This niche is VERY inviting …

As we often say, real estate is NOT an asset class.  There are MANY different niches you can invest in to earn big profits … both capital gains and cash flow.

And we’ve been watching an exciting niche which is starting to attract the attention of alert investors …

“Value-add investors are finding this sector ripe with opportunity, offering strong returns and having very little competition.”

           –    National Real Estate Investor, 5/6/19

Sound inviting?  It is!

It’s rehabbing resort properties.

If you’re a fan of the long-running TV show Hotel Impossible featuring Anthony Melchiorri, you know there are a LOT of hotels out there … and many aren’t run very well.

In fact, some fail and are sitting empty and dilapidated … waiting to be resurrected by an enterprising real estate entrepreneur.

So there’s a LOT of value-add opportunity in these often potentially beautiful properties.

And the opportunity isn’t limited to a particular geography … these opportunities are available in a variety of markets.

In fact, we recently enjoyed interviewing an experienced resort rehabber in New Jersey (yes, there’s even resort opportunity in New Jersey!)

We also got the inside scoop on a fascinating resort rehab project in Orlando, Florida.

The message is clear … there’s big opportunity in resort property … and it’s not just money.

Think about it …

Most investors don’t get excited about spending the night or a romantic weekend in their Section 8 rental home, C-class apartment, or mobile home park.

There’s nothing wrong with any of those.  They’re all great for cash flow.  But when you can get cash flow PLUS lifestyle benefits too?  That’s double prizes.

Imagine taking a tax-deductible trip to check in on your beautiful resort property … walking a lush vineyard or relaxing on the beach … and enjoying a fine meal while watching a gorgeous sunset.

Of course, before you get to enjoy all the amenities … there’s work to be done.

And fixing up an entire resort … well, that’s a heavy lift even for the most seasoned house-flipper.

But who says YOU need to do all the work?  Or ANY of it?

What if there’s a way for you to get in on the action without putting on your work boots and safety glasses?

There is.

One way is to let someone else “fatten the cow” … then you buy in to “milk it” for cash flow over the long-haul.  Listen to this episode to learn more about this approach.

If you’re accredited, then there’s a whole world of investment opportunities available to you … including investing passively into an experienced resort rehabber’s project.

Of course, if you’re super-ambitious and industrious … you can become an active resort-property re-habber.  Because it’s capital intensive, it’s an ideal activity to syndicate.

If you choose the active route … here are some things to think about.

One way to learn the business is to go to work or volunteer with an active resort re-habber.

But before you go that far, it’s probably smart to start with just talking to some folks in the business to see if it’s the right niche for you.

Fortunately, we’ll have an active resort property rehabber … along with a whole bunch of other really interesting niche investors … at our next Secrets of Successful Syndication seminar.  So if this all sounds interesting, make plans to join us.

But whether you choose active, passive, or syndication … take a look at the opportunities for profit and lifestyle in the resort property investing niche.

Resort properties are a great way to earn rental income from affluent people who would probably never rent their home from you.

Until next time … good investing!


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Opportunity Zones Update – Defer, Reduce, and Even Eliminate Taxes

Everybody is talking about Opportunity Zones … and they should be. They can be a great opportunity (just like the name says)!

But many investors have found themselves scratching their heads. How exactly does someone take full advantage of Opportunity Zones?

Recently released guidelines are giving investors and syndicators much needed clarity for moving forward … and making the most of their Opportunity Zone investments.

We sat down with attorney Mauricio Rauld to discuss how Opportunity Zones can help investors like you defer, reduce, or even completely eliminate capital gains taxes.

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

  • Your zoned-in host, Robert Helms
  • His zoned-out co-host, Russell Gray
  • The “Anti Lawyer” attorney, Mauricio Rauld

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Zoning in on Opportunity Zones

The wait is finally over.

The rules for investing in Opportunity Zones … and the potential tax breaks that come from it … are out.

In case you haven’t heard, Opportunity Zones are basically a capitalist version of wealth redistribution. They provide tax incentives to get rich people to voluntarily put their money where the government wants it to be.

Opportunity Zones exist in every state and in Puerto Rico. These areas tend to be blighted with some issues … they need some gentrification.

Each governor in the United States was taxed with the job of figuring out what areas in their states needed the most help … and where private enterprise could step up, do the work, and get benefits.

We’re not legal experts … but we know someone who is.

Mauricio Rauld is known around here as the “Anti Lawyer” … but he is actually a practicing lawyer who helps people primarily with syndications.

Since we first learned about Opportunity Zones last year, Mauricio has spent his time discovering the good, the bad, and the ugly sides of these types of investments.

The good side of Opportunity Zones

Let’s start with the good.

Opportunity Zones offer huge tax benefits … four in particular.

The first is that you get to defer the tax from whatever capital gains you’re investment is coming out of.

