Increase Cash Flow Using Powerful Tax Breaks

There’s no such thing as a perfect investment … but real estate sure comes close!

But with any investment … you have to be smart. One important aspect of smart real estate is taking advantage of powerful tax breaks. 

We’re diving deep into one of the best tax benefits that real estate offers to investors like YOU … cost segregation. 

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

  • Your appreciated host, Robert Helms
  • His depreciating co-host, Russell Gray
  • Cost segregation authority, Erik Oliver

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!


Increase cash flow and reduce taxes

You can make a lot of money in real estate … but you can also pay a lot of taxes. 

Today, we’re going to show you how you can increase cash flow and reduce taxes with investment real estate. 

Beyond monthly cash flow from a real estate property, you can also make money as your property appreciates over time. 

That equity is locked into the property until you do something about it … like refinancing or selling. 

You also have the benefit of amortizing a loan. Every month when you make your mortgage payment, part of it goes to pay interest while the other part pays down the principal. Each time you pay down the principal, you own more of the property.

But the way to make money we are focusing on today is … tax benefits!

CPA Tom Wheelwright has taught us that if you want to know what a nation wants its citizens to do with their invested capital … just look at the tax code.

The tax code is a series of incentives … and these incentives will benefit your bottom line and enhance your cash flow.

The tax code can be especially helpful in those early years of purchasing a property when there is a lot of expense … above and beyond what you get over the life of the property. 

We should remind you that we’re not tax advisors or professionals. We give ideas and information. We’ll be sharing a lot today … but sit down with your tax professional before you make any major decisions. 

Make sure you have a tax professional that truly understands this niche … preferably one who owns investment property themselves or whose practice serves a large percentage of real estate investors.

And … don’t let the tax tail wag the investment dog. 

You don’t want to invest in something just because of a tax benefit. Instead, find a great market, a great property, a great niche. 

Then, you’re going to seek to exploit the tax law legally in your favor to the best degree you can. 

Today, we’re going to talk about a tax benefit that most multifamily and seasoned long-term developers and investors know about … but many smaller investors haven’t discovered yet. 

What is cost segregation?

Erik Oliver is an authority on cost segregation. 

Depreciation accounts for a loss of worth in your asset. Some things depreciate, while others don’t. 

Land doesn’t wear out … so it isn’t depreciable. But gutters do … so they are. 

“Cost segregation is simply accelerated depreciation,” Erik says. Many people get into real estate in order to take advantage of the depreciation loss. 

“We depreciate our real estate over either 27.5 years for residential properties or 39 years for commercial properties,” Erik says. 

Cost segregation means that you accelerate that timeline instead of taking 1/39 of your depreciation each year. 

It starts by identifying the different components of your building and segregating out those components into shorter asset lives. 

For example, the IRS allows you to depreciate carpet over five years. Instead of having to lump that together with your 39-year asset cost, cost segregation comes in and puts a value to that carpet, allowing you to depreciate it over a much shorter time frame. 

Accelerating the depreciation means more tax benefits, sooner. 

Let’s put some numbers to it for a simple example. 

If you own a $270K duplex, you’ll get to write off $10K every year against your income for the next 27.5 years without doing cost segregation. 

If you were to do cost segregation on that duplex, the analysts will identify roughly around 30 percent of that $270K and categorize it into 5, 7, or 15 year property. 

Depending on when you bought the property and what the laws were at that time, you may be able to write off all of that 5, 7, and 15 year property in year one. 

That’s over $70K that can be written off in the first year instead of $10K. 

What does an analysis look like?

Cost segregation is a process generally done in conjunction with an engineering firm and accounting firms. 

In order to complete a cost segregation study, you’ve got to have construction engineers that can go in and reverse engineer these buildings, so to speak. 

You also have to have someone with tax knowledge to take that information and make it work for you. 

Many CPA firms will partner with an engineering firm to offer this service to their clients. 

The IRS has actually put out an audit guide that most cost segregation companies follow. It’s 13 steps and requires a site visit. 

“Typically, we’ll send one of our construction engineers out to the property for them to do an inspection,” Erik says. “They’re looking for things like retaining walls outside, drainage in the parking lot, what type of flooring and window coverings are used, etc.”

The resulting reports are pretty detailed … usually about 40 to 60 pages long. They basically line item every component of the building. 

“We do go over everything from flooring to cabinets to countertops. We’ll even go out and count the trees and bushes,” Erik says. 

