Getting to the Next Level with Your Real Estate Investing
The real estate game is all about the long game. It’s a process of learning … and often a rollercoaster of rapid growth, steady plateaus, dips, and rising back.
The key for investors is to always be pushing to the next level.
So … we’re talking about how to do just that.
We’re ready to talk getting started, getting out of ruts, and getting yourself to the next level of the real estate game.
In this episode of The Real Estate Guys™ show, hear from:
- Your level-headed host, Robert Helms
- His on-the-level co-host, Russell Gray
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A natural evolution in real estate
Where are you as a real estate investor?
Whether you’re just starting to think about it, getting started, or a seasoned professional ready to make a jump into a new niche … we’re here to help you get to your next level.
Not all investors are created equal. Not all investors start in the same place or end up in the same place … but there IS a natural progression and evolution as a real estate investor.
Part of that transformation is about knowledge and information. The other part is about actually changing.
If you remain who you’ve always been, you’re going to do things the way you’ve always done them, and you’ll get the same results.
What we’ve learned through observing many people at various stages of their development is that everything starts with your personal transformation … what you THINK and what you BELIEVE.
Pretty soon, that starts to manifest in the decision you make and the results you produce.
No matter where you’re at in your own evolution, there are several standard stages … and several standard ways to move to the next level.
Is real estate for you?
The first stage is when you’re not sure you want to be a real estate investor … but you think you might.
You’re exploring whether real estate is a possibility for you.
Most people do it part-time and are looking to get cash flow. But there’s a lot you have to learn.
The good news is that real estate is really relatively easy if you keep it simple. You accumulate properties over time and pay attention to details like cash flow.
You can compress time frames to accelerate the process. Part of that is developing a vision.
If you put strategy and effort into your real estate dealings, you can create more wealth faster.
Start by getting around people who are already doing what you would like to be doing and learning from them.
This principle applies to everyone. Find someone who is playing the game at a higher level than you and learn from them.
There are also lots of great books out there about getting started that can teach you the minute details of real estate deals.
All of this knowledge contributes to establishing what we call your personal investment philosophy.
Just like every investor is different, you want to set up your real estate investing process as something that supports who you are and your skill sets … not the other way around.
Buying your first property
After you’ve decided to take the leap into real estate, it’s time to buy a property.
Buying your first property is awesome and exciting … even when the property itself might not be that fabulous.
For you to qualify for loans on property, it really helps to have a dependable income … aka a good job.
That’s why so many beginners in real estate do it part-time. You might be ready financially to go and quit your job, but having an income and a credit score can help you.
A few years after buying your first property, you may be ready to buy a second … and a few years later you buy a third. Hopefully over time they produce income and go up in value.
Direction is more important than speed. Set your course and then get moving.
Remember … you’re working on your reputation as an investor, which is more than just your credit score.
Most people start off in single family homes … but you don’t have to.
Our good friend Brad Sumrok bought a 32 unit apartment building as his first investment. We know folks whose first investment was an agricultural property.
But still, most people invest in a townhouse or a condo or a single family home. It’s small, reasonable, and easy to understand.
Then the next part of the natural evolution happens … you look for a second or a different asset class within real estate.
Moving into different niches
So many people start investing in single family and then start to look at a multi-unit property like an apartment building and think … maybe I want to go into multifamily next.
Or maybe you want to focus in on another marketplace like retail or industrial.
Real estate is made up of so many different niches that behave differently depending on what is going on in the economy.
As you observe what is happening in the world around you, you can be strategic in catching where you think the wave of real estate demand is flowing.
As you move into a new niche, there is a little window of opportunity where a bunch of buyers run in and buy. They bid things up, and things slow down a bit.
You can learn to spot this window over time as you start paying attention.
Expanding into different niches lets you diversify and helps you build your experience resume.
And to get really juicy returns, most investors need to make the shift into these types of bigger markets.
Going full-time in real estate
When you reach the point that your passive portfolio can provide the income you need without working … it’s time to ask yourself if you want to go full-time into real estate.
When people see that their passive income from their real estate portfolio exceeds their full-time income, they usually want to retire.
But so many people find that they actually want to stay busy.
So, you use your real estate portfolio as a base … and you start reinvesting your own money.
You can also start sharing your expertise with other people and partnering with them. Or, you may take on private investors.
You may decide to invest your time and money into learning a whole new asset niche and developing your expertise there.
Something many people forget is that there is a particular tax benefit that comes along with being a full-time real estate professional.
You’ll want to talk to your tax professional about that, but it’s definitely a benefit of being full-time alongside setting your own schedule and being your own boss.
The point is that there is no one way to take your real estate experience to the next level … there are MANY ways!
And that’s what makes it exciting.
Learn more about getting to the next level with your real estate investments by listening in to the full episode.
More From The Real Estate Guys™…
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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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Live from the 17th Annual Summit at Sea
Ten amazing days … over 200 people … studying, sharing, learning, growing, and partying … that’s the Investor Summit at Sea!
For 17 years, the Summit at Sea has been the highlight of our year … and we’re excited to share a piece of it with YOU.
