Halloween Horror Stories – 2018 Edition

Welcome to our annual edition of Halloween Horror Stories … real world accounts of real estate deals gone horribly wrong.

We’re honored our guests chose to share their horror stories with us. They also discuss what they discovered in the process … so YOU can learn what NOT to do.

In this Spooktacular episode of The Real Estate Guys™ show, you’ll hear from:

  • Your spooky host, Robert Helms
  • His spooked co-host, Russell Gray
  • Investors Sep Bekam
  • Todd Sulzinger
  • Michael Manthei
  • Brad and Emily Niebuhr
  • Silvana Shull
  • Lane Kawaoka
  • David Kafka
  • and Ryan Gibson

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The shot heard ‘round the neighborhood

Our first story comes from investor Sep Bekam. Sep bought a 36-house parcel and started making repairs and raising rents to market price.

But this made one particular tenant less than happy.

You see, the existing tenant was occupying two houses … one for personal use and one for their daycare business … and the rent raises meant they had to downsize.

But that’s life. Sep put a Section 8 tenant into the newly unoccupied property and thought that was that.

Six months later, he found out there had been a drive-by shooting. Turns out the Section 8 tenant had a teen involved in gang and drug activities … not the kind of thing you can find out on a background check.

The Section 8 tenant moved out shortly afterward, and Sep started the process of putting a third tenant in the house. But the old tenant … the daycare owner … still wasn’t happy. They started interfering with the leasing agents, trying to scare off prospective renters.

Still, Sep found a new tenant and everything seemed okay again … until about a month later, when the tenant heard loud shots.

Turns out the disgruntled neighbor had fired a paintball gun at the new tenant’s house … then told them about the previous drive-by shooting.

The solution … Sep made an agreement with the new tenants to put in a state-of-the-art security system so they would feel safe.

The takeaways … Crime sometimes happens, no matter how many safeguards you have in place. Sep says it’s important to mitigate the problem WHEN it happens so it’s not associated with the neighborhood.

And keep in mind, Sep has a portfolio of over 100 houses. He reminds investors to not get discouraged … these kinds of horror stories are the exception, not the rule.

The bankrupt builder

Todd Sulzinger started investing his self-directed IRA funds in 2011.

He found a developer building fourplexes who was looking for hard-money loans and decided to sign on.

A few months later, one of the developer’s major suppliers went bankrupt. And then … the developer went bankrupt too.

Because Todd was only in on a portion of the fourplex, he couldn’t foreclose.

The solution … Todd did his best to fight for the money held in the construction management company. Unfortunately, he never recovered all of his money, and what he did get back didn’t return until years later.

The takeaways … “Don’t do a hard-money loan on a fourplex,” Todd says. Know exactly where your money is going BEFORE you make a loan, and understand what will happen in a worst-case scenario.

Also, make sure you can foreclose on a property. And evaluate the risks of any loan or investments. If you’re unsure … ask questions. The vetting process should take time if you’re doing it right.

The mysterious doorman

Michael Manthei’s troubles didn’t start when he bought a 10-unit building in a rougher neighborhood … they started when he replaced one tenant with an older gentleman who seemed like a nice guy.

Soon after the tenant moved in, water started leaking from the apartment into the commercial space downstairs.

Then, there was a death in the apartment.

Turns out, the new tenant had been charging homeless people $10 to shower at his place. He let one woman stay overnight … and she overdosed and died. The man was even running a prostitution operation from the apartment.

The solution … “We kindly asked him to leave, and he complied,” Michael says. That wasn’t the end … the apartment was in bad shape and had to be gutted and cleaned.

The takeaways … Don’t trust your intuition more than the process.

Michael now makes sure new tenants complete an application, do a full criminal and eviction background check, and supply references and employment history before he will even consider them.

He considers that process an investment … on getting quality, long-term tenants.

The curious sucking sound

Brad and Emily Niebuhr do a lot of mixed-use deals. But in one property they bought a few years ago, things went terribly wrong.

First, there was the love triangle. One tenant had her boyfriend added to the lease … but a few months later, the boyfriend moved into the apartment of a DIFFERENT tenant.

But that’s not the horror story.

People started to hear lots of noise and banging … including odd sucking sounds … coming from the second tenant’s apartment. Then, water started to leak from the apartment into the commercial space below.

