The Role of Investors in Bouncing Back from Disaster

We’re sure you’ve noticed the upheaval certain areas of the U.S. … it’s been hard to miss.

Hurricane Harvey and Hurricane Irma have swept Texas, Florida, and the Caribbean, leaving a path of destruction in their wake.

Every natural disaster brings a certain amount of tragedy, and our sympathies go out to those who are hurting from the storms.

But we’re heartened to see communities coming together in the aftermath to help heal damage … and we think real estate investors can play a role in building communities that are even stronger than before the storms.

Listen in to this episode of The Real Estate Guys™ show to hear us brainstorm ideas about how investors can help … and how they can prepare for future disasters.

You’ll hear from:

  • Your disaster-pro host, Robert Helms
  • His disaster-prone co-host, Russell Gray

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Finding opportunities in the midst of tragedy

Perhaps it makes you uncomfortable to think of profiting while people are suffering.

That’s okay. In fact, it’s more than okay … it means you have the right intentions.

But bringing your skills on to the scene after disaster has struck isn’t simply opportunistic.

By getting involved, you’re solving problems and adding value. This is the sunny side of capitalism.

You can make a fair profit … and make a difference too. Just make sure you’re doing the right thing for the right reason.

Remember … the flip side of every problem is an opportunity.

In the aftermath of a disaster, there are myriad opportunities.

Investors can renovate flooded and damaged houses. Some houses will be lost causes until an investor decides to step in and put some capital to work.

But the opportunities don’t stop there.

Out of necessity, huge disasters involve a large displacement of people. Investors can create new housing situations for displaced people.

And disasters also effect the local economy. Jobs are affected, causing a ripple effect for entire communities … including landlords whose tenants’ jobs are affected.

Finding ways to revitalize local communities and create jobs can minimize damage and create huge amounts of good.

Smart choices at opportune times

Getting involved simply because there is an opportunity isn’t always the smartest choice. Make sure you’re getting involved because it makes sense and it’s the right choice for YOU.

Investors have to know that after a major disruption, banks, government agencies, and other financial institutions may create incentives to sweeten the deal and get people involved.

After Hurricane Katrina, the Louisiana government created a “go zone” with adjusted depreciation rates.

These incentives can make investing in disaster-struck areas a smart idea … but we’d warn you to never let the tax tail wag the investment dog.

It’s easy to get caught up in a temporary disruption and make a long-term commitment without realizing that circumstances may revert to what they were pre-incentives.

With that said, Houston is a favorable market … it’s landlord friendly, with many major industries creating jobs.

Most of the things that make Houston make sense haven’t changed. And if you want to invest there, there’s no better time than now.

It may be smart to be the first to make a move … while everyone else is still panicking.

Putting money to work by investing

Let’s look at properties that fall into distress.

Maybe the owners got stuck in a bad situation. Investors can step in pre-foreclosure, buy the home, rehab the property, and put it back into service.

You’re doing good by helping the owners before they’re foreclosed on, and you’re making the neighborhood a better place … all in one fell swoop.

You’re making a difference on the micro scale. The same idea works on the macro scale … when disaster strikes a whole community instead of a single person.

Disaster-struck cities will have blighted areas. Many may have been functionally obsolete even before the storm.

Now is the time to redevelop and rebuild … to create great neighborhoods where none existed before.

It wouldn’t surprise us to see entire neighborhoods change composition if real estate investors have the good sense to identify trends and get in on investment opportunities early.

A smart syndication opportunity

Perhaps you want to help pick up the pieces … but you’re not sure where to find the capital.

Incentives can help. You may also want to consider community banks, who will be eager to get investors on the scene as early as possible.

There’s lots of capital out there. Not all of it has to come from banks, though … syndication is another great option.

Running syndication deals in disaster-struck areas gives people a great opportunity to put a chunk of cash to work. Instead of donating a small amount and getting nothing back, investors can see their money do good … and also make a decent profit.

Entrepreneurs look for a market problem and figure out a way to solve it … profitably.

Look for ways to solve problems instead of despairing about everything that’s gone wrong.

Preparing for the next disaster

A big part of dealing with disasters … perhaps the biggest … is being psychologically and financially ready to step in when the next opportunity comes along.

Always be prepared. If you own properties, make sure you have the proper insurance in place.

Never risk 100% of your net worth. Always ask whether you’re taking too much risk before jumping in to a deal.

If you want to be a first responder next time disaster strikes, it’s smart to have a source of capital ready to deploy when the right opportunity comes up.

If you know you won’t have enough capital on your own but think you’re the right person to syndicate a deal for other investors, build your network before the right opportunity comes along.

Build your brand and your credibility. That way, you’re not running around looking for people to invest when the time is right.

Just like the Boy Scouts, we’d encourage you to always be prepared.

Make sure you’re aware of all possible downsides. Don’t go in looking for the upside first.

Beware of trick ponies. In the words of Warren Buffet, “Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1.”

That doesn’t mean you should be afraid to jump in when the time is right … absolutely move while the situation’s still hot, but make sure you’re making a smart, calculated risk.