We’ve gathered some of real estate’s most successful investors, entrepreneurs, niche experts, and thought leaders to share their insights and key takeaways from the 2019 Summit.
Listen in and learn what these pros discovered … and how it could help you make smarter investment decisions.
In this episode of The Real Estate Guys™ show, hear from:
- Your sailing host, Robert Helms
- His flailing co-host, Russell Gray
- Author and seasteading expert, Joe Quirk
- Rich Dad, Poor Dad best-selling author, Robert Kiyosaki
- The Apartment King, Brad Sumrok
- Marketing mastermind, Kyle Wilson
- The Godfather of Real Estate, Bob Helms
- And SO MANY MORE!
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This is the Investor Summit at Sea
The annual Investor Summit at Sea is always a highlight of our year.
It’s a concentrated amount of time with some of real estate’s smartest people … all from different walks of life, different perspectives, and even different countries.
Every year, we learn to ask better questions … clarify our thinking … and do things differently.
Opportunities like the Summit at Sea are rare. In a short time frame, investors become friends, work out problems, and do some business.
We’d love EVERY one of our listeners to join us on the high seas … but we’d need a bigger boat!
So, we’ve brought together some of our fabulous faculty members to share their insights and key takeaways from the 2019 Summit at Sea.
A first glimpse at seasteading
Joe Quirk was a last minute addition to our faculty this year … and we’re so glad he came.
Joe’s real estate niche is seasteading … that’s right … homesteading the high seas.
It’s a novel idea. Joe says that … considering nearly half the world’s surface is unclaimed by any existing nation state … the technology is at hand to create startup countries on the ocean.
“It’s sort of a Silicon Valley sensibility brought to the problem of governance,” Joe says.
Instead of trying to change things from the inside, you create startups and do things better.
The first seastead has been floating off the coast of Thailand since early 2019 … and living there costs less than the average American home.
Joe and his team are ready to scale up … and scale up quickly. But he needs partners with real estate smarts to make it happen.
“We have marine engineers, economists, scientists, and medical experts. We have almost everyone we need, but we don’t have people that know how to structure and sell these things,” Joe says.
We view seasteading as a fascinating new frontier in real estate … and we’ll have more with Joe in the coming weeks.
Look at deals through a new lens
It’s Robert Kiyosaki’s sixth Summit at Sea … and we couldn’t be happier to welcome him back.
“I come to learn as well as to teach,” Robert says. “The Summit at Sea is basically immersion learning for real estate.”
Our port excursion this year was Grand Cayman. This area has undergone an interesting transition over the last few years.
Typically, people think of Grand Cayman as the place where rich people want to hide their money … but it is so much more!
Robert says he learned that how you look at a deal can really change the opportunities you see.
In the case of Grand Cayman, Robert had always looked at the market from the point of view of an investor … but he learned that sometimes it pays to try looking at a market from a developer’s point of view instead.
Through this lens, he could see that Grand Cayman is becoming a target for families. As the economic gap between rich and poor widens on other islands … crime rates are rising.
But Grand Cayman has the lowest crime rate in the Caribbean.
That fact coupled with high standards of living make it attractive to a new housing demographic … not just people looking for a tax shelter.
“There’s a deal of a lifetime every minute if you can see it,” Robert says.
Expand your team, increase your success
The Apartment King, Brad Sumrok, joins us for his third Summit at Sea.
Brad has made apartments his bread and butter … but that doesn’t mean he is done learning and growing.
“I keep expanding my team every time I’m here,” Brad says.
There’s no better way to grow your team than by spending a week and a half on a ship with 200 other people who specialize in a variety of asset classes.
So much of investment success is leveraging other people’s experience.
Last year, Brad says he connected with our good friend CPA Tom Wheelwright … and this year Tom saved Brad seven figures in taxes!
That’s a take away Brad took directly to the bank … and by surrounding yourself with smart people, you can do the same.
Master your marketing one step at a time
We’ve known Kyle Wilson for many years. He is a familiar face on the Summit at Sea … and always has great ideas for how to better market your real estate business.
“So many people are in the real estate business. They’re good at real estate. They’re good at finding markets and putting together teams, but not always solid in their marketing position,” Kyle says.
It’s easy to overcomplicate marketing. At the end of the day, marketing is simply connecting the dots for your customers.
Kyle says the key for real estate investors is to act in a strategic way. Don’t just throw a bunch of stuff at the wall and hope it sticks.
And remember that so much of real estate investing is built on relationships. Never let what seems like a good tactic get in the way of a good relationship.
Kyle is leaving the Summit with a list of ideas and action items … but cautions investors to take things one step at a time.
“You can’t do it all. Pick the one thing that’s screaming at you that will make the biggest difference and start there,” Kyle says.
A wealth of amazing opportunities
If anyone understands the benefits of an opportunity like the Investor Summit at Sea, it’s the Godfather of Real Estate himself … Bob Helms!
We’ve been hosting these cruise ship conferences for 17 years … and Bob has been with us every time.
With 40 years of real estate experience, Bob has seen amazing changes in the way investors make money and grow their opportunities.
“As I look at the group that is here with us today and the diversity of things they are involved in, I can’t help but have a big grin on my face,” Bob says. “The opportunities out there are amazing.”