Turns out, the tenant and her new boyfriend had jaunted off to Alaska, but not before illegally subletting the apartment.

The subletter had an issue with the bathtub drain … but since he didn’t want anyone to know he was there, he was using a Shop Vac to drain water from the bathtub, sometimes as many as 13 times a day.

Even worse … the new subletter was allegedly a drug dealer who brought an unverified service dog onto the property.

The solution … Emily and Brad did a property inspection and gave the subletter notice, and he quickly moved out. They also fixed the drain issue.

The takeaways … If you couldn’t tell, Brad and Emily were managing the property without the help of a property management team. They told us that now, they wouldn’t go without one.

They also realized that investments are about more than the numbers. Even though the mixed-used property had amazing cap rates and returns, it was in a rural area, and they couldn’t find a property manager.

Although they finally have property management now, it took a lot of searching. “There’s a learning curve to the due diligence process,” the couple says.

When disaster strikes

In 2008, Silvana Shull had a successful business in Japan … a large retail furniture and interior design operation. She bought and designed a custom showroom because the numbers made sense.

But right after, the economy started to shift.

She was able to manage for about three years … until 2011 and 2012, when Japan was struck by a series of natural disasters, including tsunamis and earthquakes.

The operation was destroyed.

Silvana had to make a decision … cut her losses and try to rebuild, or close her business entirely and try to recover what she could.

The solution … Silvana sold the building she bought for less than 10 percent of what she originally paid. She shipped all her remaining inventory to Hawaii, where she eventually was able to sell everything … but the entire process took seven years of daily, dedicated effort. And she did it all while taking care of her two small children.

The takeaways … Running an international operation isn’t easy and requires a team. “I didn’t listen to advice and thought I could do anything,” Silvana says.

If she were to do it again, she would listen more and move slower. Although it’s impossible to control natural disasters, Silvana says it probably didn’t make sense to expand in Japan, considering she was living in Hawaii at the time.

The incredible shrinking IRA

Lane Kawaoka is a podcaster, like us. His show is called Simple Passive Cashflow.

He is also an investor who has made a few mistakes.

When he was starting out, Lane wanted to use his self-directed IRA to invest in a passive deal, but he didn’t know many people.

So, when he got a referral, he didn’t do much investigating. Lane invested $43,000 … almost his entire IRA fund … in a deal that looked pretty good on paper.

But then he started networking with other limited partners and heard the operator wasn’t the most scrupulous person. A year later, Lane got a letter that said his deal had gone south.

Lane was left with a property that needed $20,000 worth of repairs in a tertiary market with long selling times.

The solution … Lane wrote off the loss and eventually fire-sold the property. He was left with only $7,000 in his IRA fund.

The takeaways … “Don’t work with someone you don’t know, like, or trust. And don’t lose focus on building relationships with other peer investors,” Lane says.

Trouble in paradise

This story comes from an investor outside of the U.S. … David Kafka. David is located in Belize.

One day, David got a call from an employee. The police needed him to identify a body. Turns out, it was a client of David’s … he had just listed and sold her house.

There were some questions floating around about whether the client had actually wanted to sell, and David had the keys to her house. He was worried he might be a suspect. But he was even more worried about finding the actual killer.

The solution … Eventually, David ended up closing the deal. And he realized he wasn’t a detective and couldn’t solve the murder. He had to extricate himself.

The takeaways … Dot your I’s and cross your T’s, says David. When the unexpected happens, you want to put yourself in the best possible position.

Also, remember that sometimes bad things happen to good people … and that many things are simply out of our control. So, be compassionate and have fortitude, but keep your nose out of things that aren’t in your jurisdiction.

A red-hot deal

Our last horror story comes from investor Ryan Gibson.

Ryan invested in a condo-conversion development opportunity, converting an existing single-family home into condos.

He had great insurance … probably a little too much, he says. But that insurance came in handy when someone broke in and started a fire two months before the condos were set to be finished.

Ryan was on vacation in Hawaii when he got the call, but he had a local contractor on the ground who could help manage the situation.

The solution … Ryan immediately sent an email out to his investors. He also informed his lender, a bank, right away. And he submitted an insurance claim, which luckily covered the damage to the dollar.

The fire extended the entire process by about three months, but in the end, Ryan was able to offer his investors a return over 50 percent.