Cost segregation studies can cost anywhere from $7K to $15K. Erik says he recommends you get an estimated cost for a study for any property over $200K. 

“Sometimes, depending on a number of variables, it may not make sense to do a cost segregation, but you should always look into it in case it does make sense,” Erik says. 

Most cost segregation companies will do a free benefit analysis to make sure that you are going to get significant tax savings from completing the study. 

For more on cost segregation … listen to the full episode!


More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Encore – The Godfather’s Tips for Working with Investment Specialists

When you’re in need of valuable advice … you talk to a Dad. 

In this Father’s Day encore episode, we are revisiting the sage wisdom provided by the late, great Godfather of Real Estate, Robert’s father, friend, and partner … Bob Helms. 

Listen in as Bob shares his top tips for working with real estate brokers who understand what it means to work with investment property. 

To contribute to the Godfather Scholarship Fund in honor of Bob’s life and legacy, send an email request to [email protected] We’ll get you the details!

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

  • The father and host of The Real Estate Guys Radio Show, Robert Helms
  • The father of outtakes and co-host, Russell Gray
  • The father of Robert Helms and The Godfather of Real Estate, the late, great Bob Helms

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!


Advice from The Godfather of Real Estate himself

In honor of Father’s Day, we’d like to share some wisdom from the archives. 

We’re throwing back to late 2018 when The Godfather of Real Estate, Bob Helms, shared his best tips for working with real estate agents that understand investment property. 

That’s the thing about advice from world-class dads … it never gets old! 

Bob Helms spent many, many years actively brokering properties, teaching agents, and managing agents. He knew firsthand why it was so important to find and work with great real estate professionals. 

Our philosophy has always been that you should align yourself with professionals in every category … lawyers, CPAs, real estate brokers, and agents. 

Cooperation, not competition

Real estate is a relationship business … and when it comes to the brokerage community, it seems awfully competitive out there.

But here’s the first secret … The brokerage business and the real estate sales business are really ones of cooperation rather than competition.

More often than not, we need other agents in the community to be out there providing the inventory that we need.

You may have heard of the 80/20 rule. That rule says that 80% of the real estate in a market is sold by 20% of the agents.

“The most active agents in the network know each other,” Bob says. “They’re in deals together. They understand both sides have to win. It’s urgently important that you not practice your business by trying to take advantage of the person on the other side of the transaction.”

Many investors think they have to squeeze every last dime out of the deal. But the best transactions are whenthe deal closes and everyone looks around, high fives, and says, “That’s awesome!”

“When that happens, people also tend to say, ‘Let’s do it again!’” Bob says. “This is a relationship business. It’s a long-term business.”

The typical homeowner moves every four to seven years. When they move, they usually move out of the area completely.

That means, when you help somebody sell their house … they’re not coming back to buy a property from you … and that’s why it is so important to have a great relationship with other agents.

Working with your agent

Let’s talk a little bit about working with your agent.

Bob says that one of his biggest tips is to pay your agents … insist that your agents get paid top dollar.

Why wouldn’t you want to negotiate that fee?

“I’m going to suggest that you do negotiate the fee,” Bob says, “and the minute an agent agrees to take a discount, you know not to work with that agent.”

An agent that takes a discount on their fee will roll over when it comes to trying to save or make you money.

You want to work with someone that is firm in their value, understands what they’re worth, and will fight for it.

The reality is that the vast majority of real estate agents don’t really work with investors … not because they have anything against it but because they’ve simply never done it or been taught how to do it.

The difference between working with a typical agent and someone who specializes in working with investors is gigantic.

And, if you’re a real estate agent wondering how you can make more money … working with investors is the answer.

Investors are clients that buy properties again and again and again. The pricing of those properties can also be higher.

Investors tend to purchase larger properties as their portfolio grows … which means larger commissions for the agent.

Resources for getting ahead

Bob’s book, Be in the Top 1%: A Real Estate Agent’s Guide to Getting Rich in the Investment Property Niche, is a great resource for agents looking to get ahead and for investors hoping to understand more about where their agent is coming from.

Bob’s biggest tips for agents are to recognize there is no limit on how much commissioned income you can make … and that you don’t have to stop doing what is already working for you.

If you’re selling single family homes and doing well … you can keep doing it! Just add investment property as a new segment of your business.

As an investor, the person who benefits most from agents who take on investment property is YOU.

As you develop your relationships with agents across markets, they will bring you great deals.

For more tips from The Godfather of Real Estate … Bob Helms … listen to the full episode!