Bob says his advice to investors is to educate themselves on different locations and asset classes. Find the niche that is right for you … and start building a winning team!
Get on the advance notice list for next year’s Summit at Sea by visiting our website … and listen in to the full episode to hear from even more experts and ideas from our week on the waves.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Forecasting the Future of Real Estate in 2019
Are you prepared for the future?
In our annual yearly forecast episode, we explore the future of real estate in 2019. We don’t have a crystal ball … but we do have great resources and smart friends.
Hear from three real estate experts on the state of the housing market, the effect of changing interest rates, the outlook for commercial real estate, and MORE.
In this episode of The Real Estate Guys™ show you’ll hear from:
- Your forward-thinking host, Robert Helms
- His fraidy-cat co-host, Russell Gray
- Consultant and new home expert John Burns
- Podcaster and real-estate expert Kathy Fettke
- The Apartment King, Brad Sumrok
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In the news …
We’ve scoured the news sources and industry journals to see what might be coming in 2019.
The National Association of Realtors predicts in their 2019 Forecast that home sales will flatten and home prices will continue to increase.
The report also says not to expect a buyers’ market within the next five years except in the case of a significant economic shift.
On the other hand, the forecast cautions sellers to be mindful of increasing competition. It notes inventory growth, particularly in high-end housing, but reminds readers of the current housing shortage.
We’ve looked at predictions from various experts. Several of those experts predicted home prices will stabilize or rise at a much slower rate than in previous years.
One expert predicted listings in entry-level markets will remain tight. Yet another predicted industrial markets will continue to sizzle, interest rates will keep rising, and apartment rents will steadily moderate.
We’ve also read an article covering the State of the Market Panel hosted by Real Estate Journals.
The panelists agreed 2019 will be a big year for commercial real estate, including some new industrial and distribution/warehousing opportunities. They noted commercial rates will keep inching up.
Investors should consider opportunity zones and changes in the tax code in 2019. There are far different incentives for investors than for homeowners, and expensive housing means even more people will be pushed from buying to renting.
Predictions for the new home industry from John Burns
John Burns runs John Burns Real Estate Consulting, and he aims to help people in the new home industry understand trends.
In 2019, John says he is, “confident we won’t see construction grow that much.” He notes sales slowed dramatically in 2018, and he believes people will continue to be cautious.
What are builders paying attention to? They’re trying to build smarter with strategies like offsite construction and materials efficiency. They’re also building better by integrating smart-home technology and pivoting toward lower price points.
What about trends in home ownership? John says he thinks ownership is ticking back up. He says the millennial generation has some unique considerations … most want homes, but compared to previous generations, it may take them a bit longer to commit, especially because of increasing student loan debt.
And how do interest rates affect home builders? “It takes a big bite out the market,” John says. If people can’t get mortgages or can’t afford a new mortgage, they’re less likely to invest in a new home.
Take advantage of opportunity zones in 2019, says Kathy Fettke
Investors should look for jobs and opportunities in 2019. There will always be certain companies and cities that will thrive through a recession, says podcaster and Real Wealth Network founder Kathy Fettke.
These areas can provide investors with both equity and cashflow … and with new opportunity zones, there’s also the potential for tax breaks.
Neighborhoods that are flooded with investors because they’re opportunity zones WILL see equity growth, Kathy notes.
But just because an area is an opportunity zone doesn’t mean it’s a guaranteed good deal, and Kathy cautions investors to make sure deals make sense by investigating if they’ll hold out in the long run. That means job sources, stable and growing infrastructure, and good prospects for revitalization.
“You need the city on your side,” she says.
In 2019, Kathy is looking for stable employers that can thrive through a recession … she mentions Netflix. She warns investors not to get ahead of themselves by investing in areas that aren’t likely to improve within 10 years.
Employment is low, and interest rates are rising. We asked Kathy what she thinks will happen in that arena.
She says that while it’s hard to predict what will happen with the Trump administration, investors should keep their eye on corporate debt.
The ’08 recession happened because of a big consumer debt problem … corporate debt might cause trouble in the future. So, take a close look at the businesses that employ renters when investigating a market.
“Our world is changing so quickly,” Kathy notes. “Today is no longer a world where you can invest and forget about it for 30 years.” So in the housing realm, make sure you’re looking beyond the current tenant to say, who’s next? And will they have a job? Look for stability.
Demand and supply in multi-family, with Brad Sumrok
Last, we talked to the Apartment King, Brad Sumrok, educator and investor in the multi-family housing realm.
“I’m still proceeding with caution,” Brad says. But he notes there are many indicators that multi-family will continue to be a good asset.
We asked him whether some of the signs of doom from ’07 and ’08 are happening again in the multi-family space. The short answer? No.
Back then, there was a huge oversupply of housing. Now, there’s a 2-million-unit shortage. Most building now is happening in the A-class luxury space … but that’s not where the demand is. That means there’s an oversupply of luxury housing … but still some great opportunities to provide housing for working-class tenants.
Most people in the B and C class aren’t renters by choice … it costs, on average, $339 more per month to own a home than to rent. For blue-collar tenants, that’s a huge difference. And strict financing is further reducing the number of buyers.