The takeaways … “If it can go wrong, it probably will,” says Ryan. So always be over-insured. And remember, “Bad news doesn’t get better with age.”

Be transparent and handle problems as quickly as possible … and make sure you have eyes and ears on the ground to help you out when times get tough.

How to handle a horror story

In stressful times, attitude plays a big role. But what really matters is asking the right questions:

  • What happened?
  • Why did it happen?
  • How can I resolve it?
  • What can I learn?

That way, you can turn your horror story into a learning experience that will help you be an even smarter investor.


More From The Real Estate Guys™…

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The Future of Interest Rates and More with David Stockman

We love talking about real estate. But, real estate is only a part of the sea of our economic landscape. Rising interest rates have a HUGE impact on real estate and the economy in general.

That’s why we are talking to one of our favorite former Wall Street and Washington insiders.

He tells us his take on the future of interest rates and the economy … and shares how YOU can capitalize on changing interest rates to make smart real estate decisions.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your swimming host, Robert Helms
  • His sinking co-host, Russell Gray
  • David Stockman, former U.S. Congressman and best-selling author

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The U.S. economy is a fantasyland

David Stockman is an expert not only in economic policy, but also in articulating and explaining complex topics in a way anyone can understand.

David’s political path began in college when he worked for a congressman and learned what it took to be a policymaker. He won an election to congress after the incumbent in his district retired.

Later, he was drafted to be a part of Ronald Reagan’s economic team. President Reagan appointed David as budget director, where he helped launch economic policies.

When it comes to economic policy, there are generally two schools of thought … Keynesian and Austrian.

“Keynesianism says basically that you can’t rely on capitalism to grow; you need the helping hand of the government,” David says. “We say get out of the way! The less government the better.”

And of course, limit borrowing and spending.

The other major factor in economics is interest rates … which directly affect home buyers and investors.

“Rising interest rates have historically told Congress to get its fiscal house in order,” David says. “It elicits a reaction in the country that says, ‘You’re crowding out investment that we need in the private sector.’”

But money printing and distortion of the capital market can cause major crashes like the one we endured in 2008. The subprime disaster SHOULD have been a wake-up call to the country.

In the 94 days after the crash, the Fed increased the balance sheet by 150 percent more than in the previous 94 years.

David says that put us on the path of crazy money printing and low interest rates … and has fueled more speculation.

Now, the Fed is trying to stabilize interest rates and has put the economy in a precarious position.

And there’s an important concept for today’s investors to keep in mind as they evaluate the economy … the recency bias.

“If you’re looking just at what happened yesterday or last year, you might lose track of the fact that we’re in fantasyland, and fantasyland is a dangerous place to be,” David says.

Essentially, the Fed realizes that they went way too far for way too long, and that they won’t be ready for the next big crisis. And the deficit continues to grow out of control.

Which means the next crash could be even bigger.

David says that for investors who are borrowing large sums of money to finance their investments, there’s no more dangerous time than right now.

He calls for prudent underwriting today, and keeping an eye toward the future.

Higher interest rates and lower property values are the types of problems that can erase yields.

“Debt can produce wonderful returns,” David says. “But, if you get caught blindsided, it can be a very dangerous thing to wrestle with.”

Shore up investments before the crash

While many pundits are talking about how robust the economy is, it’s important to listen to the people who are sounding the alarm. So, what can happen?

“If we have another crisis, innocent people will be hurt,” David says. People who lost in the dotcom bust and the housing crisis will have similar and possibly even bigger losses.

This time, the fed will not be in the position to bail out the system. And David says that perhaps in the next crash, the Federal Reserve will emerge as the real culprits of economic instability.

One of the big lessons is to stay educated and understand the fundamentals. You can turn a crisis into an opportunity.

What should a prudent investor be doing now to prepare for the next downturn?

“I think that the idea of cash-flow oriented investment is a sound one,” David says, “but the underwriting going forward will have to be more discriminating and careful than ever before.”

This is especially true for commercial investing. It’s important to ensure that tenants can continue to pay their leases.

Above all, David says that being a careful and prudent investor is a more secure place to be.

For investors who didn’t live through 2008 … or even if you did … you can learn from David’s expertise.

Want to learn more from David and keep up with his advice and takes on the economy? Send an email to Stockman [at] realestateguysradio [dot] com.


