Expecting the Unexpected – Investing in Uncertain Times

Real estate investing is full of ups … and downs. If you haven’t experienced the downsides, we guarantee you will eventually.

As a real estate investor, you have to be on top of your game. You didn’t get into this business to pull the sheets over your eyes … you’re here to build wealth, and that requires planning and preparation.

You can’t bet on disasters NOT happening … they most likely will. Careless investing is a sure recipe for a crash. Careful investing, on the other hand, will help you survive crashes without losing the wealth you’ve accumulated.

In this episode of The Real Estate Guys™ show, we discuss how YOU can prepare for storms that come out of nowhere. You’ll hear from:

  • Your careful host, Robert Helms
  • His criminally cautious co-host, Russell Gray

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


The nature of real estate

The real estate market is naturally volatile. Economies change, local markets evolve, natural disasters arise … sometimes overnight.

The downsides are ALWAYS looming.

But real estate investors are always looking for the upsides … sometimes so intently that they forget to look at the downsides too.

We caution you to do your due diligence AND have a back-up plan.

Some excellent words of wisdom are to always have a little cash on hand. The downsides are rarely in your control … but you can control your ability to react when they arise.

Four ways to be prepared for a downturn

As real estate investors, we weigh risk and reward every time we look at a deal. But some risks aren’t so obvious.

Being a successful investor means playing defense and offense at the same time.

While you can’t predict the future, you can take practical steps to make sure you’re ready to fend off threats and take advantage of smart deals.

Step No. 1: Get in touch with a demographic that can weather a storm.

Tapping into the right demographic is the key to recession-resistant investing.

It’s a smart idea to look at markets where someone who is a bit under the median income can afford to live.

In tough times, people who are well-off can downgrade to your market. And in good times, people on the lower end of the income scale can move up.

Either way, your area will be in demand.

Many factors can cause a downturn … rising interest rates, slow wage growth, tax increases, or geographic factors to name a few.

Downturns aren’t solely due to nation-wide economic slowdowns. Make sure you pick a demographic that can resist small ebbs and flows in your market.

Step No. 2: Invest in towns that have multiple “stories.”

Every town has something it’s known for.

Even better is a town that’s known for many things … the stories that draw people and growth.

A big industry would be one story. Two big industries? Even better. A major sports team might be another story.

Don’t bet on a single story. Make sure the jobs in your market are tied to multiple industries … that way, when one industry fails unexpectedly, you won’t see a mass exodus or decline.

And be sure an area is appealing for more than one reason.

Step No. 3: Monitor your inputs.

Look at what inputs make the numbers on your financial statement move. These are the inputs to keep track of.

Compile data, set up alerts, and don’t be remiss about digging deeper when an alarm goes off in your head.

All the information you need can be found in one way or another. The internet is a treasure trove of data. Your local Chamber of Commerce is another resource for keeping track of essential information.

Don’t be casual … especially if you’re an experienced investor. Treat every deal like it’s your first.

Monitoring your inputs can help you stay ahead of the curve and react to changes before others even know there’s a threat.

Can you see the advantage?

Step No. 4: Key into experts.

We live in the information age … it’s almost ridiculous how much information is available.

But some of the best information comes from people who have been in your situation and figured out solutions.

Listen to and read information from multiple sources … even if you disagree.

Learn what other people are saying BEFORE you interject your own opinion.

You can’t expect the unexpected if you only listen to people who share your point of view.

Navigating the three rings of risk

We’ve learned a lot over the years.

One piece of advice we think highly of is to always own a property or two with no loan. The return won’t be as high … but you can sleep at night.

In investing, it all comes down to the rings of risk.

Every investor should have three rings of risk in their portfolio.

The center ring is your livelihood. It should be isolated from all the other risks you’re taking.

The second ring is those bread-and-butter properties that bring cash flow and provide long-term equity growth from modest appreciation.

The third ring is where your risky investments happen. You should only expand into this area after you’ve established the first two rings of your investment portfolio.

In the outer ring, you can be more speculative. You may lose quite a bit in this ring … you’re taking on way more risk. But you could also win big.

Another thing to keep in mind is your Plan B.

In any short-term play, make sure you have a Plan B and even a Plan C to take you through the long term.

Sometimes the market changes in the middle of your play. In that scenario, financing structures and a property’s ability to cash flow can be really important.

If you are house rich and cash poor, it may be time to sit down with a financial advisor and considering refinancing so you can leverage the equity you have in your properties.

You may also want to consider selling and buying new properties so you can get some cash on your balance sheet.

When the market turns, you want to be in a position to snatch up a bunch of cheap real estate … and you won’t be able to do so unless you have cash on hand.

Another consideration to take is whether to diversify your liquidity. If the dollar falls, precious metals will retain their value … and the more wealth you have, the more important it is to put your equity in a stable medium.

Your best strategy is a strong network

Knowing how to sell is the essential survival skill in a tough market.

We’re hosting our yearly How to Win Funds and Influence People event this year … a workshop that teaches participants negotiation strategies that result in win-win deals.

We host events like these because networking is SO important. The best way to prepare for the unexpected is to get around smart people and take note of their strategies.

Getting around people who’ve been in your shoes is essential … and most successful real estate investors are more than happy to share what they’ve learned.

We don’t only host events for investors like you … we also attend them! We’ll be at the upcoming New Orleans Investment Conference learning about all things investing with some of our most knowledgeable investor friends.

Join us!

Your net worth is defined by your network. Make those crucial connections, and you have the key to staying strong through ups AND downs.


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.

Property Management – The Key to Profitable Investing

Buying a property is one thing. Operating it is another.

Many investors buy property but fail to think about where their money will really be coming from … the tenants.

If you can’t take care of your property or your tenants, your income stream will be in big trouble. That’s where a property manager comes in.

In this episode, we invite a special guest to discuss the finer points of developing your property management philosophy.

He’ll offer tips on how to find a stellar property manager, what to expect from your property management company, how to manage a team, and MORE.

You’ll hear from:

  • Your philosophical host, Robert Helms
  • His phil-o-what? co-host, Russell Gray
  • Property management professional, Ken McElroy

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Why do real estate investors need a property manager?

We want to make it really clear … property managers are the unsung heroes of the real estate business.