And don’t bet the farm on a single deal or market.


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.

The Case for Entrepreneurship

Entrepreneurship is not for everyone. Being your own boss can be intoxicating and lucrative, but there’s a lot of work that goes into building a business.

The holy grail of being successful as a real estate investor is passive income. But to reach that goal, you have to come up with enough capital to feed your portfolio.

The typical path for an investor might be to work for someone else while saving and investing in real estate on the side, building a portfolio steadily and slowly until they reach a tipping point.

But for our guests, entrepreneurship offered an out from the rat race. Of course, it wasn’t an overnight process for either guest.

Listen in to hear us chat with two successful entrepreneurs about their paths to success … and the stumbling blocks they’ve encountered. These guests embody the maxim “Be more, do more, have more.”

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

  • Your entrepreneurial host, Robert Helms
  • His slightly eccentric co-host, Russell Gray
  • The original Shark Tank shark, Kevin Harrington
  • The Real Asset Investor, Dave Zook

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Broadcasting since 1997 with over 300 episodes on iTunes!

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Getting his start with a creative solution

Kevin Harrington is credited with being the pioneer of long-form infomercial programming. That’s right … he invented a now-ubiquitous form of advertising.

We asked him how he got his start.

In the 80s, Kevin was watching Discovery Channel when he discovered the network went black for six hours a day. He saw an opening in the market … and started making 30-minute long-form advertisements to fill the space.

He’s a great example of someone finding a need in the market and monetizing it.

At the same time, Kevin was working to raise the profile of his own personal brand. That meant creating tons of material, appearing on talk shows, even writing books.

Eventually, Kevin got a call from Mark Burnett, the producer of Survivor, asking Kevin to be a part of Shark Tank.

Since then, Kevin’s built a global brand in marketing and investing.

Embracing change and failure to find success

We asked Kevin four questions about how he maintains success … and how newbies can find success too, despite inevitable failure.

How have your marketing techniques transformed with the profusion of modern media?

In a world with many diverse media sources, Kevin noted that television viewers are down by 50% today.

His solution is simple … “Follow the eyeballs.”

His audience is now on Facebook, Instagram, media streaming services … the list goes on.

To stay current, Kevin’s branched out into social media. He started using social media influencers and shortening ad times.

To be successful, an ad has to catch a viewer’s attention in the first five to eight seconds … much different than long-form infomercials.

It’s a different selling strategy, in different venues.

What is your business model?

Kevin told us he aims to invest in 20 projects a year, but only expects one-quarter to one-third of those to be successful.

“I fail more than I succeed,” he said. His goal is to “Fail fast, fail cheap, get the losers out of the way, and focus on the winners.”

He might lose $20,000 on an investment … but the winners bring in millions.

He finds inspiration in the quote, “Success is going from failure to failure with no loss of enthusiasm.”

What do new entrepreneurs need to focus on?

Kevin gave two great tips for budding entrepreneurs:

  • “Failure is part of your day to day.” Kevin told us that early on, “It really brought me down to put so much time, energy, and money into something that bombed.” But beginners NEED to know that failure is part of the game. Failures can pave the way for success, so dust yourself off and keep getting back on the horse.
  • “Surround yourself with a great dream team.” Kevin can do deals on the spot because he has a team of experienced lawyers, finance gurus, and mentors to back him up in every situation. Having a good team ensures you get paid the way you want to get paid. And Kevin sees too many entrepreneurs trying to do it all on their own. Success is a team effort.

How do you say no to ventures that might be good?

A key component of Kevin’s work is investing in entrepreneurs. He gets exposed to a LOT of ideas … so we asked him how he can pass up ventures that are pretty good, but not do-a-happy-dance good.

“I try to ask how I can help. I try to be involved,” Kevin said. He spends a lot of time providing advice and mentoring services to entrepreneurs who aren’t quite there yet.

“If you want to be successful and get what you want, just help enough people get what they want,” he said.

And Kevin does just that, spending equal amounts of time growing his own business and giving back to society by mentoring new entrepreneurs.

Breaking paradigms with syndication

Many people are under the impression that there’s only one path to building wealth through real estate investment … slowly building capital and buying properties one at a time until you’ve eventually accumulated enough.

Syndication breaks that paradigm, because the money you use to invest doesn’t have to be YOUR capital.

Dave Zook got started in syndication when he attended our Secrets of Successful Syndication event.

Dave was a published author and owner of several small businesses when he decided he wanted to dip his foot into syndication. He’s now raising millions of dollars each year to fund syndication deals.

For Dave, success means having his fingers in a lot of different pies. He recently invested in an office space that came onto the market at the right time, in the right place.

He’s also made a name for himself in the ATM business … a growing real asset.

Dave’s passive investors purchase the physical asset … the ATMs. Dave contracts with the land and business owners on whose property the ATMs sit. He also contracts with a management company to manage machines for investors.

ATMs offer both good cash flow and great tax benefits. And they are completely passive.

Dave’s investors get blended returns that are stable from month to month and dependable for a 7-year contract. And they get tax benefits when the assets depreciate after 5 years.

All investors have to do is sit back and watch.