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Building Your Network and Credibility by Attracting the Right People

Real estate investing is a social endeavor. The more people you know … and the better those people are … the more likely you are to succeed.

But how do you turn your business relationship dreams into reality?

The secret to building relationships is alignment.

In other words, YOU have to bring value to the table to build strong relationships … and you want to seek out people who can bring value to you, too.

In this episode of The Real Estate Guys™ show, we’ll talk with a powerful connector who is an expert at helping folks nurture and build relationships.

You’ll hear from:

  • Your connected host, Robert Helms
  • His cantankerous co-host, Russell Gray
  • Kyle Wilson, promoter and brand builder

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The three ingredients of strong relationships

Kyle Wilson has had the chance to work with a lot of great people throughout his career. Recently, he wrote a book about the lessons he has learned from them.

One of Kyle’s mentors and partners was entrepreneur Jim Rohn, who died in 2009. Jim said, “Success takes time, and the twin killers of success are impatience and greed.”

Today’s society wants instant success, says Kyle … but it takes time to do anything worthwhile, including building your network.

That doesn’t mean every relationship you spend time on will be great. A second lesson Kyle learned comes from Zig Ziglar, who said, “Never do a good deal with a bad guy.” It’ll never work out for the best.

We’ve got the first two ingredients … time and good people. The third ingredient of a successful relationship is value.

You need to BE a good partner before you can HAVE a good partner … and that means bringing value to the table. Solid relationships aren’t usually based on people just being nice to each other … they’re about value.

A good relationship or partnership should be win-win on both sides.

Dream big … and put in the time

Kyle shared another lesson from his book, 52 Lessons, with us. (Pssst … to read the book, simply click here for free instant access. Kyle is publishing the book entirely online, one chapter a week.)

He learned this lesson from Mark Victor Hansen, founder of the well-known Chicken Soup for the Soul book series.

Mark told Kyle, “We’re going to sell 100 million books.” Kyle didn’t believe him.

Today, the Chicken Soup for the Soul franchise has sold more than 600 million books.

Kyle calls the lesson he learned “stretching the rubber band” … Mark forced Kyle to think beyond what he thought was possible.

It’s essential to build relationships with people who can get you outside of your comfort zone and help you dream big.

To turn your dreams to reality, however, requires dedication, a lesson Kyle learned early in his career from success expert Bryan Tracy.

Bryan said, “Success is like getting a plane off the ground.” It takes a ton of fuel and energy to get that plane from the runway to the air … but once you’re at 300,000 feet, you can coast a little.

Kyle applied that wisdom to the beginning of his career. He spent the first two or three years putting in the hours … so he could reap the results later.

Most people spend their whole lives going 80 miles per hour down the runway and never breaking free from gravity. “That’s not efficient,” Kyle says.

Great relationships will propel you upwards

52 Lessons is a compilation of stories from individuals who’ve been through a defining experience and made the changes necessary to bounce them to success.

Kyle can share a similar story … he sold 7 million books as a publisher, then sold all his companies and retired in 2007 to become Mr. Mom. He even signed a non-compete.

Several years later, he wanted to get back in the game … so he used the knowledge he’d amassed to start a new publishing business. His first book was Passionistas, a book about millennial women hustling to make their businesses succeed.

Kyle says he’s able to leverage his experiences and relationships to create more success for himself and others around him. That’s one reason he loves attending our annual Summit at Sea™.

The Summit isn’t just about information, Kyle says … it’s about the people you meet and the relationships you build.

At some point, most investors will want to move from solo investments to syndication with other people. That’s where our Secrets of Successful Syndication seminar comes into play.

Most people attending that event already have half a dozen properties … and almost everyone has something they can offer to other investors.

It’s a way to put yourself in a target-rich environment.

Leverage social media

Kyle says that for the modern entrepreneur, online relationships are important too. “Whatever business you’re in, it’s all about building an audience.”

Whether that’s through a podcast, social media, an email list, events, or a combination, online networking might be your secret sauce to building a network.

Kyle says that for him, “It’s counterproductive to pay someone to do social media … it’s about the pulse.”

But whatever strategy you alight on, you have to be authentic about it. You can delegate the minutiae … but you should be the architect of your connection strategies.

And EVERY strategy you make should begin with the philosophy of bringing value to others.