As a real estate investor, your money is coming from your tenants.

Property managers interact directly with tenants. A good property manager will maximize the return on your investment by finding … and retaining … paying tenants.

If you’re a new investor, you may be fulfilling the role of property manager yourself. As your investments increase, however, you’ll soon find it necessary to outsource property management tasks to someone else.

Every real estate investor is running a business. If you want to grow your business, you need to make sure that every vital function is scalable as you move up the ladder and acquire new investments.

Overall, scalability means two things:

  1. Making sure that every aspect of the business you handle personally is either scalable (you can handle more of it as you get more properties) or can be delegated
  2. Making sure the people you rely on are also scalable

Make sure the system you set up has redundant life support systems. In other words, if one part of the system fails, you have a back-up plan to ensure everything is running smoothly and your cash flow won’t be interrupted.

And make sure your property manager has a back-up plan too and won’t be overwhelmed when you add to their workload.

Your property manager is essential to your process.

We’d caution you to consult with property managers BEFORE you even purchase a property … they have their fingers on the current state of the market and know what’s happening now.

And make sure you are not only thinking about how your property manager can help YOU, but also how you can help your property manager.

What does a property manager do, exactly?

Property managers are responsible for two essential tasks:

  1. Finding, vetting, and placing tenants
  2. Providing ongoing support for the tenants and property

Different property managers have different philosophies on how to fulfill these tasks.

You can approach working with your property manager in several different ways:

  1. Establish your own policies and require the manager implement them
  2. Pick the right person and let them do their job, using their own established policies
  3. Work with your property manager to establish a routine that’s somewhere in between.

Whichever route you choose, you want to keep your main goals in mind … to keep your property manager happy, to keep your tenants happy so they stick around, and to keep your property in good shape … and, just as important, to make sure your cash flow is stable.

Sometimes, the best option can be trusting your manager’s experience and letting them decide maintenance and marketing strategy.

Picking a property manager can be tricky, but the VERY LAST criteria you want to use when shopping for a good manager is price.

DON’T pick the cheapest property manager.

If your property manager is poorly paid, they’ll be unmotivated to do a good job, and you’ll end up losing more than you save.

Don’t begrudge your property manager the money they get for doing the easy jobs, like handling long-term tenants.

You want your property manager to be happy … it’s a win-win for both of you.

The bottom line is that real estate is a people business, not a property business.

Your managers and tenants aren’t widgets. Value them, and they’ll value you.

Want to help your property manager without giving them a raise? Consider referring them to other investors in the market for a manager.

Referring a good person or company is a win-win-win for you, your investor friend, AND your property manager.

Pro tips for property management

Ken McElroy started managing properties as a college kid who wanted a free place to stay.

Today, he runs a 250-person property management company that manages properties in Washington, Oregon, and California.

We asked him what he’s learned about property management over the years. Here are some key questions and answers:

What are the basics of finding a good property manager?

First, look for experience. Collecting rent is harder than you think.

Second, look for people who can hold down the rules without being too confrontational.

What should investors expect from good property management?

Two things:

  1. The return you budgeted for
  2. No issues

Ideally, Ken says, there should be no reason for you to call your property manager … in other words, your property manager should be responsible and responsive enough to handle issues as they arise and get you your return.

How do you manage a large team?

Ken’s company employs 250 people who work at the corporate office or on the ground at the properties.

“The key to everything is communication,” Ken told us.

One of his strategies is to have on-site managers hold daily meetings with all staff members, including workers responsible for maintenance, landscaping, and leasing.

Is it better to outsource maintenance and repair services or hire in-house teams?

This comes down to what the residents need.

Retention comes first, says Ken, and to retain tenants, managers want to handle any issues immediately.

A tenant will not want to stick around if you don’t handle a broken heater or jammed plumbing as quickly as possible.

Whether in-house vs. outsourced is better ultimately comes down to what strategy will allow your property manager to solve problems immediately.

What’s your client retention strategy?

Ken implements a policy of making sure one of his employees reaches out to every resident, every month.

He also hired a relationship manager to contact new tenants about the move-in process right away.

And he has his team reach out to tenants well before their lease is up … six months before, in fact … to check in and get tenants thinking about renewing their lease.

He shoots for a 50 to 60 percent retention rate.

What kind of tenant screening do you do?

Ken runs a criminal background check and a sex offender check. Someone with terrible credit and multiple evictions is obviously not the ideal tenant.

What advice do you have for new investors?

Going into property management as a new investor with no prior knowledge can be a recipe for disaster.

If you really, truly, have the time and can show up, you could successfully be both owner and property manager, says Ken.

But if you’re just doing it to save money or don’t have time to have your boots on the ground, disaster is a certainty, not a possibility.

The golden rule of property management

We love talking to Ken because he has a “No BS” policy. He has a ton of experience, and he’s not afraid to share it.

He’s also always looking to learn. For example, he’s been incorporating social media into his marketing strategies over the past few years and is always looking to learn how to use new technology.

If you want to read a whole book of tips and tricks, we highly recommend you check out his book, The ABCs of Property Management.

Looking for more property management advice? Check out Terry’s Tips for Happy Tenants, a report compiled by business owner Terry Kerr that you can find on our website.

Want to know our golden rule for flawless property management? Treat each tenant like they’re gold.


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.

Impact of Zoning Policy on Prices and the Path of Progress

Zoning, zoning, zoning.

It’s a big deal in cities like San Francisco and New York … but what is it, and what impact does it really have on YOUR real estate investments?

In this episode of The Real Estate Guys™ show, we’ll discuss the way zoning can limit available land and have a huge impact on supply and demand cycles.

To zone in on this issue, we invited a special guest to present his take on how zoning has affected property markets in the U.S.

Listen in! You’ll hear from:

    • Your zoning-in host, Robert Helms
    • His zoned-out co-host, Russell Gray
    • Economist and Cato Institute fellow, Randal O’Toole

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Supply and demand isn’t so simple

Supply and demand seems like a simple concept. But there are a surprising amount of inputs that affect both sides of the equation.

Capacity to pay can crimp demand by limiting the number of people who CAN buy property, regardless of whether they WANT to buy.

And on the supply side, market factors restrict how much property is available to sell for a particular use.

