It’s one of our favorite segments … answering YOUR real-world questions about real estate investing.
In this batch of mail, we run through where to start with syndication and investing to how to think about self-directed retirement funds and everything in between.
As a reminder, our show is about offering ideas and information, but we are not legal or tax professionals and do not give advice. Always see a pro for advice on your specific situation.
In this episode of The Real Estate Guys™ show you’ll hear from:
- Your problem-solving host, Robert Helms
- His unraveling co-host, Russell Gray
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Question: I’m a real estate agent and would like to start investing for myself. How do I get started?
Kristen in Seattle, Washington, brought us this wonderful question. First of all, hats off to you for wanting to be your own best client!
Starting with the right education is so important and so is developing your network. You might consider joining an investment club, but you could also think even bigger and start your own!
Starting a syndication or investment club can be very successful if you surround yourself with the right people and experts. Here’s a few people you’ll probably want to include:
✓ A CPA to help with understanding tax benefits
✓ A mortgage broker to extract excess equity
✓ Other real estate agents … especially those with investment knowledge
You can convert your pursuit of education into a profitable business. Start by going to events with meetups and investment clubs. Remember, it’s not just the presenters who have a great story. It’s also the people in the seats. Make lasting connections with other attendees, and bring them into your network.
Question: Which materials … books and blogs should I read for getting educated in investing?
Our best advice to Luca in Croatia, who submitted this question, is to not just read a book … STUDY a book. Prepare your mindset to start thinking like an entrepreneur.
What does this mean? Find a group of people who are interested in investing, and get together and discuss a book.
You’ll learn by listening to what others have to say AND teaching different concepts. Repeat the process of learn, study, teach, and use these discussion groups to build your network.
Recruit people who are further along in the investment process than you to learn from them. You want to discover not only the technical aspects of what they do, but also how they think. Explore their mindset and examine how it makes them successful.
Question: I want to self-direct my retirement funds after I leave my job. How can I use this money to invest in real estate?
This question comes from Jason in Stokesdale, North Carolina. Some aspects of this type of investing can get a little tricky, so remember to always seek advice from a tax and legal professional.
For money that’s in a 401k from an employer, you might have access to what’s called an in-service withdrawal. You might also consider taking out a loan on your 401k.
As with any investment, make sure that the numbers add up, especially since there are important tax considerations to make when you’re investing borrowed money. This is also where a CPA will come in handy.
The vast majority of custodians do not allow for traditional investing and don’t charge a lot in fees and maintenance charges because they make a piece of what you’re investing in. Non-traditional custodians may charge more fees upfront because they do not make a piece of anything you invest in, but they can offer more flexibility in what you invest in.
If you want to know more on this topic, we have a couple reports that might be helpful on Qualified Retirement Plans (QRP) and Individual Retirement Accounts (IRA). You can get both of those by emailing QRP (at) realestateguysradio (dot) com AND IRA (at) realestateguysradio (dot) com.
Question: For those who don’t like all the work of real estate investing, how do you find a trusted syndicator?
Roy in Bridgewater, New Jersey, and Patrick in San Diego, California had similar questions about passive investing through a syndicator. They both want to break into the bigger real estate deals, but are worried about putting their money into the wrong hands. Syndication is a powerful tool that we’re big fans of here on the podcast, but vetting your syndicator is key!
First, look up all the info you can on your sponsor and know who you’re dealing with. Ask them upfront if there’s anything important you should know about them or their business, and then, go searching.
Referrals are a good way to get to know your sponsor. Careful Google searching (watch out for false information on the internet!) and looking up professional licenses and potential trouble with regulators are also essential before doing a deal.
Also, make sure their attorneys and legal documentation all checks out.
As we’ve said many times before … develop a relationship with the sponsor. Take the time to get to know them and the types of deals they do to make sure it’s a good match.
We’d love to talk to you more about syndication at our Secrets of Successful Syndication event on September 13-14. Register now!
Question: I have a commercial property near the end of its lease. Should I sell it or keep the passive income?
Colleen in Savannah, Georgia, has had a triple-net (commercial) property for 13 years, but the lease will be up in 4 years. She enjoys the passive income from the property, but wants to know if it might be time to let it go.
We discussed the advantages of commercial property in detail with Tom Wilson in our Profitable Niches series, and the longer leases and steady income are definitely big pluses!
Lease negotiation can happen before a lease is up, so that’s an option to make the deal sweeter for a potential buyer. But, here are a couple questions we would ask to determine if selling is the right choice:
✓ Knowing what you know now, would you buy it?
✓ If you did sell it, what would you do with the money?
Ultimately, the decision to sell or keep the property is up to you, but evaluating the lease with fresh eyes is a good way to keep your investments in line with your goals!
Question: How can I make some of my assets more liquid to prepare for an economic downturn?
Marty in Richmond, Virginia, has some real estate investment experience, but he’s concerned about a possible negative turn in the economy and how to protect some of his assets he’s received after selling a property.
We discussed the state of the economy and how to protect and grow wealth at great length in our video series: The Future of Money & Wealth. Take a look at that seminar for valuable insights from incredible experts.
To answer the question, if you think the market is going to downturn, you’ll want to play your investments differently. There are pros and cons for stock market investment and even bank investment, and they all carry different risks.
If you want something that is liquid and fairly stable in relation to the dollar, you could consider a couple options like currencies, precious metals like gold, or putting your money in the bank or a safe.
Some other creative strategies are looking into a private mortgage or note or even paying cash outright for a property. As long as you’re able to cover property taxes, having a property in a stable market is a good way to keep cash flowing in a down market. Even in a poor economy, people need a place to live.
Question: How many times a year is your syndication class given?
This was an easy one from Floyd in Las Vegas, Nevada. We do our Secrets of Successful Syndication podcast twice a year. The next one is coming up in September, and we’d love to see you there!
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