Trick, treat or terrific tax break …

Posted by on October 21, 2019 · Leave a Comment 

Late filers in the U.S. just got finished assessing last year’s tax damages.  For some, it was a pre-Halloween shocker.

Fortunately, there’s still some time left in the current year to make some smart moves and take advantage of some of the most generous tax breaks available to investors …

First, consider setting up a Qualified Retirement Plan.  Even if you don’t fund it until next year, you’ll need it in place by end of year or you lose the option.

Be aware that not all retirement plans are created equal.  In fact, there’s one specific plan that can 10x your tax savings! 

Of course, there’s a lot to consider when deciding how a QRP makes sense for you. 

That’s why we asked tax strategist CPA Tom Wheelwright and QRP expert Damion Lupo to get on a video conference with us to talk through the pros and cons. 

One thing we’ll talk about FOR SURE … is how to avoid the most dangerous and expensive mistake many real estate investors make with their retirement accounts. 

That ALONE makes it worth the time.  Plus, it’s free. It’s informative. And nothing’s for sale.  

So click here now to register for The Tax Truth About Real Estate Investing with Retirement Accounts featuring Tom Wheelwright and Damion Lupo. 

But wait, there’s more!  And that’s not hype …

Another great opportunity for a HUGE current-year tax break comes from investing in oil and gas.

We know.  Energy isn’t REALLY real estate … but it comes out of the ground, provides BIG tax breaks and passive income.  So it has a lot to offer real estate investors. 

Robert Kiyosaki first exposed us to the idea of using oil and gas for tax breaks.   

Since then, we’ve invited long-time oilman Bob Burr to join us aboard the Investor Summit at Sea™ to teach us about oil and gas investing. 

Bob’s always a BIG hit.  We learn a lot. And we’re happy to say, Bob will be back for our next Summit.

But you don’t need to wait to have Bob explain oil investing.  You can click here now to listen to our recent interview with Bob Burr. 

Of course, today’s topic is taxes … and while most real estate investors understand depreciation when it comes to buildings, most don’t understand it when it comes to energy.

So we asked Bob and his team put together a short video to help you understand the terrific tax benefits of energy sector investing.  Click here now to request free access.

Last but not least on our list of year-end tax saving opportunities is … buy an investment property!

After all, investment real estate offers some of the best tax breaks available. 

As CPA Tom Wheelwright explains in this fantastic Investor Summit at Sea™ presentation … the current tax law’s bonus depreciation provides HUGE tax benefits. 

Of course, you should never let the tax-tail wag the investment-dog.  Do your homework and be sure to pick a strong market and a great team.  

But accelerated depreciation schedules can make even a late addition to your property portfolio a big-time contributor to your tax-saving strategy.

So there you go … some great ideas about how YOU might save BIG on your 2019 tax bill.  Sure, it takes some effort, but the return on time could be HUGE!

Keep in mind … we’re The Real Estate Guys™ and NOT the Tax Guys.  So be sure to work with your own qualified tax advisor to figure out what makes sense for you.

And if you need help finding a brilliant CPA who’s well-versed in how to get maximum tax benefits out of your investments click here to connect with Tom Wheelwright. 

Happy Tax Planning! 

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Pension problems percolating …

Posted by on October 16, 2019 · Leave a Comment 

In a complex financial eco-system, there are MANY components, dependencies, and inter-dependencies …

… any of which can be the catalyst for a seismic economic earthquake.

The flip side and basis of real estate’s stability is real estate’s relative lack of liquidity as compared to publicly traded securities.

After all, you can’t hit a buy or sell button and execute a real estate transaction in seconds like you can with stocks, bonds, currencies and options.

Real estate moves slowly.

That’s why real estate prices and rents don’t bounce around on a daily basis after a Presidential tweet, an executive faux pas, a jobs report, or even a Federal Reserve interest rate pronouncement.

It’s also why so many Mom and Pop investors come home to real estate when the Wall Street roller coaster ride becomes a little too nauseating.

But because most minor economic waves tend to break harmlessly against the breakwater of real estate’s stability…

… real estate investors can get bored of watching the horizon for the occasional financial tsunami.

And boredom’s not the only problem.

There’s also the issue of overwhelm. In today’s complex world, there’s not only a lot more to watch, there’s a lot more chatter.

While lots of information is generally good, some stories get lost in the noise. And entering an election year, there’s a LOT of noise out there.

But it’s a mistake to tune out and assume all is well. Or to put blind faith in the “smart” people whose hands are on the controls.

Sometimes, those in control are the very people creating and downplaying the problems.

Remember, it was then Fed chair Ben Bernanke who assured the world in 2007 that the sub-prime crisis was contained and didn’t pose a threat to the economy.

We all know how that ended.

Current Fed Chair Jerome Powell recently assured the world that the U.S. economic expansion is sustainable.

Perhaps.

But there’s a long list of alarm bells going off … in bond markets, in oil, in trade, the dollar, geo-politics, and the resumption of easy money (just don’t call it QE).

Okay. Take a breath. Yes, Halloween is coming up, but we’re not trying to scare you … much.

It’s unwise to unplug a blaring smoke alarm because it’s interrupting your sleep.

If you’re trapped in the wrong slow-moving real estate and you wake up late to a developing problem …

… you may not be able to rearrange your portfolio fast enough to avoid losses and capture opportunities.

Remember … a bend in the road isn’t the end of the road unless you fail to make the turn … and problems and opportunities exist concurrently in any transition.