For example, if you have a piece of real estate … or any other asset, like precious metals, stocks, bonds, even your collectible car … you can take those gains and reinvest within 180 days into a qualified Opportunity Zone fund and defer the tax.

You aren’t deferring the tax indefinitely like a 1031 … but you will get to defer for at least the next seven years … until December 31, 2026.

The second benefit is that if you hold onto your new investment for a period of five years, you get a 10 percent discount on the capital gains you would have paid on the original investment.

Benefit number three kicks in if you hold onto your investment for seven years. Now, you’ll qualify for a 15 percent discount on your capital gains.

The biggest benefit of all … number four on our list … applies after holding your asset for a decade. After 10 years or more, the entire gain from your investment is tax free.

It’s all about taking an appreciated asset, putting it into an Opportunity Zone fund, and not paying taxes right away. The longer you wait … the less tax you pay.

One important thing to highlight once again is that the money you place into these Opportunity Zones doesn’t have to be in real estate to begin with.

A lot of the money we foresee coming into Opportunity Zones hasn’t historically been in real estate. They’re in other types of investments where there are big gains to be paid … like the stock market or precious metals.

As always, talk to your tax professional before making any decisions … but if you are sitting on a big tax gain, Opportunity Zones could be an attractive option.

Another positive … there is very little government interference and regulation on this project.

It’s a self-certification … meaning that whoever is putting together the fund simply checks a box on the first year tax returns to certify that it qualifies as an Opportunity Zone.

During your holding period, the government will check with you every so often to ensure you comply with program … but it won’t be dealing with the SCC or going through an approval and registration process.

The bad side of Opportunity Zones

There are some downsides … the bad … of getting into Opportunity Zones … and really it isn’t so much “bad” as it is things to consider fully before diving in.

The first is a rush for time.

In order to fully gain the benefits … to get seven years under your belt before December 31, 2026 … you need to make the investment before the end of 2019.

That means you will need to liquidate your asset and invest in a fund pretty quickly to get the 15 percent discount.

If you don’t make that deadline, you can always go for the 10 percent … and either way you should want to hold the investment for 10 years or more to make it tax free. If that’s your plan, there is less of a rush.

The other important consideration is the substantial improvement requirement.

This requirement means that if you buy a price of property you must put the same amount of money that you purchased the property for into renovations. The government wants you to improve the property.

This requirement only applies to vertical construction … meaning the buildings, not the land.

So, if you buy a property for $1 million and 20 percent of that is in the land with 80 percent in the building … then you only need to invest $800,000 in improvements.

There are a few exceptions to this rule. If you purchase a piece of property that has been vacant for the last five years … the substantial improvement requirement doesn’t apply.

Remember, the whole idea behind Opportunity Zones is for folks to put private capital to work in revitalizing these areas.

The other important requirement for your property to qualify is that it must involve an active trade or business. This is still a bit of a gray area … but we expect more guidance from the Treasury Department soon.

The ugly side of Opportunity Zones

Mauricio says that when it comes to “the ugly” of Opportunity Zones … a lot of personal opinion comes into play.

Much of the work Mauricio does is with syndicators, and there are pros and cons for them in this type of investment

Syndicators can promote Opportunity Zones as a great chance for investors because of the extensive tax benefits.

But syndicators themselves don’t get the tax benefit for the carried interest.

If this is a traditional syndication, the syndicator will get a cut for sweat equity … let’s say 20 percent.

The investors get 80 percent AND all the tax benefits … but the syndicator will have to pay taxes on the 20 percent they made. They can’t defer that.

This could be ugly … because as a passive investor you want an incentive for your syndicator who is running the project to be excited about the deal.

But on the other hand, most syndicators aren’t going after these deals for tax benefits for themselves. Instead they see them as an opportunity to court capital from a completely new and different source.

Someone who has been in the stock market or private equity or in precious metals that has avoided selling because they didn’t want to pay tax can now work with syndicators in real estate and find a win-win situation.

Another ugly truth … you can’t get into Opportunity Zones alone.

You have to put together a fund … some kind of entity. It doesn’t have to be a syndication … but it has to be a partnership. You need at least two people to get started.

Mauricio also cautions investors to be aware of artificial demand.

Opportunity Zones are designed so that people are investing in areas that they wouldn’t have originally invested in. You’ve got to make sure the investment still stands on its own merits.

Because it is an artificial demand, you could be potentially overpaying for the property in the long run. At some point you could be paying so much more that the tax benefits may not make sense.

Talk to an expert

Think Opportunity Zones might be the right opportunity for you? Talk to your tax professional.

At the end of the day, it’s a tax matter. There are forms to check and rules to follow. You want a tax expert to keep you on track.

And you’ll need an attorney to help you put together a fund, make sure it is structured properly, and ensure the investment itself is eligible.

There are no guarantees in investing … but doing your due diligence gives you the best chance at success.


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Using Market Metrics to Spot Trends and Opportunities

Markets are always in motion.