It can be difficult to identify why markets with thriving demand and appropriate supply are so successful compared to similar but less profitable areas.

But part of real estate investing is identifying factors of success … before an area starts booming. Little details, like school district boundaries and zip codes, can have a huge impact.

Other government designations, like zoning restrictions, can have a monumental effect on housing value.

What happens when zoning rears its ugly head

Zoning has a tangible impact on the cash flow you can generate.

When previously residential areas are rezoned for commercial use, real estate investors can net quite a bit more bang for their buck.

On the other hand, failing to take into account zoning restrictions can completely crush attempts to make a profit.

For example, the owners of one church in Palo Alto found out the hard way that the building wasn’t zoned for commercial use.

In that case, the church had to stop leasing space to a dozen commercial tenants after the city cracked down on them for violating zoning restrictions.

So why do cities have zoning in the first place? And why do some cities have strict zoning requirements, while others, like Houston, have almost none?

Zoning allows the government to plan the future of certain areas in order to maximize the impact of public transportation, designate areas for certain use types, and even increase land values.

It doesn’t matter whether or not you’re a fan of the government butting their heads into property owners’ decisions about what to do with their land.

The truth is, there’s not a lot you can do about it … except use zoning (or the lack thereof) to your benefit.

Zoning is an important factor in the flow of people and money into and out of certain areas.

It’s your job to pay attention to zoning so you can invest in the areas that attract people and money.

Don’t get caught up in the way you want the world to be.

You invest in the real world … and confronting the brutal facts is the only way you can make good decisions.

What a public lands expert has to say about zoning

We were honored to chat with Randal O’Toole, an economist and senior fellow at the libertarian think tank Cato Institute. Randal focuses on urban growth, public land, and transportation issues. He gave us a bit of a backstory on zoning.

Randal said zoning began in 1947 with Britain’s Town and Country Planning Act … and quickly spread across the world.

Randal has strong opinions about zoning … and we appreciate his point of view because we think it’s smart to expose ourselves to a variety of perspectives.

Randal noted that in the U.S., anyone can own land … but what you can DO with that land is limited.

For example, some areas in California are zoned for minimum density. This means owners need to develop properties that will accommodate a certain number of people.

He also noted that there are no markets in the U.S. that are short of land itself … areas with highly reported housing shortages often suffer from a lack of developable land.

In the Bay Area, for example, 17 percent of land has been urbanized and 20 percent is set aside for public parks.

That leaves a whopping 63 PERCENT of land that is privately owned, but undevelopable due to zoning restrictions.

California as a whole is the most heavily populated state in the nation … yet 95 percent of its population lives on 5.5 percent of the state’s land, and it’s not because there isn’t land to spare.

It’s Randal’s belief that government restriction of land use creates a steep supply curve, causing huge fluctuations in pricing and eventually creating bubbles in the housing market.

Zoning requirements created the huge housing bubbles that led to the economic recession of 2008, Randal said, and are the reason that places without land regulation didn’t get hit as hard as other areas.

Randal also noted that zoning results in an exodus of low-income people who can no longer afford markets where zoning has driven values up.

This phenomenon hits vulnerable populations particularly hard, pushing people from highly zoned cities like San Jose to low-zoning cities like Houston.

Relaxing land-use laws, Randal suggested, would reverse the transfer of wealth from the poor to the rich and make land ownership more equitable across the board.

But changing those laws will require the courts to take action.

Interested in Randal’s take? You can read more of his work, including books on home ownership and government planning, at the Cato Institute website.

Zoning as a factor in housing market bubbles

We think Randal’s take on the economic crisis of 2008 is pretty fascinating.

We spent all of 2008 trying to figure out what caused the housing bubble. Traditional theories focus on the economy, the federal government, and the banking industry.

Randal has a completely different take. It’s his view that crisis-level housing bubbles are caused by the restriction of property supply, limiting the ability of the market to meet demand.

And Randal’s theory makes sense … the economic crisis affected different markets much more severely, and the ones that were impacted the most had the strictest zoning policies.

Our take is that a combination of economic and zoning factors caused the recession.

Although zoning may seem like a small factor, it’s something we’ll be paying a lot attention to going forward.

How to profit from zoning restrictions

Zoning isn’t necessarily all bad.

Pay attention to zoning restrictions, and you can find BIG OPPORTUNITIES.

When areas that have outgrown their original use are rezoned, investors are presented with a chance to increase property value.

Take the meatpacking district of New York City, for example. An area formerly used for, you guessed it, industrial meatpacking operations, is now a thriving mixed-used area packed with residential and commercial properties.

But sometimes, bureaucracy can’t keep up with the evolution of society.

As an entrepreneurial guy or gal, it’s your job to look at the market and evaluate what it needs.

Don’t get confused or infuriated. Pay attention.

Ask yourself:

  • Is a neighborhood on the verge of transitioning from one use type to another?
  • Can you influence the zoning of a property (for example, by stepping down the zoning)?
  • How can you meet demand and stay within the zoning restrictions of your city?
  • What zoning practices do the markets you’re interested in follow?

From one perspective, zoning can be a big problem. From another, it can create golden opportunities.

It’s up to you to decide which perspective you’ll take.


More From The Real Estate Guys™…

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

The Role of Investors in Bouncing Back from Disaster

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

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

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

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

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

You’ll hear from:

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

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Finding opportunities in the midst of tragedy

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

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

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

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

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

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

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

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

But the opportunities don’t stop there.

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

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

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

Smart choices at opportune times

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

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

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

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

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

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

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

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

Putting money to work by investing

Let’s look at properties that fall into distress.

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

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

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

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

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

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

A smart syndication opportunity

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

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

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

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

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

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

Preparing for the next disaster

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

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

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

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

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

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

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

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

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

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

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


More From The Real Estate Guys™…

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

Ask The Guys – Apartments, Retirement, and Offshore Entities

Our listener questions this week run the gamut from extremely practical to extremely theoretical.

As always, we weigh in on topics that are relevant to YOU … listen in to hear our ideas on apartment management basics, diversification, and more … plus some podcast recommendations and a whole lot of info on one of our favorite places, Belize.

Keep in mind that we are not legal or tax professionals. We do not give advice. The ideas in this show are simply that … ideas.