More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Passive Investing through Real Estate Investment Funds

There are plenty of people out there who want the benefits of real estate but don’t want to get their hands dirty. 

For those folks, private funds can be a great option. 

While it can be expensive to send your money on the long round trip to Wall Street … Main Street funds are a lot leaner and a lot more transparent. 

We’re visiting with a Main Street real estate fund manager and exploring the benefits of passive investing through real estate investment funds. 

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

  • Your hyperactive host, Robert Helms
  • His passive-aggressive co-host, Russell Gray
  • Real estate investment fund manager, Paul Moore

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!


A space for passive investment

You can be an active investor that does all the work … finds the market, puts together the team, rolls up your sleeves, even paints and carpets. 

Or, you might leave that work to somebody else and invest passively in real estate. 

Today we are talking about one of the many ways to passively invest … real estate investment funds. 

A real estate investment fund has a specific purpose. It invests in a particular type of real estate …  maybe in a geographic area, maybe a specific product type. 

The difference is that a fund isn’t typically going to invest in just a single property. And, it’s not a single investor … multiple investors come together to share both the risks and the rewards. 

In today’s environment with the volatility we’ve had in the stock market, many people are looking at other ways to invest. 

Real estate investment funds usually invest in commercial properties, because they’re playing at scale. So, you become a Main Street investor investing in Main Street. 

If you drive around your community and see a new apartment building or self-storage facility going up … it’s likely those aren’t owned by individual investors. But they aren’t usually owned by institutional investors either. 

There is a middle space. 

That space used to be a good old boys club … you could only find them if you knew the right people. 

But things have changed. Depending on the type of investor you are, a fund can make sense for you in so many ways. 

The basics of real estate investment funds 

Our guest today has a multitude of real estate investment funds and is here to show his approach to that business. 

Paul Moore is a fund investor and manager from Wellings Capital. Before COVID-19 hit, Paul and his team raised a record amount of money. By the end of March, they decided to hit pause on the fund. 

“We pressed pause to evaluate opportunities in this new light,” Paul says. “We’ve been evaluating syndicators for years and have a short list of people who meet our criteria to invest with.” 

The fact that the fund is made of passive investors means that Paul had this luxury … it’s not like they were stuck in escrow and wondering if things would work out. 

Let’s talk about what makes the type of funds Paul works with different than your average syndication deal. 

Often, syndication is a single property. You find investors that fit the criteria of your deal and your investment fits them. 

What Paul does in a fund is bigger than that. Funds have multiple properties … which offers great diversity. 

With funds, you’ll see diversification across five or six different metrics. 

You’re diversifying across operators … across geographies … across asset types. You’re also diversifying across strategies and time.

All of that diversity helps create opportunities that are recession proof and still offer promising returns. 

Diversification across time is a particularly intriguing part of a real estate investment fund. 

An investor that joined a fund … say in June 2020 … would get the benefit of assets that have already been purchased by that fund. 

Basically, you’re buying into a portfolio, and about three quarters of the assets have already essentially been de-risked. 

Because a fund is diverse, you’re going to have a home run or two, a grand slam … and maybe a few base hits. 

In Paul’s current funds, you’ll find multifamily properties, mobile home parks, and even self-storage. 

Nothing in investment is guaranteed … but funds are pretty well protected pieces of collateral. 

Understanding operators and managers

When you talk about funds, you have managers and operators. Some people act as both. They have a property management company and they manage portfolios. 

That’s not how Paul’s team operates. They search out properties and operators. 

“We spend a lot of time getting to know the operators,” Paul says. “We get to know everything about them, about their company, about the way they treat their employees. That due diligence really pays off for us in the long run.” 

Paul says that the team is always more important than the property. Once you have a great operator, they can lead you to potential properties. 

The right operator can stay with you and shepherd you through whatever comes in the market. 

Paul’s job as a fund manager is managing and interfacing with these operators on behalf of all the investors who take part in the fund. 

“We have such good operators that we never want to try and take control, but we do stay in close touch with them and get regular updates on what is happening in the market,” Paul says. 

For more information on passive investing through real estate funds and what you could expect from working with Paul and his team … listen to the full episode!


More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Wilson Properties – Tom K. Wilson

Wilson Properties – Tom K. Wilson

 

High returns, hands-off management, and tenants that won’t skip out overnight … That’s commercial real estate syndication!

 

Commercial real estate investing is one of the best kept investment secrets … and Tom Wilson, CEO of Wilson Investment Properties, knows what it takes to be successful.