Events are often only as good or bad as your personal awareness and preparation make them.

So back to our threat assessment …

You’re going to be hearing more about problems with pensions.

But before you check out because you think pensions don’t have anything to do with you … think again.

You may not have a pension. But lots of people do.

More importantly, pensions control a HUGE chunk of assets in the economy, including stocks, bonds, and real estate.

While there may be many reasons for any particular pension fund’s failure, there are a couple of undeniable macro-factors common to all …

… artificially low-interest rates and an aging population.

This one-two punch has many pension plans on the ropes.

Recently, General Electric (GE), an iconic company once revered for its great management, announced it’s freezing workers’ pensions.

GE is FAR from alone.

Both public and private pension programs, not to mention Social Security, have been on a slow motion collision course with insolvency for many years.

There are many potential ramifications for real estate investors. Some good. Some not so much.

Starting with the not so good …

Loss of purchasing power creates a ripple effect in any economy … affecting which states, cities, neighborhood, product types, and price points people can afford for housing.

Jobs and wages are important. But neither have a direct impact on retired people living on fixed income.

When costs tenants can’t control rise for essential items such as energy, healthcare, food … they’re forced to cut back on big things they can control, like rent.

Think about that when you jump on the senior housing bandwagon. Not all senior housing communities or investments are created equal.

Also, for investors with properties in retirement markets … even if YOUR tenants aren’t depending on pensions and social security directly …

… those retirement checks still provide the economic fuel for the local economy.

After all, your tenants might work at the restaurant, gas station, grocery store, dry-cleaner, auto shop, or landscaping service providing services to retirees.

When retirees cut back, it affects those tertiary businesses and their employees (your tenants). Pay attention to these dependencies.

Bigger picture, failing pension plans mean potential bailouts.

While the Federal government can (for now) still print unlimited amounts of dollars, local municipalities cannot.

So failing local government pensions create a huge temptation for local officials to increase property taxes and the costs of municipal services.

Landlords are easy targets for pandering politicians in cash-strapped towns.

And while you might not pay directly for all municipal services, it doesn’t matter. If the tenant’s costs go up, it puts downward pressure on their ability to pay you rent.

It’s a complex eco-system and we’re all inter-connected.

Bailouts also could mean big federal tax increases, or perhaps even worse … loss of faith in the dollar, rising interest rates (pressure on both you and the tenants), and a general decline in the economy, jobs, and wages.

Robert Kiyosaki tells us failing pensions are one of his biggest concerns right now.

There’s more to watch out for, but before you go into a full-fetal coma, let’s end on a high note …

The flip-side of any crisis is opportunity.

When asset prices collapse, those who are liquid, educated, well-connected, and emotionally prepared can acquire quality assets at bargain prices.

So note to self: Now is the time to get liquid, educated, well-connected, and emotionally prepared.

Sadly, many retirees will sell homes to raise cash, then enter the ranks of renters. So just like 2008, demand for rentals in the right areas could actually increase.

Therefore, it’s important to really understand your markets, their drivers and demographics, and to be mindful of the product types and price points favored by an increasingly large retirement population.

For example, multi-story homes can be less desirable to seniors. Warm weather is a plus … who wants to shovel snow in their 70s?

Great local medical services are also really important to seniors.

And if retirees have moved away from friends and family in search of affordability, great transportation infrastructure is another valuable market “amenity”.

And of course, areas with an overall lower tax burden help those fixed incomes stretch further.

It’s not rocket science, but you do have to think.

That’s why we attend conferences and listen to smart people talk about all these things from different perspectives.

It’s also why we host the Investor Summit at Sea™ each year, where we get together with big-picture thinkers together and street-level niche experts to find ways to think big but invest small and smart.

Whether you join us at these events or find your own tribe, we encourage you to take your nose off the grindstone a few times a year and confer with the smartest investors you can find.

Because even though you can’t possibly watch it all and see every threat or opportunity forming, your tribe can. And you can all learn faster together.

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.

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Exploring Huge Tax Benefits and Unique Profit Strategies in Oil and Gas

Posted by on October 16, 2019 · Leave a Comment 

Land is at the heart of real estate investment. Some investors build on the land. Others profit from growing on the land. 

But today we’re talking about the opportunities that lie UNDER the land … oil and gas. 

Many investors hop into real estate because of its tremendous tax breaks … but that often only applies to PASSIVE income. 

Oil and gas offer huge tax benefits that apply to ACTIVE income … that’s why high-income earners love this niche. 

No investment is perfect … some forms of oil and gas investing come with high risks along with high rewards. That’s why we called on a seasoned Texas oilman to learn more. 

We’re exploring exciting strategies for finding more predictable profits and tax benefits in oil and gas. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your drilled-in host, Robert Helms
  • His drilling-down co-host, Russell Gray 
  • Founder of Panther Exploration (PANEX), Bob Burr

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A unique way to catch a break 

Today we’re talking about a niche within real estate that has some unique upsides and some great tax benefits … and it’s something you might not have considered before. 

Oil and gas is a very different type of investment … but there is a huge tax advantage to oil and gas investments that doesn’t exist in too many other investment categories. 

So, if you’re at the end of the year, and you’ve got a big tax problem, and you’re trying to figure out where to deploy some capital … you could make an investment and get a tax break. 

Energy is forever. It’s not a fad. It’s not an industry that shuts down … and any type of economic recovery is going to require the development and consumption of energy. 