In this edition of Ask The Guys you’ll hear from:

  • Your deal-hunting host, Robert Helms
  • His tag-along co-host, Russell Gray

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Question: What expenses do I need to budget for as an apartment building owner?

Arnie in Minneapolis has a 20-unit apartment building that provides student housing near a university. He asked us to explain what his basic expenses will be. First, the obvious:

  • Utilities. These can get a bit tricky, though, because the tenants may not pay all the utilities directly. You may have to pay for gas and water, for example.
  • Taxes. Make sure you’ve done your research and know how and when taxes are reassessed in your area.
  • Property insurance. This is a must.
  • Management costs. Consider how much staff you’ll need and whether you want to hire third-party management.

And the less obvious:

  • Marketing and advertising costs. Marketing your property helps cut vacancies. For a college property, brochures may be one option.
  • Legal costs. Make sure you have a legal team in place and a process for handling tenants with bad debt.
  • Maintenance. Small but necessary services like pest control and carpet cleaning can add up.

Although apartment owners have to juggle a list of expenses, there are ways they can make some extra income. Apartments geared toward both college students and other types of residents can offer paid laundry services, parking spots, and even furniture rentals.

Question: I’m a new investor. Should I diversify with different product types and markets now, or later?

This Texas listener started investing in the past year and is trying to hone his personal investment philosophy. Ryan said he owns two single-family homes, but is also interested in commercial, agricultural, and lifestyle properties.

He wanted to know whether it’s wise to start diversifying now or smarter to wait.

The simple answer is it’s up to Ryan. How much completely depends on the amount of time, energy, and focus you have to spare.

Having a great team can be the make-or-break factor.

Beginners are starting without the stable of resources that established investors have, and access to a mentor can make all the difference in whether you’re successful with a specific product class or market.

Being in the hottest niche doesn’t matter much if you don’t have a great team to support you.

We recommend Ryan spend some time poking around.

Diversification is great … but it means two markets, two sets of knowledge, two teams.

A single investor can only know a handful of markets really well, so getting well-acquainted with a single market can be a good place to start.

It all comes down to your goals … and passions.

The more you love a market or product type, the longer you’ll stay in the game.

Ryan, search your priorities and keep figuring out what you really want to do. What’s right for you may be honing in on single-family, or it may be finding a mentor to help you get involved in other markets.

Ultimately, the right choice is completely dependent on YOU.

Question: What do I need to know to get involved with a lending deal?

Steven from Havelock, North Carolina got an offer to be part of a private lending deal … but he wants to know how he can educate himself before he says YES … or NO.

Lending deals come in two forms … private loans, or divided private placements.

They all boil down to the same components:

  1. A piece of collateral against which you’re lending.
  2. A borrower to whom you’re lending money.
  3. A servicing process, to collect payments and distribute money to investors.

Although the basic process is pretty simple, it’s become more complicated since 2008. If you’re underwriting the loan, you need to know as much as you can about the following:

  • The management team’s process
    • How they manage and service loans
    • How they deal with default loans
    • What their basic guidelines are for protective equity
  • Projections for how much the market can pull back before the property in question is underwater
  • The debt-to-income ratio … how much income is available to service the loan

If you’re only investing, not underwriting, you don’t need to know every detail … but you do need to know enough to know that the people doing the loan know what they’re doing.

Take a look at the company’s track record, advisors, and business philosophy, policies, and procedures.

Make sure they have a realistic model for getting you a ROI.

And always make sure you have advisors … a smart legal team can tell you in minutes whether a deal is as good as it looks.

Question: Do you have any podcast recommendations?

Robert from Madison, Alabama said he’s obsessed with our podcast (thanks, Robert!) and also listens to Robert Kiyosaki and Peter Schiff.

He wondered whether we had recommendations for other podcasts in line with our thinking and perspective.

First, a caution … don’t seek out a single perspective!

As a real estate investor, you always want to strive to stand on the edge of the coin. Get multiple perspectives and then let those ideas interact with each other.

Peter Schiff and Robert Kiyosaki are absolutely valuable listening, but they don’t necessarily focus on real estate investing. If you’re looking for practical, tactical advice, consider the following:

Almost every real estate niche has experts producing media … if not podcasts, certainly books and courses.

Other wealth-related recommendations include:

We heard of a great technique for reading books, and we think it applies to podcasts too … read three chapters (or listen to three podcasts or so) and see whether the content grabs you.

If it doesn’t, it’s not worth your time!

Question: Do The Real Estate Guys™ provide mentoring services? How do I find a good mentor?

While we’re honored that Grant, from Denver, Colorado, would like to have us as his mentors, The Real Estate Guys™ do not provide individual coaching or mentoring services.

We coach the syndication mentoring club … a group for investors who have gone to our Secrets of Successful Syndication event and have a good baseline for investing and syndication.

That’s it.

However, we think there are lots of great resources out there for coaching.

Interested in a specific product type? Experts like Gene Guarino can coach you in residential assisted living. Other experts can help with everything from apartment buildings to commercial spaces.

Our recommendation … figure out what kind of help you really need.

Do you want someone to make you stick to deadlines and goals? Someone to give you practical resources? Someone to help you make connections?

Once you’ve identified your needs, take a look at who’s out there and do your research. Check in with former students to see if there’s evidence the program was successful.

Question: Do you have any tips on lifestyle investing in the Mediterranean?

Bob lives near dark and stormy Seattle. He and his wife are nearing retirement and want to spend their winters somewhere warmer … preferably the Mediterranean.

They’re looking for a part-time vacation home, part-time rental situation.

He asked whether we had any tips on researching the cost, feasibility, and process for buying a property in this region.

Unfortunately, we don’t have a lot of experience in this specific part of the world.

But we do have a lot of experience investing all over the world … enough to know that legal structures vary incredibly from jurisdiction to jurisdiction.

The key to success? Always get plugged in with someone who knows the market from a local point of view.

It would be a smart idea for Bob to plan a vacation … narrow down his interests to a specific market and work on making strategic relationships while he’s over there.

Yes, we just recommended a vacation!

Bob also needs to work on building a legal and tax team in the U.S. to deal with sometimes complicated foreign legal structures.

The short answer … worry more about acquiring relationships than acquiring knowledge.