That means more renters, and more demand for housing.
An increasing number of investors are looking at multi-family, which does inevitably mean cap-rate compression. But tax laws are on the side of investors.
“As the market changes, you have to temper your expectations,” Brad notes. Investors can’t expect to triple their equity in three years, and returns are likely to align with historical models.
That means there’s less of a cushion for making mistakes. It’s a strong case for investors to educate themselves before getting into an asset class.
To get educated on the multi-family market, check out Brad Sumrok’s 2019 Apartment Forecast! We wish you lots of equity in the new year.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Why Apartments Now
Why Apartments Now
When it comes to investing in apartments, there’s no time like the present! Learn how to earn more and pay less from apartment king, Brad Sumrok.
There’s a reason we call Brad Sumrok the apartment king. Over the last 16 years, Brad has owned over 4,000 apartments in seven different states!
He was named the Independent Rental Owner of the Year in 2012 from the prestigious National Apartment Association, and he has made MILLIONS by investing in apartments.
Brad believes investing in apartments is the best way to become financially independent … and he’s on a mission to share his most valuable lessons with you.
Watch his video presentation to learn…
- Why apartments are a smart investment RIGHT NOW
- Proven principles for apartment investing
- How to use depreciation to save money
- And more!
Follow in Brad’s footsteps to get out of the corporate rat race and earn some serious cheese.
Simply fill out the form below to access Brad’s presentation … Why Apartments Now
Save a Million Dollars in Taxes with Apartments
Death and taxes are the two things you can count on in life. But, there is no need to pay a penny more than you owe. And, while we talk a lot about ways you can grow wealth and do bigger deals faster, today we’re talking about how to reduce one of your biggest expenses … taxes.
With tax reform and other favorable policies for real estate investors, now is the time to look at your strategy and make some changes to reduce your liability.
This week’s guest did just that … he took a piece of advice from our Summit at Sea and turned it into a BIG win. After making a big apartment deal, he saved over $1 million in taxes across ALL his earnings.
Remember, we aren’t tax or legal professionals. We think you’ll get some great insight from this story. But, when it comes to your OWN personal tax situation, be sure to find a pro to guide you.
In this episode of The Real Estate Guys™ show you’ll hear from:
- Your tax-wise host, Robert Helms
- His tax-free co-host, Russell Gray
- Guest, Brad Sumrok, apartment investor and coach
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Broadcasting since 1997 with over 300 episodes on iTunes!
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Real estate investment returns are more than just cash
When we buy investment property, we most often look at the cash return. But, there are so many other benefits and things to consider when looking at a deal:
- Cash flow. This is the big one. You want more income than expenses.
- Long-term capital appreciation. The equity in the property gets bigger as the loan gets smaller.
- Amortization. Every month you’re paying principal and interest, and your principal is decreasing.
- Tax benefit. The government wants to incentivize real estate investment, and there’s a HUGE opportunity to reduce your liability.
Why look at your taxes now? For the first time since the ’80s, Congress has made significant changes to the tax code.
We definitely don’t suggest letting the tax tail wag the investment dog, but this year is the perfect time to dive deeper.
But, definitely don’t go at this alone. The best thing you can do is seek out an expert to guide you through these tax changes and give you the best advice for your specific situation.
Saving a million in taxes … it’s possible
Brad Sumrok is a long-time friend and a well-known player in the apartment investing space. He has thousands of doors and teaches students how to syndicate and buy into big apartment deals.
He also has an AMAZING story to tell about how he recently saved big on his taxes.
“I had a goal in the past that I wanted to pay $1 million in taxes,” Brad said.
But, he recently realized that just because he was earning more, it didn’t mean he had to PAY more in taxes. And he learned how to look at real estate as more than just appreciation and cash flow but also as a way to reduce his liability.
But first, let’s talk more about the deal.
Brad was evaluating a deal for a 124-unit apartment building. The returns were on the lower end of what his threshold is, and he almost walked away.
But, after taking into consideration the tax savings earned from depreciation, Tom realized that a marginal deal was actually a fantastic deal.
One of the reasons this deal worked out so well was because of bonus depreciation. While apartment buildings have a depreciation period of 27.5 years, for certain improvements and components, you can take 100 percent of the depreciation in the first year you own a property.
Since the bonus depreciation wasn’t subject to passive loss limitations, Brad was able to use the depreciation loss to offset their total income … which meant he saved $1.2 million!
“It took a marginal deal and turned it pretty much into a home run,” Brad said.
Taking hold of a good idea
After you read Brad’s story, remember not to get too caught up in the numbers. Every deal and tax situation is different.
But, what Brad did was remarkable. He took a conversation he had with an expert at one of our events and put it into action.
What is the value of one great idea or one good relationship? You never know what you don’t know. Put yourself in a position to find that great idea and explore it.
Sitting in a seminar room, attending a webinar, or listening on a phone call will never be enough. Putting an idea into practice is what saved Brad thousands of dollars, earning the cost of his attendance at an event several times over!
If you want more exposure to new people and new ways of doing things, we invite you to attend Brad’s Apartment Investor Mastery National Conference on August 18.