Oil and gas has a history with the petrodollar in association with the dollar and other currencies. But it also acts as a hedge against currency, because it’s a commodity like gold. 

Another interesting aspect of oil and gas is it’s not JUST oil and gas. There are many peripheries of the business. 

There are actual businesses that are associated with the industry that aren’t directly oil … so you can make a profit based on the oil business without having the same level of risk.

We’re hardly experts in oil and gas … but we are learning. And that’s why we hang around with smart people who know a lot more than we do. 

One of those people is our guest is Bob Burr, founder of Panther Exploration (PANEX). He has been in the oil business for over 45 years … and he has plenty of expertise to share. 

Opportunities in oil and gas

The first thing to know about oil and gas is that there is certainly an economic benefit. Everyone goes to the pump and sees what happens to oil prices. 

But this time of year there is also a tax benefit. 

We often say that we don’t let the tax tail wag the investment dog … but this niche might be the exception. 

If you invest a dollar in oil and gas, the federal government will let you write off all the intangible cost of that drill. 

“That means if you drill a hole in the ground and it has no value, it’s a hole. They used to make us depreciate the equipment out over seven years and eventually you would write off 100 percent. Now we get to write off the equipment also,” Bob says. 

Bottom line … you’re talking about a 90 or 95 percent write-off against ordinary income the first year, right at the beginning. 

So, how do you get started?

There are really a couple of different ways to invest in oil. The first is exploration … trying to figure out where the oil is. 

Many of these properties are not owned. Instead, they are leased with wells that produce oil. 

Most people looking for the tax write-off don’t want to be involved in exploration … because most of the time you don’t hit oil. 

Instead, they want to be involved in wells that are already producing. Wells produce different amounts of oil each day depending on the location … but some wells have been producing for decades. 

The other option is to find other businesses associated directly with the oil and gas business that makes sense for investors. 

Three years ago, Bob and his team started to look at saltwater disposal wells. 

As wells produce oil, they also produce tremendous amounts of saltwater. You can’t dump saltwater on the surface … it kills everything. 

So, the government requires producers to pump this water back down into the earth at a safe level. 

Bob pays a landowner to lease their land and builds a well to safely pump this saltwater … and other drilling companies pay him to take care of their saltwater waste for them. 

“We’re operating a well now that in the first two years it was in production, it made $4.8 million,” Bob says. 

Bob has also built off of this business by finding a way to clean the water before pumping it … allowing them to separate and remove any leftover oil and “skim extra off the top,” if you will. 

“We’re disposing of 10,000 barrels a day, and if even one percent of that barrel is oil, that oil is ours, and it adds up,” Bob says. 

And the saltwater disposal investment gets the same tax benefit as oil and gas. 

For a niche like Bob’s saltwater well, investors can expect to put in $100,000 per unit. 

They can then … depending on the details of the deal and after consulting a tax professional … write off 90 to 95 percent as ordinary income. 

Syndication is sacred

Oil and gas investment has the potential to be higher risk than other investments … that’s why Bob and his team take their job so seriously. 

“I’m interested in one thing: Making money for us and our partners. That’s why I tell my team that they have a moral responsibility to get serious,” Bob says. 

That is one of the great messages that Bob has shared with us and with other investors at our Secrets of Successful Syndication event. 

Syndication is a sacred thing. You are working with somebody’s hard-earned money. They’re entrusting it to you. 

That’s why an investor who is looking for this type of potential upside in terms of returns, as well as tax benefits, needs to understand and be educated on their prospects. 

To learn more about oil and gas investing, listen in to our full episode. 

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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Mastering Market Trends to Find Late-Cycle Opportunities

Posted by on October 9, 2019 · Leave a Comment 

They say the best deals go first … so it is too late in the cycle to find great real estate investment opportunities?

We say the answer is no. 

We’re visiting with a multi-market investor who is finding plenty of deals … even this deep into the economic cycle. 

Join us as we push past talk of bubbles and compressed cap rates to uncover deals still up for steals!

In this episode of The Real Estate Guys™ show, hear from:

  • Your dealing host, Robert Helms
  • His reeling co-host, Russell Gray 
  • President of ROI Turn Key Properties, Jared Garfield

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The complex market ecosystem

It’s not just important what you invest in … but where. 

Markets are different across the world. So, today we’re going to focus on studying market trends to find excellent real estate investments. 

There is a lot of talk about “the market cycle.” But you see, there’s not just one market cycle. And some market cycles run concurrently. Others lag … and some are completely opposite of others. 

The key is to make decisions on where to invest depending on where you think the puck is going. 

Remember that markets are more than just geography. They also take in demographics. 

Economic cycles affect markets too … and they are affected by the business cycle … the ebb and flow of supply and demand. 

It’s an extremely complex ecosystem. 

Because real estate moves slowly, you don’t day trade. You look out at the horizon and think about the long game. 

There’s also a lot you can learn from other people’s experiences. There are plenty of resources from people who have been through a market downturn or downward cycle before. 

Just don’t forget that in real estate, there is no one great, perfect real estate market. 

The trick is to match a market with your personal investment philosophy … who you are as an investor, what you’re trying to accomplish, your goals and dreams. 

Focusing on a handful of markets can make a lot of sense in the long term. 

Our guest is in a lot of markets and does a lot of thinking and research about this very topic … and he is here to talk about some of the markets he likes for investors today. 