Align yourself with others

As The Guys, we’ve built a successful brand and a network full of investing rockstars because we work to find common values.

If you’re looking to make connections, DON’T jump into a partnership right away.

Instead, do a deep dive to determine your own personal mission, vision, and values. Then you can determine whether others will help you advance your goals … and whether YOU can help THEM.

Not everyone you meet will offer that kind of win-win relationship.

If you’re looking for help figuring out your mission, vision, and values, come to our Create Your Future goal-setting retreat.

Discover the big picture of who you are as a person … and learn what you want, how (and how not) you can get it, and how to evaluate potential relationships.

Convert your passion … into action. And attract the right people into your life by removing uncertainty about what YOU want.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Ask The Guys – Finding Great Agents, Vetting Syndications, Starting Small

We’re back … with an all-new episode of Ask The Guys!

In this series, we answer YOUR questions about all things real estate.

Before you click play, please remember that we are not tax advisors or legal professionals. We offer ideas, not advice … please run any investment ideas past a professional before putting them into action.

Now, listen in to The Real Estate Guys™ show! You’ll hear from:

  • Your pondering host, Robert Helms
  • His pesky co-host, Russell Gray
  • Bob Helms, the godfather of real estate

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Syndication, securities, and accreditation

Susan, from New Hope, Pennsylvania, wants to know what real estate investment opportunities are open to non-accredited investors.

The short answer is A LOT. For the long answer, let’s start with a definition.

An accredited investor is someone who has a net worth of over $1 million excluding their primary residence OR someone who has had an annual income of $200,000 for at least two years ($300,000 for married couples).

These requirements allow the SEC to regulate the kinds of investors who get involved in securities investments.

They are a way to verify you’ve reached adequate financial aptitude and won’t run aground by investing in a big deal.

If you’re not at that level yet, that’s perfectly all right!

You have multiple options:

  1. Employ a tenant-in-common ownership to invest in a property as a group. Make sure you structure the deal so it stays within SEC regulations.
  2. Make friends with a syndicator. Deal makers can work with up to 35 non-accredited investors through the 506B exemption.
  3. Work with an accredited partner to complete your first few bigger deals.
  4. Invest in a publicly traded security in real estate.
  5. Use a crowdfunding site to invest limited funds into a larger project.
  6. Make a private loan to other investors.

HOWEVER … keep in mind that the average beginning investor is NOT accredited. Condos, single-family homes, and other smaller properties are ALL available to non-accredited investors.

In fact, the vast majority of real estate investment opportunities are available to non-accredited investors.

The fundamental piece of the equation is education. You have to know WHAT you’re buying and WHO you’re doing business with for every deal before you can move confidently into a deal that risks large amounts of your equity.

Michael, from Richardson, Texas, asks a related question … when does a deal become syndication?

Syndication simply means putting together money from a group of individuals.

Things start to get a little tricky when some of those individuals are passive investors, however … because then you have a security and have to make sure investors are accredited, like we talked about above.

When you’re working with a group of people to do a deal, make sure you hire a real estate or securities attorney to properly document your deal. We DO NOT recommend the do-it-yourself method here.

Repair first … or sell as-is?

Betty, from Littleton, Colorado, is wondering whether her in-laws should fix the broken foundation of their home before selling or sell it as-is.

Bob reminds us that as-is means as disclosed … it’s important to tell a potential buyer EVERYTHING that could be an issue, including any reports you’ve commissioned.

The best solution in this case might be to get a report on the damage to the foundation … and then decide whether to sell or fix.

There’s no automatic best answer here … in a strong market, you can probably get away with as-is, while in a buyer’s market, you may have to do more work.

To figure out the best option, sit down with your real estate professional.

Investing to learn

We got a question from Daniel, in Garden Grove, California. He is wondering how to invest in larger deals as a learning endeavor. He wants to expand beyond single-family investments. Like our first questioner, he is not accredited.

Let’s start with what you need to do to FIND deals as a passive investor.

Passive investors bet on both the jockey and the horse. In other words, you need to know the details of the deal … AND know who you’re doing business with.

That’s why networking events are so important. And the TYPE of events you go to are important too … we bet you’ll find more dedicated, passionate investors at professional development events than at events where syndicators get together to show off their deals.