The Guys will be there talking about apartment investing and it’s sure to be a valuable, exciting event. Register by going to the events section on our website or sending an email to bradconference [at] realestateguysradio [dot]com.
We hope to see you there!
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter and visit our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.
Apartment Investor Weekend Training – Jul 21-22, 2018
Apartment Investor Weekend Training
July 21 – 22, 2018
Dallas, TX
Break into investing in multi-family apartments! Brad Sumrok, shows you how at the Apartment Investor Weekend Training. This “Rat Race 2 Retirement” is one you don’t want to miss.
Join Brad in his signature event and learn the way he retired early from his corporate job … through investing in apartments. He breaks down the entire process step-by-step.
In two-content filled days, Brad shares specific how-to’s from his profitable experience as an investor. You’ll also meet like-minded investors from around the country … and learn how YOU, too, can become an apartment investor and leave the rat race behind.
He doesn’t hold back the good stuff … so come ready to take notes!
Brad Reveals …
- His “3-Step Wealth Formula”
- Brad’s “3 Rules to Retire Early and Permanently”
- Brad’s proven “12-Step Apartment Acquisition Process” that will save you time and money
- Multifamily financial & market analysis
- Due diligence
- Rehabbing
- Property & Asset Management
- Multifamily financing
- Group Purchasing
- Contract-to-Closing
- Raising money within SEC Compliance
- Multifamily business planning
- Costly mistakes and how you can avoid them
- Using your SD IRA to invest
- Getting started now
Plus … Go on a BONUS bus tour to see Dallas apartments owned by Brad and his students!
Discover how to change your life by owning apartments … end the rat race and get on to early retirement!
July 21 – 22, 2018
Dallas, TX
Simply complete the form below for more information …
Apartment Investor Weekend Training – Jul 21-22, 2018
Apartment Investor Weekend Training
July 21 – 22, 2018
Dallas, TX
Break into investing in multi-family apartments! Brad Sumrok, shows you how at the Apartment Investor Weekend Training. This “Rat Race 2 Retirement” is one you don’t want to miss.
Join Brad in his signature event and learn the way he retired early from his corporate job … through investing in apartments. He breaks down the entire process step-by-step.
In two-content filled days, Brad shares specific how-to’s from his profitable experience as an investor. You’ll also meet like-minded investors from around the country … and learn how YOU, too, can become an apartment investor and leave the rat race behind.
He doesn’t hold back the good stuff … so come ready to take notes!
Brad Reveals …
- His “3-Step Wealth Formula”
- Brad’s “3 Rules to Retire Early and Permanently”
- Brad’s proven “12-Step Apartment Acquisition Process” that will save you time and money
- Multifamily financial & market analysis
- Due diligence
- Rehabbing
- Property & Asset Management
- Multifamily financing
- Group Purchasing
- Contract-to-Closing
- Raising money within SEC Compliance
- Multifamily business planning
- Costly mistakes and how you can avoid them
- Using your SD IRA to invest
- Getting started now
Plus … Go on a BONUS bus tour to see Dallas apartments owned by Brad and his students!
Discover how to change your life by owning apartments … end the rat race and get on to early retirement!
July 21 – 22, 2018
Dallas, TX
Simply complete the form below for more information …
Beware of bubble genius …
Hard to believe it’s nearly 10 years since Fannie Mae and Freddie Mac collapsed and were taken over by Uncle Sam.
Time flies when you’re getting rich.
It’s been a GREAT run for residential real estate investors … especially apartment investors. Free money in the punch bowl can really juice up a profit party.
But after 10 years of equity happening to real estate bull market riders … it’s a good time to think about where we are, where things are headed, and what to do next.
And looking forward comes in two parts: external and internal.
The external is the world of variables outside your control. Like driving down the freeway, there are lots of other drivers whose actions affect YOUR safety and progress.
But the key to your success isn’t what’s going externally. It’s how YOU navigate those external circumstances … based on what’s going on inside of you.
It’s about financial and emotional intelligence.
Because what you think and believe affects what you do … and what YOU do has the greatest impact on the results YOU experience.
One of the biggest dangers of riding a wave of easy money into gobs of equity is thinking you’re an investing genius.
We know … because it’s happened to us … and we see it happen all the time.
It’s much harder to be humble, curious, teachable and innovative when you already think you’re smart.
It’s important to know the difference between luck and skill.
True financial genius is being able to make money when everything externally is falling apart … like a pro race car driver deftly navigating a multi-car melee at 180 miles an hour.
That’s REAL skill. Anyone can rocket down an open road.
Fannie Mae’s chief economist Doug Duncan told the audience at Future of Money and Wealth he thinks recession is likely in the not-too-distant future.
And Doug made those comments after reminding everyone his last year’s Summit predictions were all essentially spot on.
So based on both his pedigree and track record, Doug’s qualified to have an opinion. And we’re listening.
“The time to repair the roof is when the sun is shining.”
– John F. Kennedy
The sun’s been shining on real estate investors for ten years now. Maybe you’re one of the many who’ve made tons of money. We hope that trend continues.
But as our friend Brad “The Apartment King” Sumrok reminds us … it’s time to approach today’s market with a little more sobriety.