Identifying and adapting to markets

Jared Garfield used to go to his grandfather’s real estate office, drink soda, and talk real estate. 

“From the time when I was a kid, I wanted to be in real estate and follow in the family business,” Jared says. 

But Jared learned from his family’s successes and failures … and what he learned was the power of diversification. 

Jared started buying houses in college. He bought foreclosures and flipped them for modest profits. After graduation, he built up a pretty large real estate portfolio. 

But Jared recognized that markets change. A market that is more cash flow oriented becomes more of an appreciation market over time. Dallas, Texas, is the perfect example. 

So, Jared spends a lot of his time watching that evolution and … to the best degree possible … anticipating it. 

“I developed a spreadsheet that analyzes 278 metropolitan statistical areas across the entire country on about 80 different metrics,” Jared says. 

Jared incorporated everything from poverty level to crime to test scores to media to affordability … and he looked at appreciation, building permits, job growth, population and more. 

“With that, we’ve identified some markets where you can really outperform many of the other markets,” Jared says. 

Jared also says it is important to think about submarkets. Investors tend to be the first in when there is an opportunity and the first to leave. 

So, Jared likes to look at secondary and tertiary markets. Take Huntsville, Alabama, for example. 

Huntsville is known as the Pentagon of the South. It’s home to NASA, Boeing, Lockheed, and Raytheon, and the FBI just moved 4,500 jobs from Langley to Huntsville. 

Jared bought foreclosed houses in C or C+ neighborhoods for $28,000 to $35,000. They put in an average of $30,000 into rehab. Five years later, those homes are selling for about $120,000. 

The cash flow is really good. 

But, Jared says, you have to deploy different strategies at different phases of the cycle. 

Now that Huntsville is no longer an absorption project … it’s expansion, full tilt … there is no reason to buy turnkey in C class neighborhoods. Instead, it makes more sense to buy new construction. 

“A market gives you what the market gives you, and you have to decide how to take that and turn it into something that makes sense,” Jared says. 

Selecting the right market for you

There’s a lot to learn about selecting and profiting in high cash flow markets … that’s why Jared has prepared a special report for our listeners. 

In this report, Jared shares how to choose markets … the metrics you should use and how to understand the difference between high cash flow markets and others. 

Jared also shares what things you should watch for in each of his top market picks. 

One of those big factors is the one-horse town. 

A one-horse town doesn’t mean small. It could also mean a big town with a very segmented workforce. 

Seattle took a bath when Boeing laid-off workers in 1990. Houston had it rough because it used to be pretty much just oil. You’ve got to have a diversity of employment and industries. 

“I like to invest in towns that are at least 300,000 in population and have a variety of employment sectors,” Jared says. 

With single-family investing, all the data is there for you to pick the right market and get high returns … you just have to know how to look. 

For more tips and experiences from Jared, listen in to the full episode!

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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Clues in the News — The Fed, the Repo Market, and Real Estate Investing

Posted by on October 2, 2019 · Leave a Comment 

When you’re an investor … the state of the financial system is always on your mind. 

The Fed shocked the world when it pushed an emergency infusion of cash into a distressed financial system. 

In 2008 … it took $85 billion per month to stabilize the U.S. financial system. 

Today, the Fed is injecting $75 billion PER DAY. 

Does this mean our financial system is in trouble? 

We’re searching for Clues in the News about the Fed, the Repo Market, and what it could mean for investors like you. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your stable host, Robert Helms
  • His fabled co-host, Russell Gray 

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Staying Smart in a Changing Market

We look at a lot more than just real estate. That’s how we stay smart in an ever-changing market. 

This week, we’re looking at what’s going on at the Federal Reserve … and we’re not just talking about the interest rate change. 

But let’s start there. 

The Fed came out and dropped interest rates by 25 basis points … which is one-quarter of one point. 

It’s important to note that the Fed doesn’t actually drop interest rates, because they don’t set interest rates. 

What they do is set a target and a range. 

They dropped the high end of the range down 25 basis points … and that manipulates the markets. 

The Fed also goes into markets and buys and sells bonds … again manipulating interest rates. 

So what is the effect of those actions on a real estate investor?

Sometimes it can be confusing … but it starts with understanding that yields … which are interest rates on bonds … are a function of supply and demand. 

When money floods into the bond market, it means that the interest rates come down. When money leaves the bond market, it means that interest rates go up. 

Many people think that if the Fed lowers the interest rates, mortgage rates are going to go down … BUT really the opposite is what would happen. 

Today, it’s different. 

The money that is moving around isn’t coming from the market. The Fed is putting more money into the system. 

That means investors are playing with new money that is in the system … and bonds go up and stocks go up. 

For the last decade, there has been a big infusion of money into bonds … so much so that it has driven interest rates yield down. 

There are $250 trillion of total bonds out there … $17 trillion of them are negative yields. 

It’s important to understand because, at the end of the day, a real estate investor is a user of debt. 

As investors, we have to pay attention to what the Fed is doing … and we should watch other investment categories like stocks and oil and gas and metals. 

All these things play together and play off of each other. 

The Repo Market

Now, something happened this week that hasn’t happened since 2008 … and it has got a lot of people nervous. 

The repo market dried up. People were going in to raise short-term cash … and there was no money. 

The repo market is like a pawn shop. It’s where Wall Street traders go to hawk a bond. It’s the same thing that house flippers do … but it happens in a day instead of over the course of several months. 

Remember that the bond that you hold is valuable because it has a rate of return. 