If you want to learn, put yourself out there, get to know people, and pick out a few niches you find interesting. Then put a smaller amount of money into multiple deals … instead of putting all your eggs in one basket.

And make sure you’re working with a syndicator who is invested in your educational process. You want a syndicator who will let you be a fly on the wall.

Passive investment options for residential assisted living

Bill, in Northbrook, Illinois, asks whether it’s possible to invest passively in residential assisted living or AirBnb investment options.

If you’re interested in residential assisted living, we recommend looking into Gene Guarino. His educational events have taught many investors how to step into the assisted living field … and many of those investors become syndicators willing to work with investors like Bill.

AirBnb, on the other hand, is something we’re not 100 percent sure about yet. There’s some legal resistance and the whole industry can be a bit sketchy.

We just don’t know enough about AirBnb investing to recommend this option … and we haven’t yet found an expert who’s really crushing it in that field. For now, this option is just a wait-and-see niche for us.

Book releases and Belize trips

We answer three quick questions from curious listeners …

Ellie in Seattle wonders where she can find a copy of Bob Helm’s new book, Be The One Percent.

The book is meant to teach realtors about how to serve investors … and become investors themselves.

To get your hands on a copy, listen in to the show for special access.

John, from San Antonio, Texas, wants to know whether we hold a convention in Belize. While we don’t hold a convention … we do conduct Belize discovery trips three to four times a year!

These trips are a great way to get an in-depth perspective on the Belize market … and even if you’re not ultimately interested in offshore investing, you’ll learn a heck of a lot about market analysis.

Holly, from Pingrove, Illinois, wonders whether we have any Belize field trips scheduled in the near future. To check out upcoming field trip dates, check out the event page.

Finding the truth about private lending platforms

We were excited to hear from a former participant in our mentoring program. Domingo, who’s located in San Anselmo, California, wants to know what we think of a particular private lending platform.

He also wants to know what we think about his general economic theory … that there’s a strong possibility the market will come down, and that real estate will continue to be a viable investment option during a crash, even if liquidity dries up.

About the lending platform, we can’t really comment. There are several peer-to-peer lending platforms that specialize in crowdfunding loans, and these can be a great way to diversify loan types.

But lending is lending … so no matter the loan type, you have to understand the basic underwriting … what you get if a foreclosure happens.

Don’t get lost in the weeds. Instead, understand the basics … what are you giving, and what do you get? And if things go wrong, what happens?

As to the economic theory, we think Domingo is on the right track. ALL of our listeners should be thinking about how to position themselves so they can thrive when a downturn happens.

Land brokerage and multi-family investing

Our last question is from Troy, in Millcreek, Washington. Troy is looking to get better as a land acquisition agent … but he also wants to dip his toes into multi-family products.

We haven’t been in the land brokerage business, but we think there are a few things to take into consideration.

First, land is not land is not land.

By that, we mean every land bank could lead to a different outcome … so you need to look at where every piece of land will end up, whether that’s agriculture or retail development.

Second, every specialty brokerage follows the 80/20 rule … 80 percent of real estate is sold by 20 percent of agents. So, be the 20 percent.

That means you need to be really well educated, have outstanding product knowledge, and build excellent relationship.

To succeed, look for the big players in your field and try to get in a room with them. Pick their brains, learn the language, and build your business.

And ask yourself the most important question … who is my customer? Understand the needs of the person you’ll be selling to.

As to multi-family, our friend Brad Sumrock has a wealth of resources. He’s one of several multi-family investors on our Summit at Sea faculty … but he also holds a two-day training three times a year in Dallas, Texas.

It’s an invaluable learning opportunity, and one we can’t recommend enough.

Have a question of your own? Ask us here. Until next time, happy investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Finding Opportunity in Comeback Markets

Job creation is up. Even better news … the jobs being created are blue-collar jobs, many in the reviving manufacturing industry.

This means more wages, more workers … and more folks who can pay rent.

In this episode of The Real Estate Guys™ show, we talk to an entrepreneur who has built a real estate business in an off-the-radar market.

The truth is, the hot markets you always hear about … San Francisco, New York, Los Angeles … don’t make sense for investors.

On the other hand, markets with not-so-great reputations might get you the best bang for your buck, depending on where they’re at in the market cycle.

Our conversation today delves into what makes a market make sense … and what it takes to make a profit in sensible markets.