Questions: Belize, Belize, Belize!

We had three listeners ask questions about our Belize Discovery Trip.

Travis, from Maple Grove, Minnesota, wondered whether investors have to be extremely wealthy to invest in Belize.

Along the same lines, Brad, from Bakersfield, California wanted to know the type of investments typically available in Belize … and whether potential investors can work around lack of available financing.

We believe there is a ton of opportunity in Belize … and you don’t have to be über wealthy to take advantage of it.

Belize doesn’t offer traditional bank loans. So investors have a few options.

One option is to go in on an investment with a group.

Another is to refinance a property you own in the U.S. and use the equity to fund a deal in Belize.

No matter the route you choose, be smart about it. Understand the supply and demand dynamics.

Ask yourself exactly what you want … whether it’s lifestyle, cash flow, asset protection, equity, or something else … then visit Belize and see whether the market will help you achieve your goals.

If the answer is YES, the next step is to build a team … and you can do that by joining us on our field trips and getting to know the people who will help you put together a great deal.

Our third question about Belize took a slightly different tack … Craig, from Rosemount, Minnesota asked whether an IBC is the only corporate structure two parties would need to go in on a deal together.

This is a legal question. And we’re not legal advisors.

But we can tell you that although people often use entities to buy properties in foreign coutnries, it’s perfectly acceptable to own property in your name.

If you do use an IBC, you’d have to use an IBC from a different country. IBCs can’t be used to do business in their country of origin.

The bigger question is making sure you understand what you’re trying to accomplish, why you’re doing it, and what the possible ramifications are.

Do your homework. You don’t want to learn a lesson by making the wrong mistake.

Yearning for more in-depth information about IBCs, financing, and buying in Belize? Come on our field trip!

Spend time with Robert and other investors, build relationships, investigate the market, and enjoy all Belize has to offer for three and a half days.

We guarantee you’ll learn something … and have fun too!


More From The Real Estate Guys™…

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

The Case for Entrepreneurship

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

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

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

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

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

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

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

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Getting his start with a creative solution

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

We asked him how he got his start.

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

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

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

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

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

Embracing change and failure to find success

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

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

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

His solution is simple … “Follow the eyeballs.”

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

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

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

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

What is your business model?

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

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

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

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

What do new entrepreneurs need to focus on?

Kevin gave two great tips for budding entrepreneurs:

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

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

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

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

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

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

Breaking paradigms with syndication

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

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

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

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

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

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

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

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

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

All investors have to do is sit back and watch.

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

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

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

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

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

Affording to lose and losing to WIN

Not everything these excellent entrepreneurs did worked.

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

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

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

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

But it can also be exciting.

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

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

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


More From The Real Estate Guys™…

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

Clues in the News – Housing Sales, Home Improvement and Foreign Investors

Every real estate investor is afloat in a vast economic sea. As an investor, it’s easy to believe you’re on stable ground … only to wake up and find you’ve drifted far from your goals.

We believe SMART real estate investors (you!) have to act a bit like ocean biologists … tracking the winds, noting the undercurrents, and keeping detailed observations of the environments you find yourself inhabiting.

One way to take your notes is to read the news. And in this edition of Clues in the News, we bring the news to you! Listen in to hear from:

  • Your economic sea biologist host, Robert Helms
  • His lowly research assistant, Russell Gray

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Slumps in home sales, builder confidence

This is a trend we’ve been observing for a while … existing home sales are decreasing. In June, they dropped 1.8% to the second lowest level this year.

If we stopped right there, you might think the economy is in trouble because people aren’t buying houses. But let’s take a closer look.

While sales of homes overall are dropping, the median home price in June was $263,800 … 6.5% higher than the same time last year.

All housing types aren’t equal. While prices are rising for houses in the 250k+ category, they’re falling for homes under 100k.

Just further evidence, like Robert Kiyosaki says, that the rich are getting richer while the poor are getting poorer.

The article linked above quotes Lawrence Yun, NAR chief economist, who says, “The demand for buying a home is as strong as it has been since before the Great Recession.”

So why are home sales dropping?

Many factors could contribute to a slow market … the growing number of millennials with high debt and inadequate income, for example. And the flux of institutional investors entering the real estate market.

Severe housing shortages are also leaving folks on the sidelines.

While the average median home price has risen, the median price of a new home has dropped by 3%.

Homebuilder confidence in recent months has reached record lows … leaving buyers hoping for a new home in the lurch.

If you look at the stock market, it would be easy to believe everything is peachy. But look at homebuilders … and you’ll see an indicator that not everyone has a bright outlook right now.

Fewer new homes, more home improvement

Speaking of homebuilders, housing inventory is at a 30-year low.

This while home prices have risen to pre-crisis levels in most markets (and far higher in a select few).

It’s a conundrum. Why are homebuilders moving at a snail’s pace? Why is homebuilder confidence so low?

Take a look at capital markets, and you’ll get a partial answer … real estate is heavily dependent on financing, and while the markets may have recovered from 2008’s recession, banks are still wary about giving loans.

In addition, 78% of homebuilders complain that labor shortages are their No. 1 concern.

Reliable, skilled labor is difficult to find. One reason? Construction workers found different careers during and after the recession … then never returned to the home-building business.

In lieu of buying new homes, homeowners are instead spending record sums on home improvements.

According to an article in the Wall Street Journal, “A shortage of new single-family homes across the U.S. is pushing up prices and locking many buyers out of the market.”

Note the certainty in that statement? Reporters are quick to assign cause and effect.

It’s your job to look at the bigger picture and see what’s going on. Then reexamine the conclusions made in the news … and draw your own.

Sales to foreigners up, buyers and sellers struggle outside U.S.

While home sales overall are down, Forbes reports that foreign investments in U.S. properties have skyrocketed recently. Sales to foreigners are up 49% over last year.

If you’re a U.S. investor familiar with the current political situation, you may be wondering what these investors are thinking.

But think about it … the U.S. has strong property rights, lots of renters, a relatively stable government, and strong infrastructure.

Buyers from China and Canada want to move their cash to a place where they see a better long-term future … and the U.S. fits the bill.

Speaking of Canada, a model produced by Better Dwelling predicts that Canadian home prices still have farther to fall.