There’s a payment associated with it. It’s a poker chip in the Wall Street casino. 

Healthy markets require certain components. There has to be cash. There has to be assets. There have to be buyers. There have to be sellers … and there has to be trust. 

If any one of these components breaks down, then the system locks up until people fix whatever the problem is. 

On September 16, 2019, people showed up at the repo market … and there wasn’t enough. 

So, in order to get cash, they had to start bidding up or discounting what they were selling. 

Interest rates went all the way up to nearly 10 percent … and the Fed’s target is about 2 percent. 

So, the Fed had to step in. They pumped in $53 billion the first day. 

It wasn’t enough. The next day they had to put in another $75 billion. 

Still not enough. The third day, the Fed added in $75 billion more. 

That’s more than $200 billion in three days. And it STILL wasn’t enough. 

So, the Fed lowered the rates … and every single day of the following week they pumped another $75 billion into the market. 

The question for investors is … why did this happen?

Well, nobody knows. It’s a big mystery. 

Ultimately it all comes back to those key components … buyers, sellers, cash, assets, and trust. 

If there’s no cash, you can’t have buying and selling … and people don’t trust the marketplace enough to come in. 

What You Can Do To Prepare

Every listener out there that didn’t live through 2008 really needs to wake up and understand what can happen. 

For those of you that did live through 2008, this is probably like deja vu. 

But there are things you can … and probably should … do to be prepared just in case this is a real crash. 

It may not be. It may be just a little crash … but if you’re prepared, a crash is a great wealth-building opportunity. You can go into a marketplace and pick up bargains. 

The best thing you can do is get educated. Education is not just consuming knowledge and perspectives … it’s processing and thinking and conversing with experts. 

The second thing you can do is pay attention. We obsess about the news because there is so much you can learn from what is happening around you. 

From a practical portfolio management standpoint … right now you can lock in low rates for the long term. Take advantage of that. 

And you can take the combination of cheap interest rates and equity and pull some of that equity out and get liquid. 

Store that liquidity in something that allows you to pivot to other currencies. 

All of this is so you can be prudent as you look ahead into the unknown. 

Listen to the full episode to learn more about today’s Clues in the News!

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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Short-Term Rentals for Long-Term Profits

Posted by on September 26, 2019 · Leave a Comment 

Why do we like short-term rentals as an investment niche? Short-term rentals lead to long-term profits!

But don’t take our word for it. 

We’re talking with a real-life short-term rental investor to discover what it takes to be successful in the world of short-term rentals. 

Learn practical tips and tricks … and have some fun along the way. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your long-suffering host, Robert Helms
  • His short and sweet co-host, Russell Gray 
  • International real estate investor, world traveler, and short-term rental guru, Tim Hubbard

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A Unique Investment Opportunity 

There are many ways to invest in real estate. 

You can put a tenant in a property and just let them stay for a long, long time … but there are actually reasons that shorter occupancy lengths can be really profitable. 

In fact, short-term rentals can be one of the most profitable ways to invest in real estate … and it can be one of the lower risk ways to invest in real estate. 

So, let’s set the stage. 

In most buy-and-hold situations, you have either a month-to-month rental period or an annual rental period. Sometimes a commercial property has a 5, 10, or 20-year lease. 

The amount of time that you’re tying up a property with the tenant completely depends on you, the property, and the marketplace. 

Recently, everyone has been enamored with vacation rentals. 

You buy a property in a niche market that people love to visit. Instead of renting it on a month-to-month basis, you rent it on a nightly or weekly basis … and that can up your returns. 

But there are also corporate rentals and contractor rentals … all kinds of ways to rent for shorter periods of time. 

And apps have made it possible for you to reach consumers without spending large amounts of money on advertising. 

One of the great things about short-term rental properties is that you can build up a clientele of repeat customers … people who fall in love with an area, have regular business in the area or come to visit family. 

When you develop that relationship with a client … just like you would with any tenant … they come back again and again … and maybe even tell other people. 

Another consideration is that many short-term rental opportunities also come with the potential for personal use. You could use the property when you travel and rent it for the rest of the time. 

But this is an area of real estate that takes a little more thought and education. You don’t just put a yard sign out in front of your property that says, “Available by the night.”

That’s why today, we’re chatting with an expert.

Making the Most of Your Short-Term Rental

We met Tim Hubbard many years back when he attended the Secrets of Successful Syndication. He then came on the Investors’ Summit, and he has been on every one since. 

Tim on his own account has more than two dozen of these types of short-term rental units. 

“All the properties I’ve acquired had long-term tenants in them. I just found traveling that you can get a lot more by the night, so I started doing that instead,” Tim says. 

Sometimes people stay in Tim’s properties for a longer amount of time … like for a month … but he is still getting nightly rates. 

Tim takes a unique approach to rentals. He doesn’t necessarily cater to just vacationers. 

“I try to find the best properties for business people first because they tend to come back more often, and they tend to travel alone. They’re professional, and they don’t have parties.” Tim says. 

But unlike a rental where tenants move in and out once a year, short-term renters are coming and going every few days. 

There’s a lot of housekeeping and a lot of operational pieces. 

It’s common for people starting out with their first property to clean themselves and handle guest messages … but by finding other ways to take care of that, you can scale quickly and continue to scale. 

Outside of having managers that run these processes for him, Tim has also found other ways to simplify the short-term rental experience. 

One way is by having digital locks with door codes on all the properties. This allows guests to check themselves in. 