Population, economic growth, demographics … these factors and more affect the supply and demand for every property you own.

Without understanding market metrics, investing is like reaching into a lake and hoping you pull out a fish.

But WITH market metrics … the savvy investor can spot trends and opportunities … and bag a winning catch!

Listen in as we explore how to make market metrics work for you.

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

  • Your metric-master host, Robert Helms
  • His laugh-master co-host, Russell Gray

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Crystal balls aren’t real, but market metrics are

Every market is different.

Every city … every neighborhood … even every street has unique attributes of real estate.

When we look at real estate, we’re dealing with many different kinds of markets … niche markets, geographic markets, and demographic markets.

Real estate isn’t a typical asset class. Every deal is unique.

You can choose to throw a dart at the map and buy a property … or you can study market metrics and identify trends.

Most of the information readily available to investors isn’t local … it’s national or state data.

As an investor, you need to learn to take that higher-level data, look at both sides of the equation, and break down what it means for you.

We don’t have a magical crystal ball … but we do know that we can spot important trends if we pay attention to key metrics … and so can you!

Deciphering national statistics

Let’s start by talking about days a property stays on the market.

The National Association of Realtors recently announced that residential properties remained on the market for an average of 36 days in March 2019 … which was down from 44 days in February 2019.

What does this mean for the newbie real estate investor trying to figure out if this is a seller’s market or a buyer’s market?

This is the perfect example of national statistics that give a false impression when you focus on the market at a local level.

Someone in the Bay Area may think that 30 days on the market is forever … but to someone else from Kansas, that seems like selling in record speed!

Remember to dig deeper and look at both sides of the equation. Think about what other factors could be creating this metric.

Imagine that fewer people were listing their homes … that would mean that there were fewer houses available.

If there are fewer houses available but the same number of buyers … then the number of days spent on the market is going to go down.

On the other hand, if there are more sellers than buyers … then homes are going to spend more time on the market.

Three crucial metrics for real estate

Depending on the information you’re after, you pay need to attention to different metrics.

To get a good amount of information, you need a big statistical set.

That’s why most of the data that you read is going to be relating to a bigger group of properties than really affects your market and your property every day.

News pundits often talk about average home price and median home price. These are two different things with very different meanings.

If you have a list of 101 sales that happened last month, the sale in the middle of the list … number 51 … is the median price.

So, if you have the numbers two, five, and seven … the median is five.

And if you have the numbers two, five, and fourteen … the median is STILL five. Median price is NOT the same as the average price.

Another important metric to understand is net in migration.

People are always moving in and moving out of markets. Net in migration means a market where more people are entering than leaving.

More people means more demand for schools, services, shopping, and … housing!

It may seem like a rudimentary concept … but it is essential. If people are leaving a market, demand goes down and so do prices.

Dallas, Texas, is the perfect example of putting a market with net in migration to work for investors.

After the 2008 financial crisis, investors were forced to look at markets differently … and up until this time, Dallas had been boring.

The market had the least appreciation of markets on our radar … but after 2008, stability started to look really, really good.

Dallas had a winning combination of affordability, low income tax, vibrant infrastructure, and diverse economy.

The energy sector was a huge player … and it was one of the few industries that remained solid after 2008. As people moved in for jobs, demand grew.

Now, a decade later, we look at the net in migration, and Dallas has an additional one million residents since we first started looking into the market.

Look to the future

Some of these concepts may seem basic … but in real estate, it’s easy to fall asleep at the wheel. Real estate really does move slowly.

But when you see the headlines, you may feel like the wind is changing fast … and you need to act or be swept away.

Don’t panic. You have time to get in position, study a market, and build relationships.

Keep your focus on the basics … supply, demand, and capacity to pay. Every metric impacts these basic principles of real estate investing.

We can all look at the past and act on what we learn here in the present … but we need to look forward too.

As investors, we ultimately have to take our best educated guess. Market metrics give us the information we need to do our due diligence and act in the best way we know how.


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The Avengers Endgame and YOUR real estate investing …

You probably know The Avengers Endgame is the culmination of a 22-film decade-long extravaganza of EPIC story-telling.

What you may not know is how many great real estate investing lessons surround The Avengers Endgame.

Here are just a few … and don’t worry, there are no spoilers!

Lesson 1:  Businesses and their jobs will move to seek a better environment.

The Avengers Endgame was filmed at Pinewood Studios in Atlanta, Georgia … and NOT in Hollywood, California.

The Pinewood Studios website says Georgia is “the number one filming location in the world” according to this industry report by Film LA.

One of the reasons is ” … the highly competitive nature of tax credits …”

Over five years ago, the Los Angeles Daily News reported this trend …

Why TV, Film Production is Running Away from Hollywood

“ … they’re running away from here … primarily due to tax incentives offered in … states with rich tax credits such as Georgia …”

But it’s not just taxes, though they’re a BIG part.