Canadian real estate markets started crashing when the Canadian government made policy changes that hinder foreign investment.

It’s a lesson for investors to look at both the economics and the politics of a situation … then align themselves financially to policy decisions for the smartest payoffs.

You also need to be aware of the data … and what that means in terms of rising trends. While the Canadian housing market is struggling, lonely urban centers are predicted to be the next big real estate trend in the country.

While our friends across the border are seeing home prices fall drastically, our friends across the pond are seeing a dearth of affordable housing. 

An article we found recommends the London government lower tax rates for new homeowners and suggests 100% mortgages as another option.

The alternative is that London will see a “brain drain” as young workers unable to find affordable housing move outside of London.

This is a problem in the U.S. too, as large companies seek to find locations where workers can afford decent housing and quality-of-life measures are high.

The good thing about problems? (And there is a good thing.) If you’re creative, a problem is only an opportunity to create a solution.

Businesses and people need good places to live. Real estate markets have the opportunity to create them.

Homelessness and hedge fund managers

A recent article in Bloomberg listed the cities where rent hikes leave the most people homeless.

The bottom line is markets with less slack see more homelessness. The message for you? Slack is good.

It’s crucial for you to dig into your local market and figure out the dynamics driving outcomes. Many things can put a squeeze on your bottom line … make sure you’re aware of current and potential trends in demographics, jobs, and the local economy.

Winning markets don’t require a good economy to stay viable. They allow you to stay profitable even when factors change and be the recipient of demand when other markets are struggling to keep prices down and renters happy.

Remember, when you invest in the rental marketplace, you’re getting into a long-term contract. But a stable one.

Stability is probably one of the big reasons hedge fund managers and other wealthy investors are making a break for real estate.

They see the opportunity for a safe haven … but most don’t want to get their hands dirty. If you do, you may find doors opening for you.

Tune in to our next episode to hear an amazing guest make his case for entrepreneurship.

Until then, go out and make some equity happen!


More From The Real Estate Guys™…

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

Pig in a Python – Investing in Undeniable Demographics

There are three undeniable certainties in life.

We are born. We live. We die.

We don’t have control over the birth and death part, but we can decide how we want to live.

In this episode of The Real Estate Guys™, we have invited Gene Guarino to teach us his secret solution to the age-old problem of, well … aging. Gene won’t be sharing secrets about erasing wrinkles, but he will teach us how to invest money wisely by following one undeniable demographic — the Baby Boomers.

Gene has trained thousands of investors and entrepreneurs about how to invest in and operate Residential Assisted Living homes. And today Gene is teaching us how the baby boomer generation can bring a financial boom to your bank account.

Listen in to the show today to hear from:

  • Your timeless host, Robert Helms
  • His hopefully-on-time co-host, Russell Gray
  • Founder and CEO of Residential Assisted Living Academy, Gene Guarino

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Mums the word

Gene Guarino started looking at his finances and his family a little differently years ago when his mother was getting older and needed more daily assistance.

Typically when families decide to move aging parents into care centers, they think there are only two options:

1) high-end, budget breaking assisted living communities or

2) government-subsidized centers with too many tenants and not enough staff.

When Gene started looking at the big-box care centers, he wasn’t too impressed. He wanted his mom to feel at home. He wanted her to feel like she was part of a close-knit community.

And that’s when he had his ah-ha moment.

In order for his mom to feel at home, she actually needed to be in just that … a home!

Many assisted living centers for the elderly are large structures housing anywhere from 100-500 residents. This hardly makes it easy to feel connected to your community.

Gene does assisted living differently and he’s teaching thousands to do the same.

The waves of change

Gene has a little nickname for the impact the Baby Boomer generation is going to have on just about everything from real estate to health care. He calls it the “silver tsunami.”

“You can’t argue with the demographics,” Gene says. “We are talking a demographic shift that is undeniable. There are elderly citizens in every state. You can make money doing this anywhere.”

So what exactly is Gene doing about the silver tsunami?

He invests in regular houses, makes a few key renovations, adds in tenants, staff, and caregivers … and just like that, he goes from landlord to business owner.

The philosophy of Residential Assisted Living appeals to Gene’s customers because they feel comforted that grandma or grandpa will be living a normal lifestyle.

And it appeals to Gene’s personal philosophy to “do good and do well.”

“We always have to remember that our tenant is not actually our customer,” Gene says. “Our customer is who we like to call ‘Daughter Judy.’ In other words, the tenant’s children who are looking for a clean, safe, happy home where their beloved parent will be well cared for.”

Home sweet home

Care and accommodations are crucial to the business model’s success. The average Residential Assisted Living property will house 10-12 residents. Living spaces such as offices and dining rooms can be converted into bedrooms.

Each state has their own rules regarding things like occupancy and structural regulations.

“We have to remember this is a home, not a hospital,” Gene says. “So it needs to feel comfortable. An ideal property to convert would be a single-level ranch style house divided into 300 square feet per resident.”

Over the years, Gene has found that some areas are better than others for Residential Assisted Living. As with all real estate it’s always about location, location, location.

Gene prefers to stay away from HOA neighborhoods because although they can work for the facility, they sometimes cause a little more headache than needed.

“When selecting a location, think about the community,” says Gene. “Don’t buy the property first with the intent to fill it up. First find your tenants and they will lead you to the prime real estate.”

The learning curve

This style of assisted living is new. It’s innovative. Gene started traveling uncharted territory, but he’s now the expert tour guide anxious to get new recruits onboard.

Each year Gene personally hosts the Residential Assisted Living Academy where individuals can learn the business model, tour properties, and speak to field experts and first-time owners.

This three-day, intensive course benefits the students because they can dive right in to see what life is like as a landlord and business owner.

Once finished with Gene’s courses each graduate has the confidence, systems, resources, and support to successfully operate their own Residential Assisted Living business.

Interested in seeing the possibilities for you?

Click here to learn more about Residential Assisted Living Academy Training.

As we like to say … go make some equity happen!


More From The Real Estate Guys™…

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

Real Life Lessons – Raising Capital to Fund Bigger Deals

Periodically, we like to bring you stories of real-life investors … investors who’ve been in your shoes and made it up rocky paths to emerge better than they started!