Tim has also created guidebooks that go out digitally and give guests the necessary information they need to know about the property. 

“It’s really about figuring out what the guest is going to ask you before they show up and answering those questions before they even arrive,” Tim says. 

This cuts down on guest messages and increases the likelihood they will leave a great review at the end. 

You also need to offer some standard amenities. Think about the normal amenities you would find at a hotel like an iron and coffee. 

You Can Find Success

Many people think that you have to be in some big top market in order to attract guests … but that’s not true. 

There is a client that wants to stay at a unit like yours in almost any city that has commerce or industry. 

Like any other investment … it’s important to do your research. But with the right tools in place, you can find long-term success with short-term rentals. 

Listen to the full episode and learn more tips and tricks from Tim!

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 – Recession Preparation, Note Investing, Gold Strategies

Posted by on September 19, 2019 · Leave a Comment 

You’ve got questions. We’ve got answers. 

That’s right. It’s time for another segment of Ask The Guys … when we talk about trends, challenges, and investment opportunities. 

This time we’re tackling listener questions about investing in the face of a potential recession, the pros and cons of private note investing, whether it makes sense to leverage gold to invest in real estate … and more!

Remember … we aren’t tax advisors or legal professionals. 

We give ideas and information … NOT advice. 

 In this episode of The Real Estate Guys™ show, hear from:

  • Your knowing host, Robert Helms
  • His crowing co-host, Russell Gray 

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Preparing for a recession

James from Phoenix, Arizona, just moved to the area and is interested in purchasing a single-family rental property.

He wants to know what zip codes we feel offer the best opportunities for a solid cash flow, long-term equity investment.

He also wants to hear our thoughts on how we think a possible recession will affect the Phoenix housing market.

First off, we don’t get into the specificity of zip codes in any market. BUT we do know a great provider in Phoenix that absolutely has the answer.

It’s always better to find someone with boots on the ground knowledge to learn more about a marketplace. So, that’s our advice there. Find a good team member … and work with them.

But when it comes to recession … that’s something we can definitely talk about.

As a country, we recently had a tax code change. One of the biggest changes was that state and local taxes are no longer deductible on your federal income tax.

People who lived in high tax states like California are suddenly realizing what a big difference that deduction made … and they are moving to greener pastures.

Phoenix is a major metro that offers a lot of the quality of life amenities people want … and its close proximity to California makes it a hot destination for those fleeing the state’s high prices.

For investors, the key is to find properties with what we like to call “recession resistant pricing.”

If things go well, the value of the property moves up … but those rents are still in demand even when things in the economy aren’t doing as well.

So, your mission ought to be to get with a great local provider and work together to find properties that hit in this sweet spot.

The good news is that Phoenix is a market where we saw pretty good stability in the last downturn.

A look at note investing

Larry from Folsom, California, wants to know what we think about the notes business … and what we think about the notes business as a real estate business.

Some people like to invest in the property. Some people like to invest in the financing.

The note business means that you are writing mortgages, carrying back mortgages, placing private notes, or buying second-hand notes that are loans.

You get the note … and you get the interest … and you have the collateral against the property.

There are two primary reasons people invest in notes.

Some people invest in notes because they want the yield … they want the interest rate, which often can be higher than traditional mortgages.

Other people invest in notes or make hard money loans because what they really want is the property.

They make a loan to someone who is in need … if it pays off, great. If it doesn’t, they get the property.

So, the note business is an interesting business. It can be appealing because you are able to derive income without the hassle of landlording or the risk of the property going down in value.

But that doesn’t mean note investing is without capital risk. It all depends on whether you want to sell the note or not after you buy it.

Where the real money gets made in notes is when you’re trading in notes and you’re using distressed property.

You might go in and lend to somebody who may not be a prime borrower in an ideal situation … so they’re going to pay a premium.

That means you are going to get a little bit of extra interest … and maybe a little bit of extra protective equity.

You can also take things a step further and purchase loans from people who own them already and have decided for whatever reason they don’t want them.

So, you would offer them a discount to the face value of the note.

Now, you’ll be getting paid back more than you lend plus more!

And that discount is added to the interest that a person’s going to pay. That can bring your yield up quite a bit.

Another approach is to buy non-performing notes in the hopes that you can rehab them and get the person paying again OR that you’ll be successful in foreclosing on the collateral.

These types of notes can sometimes be bought for pennies on the dollar.

The key takeaway here is that there are a lot of different ways to get involved in the note side of the business for people who aren’t as interested in dealing with the real estate and tenant side of things.

You don’t have the landlord responsibilities … you do have the debt collection responsibilities.

Overall, we like the note business … but we don’t like the note business as a real estate business.

Now, this is just because of our personal investment philosophies. We don’t want to make a bunch of money because someone else had to be foreclosed on.

For us, it’s too messy and can be ugly. But if you have a more combative personality … it might work for you.

Leveraging against gold

Quentin from Mahomet, Illinois, is seeing the value of the dollar go down … and wondering why an investor shouldn’t just buy gold to use as collateral and leverage against it.

Quentin feels that if the dollar tanks, then your collateral … the price of gold … goes up all while your real estate cash flow asset makes money.

The question is … are there downsides to this approach?

Leveraging against gold has been on our mind for a long, long time.

It has only been in the last 50 years or so that gold hasn’t been money … there’s a good possibility it’s going to come back and eventually be money again.