Money and margins are both getting tighter.
This means paying better attention to detail, increasing your financial education, and being careful not to rationalize marginal investments to bet on positive externals.
In other words, beware of being a bubble market genius … and thinking what worked in a bull market will work when things change.
Better to work on sharpening your skills at finding and creating value.
Of course, real estate is FULL of pockets of opportunity … the polar opposite of a commodity or asset class where everything’s the same and moves together.
Real estate’s quirkiness befuddles Wall Street investors … but thrills Main Street investors.
A case in point are apartments …
On the one hand, lots of brand new inventory is coming on the market … and it’s putting pressure on landlords to offer profit reducing concessions.
On the other hand, more affordable existing stock is attracting lots of interest… from both tenants and investors.
So “housing” isn’t hot or cold. And neither are “apartments”. Real estate defies that kind of simplistic description.
Of course, it takes financial education to recognize the difference between momentum and value.
It also takes time, effort, and relationships to actually find the markets, team and properties to invest in.
For most people, that’s way too much trouble. They’d rather sit in their crib with their trading app … or turn their financial future over to a paper asset advisor.
That’s all peachy until rates rise, recession hits, and paper prices plunge.
History … and Doug Duncan … says the inevitable bear market is getting closer.
Of course, as we’ve previously commented … when paper investors get nervous, one of their favorite places to seek safety with return is real estate.
So for active and aspiring syndicators … it really doesn’t get any better than right now.
Think about it …
MILLIONS of baby-boomers are retiring. They need to invest for INCOME.
And they’re sitting on stock market equity, home equity, and retirement accounts …
… holding many TRILLIONS of wealth needing to (literally) find a home withreliable income and inflation protection.
Their paper asset providers will try to meet the need, but their toolbox isn’t properly stocked. They can’t do private real estate.
But as boomers struggle at squeezing spendable money out of sideways or stagnant stock markets, they’ll look towards dividends and interest. Cash flow.
The challenge with dividend stocks is … in a volatile market, investors face capital loss on share prices. Worse, dividends can be cancelled.
Compare this to rental real estate, which produces far MORE reliable income than dividends with LESS price volatility. And no one is cancelling the rent.
So dividend stock investors would LOVE income property … IF it just wasn’t so darned hard to find, buy, and manage.
What about bonds and bank accounts for income? (Try not to laugh out loud)
Remember, a deposit is a LIABILITY to a bank. When you deposit money in the bank, the bank needs to create an offsetting ASSET … a loan.
But the Fed has stuffed banks full of reserves … and there aren’t enough good borrowers to lend to.
Banks don’t need to offer higher interest to attract deposits. So they don’t.
As for bonds …
Yes, it’s true bond yields are edging up, which means bond holders earn a little more income … but at a what price?
Rising bond yields also mean falling bond values. So bond buyers are understandably very nervous about capital loss on their bonds.
WORSE …, bonds carry the added risk of default or “counter-party risk.”
A bond default is TOTAL loss. Yikes.
Real estate to the rescue …
The relative safety and performance of income property or income producing mortgages secured by real estate is extremely attractive right now.
The biggest problem for passive paper investors is real estate is hard to buy, messy to manage, and takes more financial education than just knowing how to click around an online trading app.
And THAT is the BIG opportunity for skilled real estate investors to go bigger faster with syndication.
Whether you decide to explore the opportunities in syndication or not … it’s important to stay curious, alert and proactive.
Most real estate investors we know are preparing for the next recession … because that’s when true financial genius pays the biggest rewards.
Until next time … good investing!
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter and visit our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Investor Summit at Sea 2018 – Part Two
In this episode of The Real Estate Guys™ show, we bring the Summit at Sea™ to you! In part two of our Summit recap, listen to expert investors discuss the topics they know best, including:
- Why moving to Puerto Rico can save you big bucks
- What kind of capital you need to prepare for the future
- The benefits of investing in real assets
And more! Our faculty will give you a taste of life at sea on the Summit cruise ship.
You’ll hear from:
- Your smooth-sailing host, Robert Helms
- His seasick (just kidding!) co-host, Russell Gray
- Economist Peter Schiff
- Chris Martenson and Adam Taggart, co-authors of Prosper!
- The apartment king, Brad Sumrok
- David Sewell, agricultural farmland broker and syndicator
- Brand-building consultant Kyle Wilson
- Syndicator Michael Becker
- Author of the Gold Newsletter, Brien Lundin
- Precious metals dealer Dana Sanderson
- Real estate guru Kathy Fetke
- And finally … the godfather of real estate, Bob Helms
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Tax free in sunny Puerto Rico
The Summit at Sea™ is more than just a once-in-a-lifetime educational opportunity … it’s also a cruise around the Caribbean.
One of our stops was lovely Puerto Rico (PR), where some Summit attendees were lucky enough to be hosted by faculty member Peter Schiff. Peter moved his family and business to Puerto Rico about five years ago.
“It was not a sacrifice,” says Peter. He sees great benefits to living in PR. It’s very family friendly and has beautiful weather and beaches and great communities.