As New York discovered when Amazon abruptly backed out of plans to bring 25,000 jobs to Long Island city for their much sought after HQ2 …

… it came down to a long-term environment that Amazon did not care to work in …”

And they’re not talking weather.  It’s the political environment.

So while YOU may or may not agree with Amazon’s or Disney’s politics or business practices … it’s important to remember how the businesses feel.

Learn to look at markets the way employers do … even if you disagree.

Lesson 2:  Get rich in a niche.

This is where LOCAL knowledge really helps.

As you might guess, creating a blockbuster film like The Avengers Endgame requires hundreds … perhaps thousands … of talented, highly-paid people.

While some workers are local to the studio, many come to town temporarily during production … which can last months.

These folks aren’t going to live in a hotel room or a trailer all that time, which means they need nice, local housing.  But they aren’t buying.  They’re renting.

Some investors we know figured this out … and developed an entire business model catering to the unique temporary housing needs of the film producers.

“What?  You didn’t see that coming?”

– Hawkeye to Quicksilver in The Avengers – Age of Ultron 

We learned about it during an Atlanta field trip years ago … and it made perfect sense then … and it still does.

After all, when a producer is driving hard and fast to execute on a high-stakes timeline to get a 9-figure film over the line …

… they’re deploying a LOT of capital really fast … and they need to get things off their checklist quickly.

Focus on the REAL needs of your customer and you don’t need to compete on price.

Lesson 3:  Primary drivers create secondary and tertiary jobs.

Even if you’re unable to get into the primary path of cash, there’s still a lot of opportunity to get in on the action … a little downstream.

When money is being drawn into a geography by a large enterprise or industry … the money flows through the primary driver to the locals.

So even though not all real estate investors are renting directly to members of The Avengers Endgame production team …

… there are plenty of employees of secondary local vendors who are also being paid out of the fat production budget.

Of course, it’s not just The Avengers Endgame budget, which is temporary.

The real driver is the CONSISTENT stream of production budgets drawn to Pinewood Studios.

But whether you’re deriving rental income directly tied to those production budgets via primary and secondary employees … there’s yet a third tier.

Even your tenants who don’t get paid directly from the production are working for the restaurants, shops, and other local businesses who serve those who are.

Just remember … it all starts with the PRIMARY drivers.

Pay attention to primary drivers and the rest will usually follow.

Lesson 4:  Always begin with the end in mind.

You may recognize this adage as one of The Seven Habits of Highly Successful People by Stephen Covey. It’s a powerful concept.

The Avengers Endgame is the capstone of a world-class case study in what “beginning with the end in mind” looks like in the real world.

Every film over a decade painstakingly added new characters and story-lines carefully woven together into a powerful tapestry of cinematography.

It’s a testament to thinking ahead.

Of course, there’s probably been many course adjustments along the way … as talent, opportunity, and even adversity, all manifested on the road to success.

In that regard, The Marvel Cinematic Universe is a lot like life and investing.

Yet very few folks we know are thinking that far ahead.  But perhaps they should be.

In the Create Your Future Goals Retreat, one important outcome is to define your personal mission, vision, values and most important goals … for ALL areas of your life.

With clarity of vision, you can make better small decisions about how you want to live and fund a life you’ll be pleased with when you put you head on the pillow for that very last time.

Take time to plan a happy ending for YOUR endgame. 

Lesson 5:  Big dreams take time to build.

In the 22 films from Iron Man to The Avengers Endgame, Marvel Studios patiently constructed an entire “cinematic universe”.

It made the concept of a trilogy seem tiny.  It was (and is) a BIG vision … and it took over a decade to develop.

In real estate, whether you’re assembling a powerful portfolio of properties or building a mega-million-dollar master planned development, it takes time and consistency to get it done.

Most people can’t think that big … and still pay attention to details at the same time.  And many that do, can’t stay the course.

But when you do, you have a chance to accomplish something extraordinary.

Think big.  Plan small.  Stay the course. 

Lesson 6:  Together Everyone Achieve More.

TEAM is a huge theme both inside and outside The Avengers Endgame story line.

From the first Avengers film, where a self-absorbed Tony Stark transforms into someone willing to make the ultimate sacrifice …

… to the violently divisive Captain America – Civil War and The Avengers – Age of Ultron where division nearly destroys the team …

The Avengers discover time and again their best chance for success is teamwork.

Of course, out in the real world, it took teams of writers, directors, actors, special effects, stunt people, production and marketing staff …

…  all working together with diverse skills, backgrounds, personalities and perspectives …

… to make The Avengers Endgame the BIGGEST box-office success in history.

If you have aspirations to build a great real estate investing business or portfolio … ESPECIALLY if you’re syndicating, you’ll need a team.

Build a great team.

Finally, to paraphrase Scarlett Johansson’s Black Widow when she unleashed The Hulk to smash the baddies … Go be an investing hero.