The investors on our show today all fell into real estate investing in different ways, but one thing brings them together … they all attended our Secrets of Successful Syndication event … and then turned their education into effective action by becoming successful syndicators!

We asked each guest to tell us more about how they got started, what happened when they ran out of money, and some of the setbacks and successes they’ve each experienced.

Behind the mics for this edition of Real Life Lessons:

  • Your psyched-about-syndication host, Robert Helms
  • His seriously silly co-host, Russell Gray
  • Engineer turned syndicator, Sep Bekam
  • The deal hunter, Peter Halm
  • Self-storage empress, Linda Murray

Listen



Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Why syndicate?

At some point, every real estate investor reaches a crucial moment where they have, for all intents and purposes, run out of money.

At that point, investors have two paths … they can take the path of least resistance and simply give up … OR they can harness their expertise and provide investment opportunities to other investors through syndication.

Syndication is a more effective version of “no money down.”

The truth is, there’s a ton of money floating around out there if only you have the right value proposition.

Syndication offers you the opportunity to build a big business with cash flow, long-term gains, and profit sharing … and all you have to do is find and broker decent investments.

You have the chance to create your own perfect life. Ask yourself … What do I want to get good at? What do I like to do?

Then focus on building specialized skills. You can’t be an expert in everything.

Syndication is like assembling a puzzle … you might only be a small piece of the whole (albeit a crucial one).

All of our guests today have taken the leap of faith into the world of syndication … let’s take a look at their stories!

From fear to freedom

If you met Sep B. years ago, before he started investing, it might be hard to make the connection between the shy, analytical engineer of yesteryear to the full-time syndicator of today.

When Sep started out, he had invested his personal money in two fourplexes in his own state. He had no business background and lots of fear about the unknowns of investing out of state.

“I was very motivated but didn’t know where to start,” says Sep. But Sep knew he had no money of his own left … and his family and friends were starving for yields.

So what did he do? It’s simple. Sep constantly looked for deals.

Six months after his first Secrets of Successful Syndication seminar, Sep closed on his first syndication deal.

Some of Sep’s major takeaways from his syndication experience:

  • Match potential investors with their needs and wants. Sep found investors were more likely to come to him when he emphasized his team, put strong systems in place to protect capital, and crucially, matched investors and investments appropriately.
  • Always be okay asking questions and learning from others. “It takes a certain level of curiosity to ask questions even if everything isn’t going right,” said Sep.
  • Find ways to mitigate obstacles. Sep and his team ask everyone they work with a series of questions to preemptively make sure companies and investors are the right fit for Sep’s syndication business.
  • Make small, controlled mistakes and learn from them. New syndicators will experience challenges along with success … and Sep’s certainly had his share of missteps. These days, he’s constantly fine-tuning, making sure he is adapting to changes, working with the right team, and offering the right product to tenants and a reliable source of passive income to investors.
  • Transition gradually from part time to full time. Before transitioning, understand how much passive income you need, Sep advises. Then break your goals into actionable, realistic steps.

From house flipper to deal hunter

Peter H. started out flipping out houses in Los Angeles. It was slow, hard work … paychecks only materialized when houses were sold, and prices in LA started skyrocketing, making deals hard and hard to find.

In January 2016, Peter attended Secrets of Successful Syndication. A year and a half later, he’s on his fourth syndication deal.

Some lessons he’s learned along the way:

  • Don’t tie yourself to one particular asset class. Peter’s deals have ranged from a mobile home park to multi-family apartments and currently to workforce housing. “If we discover a natural demand, we’ll jump in,” says Peter.
  • Align yourself with people who have great experience and access to funds. When Peter started doing deals that were big enough to be uncomfortable, he made sure he put himself out there and recruited people who knew what they were doing. “Everything was an interview process,” Peter said. “We asked a ton of questions.”
  • To build a network of prospective investors, listen to investor needs. By listening to people and discovering their wants, needs, and worries, Peter can file away what he’s learned until he finds a deal that fits a potential investor’s philosophy. It’s a win-win situation.
  • Syndication is not for everybody. “If syndication were really easy, everyone would do it,” noted Peter. If you are determined, want to work with people, and are willing to listen, syndication might be the path for you.

What is Peter’s philosophy? Treat everyone as a partner. “We’re all in this together, and we’re working toward a common goal of everyone wins,” said Peter.

From housewife to self-storage pro

Linda H. got her start in investing the hard way … when she realized she and her husband didn’t have enough IRA savings to sustain themselves during retirement.

She attempted to solve the problem by starting and then selling a business, but unfortunately, the business crashed before the deal could go through.

At that point, she switched to real estate, where she figured she could have more control.

She bought a fourplex, then a farm, then an apartment building. Then she ran out of money.

Listening to podcasts while she drove to each job site, Linda realized she didn’t necessarily have to go through the banking system … she could syndicate.

The transition from investor to syndicator was an uphill battle, Linda says. “It took a while to figure things out.”

Starting out as an inexperienced housewife, Linda had to wing it … but with some hard work, eventually her efforts paid off.

Today she just closed on two properties, has 850 self-storage units, and is currently working on building units at another site.

Her insights:

  • Find the right partners. Linda started out as a lone wolf, but after attending a seminar on self-storage, she met some people who gelled with her personality and they pooled their money.
  • Complementary skillsets can enhance your business. Linda had trouble raising money herself, but was skilled at the business side of syndication. Her partners were better at raising funds. Each person was able to focus on their own strengths.
  • People want what you have to offer. Linda noted that a lot of average people think the only option for investing is the stock market, which doesn’t offer a high degree of control. People are looking for options but don’t have the time to manage an investment … and as a syndicator, you can provide an answer, she says.

Making a REAL difference with real estate. One of our guiding philosophies is that “everything we do matters if it makes a difference in the life of real folks.” We think it should be one of yours, too.

As an investor or a syndicator, one of your goals should be to make sure people are better off with you than without you.

Another maxim to stick by? We like the words of Dave Zook, who says, “You can be conventional or you can be wealthy. Pick one.”

If you’re a real estate investor … heck, if you’re listening to this show … you’re not normal. And that’s a good thing!

The world needs you. You have an opportunity to add value to other people’s lives, to fill holes left by bad stewards and uninspiring investment options.

Are you ready to take the leap from investor to syndicator? We highly recommend getting around smart, successful people.