But the biggest benefit … and the reason Peter relocated to this island territory … is the tax breaks. Puerto Rico has a four percent corporate tax, and residents can receive dividends tax free.
Living and working in PR is the best way to maximize tax benefits … although you only need to be in the area 183 days a year. But since Peter is “trapped by the school year,” he chooses to enjoy this island paradise year round.
“It’s not as onerous as it seems,” he says of getting and maintaining Puerto Rico residency. We can vouch for that!
Ways to build your capital
Chris Martenson and Adam Taggart joined us on stage to chat about the value of attending the Summit … and the importance of building the eight types of capital they outline in their book, Prosper!
Their key takeaway from the Summit? The number of millennials interested in finding ways to build capital and prepare for the future. “There is a critical mass of young investors who are keenly interested in our message,” says Chris.
During a breakout with millennials, Chris and Adam witnessed young investors getting the chance to learn from experienced investors.
They were impressed by millennials’ command of pressing issues, including, Adam says, resource depletion, species extinction, and the fact that lifestyle costs are quickly outpacing wages.
“Younger generations have nothing to gain if the status quo continues as it is, but older generations have everything to lose,” notes Adam. The big question is how to resolve this tension.
Younger generations will be the ones to come up with solutions … so it’s important they realize that the other side of challenge is always opportunity.
Folks who are intelligent and aware will have a chance to make an awful lot of money … but they can’t do it with financial capital alone.
“If all you have is financial capital, you’ve basically just painted a big target on yourself,” Adam says. He says emotional capital is probably the most important form of capital to have.
That means being able to handle crisis without falling apart … and coming back stronger. It’s the willingness to be vulnerable … and make meaningful connections with other people.
“It’s hard to find places where you can drop your guard,” says Adam, but that’s why the Summit is so extraordinary … it allows attendees to be real and experience true connection with a diverse group of people.
Turning dollars into precious metals
We had two faculty members speak to our attendees about precious metals investing. Brien Lundin is the author of the Gold Newsletter, and Dana Samuelson is a precious metals and rare coins dealer.
We invited these men to join us as faculty members because even though our focus is real estate investing, we believe investors should be looking at the bigger picture of all real assets … including precious metals.
“I was really blown away at the quality of the speakers, the audience interactions, and the audience itself,” Brien says. Dana agrees, “I’ve never met a more unassuming group of over-achievers in my life.”
Both men had similar advice for investors.
According to Brien, “Some level of dollar depreciation is inevitable.” And, he adds, “Every developed economy is in the same boat.”
Gold provides a hedge against appreciation because it’s the standard of wealth … and has been since currency was first created. “We are seeing a U.S. fiscal situation where debt is going to increase, which will naturally push gold higher,” says Dana.
For investors unsure of where to start, Dana offers reassurance. “Buying and selling gold is pretty easy these days,” he says. Investors have the option of buying physical metals or coins, buying in paper form through ETFs, or buying by proxy through mining shares.
If that’s not a sign to go for the gold, we don’t know what is!
The Summit experience
We spoke to six other Summit faculty to get their takes on this year’s Summit.
Multi-family investor and syndicator Brad Sumrok says, “I thought I knew what to expect, but I was blown away. The Summit is a mind-expanding experience.”
A common thread was the value of connecting with other investors … even outside of formal sessions. “Dinners and hanging out were the most valuable part of the cruise,” says syndicator Michael Becker.
A third-year faculty member, Kyle Wilson, says, “The network and connections are unbelievable. We come to get good ideas and bounce ideas off of each other.”
David Sewell agrees that the Summit is a center for unbelievable growth and learning. “I learn something new every time I’m here.”
Like our gold-loving friends, David believes in the value of investing in real assets to gain protection from the volatile dollar. His chosen asset is agricultural real estate, specifically coffee and cacao farms in Latin America.
Because of high, steady demand, getting into the coffee and chocolate business is “almost a no-brainer,” David says.
His goal is to monetize his business away from U.S. dollars into gold … and he’s learned how to do that, he says, by attending the Summit and learning from the stellar faculty.
Both David and real estate expert Kathy Fetke, along with many other Summit attendees and faculty, know big changes are coming to the U.S. dollar and to resource availability around the world.
But, says Kathy, “The right advice can change everything.” It can be scary to realize the reality of things … but you can’t prepare for the future if you don’t know what’s coming.
The Summit is invaluable for Kathy because it provides a chance to hear about massive upcoming changes … and discover ways to prepare.
For example, Costa Rica and Ohio are both wonderful places for growing food and accessing clean water, two things Kathy says will be incredibly important to have in an uncertain future.
Kathy was also impressed by the young people at the Summit. “They give me confidence in the future,” she says.
Our long-time contributor Bob Helms, the grandfather of real estate, agrees. “I was very impressed with the information, energy, and knowledge of the young people,” he says.
Want to get on the boat next year? Get on our advanced notice list! We’ll send you updates as soon as they’re available.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter and visit our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.
Is this the end of easy money …
We’re just back from another incredible Investor Summit at Sea™ … and it was EPIC!
With 234 people, 2018 was our biggest ever … and many have already reserved their place for next year. Click here to get YOUR name on the Advance Notice List.