Until next time … good investing!


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Agriculture Investing – An Opportunity to Diversify Globally

Everyone needs a place to live … and everyone needs to eat.

Food is the original wealth. The world’s population is growing … and there are more mouths to feed every day!

Investors don’t have to limit themselves to properties with assets like houses, commercial buildings, or shopping malls.

You can harvest dollars from land that doesn’t have anything to do with tenants … and has everything to do with crops.

Agriculture investing is one of the most enduring and common sense investments there is.

Learn firsthand how money CAN grow on trees from a well-seasoned expert in international agricultural investing.

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

  • Your food-for-thought host, Robert Helms
  • His food-loving co-host, Russell Gray
  • Expert agricultural investor, David Smith

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Digging into agriculture investing

We live in a big world with lots of mouths to feed … that means lots of crops … and lots of ways to profit.

In the past, agriculture investing was a difficult business to get in to on a small scale. If you didn’t have huge capital to buy huge plots of land … you were hugely out of luck.

But in the last several years, we’ve seen lots of folks who have figured out a way to let mom and pop play alongside them.

When it comes to investing in agriculture real estate, the pizza theory comes into play … fitting since we’re focusing on food.

Someone buys a large pizza. They take it to a party, cut it into slices, and sell each slice for a little bit of a markup.

At the end of the day, the person who brought the pizza makes a little bit of profit for their effort … and everybody gets to have a slice of something they might not be able to afford on their own.  

In agriculture, somebody buys a large parcel of farmland and puts all the operations and distribution channels in place.

Then, they divvy up a slice of the deal for a small markup to give many small investors the chance to play in that space. We see this as a great opportunity.

Everyone needs to eat

Crops come in all sizes, shapes, and degrees of durability … not to mention that different regions of the world have different opportunities.

In real estate, we often talk about getting the market right. Buying an investment property in the wrong market can get you into trouble.

But with crops, it’s not exactly the same.

It doesn’t really matter where the hungry mouths are … and it doesn’t matter where the food is grown.

Wherever the best farmland is … that’s where you want to buy. With today’s shipping technologies, you can get the food wherever it needs to go.

Another perk of agricultural investment? It is a staple. It meets a basic human need … just like housing.

Everyone needs a place to live … and everyone needs to eat.

And the population … the number of consumers demanding food … is steadily GROWING.

Crops and cash flow in Paraguay

David Smith is an experienced investor. He started in real estate, and for the last several years, he has been involved in agriculture in Latin America.  

After many years living and working in real estate in Latin America, David knew he needed to diversify.

After some due diligence, David decided to invest in agriculture.

“I was so interested in the business model,” David says. “It was a passive, turnkey investment not subject to the whims of the market. I really liked the security of it.”

David landed in Paraguay … a big farming country a bit off the radar … and invested in oranges.

Why oranges?

David says one of the biggest things that struck him about this particular crop was its durability. It also has a great distribution area.

Paraguay imports about 85 percent of all the citrus products consumed in the country.

“We can’t even meet the demand in Paraguay, let alone try to export yet,” David says.

Today, David is expanding to new segments of citrus fruits like lemons, limes, and sweet limes … ingredients that are important in the local diet.

Paraguay is traditionally a row crop producer … foods like soybeans, wheat, corn, and chia. It imports citrus from Brazil and buys greenhouse vegetables from Argentina.

Looking for ways to provide foods locally that are traditionally imported can open up lucrative niche opportunities in agriculture.

By providing a local alternative to imported foods, David provides a cheaper option for local grocers while creating income for his investors.

Going bigger with greenhouses

Like any investment niche, creative solutions can pay off … literally.

In Paraguay, one of the biggest challenges to growing vegetable is the heat.

“Paraguay gets very hot … and when I say very hot, I’m talking Tucson hot. It can be 120, 130, even 140 degrees in many locations,” David says.

The vegetables grown locally under normal farming conditions don’t grow very well. Their growth is stunted, their colors aren’t as bright, and they don’t taste as good as imported vegetables.

That’s where GREENHOUSES come into play.

By growing high-use … and typically high-priced … vegetables in greenhouses, David and his team can provide a local, tasty, and affordable solution to consumers.

This also provides a unique opportunity for investors. Instead of investing in land, individuals can purchase a greenhouse.

Each greenhouse is approximately 26,000 square feet … that’s a good amount of space for growing some green.

Greenhouses are also a popular investment because of their quick returns. Most investors will receive a return after just one year of making their investment.

“It’s a very stable business that runs 24/7,” David says.

And it’s a business that you don’t have to worry about managing. David and his team employ expert staff members that specialize in growing each crop.

These employees are even more motivated to provide extra levels of care, because they share in the profits.

“We offer them bonuses based upon produce amount, not net profit. In turn, they really put a loving touch into their work,” David says.