Listen in … you’ll hear from:

  • Your reputable host, Robert Helms
  • His bad-reputation co-host, Russell Gray
  • Bryce Keesee, founder of Great Lakes Capital Solutions

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Riding the market waves

Let’s start with a quick real estate investing lesson.

Many people generalize the entire real estate investment category. They think real estate is overheated … so there’s no opportunity anywhere, for anyone.

That’s just plain wrong.

Real estate is NOT an asset class. It’s NOT a market. It’s an investment category with MANY different markets, each of which is in its own unique place in the market cycle.

But smart investors don’t look at averages. They take the time to do research, look for clues, kick the dirt, and meet people in individual markets.

When you’re looking for great markets, one excellent option is the comeback market.

Markets go through phases …

  1. Growth.
  2. Stabilization.
  3. Deterioration.
  4. Revitalization.

Catching a market as it hits step four is the key to riding an up-wave.

You don’t want to get in before things have started looking up … but you do want to get into markets that are turning upwards before the crowd.

Case study: Cleveland

Our guest Bryce Keesee got into real estate in southern Florida 15 years ago … but he has since switched to a market in the midst of MAJOR revitalization.

The market? His hometown … Cleveland, Ohio.

You might not initially think of Cleveland as a great investment market. That’s part of what makes it so great.

Bryce says the market offers many benefits … good price points for properties and rents, a steady flow of dependable tenants, stable worker incomes, and best of all … high cash flow.

Let’s get into what makes Cleveland so great.

First of all, a revitalized manufacturing industry only adds to the wide variety of blue-collar companies in the city.

Steel manufacturers join other major employers like Lincoln Electric, Progressive Insurance, several Amazon warehouses, and the renowned Cleveland Clinic, just to name a few.

This variety offers stability … and provides blue-collar jobs that keep rent prices steady.

These jobs are one reason Cleveland has a reputation for affordability.

Bryce is a fan of blue-collar workers because they tend to be long-term tenants. Many of these workers don’t plan to buy a home. Purchasing a property is “off the list” of goals for many people.

Dive into the details

We asked Bryce to give us the low-down on his typical rental property.

Bryce says properties are slightly different depending on location.

The east side of Cleveland has been abandoned for many years, although it’s starting to see growth now. So price points are a bit lower.

Bryce says single-family homes on the east side sell for $60-65,000. Monthly cashflow is $750 a month, on average … well above one percent.

The west side, on the other hand, has slightly higher price points and rents. Homes sell for 70-75,000, and rents are in the $900 range.

It takes 30-60 days from closing to repair and refurbish properties so they’re ready to rent.

The rehab process doesn’t follow a cookie-cutter template. Bryce and his partners have standardized the contractors and materials used, but each property gets an individual evaluation.

He wants well-functioning, desirable rentals that will save the company time and maintenance costs in the long-term.

That keeps tenants happy. Bryce also works to keep tenants happy by building relationships with tenants via his property management company.

“Our tenants love us,” Bryce says. A big reason is great communication from his property management team, with whom he has a 10-year relationship.

What about the general atmosphere of the Cleveland market? Ohio is extremely landlord-friendly, says Bryce. The law allows for a 3-day notice to vacate for non-paying tenants. The eviction process is only 10 days.

That doesn’t mean Bryce follows those timelines … he says his response is to establish a relationship with tenants and make sure the lines of communication are open. Yet another reason why property management is so important!

Investors interested in the Cleveland market should listen in to get access to a special report by Bryce that includes even more details!

Ohio Field Trip

Bryce really loves Ohio, and he thinks other investors will too.

Cleveland has great sports teams and the second-largest performing arts district outside of New York City.

But it’s also experiencing a revitalization that you can only really understand by kicking the dirt.

That’s why we recommend the Cleveland Field Trip.

You’ll get a chance to tour Cleveland with Bryce. But you’ll also learn about the investment model Bryce uses … an excellent education even if Cleveland isn’t right for you.

We live in an era of over-saturated markets. It’s hard to find markets that make sense. But some markets are just starting to get hot.

The very best way to get in on these markets is to learn from someone who has boots on the ground. Because remember, you’re not looking for a property, or even just a market … you’re looking for a TEAM.

And a field trip is the best way to meet the people … who know the market … and can help YOU build your own brilliant team.


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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