Dave’s tried a lot of business ventures. He finds success in going ahead with the ones that are right for his situation and experience, and right for the market.

“Sometimes I have to pinch myself,” Dave told us. “It’s been an interesting journey.”

Dave will join us this year as faculty as Secrets of Successful Syndication … his way of giving back to a community that’s got him where he is today.

Just like Kevin, Dave’s been through highs and lows and come out the other side. He’ll share what he’s learned … and how you too can take action.

Want a preview of Dave’s wisdom? Interested in learning more about ATM investing? Listen in to get access to a special report Dave compiled just for our listeners!

Affording to lose and losing to WIN

Not everything these excellent entrepreneurs did worked.

In fact, many of their ideas failed. For Kevin, the majority of ventures STILL DO.

It’s a lesson to entrepreneurs … you need to be able to afford to lose.

Not everyone is cut out to be an entrepreneur. We can testify that entrepreneurs are wired a little differently.

They have to make opportunities where others just see dust and ashes. And that can be terrifying.

But it can also be exciting.

Whether you choose to be an entrepreneur or invest in one, entrepreneurship is what makes the world go ‘round.

Well, not literally … that’s gravity! But it does run the economy and create most jobs, and we think that’s pretty doggone important.

Until next time, go out and make some equity happen!


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.

Cash in on consolidation …

One of the age-old adages of real estate investing is to invest in the path of progress.  Or as hockey legend Wayne Gretzky says … skate to where the puck is going. 

It’s just a lot easier when you’re riding a wave of demand … especially if you can find a substantial supply and demand imbalance

That’s why land near water is so expensive.  People want it and there’s just not that much of it. 

Similarly, homes inside top school districts often command higher prices and rents for the same reason. Ditto for a local market with a lot of jobs. 

But sometimes it’s not just a geographic amenity that attracts people, businesses and money. 

Consider the role of demographics … 

There are two mega-groups of people … at least in the United States … which warrant your attention.  You’ve probably heard of them … and likely belong to one.  

First are the baby-boomers.  The 76 million babies born in the mid-1940’s to the mid-1960’s continue to be a MAJOR economic force. 

Even BIGGER than the boomers are the Millennials … those born in or after the 80’s and entered adulthood in the first decade of the 21st century. 

From a real estate perspective, boomers have created opportunities in over-55 housing communitiesassisted living facilitiesresort areas … to name a few. 

Millennials are also impacting real estate … but not because of housing demand.  At least not yet, though a recent study suggests this could be changing. 

Sure, there are other groups and sub-groups to watch, but these are the two main demographics to pay attention to. 

Of course, economics is also a very important factor … 

But stepping beyond the obvious importance of job creation, real wage growth, availability of loans, and interest rates … 

… there’s another economic phenomenon occurring now which may create a unique kind of opportunity for ambitious and alert real estate investors …  

Pension funds are in big trouble … 

So much so, this article says … 

“Institutional investors, including pension funds, are stepping outside of the box, beyond core asset types of office, industrial, retail and apartments, to consider a growing menu of alternative real estate options. 

“ … property types that were once viewed as ‘alternative’ that are now moving more into the mainstream as accepted institutional caliber assets.” 

And what might those “alternative investments” be? 

“…self-storage, student housing and resorts …” 

Hospitality, seniors housing and student housing are among the former outliers that are now big targets for institutional investors.” 

“… investors are continuing to push the boundaries of ‘traditional’ investments to include a wide range of options, including single-family rentals, data centers, workforce housing, land, timber, golf courses and prisons …” 

And not only are pension funds moving toward “alternative real estate options” … they’re planning to cut out Wall Street and invest directly

So where’s this puck headed? 

Somewhere between mom-and-pop investors and big institutional investors are small and mid-size investment businesses. 

It’s what a mom-and-pop investor might eventually become if they just keep at it long enough.  Like playing Monopoly. 

But until you’re there, no pension fund is coming for your collection of 10 houses, small apartment building, frat-house, or single residential assisted living facility.  

You’re too small for them. 

BUT … someone who sees the opportunity to aggregate a portfolio big enough to bring it to a pension fund might be very interested.  

Of course, if you sell, you lose all that fabulous passive income you’ve built up.  That’s not good. 

Or maybe YOU could raise money from investors who see the opportunity, and be the small business or mid-size business a pension fund would like to buy. 

Conceptually, it’s just a value-add play.  

But instead of just buying a tired house and sprucing it up to make a few thousand bucks, you’re building a much bigger portfolio (with the help of your investors’ money) and flipping it to a whale. 

It’s the same game, but at a much higher level.  And ironically, it’s a lot LESS crowded because most people don’t think that big. 

When you’re done, you take your profits and plow them into your own, privately owned, cash-flowing portfolio.  Best of all you don’t lose whatever you already have … you ADD to it. 

Of course, the opportunity won’t be here forever … but it’s also not going away any time soon.  The pension crisis in America has just begun.  

And we’re pretty sure if history’s any indication, politicians aren’t going to solve the problem.  That’s up to entrepreneurs … like you. 

Until next time … good 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.