Determine if agriculture investment is right for you

Most Americans haven’t invested overseas.

There are a lot of reasons for this … but one of the biggest is not understanding how things operate on the ground in a different country.

That’s why having a local team managing the day-to-day of your investment is so powerful … especially in a niche like agriculture.

Just like any other investment opportunity, it’s important to do your due diligence.

David and his team help investors get a feel for agriculture by providing informative tours of their operation in Paraguay … and he also prepared a new, informative special report Citrus Fruits in Paraguay Investments that Grow Naturally.

Whether or not this particular opportunity is right for you, expanding your thinking to a bigger picture of real estate than just houses and hotels is important … and can yield lucrative results!


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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.


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Finding profits under the radar …

You’ve probably heard the popular adage, “Get rich in a niche!

But what does that really mean?  And how do you do it?

The premise is when you work or invest in something with a high barrier to entry, or that few strong players know about, you face less competition and can therefore enjoy better profits.

Makes sense.

The challenge is finding and mastering the niche.  And common sense says a profitable niche doesn’t stay secret for long.  So when you find one, it’s wise tomove quickly and capitalize ahead of the crowd.

Of course, all that sounds good on the chalkboard.  But how do you make it work in the real world?

We look for clues in the news … and this headline caught our attention …

Sovereign Wealth Funds, Private Equity Step Up MOB Acquisitions

For the unfamiliar, MOB stands for Medical Office Building.

Obviously, MOB is a niche, and sovereign funds and private equity are BIG players … with big research budgets and smart analysts.

So watching what big players are doing is one way to identify a hot niche.  Then you look for a niche within a niche where Main Street investors can play.

But first, let’s look at why the big boys like MOB …

“ … increasingly view medical office space as a core property type with strong fundamentals.

“ … demand for space continues to grow amid an aging population in need of more medical services …”

 “This particular sector of commercial real estate benefits from one of the largest and fastest-growing components of the U.S. economy: healthcare … ”

That “aging population” they’re referring to are the baby-boomers.  This huge demographic wave is sometimes called “the silver tsunami” because of its economic size and impact.

It’s something we’ve been following closely … including which industries and geographies stand to benefit.

But if the big boys are already in the space, is it too late?  Or is there still opportunity for Main Street investors?

We think there is.  And clues in the article support the thesis …

“ … risks facing medical office investors …  tenants are increasingly facing reimbursement pressures from insurers and government payors such as Medicare and Medicaid … ” 

“…  medical office facilities do not offer tenant diversification … tenants are exposed to the healthcare sector, unlike conventional office buildings …”

 “ … a shift of providing high-quality care … [in] alternative settings …” 

So let’s consider how these clues might fit together to spell opportunity …

First, it’s not MOBs that big money is excited about.  It’s the demographic and industry that the properties support.  It’s about elderly people and healthcare.

The properties are actually a problem because they’re specialty use.  A medical building is typically only suited to medical uses.  That can be risky.

So, even though medical buildings appear strong for the long haul, it’s still a one-trick pony.  If the sector cools, you’re trapped in a property that’s not of much use for anything else.  Yikes.

Next, the tenants of MOBs are healthcare providers whose income is largely derived from insurance and government reimbursements, which are facing downward pricing pressure.

Savvy landlords always look past the tenant to the tenant’s ultimate source of income.

In this case, “commodity” healthcare providers are getting squeezed by stingy insurance companies and social services.  Not good.

Lastly, the article reports a “shifting preference” by tenants (healthcare providers) towards “providing high quality care [in] alternative settings …”

Now THIS is interesting!

It seems those providers being squeezed are moving towards sub-niches where there’s more profit.

In fact, people we know in healthcare say a popular strategy for combating the declining margins of “commodity” healthcare …

(commodity healthcare are the kinds of services major insurers and government programs aim their cost-cutting strategies on)

… is to focus on boutique services for affluent clients who pay by cash or through private insurance.

That’s a clue.

How can Main Street real estate investors play?

Since we’ve already identified the demographic (boomers) and economic sector (healthcare), let’s focus on the property.  After all, we’re real estate guys.

We’re looking for a property well-suited to a boutique healthcare for an affluent, self-paying, or privately insured sub-demographic.

Of course, Main Street real estate investors aren’t healthcare professionals.

So we either need to find tenants who are, or find a simple healthcare service we can deliver through readily out-sourced operators.

And we’ll need to pick a property type that works well for the healthcare service … but also other things, so we don’t get trapped in a single-purpose property.

Sounds like a tall order …

Or maybe the answer is right in front of you … or next door … or down the street.

Single-family homes!

But not just ANY single-family homes … residential assisted living homes.

This is an exciting sub-niche of the healthcare real estate niche that checks a lot of boxes …

First, your tenants are the parents of boomers (today) … and will soon be the boomers themselves.  That’s a substantial long-term pipeline of tenants.

