum and the total makeup of a security. He shares the importance of verbiage and proper documents. He also advises that you need to hire the right professionals to complete the syndication.

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Gene Trowbridge Real Estate Background:

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice

JF635: How to TRANSFORM Your Morning and Respond to Adversity #SkillSetSunday

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Hal Elrod, Author of The Miracle Morning, a Best Seller, shares his skill of facing adversity head on and transforming your morning! More than just mornings, he shares how to change your life and be a positive influence in the world. This is one of the greatest #SkillSetSunday episodes! Turn up the volume!

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Hal Elrod Real Estate Background:

– Best-selling author of The Miracle Morning and The Miracle Morning for Real           Estate Agents
– Host of the popular podcast Achieve Your Goals
– Say hi to him at http://halelrod.com/ and http://www.miraclemorning.com
– Based in Los Angeles, California

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice

JF626: Why This Lender Suggests that You Be a Student of TRENDS

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Today’s guest is notorious for being one of California’s top lenders and invest in real estate himself. He shares with us how he will roll existing profits from projects into other projects and the situations he won’t do anything at all but wait, you have to hear this show!

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Andre Jimenez real estate background:

-16 years of hard money lending experience
– Has managed over $350,000,000 in assets in his career
-One of California’s top hard money lenders
-Co-Managing partner of Windvest Capital
-Based in San Diego, California
-Reach him at andre@windvestcorp.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Do you need more leads for your real estate business and a platform to grab more leads?

Danny Johnson has a solution for you, go to leadpropeller.com set up your website for success and get more leads!

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Best Ever Show Real Estate Advice

JF621: He States that Buyers Should NEVER Buy On…#skillsetsunday

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You’ll have to hear this episode to get the answer to the title. Today’s guest closes over $100,000,000 in volume in Orange County as a broker. He has experience investing and working with real estate professionals all over SoCal. Tune in!

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David Feldberg Real Estate Background:

-Based in Newport Beach, California
-Closes $100MM a month in loans as a broker
-At Coastal Real Estate group
-You can reach him at Coastalgroupoc.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Do you need more leads for your real estate business and a platform to grab more leads?

Danny Johnson has a solution for you, go to leadpropeller.com set up your website for success and get more leads!

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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Best Ever Show Real Estate Advice

JF615: How These Two TURN ON the Leads When Direct Mail is Slow

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They began young, and extremely ambitious! Beginning in a California market is like jumping into the ring with Mike Tyson…overwhelming! They share their success within their solid network, SEO, and positive mindset. Hear how they are doing it!

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Adam and Josh Justiniano real esate background:

  • Brothers started investing at 21 and 23 years old and have closed on over 50 deals in under 3 years…while one of them is still going to college at Cal State Northridge
  • Bought 6 properties in the last 10 months as buy-and-holds
  • Done 2 flips and have a duplex in Oxnard, California as 3rd flip
  • Say hi to them at quickhomeoffers.com
  • Their Best Ever book: Spin Selling by Neil Rackham

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Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

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Best Ever Show Real Estate Advice

JF361: He Began Squatting in a Bank Owned Home and Now Owns 300+ Units

Today’s Best Ever guest enriches the Best Ever listeners with an 8 step process to not only lift your real estate business off the ground, but to eventually make a difference in the world. He shares his best real estate advice, and he’ll let us know how to extract advice from others.

Best Ever Tweet:

J Massey’s real estate background:

  •   Started real estate investing squatting in a banked owned home
  •   Owns 300+ units
  •   California investor
  •   Host of Cash Flow Diaries podcast
  •   Master of meet-ups, REI groups, and long term business relationships

 

Made Possible Because of Our Best Ever Sponsors:

Norada Real Estate – Having a hard time finding great investment properties? Unfortunately, the best deals are rarely found locally. Norada Real Estate’s simple proven system provides you with the best deals across the U.S. to create wealth and cash-flow. Get your FREE copy of The Ultimate Guide to Out-of-State Real Estate Investing at www.NoradaRealEstate.com/Guide

 

Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at www.PatchOfLand.com

 

 

 

 

 

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Best Ever Show Real Estate Advice

JF354: How Would YOU Invest $100,000? Find out the gameplan on #situation Saturday

Picture this…you’ve got $100,000 in the bank and don’t really know what to do with it. You want to make it work for you, but aren’t sure how. Here is your guide to using that money to benefit you.

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A good property manager is worth their weight in real estate.

Jason Hartman’s real estate background:

–          Involved in thousands of transactions

–          Owned income properties in 11 states

–          Host of The Creating Wealth Show

–          Say hi to him at http://www.jasonhartman.com/podcast

–          Started out as a broker

–          Recently became a real estate developer

–          Self-made multi-millionaire, entrepreneur, investor, lender and developer

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Made Possible Because of Our Best Ever Sponsor:

Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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Best Ever Show Real Estate Advice

JF232: The Top Trends YOU Need to Start Spotting in Your Deals

Would you spend a couple hours in the county courthouse to make a couple THOUSAND extra dollars on your deal? You better listen up today then, because doing your due diligence has NEVER been more important. We don’t only discuss how to make money on current and future deals, today’s Best Ever guest tells us how you can spot patterns from the PAST to make money in the FUTURE.

Best Ever Tweet:

Dave Pelligrinelli’s real estate background:

–          National certified title examiner based in San Luis Obispo, California

–          His corporation, AFX, has performed over 1 million title searches and he personally     has over 20 years’ experience in the title industry and private investigations

–          He has provided expert witness testimony for several government agencies, including the Department of Justice, Treasury Department and the FDIC

Norada Real Estate Investments – Having a hard time finding great investment properties?  Unfortunately, the best deals are rarely found locally. Norada Real Estate’s simple proven system provides you with the best deals across the U.S. to create wealth and cash-flow.  Get your FREE copy of The Ultimate Guide to Out-of-State Real Estate Investing

Patch of Land – Want to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

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