Central banks are loading up on it. So, we don’t think it’s a bad idea to take some of your liquid reserves and put them into gold.

Gold shouldn’t be considered as an investment. Gold is a place to store wealth … just like cash.

But gold protects you from cash failing and has a longer track record of success.

Borrowing against gold is just like borrowing against any other asset. The equation always just comes down to being able to provide the cash flow to service all the debt involved.

If you lose control of cash flow … everything leveraged unravels.

Still, if you’ve done the math … and you feel comfortable … it’s not a bad way of thinking.

More Ask The Guys

Listen to the full episode for more questions and answers.

Have a real estate investing question? Let us know! Your question could be featured in our next Ask The Guys episode.

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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Investing Where Real Estate, Healthcare, and Demographics Converge

Posted by on September 13, 2019 · Leave a Comment 

Real estate is like surfing … it’s all about riding the waves. 

Smart investors catch a big wave early and hold on for a long ride … and one of the biggest economic waves in history is happening RIGHT NOW. 

It’s all being driven by baby boomers. No matter what phase of life the boomers glide through, the businesses that serve them prosper. 

Over the next two decades, the baby boomers hit senior status … and senior-centered industries are set to boom along with them. 

One industry we’ve got our eye on … healthcare … really, the place where healthcare and real estate meet. 

We’re visiting with a seasoned real estate entrepreneur about how investors can ride this particular wave through residential assisted living homes. 

 In this episode of The Real Estate Guys™ show, hear from:

  • Your booming host, Robert Helms
  • His waving co-host, Russell Gray 
  • President, CEO, and Founder of RAL Academy, Gene Guarino

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Get rich in a niche

Not all real estate investments are created equal. 

One of the things that drives demand is demographics. As a real estate investor, who are you going to serve … and how profitable can it be?

The old adage goes, “Get rich in a niche.”

Today we’re talking about a niche that has demographics firmly on its side … which means potentially years of profit for investors like YOU. 

We’re diving into senior housing. 

A new approach to senior housing 

Gene Guarino is president, CEO, and founder of RAL Academy … and our go-to guy in the senior housing sector. 

“Everybody’s going to get older and eventually need some kind of assisted living,” Gene says. 

With aging baby boomers moving our way, senior housing and assisted living is a great niche to be in. 

It works nationwide … and baby boomers are living longer. 

And senior housing is a pretty wide niche. It covers everything from 55 and over communities to hospice care and everything in between. 

Gene’s niche within a niche is somewhere in the middle. 

Gene caters to older seniors … typically in their 80s or 90s …  that still want independence but need some help with their daily living activities. 

Right now 4,000 people a day are turning 85 years old. That’s 120,000 people a month and more than 1.4 million a year. 

Not all of them need assisted living, but hundreds of thousands of them will … and there’s no room at the inn, so to speak. 

One of the biggest misconceptions we need to break is that assisted living is a three-story building with elevators and a common kitchen. 

“What we do is take a single family home in a residential setting. Not a big box facility, but a home,” Gene says. “You could literally be living next door to it, and you wouldn’t even know it.”

Gene and his team take a home in a nice neighborhood and do a little bit of conversion, get it properly licensed, and hire an expert staff.

And the payoff can be enormous. 

Think about it. You might have 10 seniors in a home each paying $4,000 or $5,000 a month. The net profit from this setup is significant. 

A home that might rent for $2,500 or $3,500 a month to a single family now rents for somewhere around $30,000 a month. 

These homes offer a moderate amount of care. The seniors living there don’t need skilled nursing help … but they do need some basic help. 

So, senior housing is really in two parts … the real estate side and the business side. 

How you can get involved

The beauty of senior housing is that there are multiple ways to get involved. 

You may have real estate investors who want to own one of these homes … but they don’t want to be involved on the business side. 

Or you may have some individuals who don’t have the funds to purchase one of these homes … but they are ready and willing to be involved in managing the day-to-day operations. 

Most people don’t realize when they walk into an average business that the business owner behind the counter doesn’t own the real estate. 

Someone else owns the building and leases it to the business. The business is making money … but the real estate owner and everybody in between is making money too. 

Senior housing means you can own real estate, lease it to an operator, and get it up to twice the market rent with a long-term, low-impact tenant. 

“The key to this transaction is to find a tenant first,” Gene says. “Find an operator you can lease the residential assisted living home to.” 

There are many reasons to find your operator before you find your property … the primary being taking their suggestions on potential home locations. 

The time is now

So what’s the end game? Gene says his students have found multiple profitable strategies from investing in senior housing. 

The first is acquiring multiple homes and then selling them off as a portfolio to a larger conglomerate. 

Another approach is to simply hang on to the properties over the years making really good cash flow and giving the property an opportunity to go up in value. 

Lastly, you can build your own brand and business into something that you can eventually sell as a branded package. 

No matter what you do, Gene says the time is now. 

“Business is good now, and it’s getting better and better and better. And once the spike from the baby boomers hits, it’s just uphill from there for the next 20 years,” Gene says. 

So, to get in position to ride this wave, there are a couple of ways to go. 

You can either passively invest in the real estate with an operator … or you can learn the business side of residential assisted living. 

“I wish there was a training like the one that I give people that I could have attended,” Gene says. “It would have saved me so much time, effort, and money.”

We always say that the best way to learn is to learn from the people who are already doing what you want to be doing. Through RAL Academy, Gene is enabling investors to do just that. 