Plus, boomers are the most affluent demographic right now … and paying for Mom or Dad’s care is a TOP budgetary priority.

It’s always good to be at the front of the line for getting paid.

Also, care fees (rent) are often paid out of a combination of the parents’ estate, private long-term care insurance policies, or incomes and assets of the adult children.

So when you’re in what our residential assisted living guru Gene Guarino calls “the sweet spot” … you’re not dependent on government reimbursements.

Residential assisted living homes are boutique, high-quality, “alternative setting” healthcare … which, as the article points out, is the trend.

Another investing adage is, The trend is your friend.

Check.

Next, residential assisted living homes are NOT big, single-purpose commercial buildings well-suited only for use as a medical facility.

Residential assisted living homes are operated in single-family houses located in regular residential neighborhoods.

No special zoning.  No commercial location.

So if for some reason the bottom falls out of the sector … the home can be rented to a residential occupant (albeit at a much lesser rent), or simply sold on the open market to an owner-occupant.

In other words, you’ve got multiple exit strategies.  You aren’t trapped by your niche.  This mitigates one of the major risks the big boys fear.

Check.

But perhaps one of the greatest advantages in the sub-niche of residential assisted living homes is the ability to QUICKLY right-size to changing market conditions.

Big-box commercial properties are all-or-nothing propositions.  That’s another worry for the big guys.

When you have a 120-bed medical facility and profits get squeezed or things slow down, you still have 120-bed facility … and all the fixed costs which come along with it.

There’s no throttling capacity up or down based on demand.

But when you own ten 12-bed homes and things pick up a little … you simply add one more home to your collection and increase capacity to 132 beds.

Compared to a big-box, the properties are easy to find, set up, and get optimized.  You can catch an “up” wave sooner and ride longer.

Even better, if things slow down, you simply consolidate your residents into fewer homes … and sell or rent out the excess properties individually.

Again, there a multiple exit-strategies, and when it comes to real estate, single-family homes are arguably the most liquid.  A big-box?  Not so much.

This is HUGE in terms of maintaining profit margins … even in a declining market.

Think about it …

A big-box can’t cut facility overhead.  They either own the whole property or they don’t.  It’s all or nothing.

So the only way preserve margins when occupancy is down is to cut back on staffing, care, and amenities.  Not good for the resident under care, nor the staff or brand.

Meanwhile, the residential assisted living home operator has an advantage …

While the big-box cuts services, the more nimble RAL operator can right-size and maintain or even improve services … and attract an unfair share of residents in a competitive market.

Big check.  And who doesn’t like big checks?

But whether or not residential assisted living is for you … (though it probably will be some day … we all get old) …

… there are still great lessons to glean about strategic sub-niche investing to find profits under the radar (at least temporarily) of the big players.

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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Profitable Niches – Residential Assisted Living Homes

The Silver Tsunami is coming. That’s right. It’s no secret Baby Boomers are retiring and entering a new phase of life, and looking for an alternative to traditional assisted living facilities.  

In the third episode in our Profitable Niches series, we explore the world of residential assisted living homes.

We chat with leading national expert and President of Residential Assisted Living (RAL) Academy, Gene Guarino, about this compelling investment opportunity, and four of his students who are successfully investing in this space.    

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

  • Your happy-to-assist host, Robert Helms
  • His in-need-of-assistance co-host, Russell Gray
  • RAL Academy President Gene Guarino
  • A few of Gene’s star students, Sherry Ellingson and Rocky McKay, Loe Hornbuckle, and CJ Matthews

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An explosive demographic with specific needs

So much of real estate is about understanding specific demographics and their needs. All around the world, and especially in the United States, there is a massive population that has created business opportunities through every season of their lives … baby boomers.

Baby boomers are retiring in droves, and they aren’t too far away from not being able to live independently anymore. Unlike generations before them, boomers (in general) are adamant about not living in an institution or hospital. They want to live in a home and have a social life.

That’s what makes residential assisted living homes such a fascinating investment niche. This specific demographic and a unique financial model means more CASH FLOW than a typical single-family home investment.

Gene Guarino is the leading expert in this investment niche. As president of the Residential Assisted Living (RAL) Academy, he teaches investors everything they need to know to get started.

“It all starts with education. Get educated first. If you don’t, you’ll most likely go out, make mistakes, and bang your head against the wall,” Gene says.

We’re all about education for effective action. So, we sat down with a few of Gene’s star students to learn about their experiences and what advice they have for other investors.

Building your brand from the ground up

Sherry Ellingson and Rocky McKay are business partners who attended Gene’s class several years ago.

“We kept hearing about senior living,” Sherry says. “We both have parents who are going to be entering into this category before long, and after taking a look at some of the current options in our area we thought, ‘You know, we could do this a little bit better.’”