One of the best ways to do that is to come to our Secrets of Successful Syndication seminar.

As Tony Robbins says, “Success leaves clues.” So get around people who are super successful … and pick up some clues about how to find more success yourself!

Be the captain of your own ship. And remember, this business isn’t just about making money … it’s about making a difference.


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.

Jim Rogers, Steve Forbes and Peter Schiff from Freedom Fest

Although real estate investors deal with real assets and not volatile holdings, we think it’s crucial to understand the larger economic picture.

We’ve been attending Freedom Fest since the 2008 financial crisis.

Conventions like Freedom Fest bring together leaders of all types and set the stage for respectful dialogue between smart people with varying opinions.

We’re thrilled to bring some of those smart people on the show today and get their insights on U.S. and world economics.

A disclaimer … our guests today lean right, politically. The Real Estate Guys™ don’t endorse any political viewpoint.

Whichever side of the spectrum you stand on, we recommend you step back for this episode … and look at the information presented from the edge of the coin, objectively.

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

  • Your freedom-loving host, Robert Helms
  • His fun-loving co-host, Russell Gray
  • Billionaire publisher, Steve Forbes
  • Legendary investor, Jim Rogers
  • Economic pundit, Peter Schiff

Listen




Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

real estate podcast on itunesSubscribe on Androidyoutube_subscribe_button__2014__by_just_browsiing-d7qkda4

 

 


Review

When you give us a positive review on iTunes you help us continue to bring you high caliber guests and attract new listeners. It’s easy and takes just a minute! (Don’t know how? Follow these instructions).

Thanks!


Steve Forbes

We hope you’re already familiar with Steve Forbes, head of one of the world’s most influential business magazines (and two-time presidential candidate in the U.S.!). We asked Steve for his thoughts on the world of media.

Steve shared a quote from his grandfather, B. C. Forbes, the founder of the magazine, who said, “The purpose of business is to produce happiness, not pile up money.”

“I always try to remember the spirit of Forbes,” Steve told us. That means adapting to the age of online media and “fake news.”

“Businesses have an incentive to get their message out there,” said Forbes. Forbes publishes approximately 110,000 articles a year on the web, always aiming to maintain a unique angle … one that doesn’t resort to tabloid journalism.

We asked Steve how people can be smart consumers of media. “Compartmentalize when you read the news,” he told us, “and concentrate on what’s actually being done.”

For example, Steve sees exciting things happening in the areas of deregulation and tax cuts. He’s keeping his eyes peeled to see what will happen.

What does Steve think about the state of real estate investing in the U.S.? “Location, location, location!” (We agree wholeheartedly.)

“In a vibrant economy, people want spaces to work and live,” Steve said. “Prosperity solves a lot of problems and covers a multitude of sins.”

Jim Rogers

Jim Rogers is a legendary investor, and we’ve been itching to do an interview with him for years. We asked him for his thoughts on the state of today’s markets.

“Interest rates have never been this low,” Jim told us. “The central banks have made mistakes. Debt has gone through the roof across the world.”

His conclusion? “The next time we have a problem, it will be worse than 2008 because there’s so much debt.”

What do U.S. investors need to know about the global picture? “All investors have to understand the world now in 2017,” Jim said. He advised investors to think … which nations have the largest economies? Which nations are the biggest creditors? A clue … all these countries are in Asia.

And which are the largest debtor nations? “Look out the window,” Jim said.

What can folks do to stay sharp in a multi-media world? Jim had a few words of advice. He told us investors need two essential things … knowledge and judgment.

How can investors obtain both knowledge and judgment? Read and listen to a lot of different media types from different sources and countries. “You won’t understand just by reading the American press,” he said.

Once you obtain a wide variety of perspectives, that’s when you use your judgment to sort out what makes sense.

And what about real estate? “Many cities are in a bubble right now. But in rural areas, there isn’t quite as big a bubble,” Jim told us. He sees the most promising opportunities in agricultural investing (a topic we love to discuss!).

“I don’t know how to farm,” Jim admitted. Luckily, there are many ways for non-farmers and small investors to align themselves with agricultural investments today.

How about gold and silver? “I own it. I haven’t been buying it since 2010. I hope I’m smart enough to buy a lot at the right time,” he said.

Jim predicts that people will eventually lose confidence in paper money. When that happens, he says people will buy land, gold, and silver. “Why not start today!” he said.

Peter Schiff

We asked Peter what’s changed and what’s new since the advent of the Trump administration? “Not much has changed with Trump,” he said.

He told us he sees a lot of talk and very little action, a lot of hypocrisies.

What about the Fed’s interest rate hike? “They’ve raised rates, but not much.” Peter noted we’re at the same levels we reached at the bottom of the housing recessions and told us the Fed’s talk of quantitative tightening is “a bunch of talk.”

In an age of conflicting reports, what does he think investors should pay attention to? “Actually look at the markets,” Peter advised. “Look at the dollar, the price of gold. There are still lots of bubbles in the market.”

He noted recent high-profile disasters happening in the stock market and the possibility of less market protection from the Fed. “The key is to pay attention and be prudent.”

What can investors do in tiring times? No. 1, “Diversify out of the U.S. dollar,” said Peter. “The dollar is a tailwind for foreign stocks, which will be a safe haven.”

We also asked Peter about the advantages of obtaining residency and doing business in Puerto Rico. He has first-hand experience … he lives there with his wife and kids.

“What people don’t understand is that Puerto Rico holds all the benefits of being in the U.S. without the cost,” Peter said. Residents of PR don’t have to pay federal income tax and gas tax, Obamacare penalties and taxes, or tax on capital gains.

Choosing the right ingredients for your investment blender

While none of our three guests today are primarily real estate investors, they possess a wealth of knowledge on business trends and economics.

These guys study the key components of what you put into your own investment blender … taxes and investing, owning property, job markets, financing, and more.

We love talking to knowledgeable people like Steve, Jim, and Peter because they take those essential components of the U.S. market and try to figure out where we’ll be years in the future.

If you’re trying to build a real estate empire, there’s nothing more important than being well-informed about a market you might be married to for years or decades to come.

We hope you were taking notes … because like we always say, education is the path to effective action!


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.

Next Page »