Gene’s trainings take place over three full days in Phoenix, Arizona. On the second day, students load up and visit some of Gene’s operating homes in the area to see what senior housing looks like firsthand. 

To learn more about RAL Academy and opportunities that lie in senior housing … listen in to our full episode. 

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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Getting to the Next Level with Your Real Estate Investing

Posted by on September 3, 2019 · Leave a Comment 

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™…

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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Clues in the News – Stocks, Negative Rates, Oil, Gold and You

Posted by on September 3, 2019 · Leave a Comment 

If you’re wondering which way the financial winds are blowing … look to the news!

From the rollercoaster ride of the stock market, to negative interest rates on mortgages, to big moves in gold and oil … it appears the winds are changing. Something is coming. 

Savvy real estate investors are reading the signs and asking, “What should I do?”

Join us as we study the mystery that is the headlines and discuss what all these things mean for investors like YOU. 

 In this episode of The Real Estate Guys™ show, hear from:

  • Your headliner host, Robert Helms
  • His mysterious co-host, Russell Gray 

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The dance between stocks and bonds

On today’s edition of Clues in the News, we’ll go beneath the headlines to find out how all the goings-on in the market impact real estate. 

They say that the time to repair the roof is when the sun is shining. 

Right now, markets are good. Real estate is strong. Rents are durable. Jobs are great. Gold is high … so we need to dig into the headlines. 

Even though we’re in real estate, it’s important to pay attention to other industries and markets like oil, bonds, and gold. 

When we try to understand what’s going on in the world economically, it’s like that old game Mouse Trap. Every action has a reaction. 

And there seems to be a dance between the stock market and the bond market. 

When people are feeling good, investors buy stocks … because they are feeling bullish that the asset value of the stock that they bought was going to go up. 

When they get fearful … they sell stocks and go for safety in bonds. 

Bonds are basically IOUs. The best bond you can get is from the U.S. government, which prints the world’s reserve currency … the dollar … making it impossible for them to ever default. 

But as we saw in 2008 … it is possible for your credit to seize up. 

So, you can rearrange your affairs in order to capitalize on the opportunities that will be created by whatever is going to happen to the market in the future and mitigate the risks. 

Signals from the yield curve inversion

When you hear bonds and stocks, you may be thinking that it doesn’t have much to do with real estate. 

But it does … because interest rates are the fuel that we use to drive our real estate purchases. 

You’ve probably heard recently that rates are headed down and the Federal Reserve is planning to cut rates another quarter of a point. 

We certainly look at that to see what the long-term prognosis is for owning real estate. Then we look at the short-term housing markets. 

But in between, there are all kinds of signals. 

One of the big signals that happened last week was a yield curve inversion. 

You don’t have to necessarily understand what that is at a deep level. What you do have to understand is what it means. 

In other words, if you’re driving down the road and see that oil pressure is green, you know you’re good. 

If it falls below the green, you know that if the light turns red and you don’t put oil in your car, your engine is going to blow. 

A yield curve is like that. It’s the relationship between short-term interest rates and long-term interest rates. 

When you take on a loan, the yield curve should slope up so that the lower rates are closer to you and as time progresses they go up as they forward further in time.

When the curve inverts, it goes the other way. 

All you really need to know is that the last seven recessions were preceded by a yield curve inversion. On average, the recession came 22 months later. 

Whatever happens, there is always a flow of money to and a flow of money away. You want to make sure that you’re always in the flow of where it’s coming. 

Growth in gold

Meanwhile, gold prices are reinvigorated by the yield curve. 

Gold prices pick up on fears of a global recession because those two markets, the stock market, and the liquid metals market can hit the buy or sell pretty fast. 

That’s in part because gold is a proxy for currency. Gold is at record highs in many currencies around the world, not just the dollar.

When countries are trying to compete in international trade, they have an advantage when their goods are cheaper. 

So, if they devalue their currency so that the purchasing power of their trading partners goes up, they can sell more goods. 

When people begin to lose faith in their currencies … they look for something that allows them to step out of a currency and still hold liquid wealth. 

Some people are using Bitcoin, but the vast majority of investors … especially institutions and sovereign governments … are using gold. 

Last year, central banks around the world purchased more physical gold than at any other time since 1970.

If you think about insider trading when it comes to currencies … there’s nobody more insightful than central banks. 

The effects of oil

All economic activity is derived from energy … and in modern society, that energy is primarily oil. 

So, as the cost of oil goes up … it’s actually friction in regard to economic activity. 

When you think of what happened coming out of the great recession, the economics in the United States that were producing all theat jobs leading to recovery … were ENERGY PRODUCING LOCALITIES. 

The other side of it is an economic problem … a lot of the oil that has been built upon bonds issued by oil companies are counting on higher oil prices. 

When those oil prices drop, they still have the same debt service.

There’s a lot of fragility out there … and nobody knows what could be the catalyst that’s going to ignite the debt bomb that creates the next debt implosion. 

But one of the things to pay attention to is all of the debt in the oil industry. 

We look at it for the cost of the input to the daily lives of our tenants. When gas is more expensive, it increases their cost of living. 

So, they’re going to be more resistant to rent increases … and they will be moving out of the higher priced places into the lower ones. 

And then of course, it can also point to the health of the credit markets. 

Time to pay attention

There’s a lot to be licking your chops at … so to speak … with what is happening in the world right now. 

And NOW is the time to pay attention. 

Learn more from the Clues in the News by listening in to the full episode. 

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