Rocky and Sherry first acquired an existing assisted living facility that needed some updating. The property is 10 beds with jack-and-jill baths and lots of places for residents to be able to visit with friends and family. The goal is to have residents feel at home and have a happy, safe place to make their own.

How do they attract tenants? Case workers from hospitals and rehab centers refer potential residents and their families to placement agents who find out what they are looking for in an assisted living facility.

Then, the agents take them on tours and show refer them to various home options. That’s why a good reputation is so important.

“The reputation of a home is attached to the owner, so your focus should really be on creating your own reputation and brand from the ground up,” Sherry says.

“The demand for a good home is extremely high, and as we provide such an essential service for our residents, it feels like we are doing the right thing,” Rocky adds.

For investors just starting in the niche, Sherry and Rocky recommend looking for an existing home and remodeling it into a residential assisted living home. They also suggest having a fixed rent rate with everything included so families can set their budget and not worry about hidden fees.

And don’t forget that there is benefit in adding more properties. More residents means the ability to buy supplies in bulk and save even more money on operation costs. Sherry and Rocky hope to have a couple hundred operating homes in the next several years.

Raising capital and expanding your network

After going through the RAL Academy course, Loe Hornbuckle found his passion. Since then, he has opened 40 beds in residential assisted living homes and is in the process of developing an 80-bed facility made up of five homes on six acres as a planned community.

“I look at residential assisted living as a tool to keep people out of nursing homes or institutional environments that may not be right for them,” Loe says. “There are a lot of people who are placed inappropriately in those settings.”

Even though he was passionate about the type of investment he was making, Loe says he still had a lot to learn when it came to raising capital.

“The first time I raised capital, I put out my business plan, and at the end of the first day my wife found me in the fetal position on the floor. It was harder than I thought it would be,” Loe says.

Proper education changed this for Loe. He learned you have to build a network to effectively raise capital. He suggests that RAL investors attend events and conferences so they can meet the many people out there who are willing to help them along the way.

“Your network is everything. When you build your network, you have the power to step into good business like residential assisted living,” Loe says.

Syndication and working smarter

As a self-proclaimed real estate addict, CJ Matthews was looking for an investment with good cash flow and without a huge amount of ongoing work. After hearing Gene speak on RAL homes, she knew she had found the perfect niche.

“With residential assisted living, you do the work to set everything up, and then you become the business owner. At that point, someone else can actually run the day-to-day business for you,” CJ says.

The biggest advice CJ offers to potential RAL investors is to learn about and apply effective syndication.

“Before learning to syndicate, going out and asking for money felt risky or scary to me, but after I attended the Secrets of Syndication seminar, I knew what I needed to do,” CJ says.

When it comes to working with partners, CJ recommends choosing people who have skill sets you don’t. That way you can work synergistically and accelerate your success. And don’t forget this particular investment niche requires a special touch.

“This space isn’t for everyone. You need to love real estate, love making money, love putting in work on the front end, and most importantly have a heart. If you aren’t willing to care about these people and making the last years of their lives happy, then this may not be the investment for you,” CJ says.

Interested in learning more about investing in residential assisted living? Listen in to the show to hear more from Gene and his students. You can also email us at ALF@realestateguysradio.com, and don’t forget that Gene will be cruising with us on our Investor Summit at Sea. We’d love to see you there!

Listen to other episodes in our Profitable Niches series (like Stacking up Profits with Self Storage or Making Money with Mobile Homes) to step off the beaten path and learn more about other lucrative, but as-yet unexploited asset classes.


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.

10/4/09: A Bird’s Eye View of Opportunities in Lodging & Hospitality

“Get rich in a niche” is a classic piece of advice for almost any profession. Specialists almost always make more money than generalists.  On today’s show, The Real Estate Guys discuss one of the most unique niches in real estate niche: lodging and hospitality.

Joining in the conversation are:

  • Host Robert Helms
  • Co-host Russell Gray
  • Six decade investor “The Godfather of Real Estate”, Bob Helms
  • Special Guest: Ed Watkins – 35 year industry veteran and Editor of Lodging Hospitality Magazine

The dialog was lively and informative as The Guys discussed:

  • An Overview of the Resort Market Today
  • New Trends in the Hospitality Industry
  • Boutique vs. Lifestyle Hotels
  • The Outlook for Condo-Hotel and Fractional Product
  • Opportunities for the Investor in the Resort Space

While the hotel business is flat and financing is almost non-existent, we discovered the picture is quite different in the boutique space.

We also contrasted the condo-hotel model (think City Center in Las Vegas) to the concept of “fractional” ownership.  We’ve heard great things about fractional structures and Ed was able to share some interesting and valuable perspectives.  There’s no substitute for 35 years at the center of an industry when it comes to being aware of cycles, distinguishing between fads and sustainable trends, and having one’s thumb on the pulse of a niche market.

We closed, as always, asking where the opportunities are for today’s investor and Ed gave us some great ideas to think about!

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