We kicked off the 2018 Summit with a two-day land conference based on our theme, The Future of Money and Wealth. Our speakers hit it out of the park!
Fortunately, we videotaped the whole thing. Watch for more details … or if you already know you want it, click here to pre-order the entire two-day series.
Meanwhile, it seems the world continued to spin while we were gone. So as much fun as it might be to keep cogitating on currency, bonds, gold, oil and interest rates …
… we decided to dig into our real estate news feed and see what’s happening with our favorite investment sector.
But a funny thing happened …
A couple of related headlines jumped out as particularly interesting after a week of contemplating the future of money and wealth.
First …
CRE Valuations Are Trending Down – NREI Online, April 6, 2018
For the uninitiated, CRE is short for Commercial Real Estate. And when the industry talks CRE, it includes large multi-family.
But even if you’re a Mom & Pop single-family home investor, you can still learn a lot from following CRE trends.
So this first article opens with …
“… real estate investors can expect that property prices will trend downward in the near future …”
“‘Value appreciation has practically stopped …”’
“However, there are variations among sectors. Industrial … has seen rising values … malls have seen big losses …”
“Cap rates have been inching up … for all sectors except industrial …”
After two days at Future of Money and Wealth, then another seven days at the Investor Summit at Sea™, these comments make a whole lot more sense to us.
First, interest rates are rising. But the impact on real estate is much deeper than just mortgages getting more expensive. If only it were that simple.
So without getting lost in the weeds, consider the impact of rising rates on the overall economy …
With record levels of consumer, corporate, and government debt … rising rates put a pinch on budgets at every level.
This means it’s harder for consumers to spend more, for businesses to sell more, and for landlords to raise rents on those consumers and businesses.
And when you realize income property values are driven by income, it’s easy to understand why stagnant rent growth means stagnant equity growth.
But this article also reminds us why we LOVE real estate … “there are variations among sectors” … so while retail (malls) are losing value, industrial is gaining.
We discussed this trend in our February 14 newsletter, so we won’t revisit it here. The point is …. when things shift, pain and profit are NOT equally distributed throughout the economy.
So if you’re alert and proactive, you can get in front of an opportunity … or out of the way of a problem … faster than investors on cruise control.
Meanwhile, while rising cap rates can come from income rising faster than prices, most of the time it’s from prices falling.
(Again … no investor left behind … cap rate is income divided by price. Just grab a calculator and play with numbers until you understand. It’s an essential investor skill.)
So why might cap rates be “inching up” … that is, why would buyers be offering less for the income?
Conversely, why would sellers be offering more income for less price?
(That’s two different ways of saying the same thing … go back and play with the numbers until you get it.)
One likely reason is investors aren’t willing to overpay today (bid up) expecting income to grow in the future. The numbers need to make sense TODAY.
So cap rates are like a barometer of sentiment. Rising cap rates are an indicator of a less bullish, more bearish outlook.
If rents rise (creating more income) and/or interest rates decline (reducing expenses), then cash flows improve.
If the rents don’t rise (stagnant income) and/or interest rates climb (expenses increase), then cash flows stagnate or decrease.
So investors are saying the think either rents won’t rise, or interest rates won’t decrease (or even increase), or both. That is, they don’t expect market forces to improve cash flows going forward.
Make sense?
Which leads to the next headline …
Competition Intensifies for Value-Add Assets, NREI Online, April 17, 2018
“… competition is becoming increasingly stiff as the industry faces the likely end of the cycle and rent growth has moderated for core assets.”
“As yields get lower and lower … two strategies have emerged … speculative building and value-add …”
Quoting a research director at a commercial research firm …
“‘Value-add has become quite attractive … people are less afraid to take on vacancy risk and reposition buildings.’”
So let’s break this down real quick, then you can go get a snack …
When you hear “the likely end of the cycle”, it’s code for “the party’s nearly over.”
Real estate, like the rest of the economy, has been partying on easy money since 2009.
At Future of Money and Wealth, Fannie Mae chief economist Doug Duncan reminded us we’ve been in one of the longest (and weakest) recoveries in modern history.
In other words, we’re nearing “the likely end of the cycle.” Duncan thinks the U.S. will be in full-fledged recession in 18-24 months.
So now instead of just buying a property and riding a wave, you actually have to buy smart and do some real work to improve the income … like “take on vacancy risk and reposition buildings.”
And if you’re like our pal, the apartment king Brad Sumrok, and you’ve already been doing value-add and achieving spectacular results … be prepared to settle for “only” solid results.
Here’s the bottom line …
Rising interest rates are moderating the economy, so it’s important to focus your growth plans on things you have more control over.
This is probably not the environment to bet big on rising rents, falling rates, and lots of passive equity growth. You’ll need to buy smart, have a good plan, and work hard. We call it “force the equity.”
Pick your sectors, markets, properties, and financing structures for the long haul.
And remember … real estate is a highly inefficient investment vehicle with lots of nooks and crannies for good deals to hide.
So when you’re well-connected, diligently searching, and properly prepared with a solid team and resources so you can act quickly and carefully, you improve your odds of landing profitable opportunities.
Until next time … good investing!
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter and visit our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
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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