Tom began building his own real estate portfolio in the 1970s. Since then, he has bought and sold over $500 million of real estate.

At Wilson Investment Properties, Tom and his team help investors like YOU get started in commercial real estate syndications.

Rather than leave you to find investments on your own, Tom is here to ease the investment process by:

✓ Identifying and selecting profitable properties

✓ Providing guidance through all phases of acquisition

✓ Managing all aspects of the property after the purchase

✓ Assisting in the final sale of the property

Partner with a real estate provider with a proven track record of success!

Simply fill out the form below to contact Tom’s team …

 


Ask The Guys — Scaling Up, Credit Lines, and Pandemic Prepping

It’s time for Ask The Guys … the episode where you ask and we answer!

This edition we are tackling topics from how to use credit lines strategically BEFORE they disappear to how to prepare NOW for the investment problems … and opportunities likely to emerge from COVID-19 … and more!

But remember … we offer commentary, education, and resources … not advice. 

Always consult with tax or legal professionals before making any investment decisions. 

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

  • Your know-it-all host, Robert Helms
  • His know-nothing 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!


Where to get liquidity from your balance sheet

Our first question comes from Alicia in Woodstock, Georgia. 

She says, “Hey guys, I want to have liquidity to buy real estate, but I’m not sure where to pull the money from.”

Alicia says she has a homestead and a rental that are both paid off. She also has a 401K. She wants to know if she should convert the 401K into a self-directed account and take money from there. 

First, Alicia is thinking the right way. If you want to acquire more real estate, you have to have more money. 

The good news is that someone like Alicia already has idle equity sitting around waiting to be worked with. 

The cheapest money out there is mortgage money. It’s very inexpensive and long-term … so the payment and the cash flow is really easy to manage. 

Someone like Alicia could potentially borrow against her paid off rental property … and the 401K is also an option. 

But, if you roll that 401K over into a self-directed account, you’ll want to talk to your tax professional first to see if you will end up facing some type of a penalty. 

Then, the only other way to go about getting money that gives income from your own balance sheet is to think about raising money from someone else’s balance sheet. 

There are people out there who have money … but they don’t have access to deals, and they don’t have the hustle. 

When to buy a house

Don is looking to buy a house and wants to know when he should be buying. 

“Prices are still high,” he says, “and judging from past market crashes, should we wait maybe two months to buy at a lower price?”

When you’re buying a residence to live in, market timing means very little. If you’re looking for an investment property, you make different decisions than you would for a home you want to live in. 

Your first priority should be finding a home that is safe, clean, affordable, and in a good neighborhood. If you’re patient, some good deals will come. 

Finding off-market deals

DC from Edinburg, Texas, says, “Due to the pandemic, people are going to be selling their homes at discounted prices. How do I find these deals? I want to get some off-market deals.”

The premise that there will be deals to find is fairly sound … and the answer as to how to find them is simple … relationships. 

You won’t find much success cold-calling or knocking doors. Instead, find someone who already has the pulse on that part of the market and form a relationship with them. 

Build a brand of someone who people want to do business with. Don’t just throw lowball offers out there and see what happens. That will become your reputation. 

And don’t jump at the very first thing you see unless it happens to be fantastic. If you build the right relationships, you’re going to find some amazing deals. 

Scaling up your investments

John in Round Lake, Illinois, is a fledgling investor looking to scale up. 

“I can’t help but have some apprehension about jumping from small things to a big thing,” John says. “How can I make sure I don’t mess up?”

Many folks make this same shift that John is looking at … and they do it for different reasons. 

Often, it’s because they get to the point where the economics of scale efficiencies, headaches, and management of single-family houses becomes a lot for them. So, many make the jump over to multifamily. 

There are many benefits to this approach. One is that once your portfolio reaches a certain size, you can get into non-recourse financing. 

This means your lender has recourse against the property, but not you personally. 

And, with bigger properties, you typically don’t buy all by yourself. You do it with partners or syndication … and those people bring support and power to the deal. 

If things were to get dicey, these factors combine to make apartment investing actually less risky than going it alone in single-family homes. 

And, one of the beautiful things about syndication is that anything you’re lacking … including experience … you can go aggregate by finding other people who need what you bring to the table. 

A query on credit lines

Mark in Ohio has a question about credit lines. 

“I have two large lines of credit, and I’m currently not using either,” he says. “Should I draw the entire amount out now, or should I wait a bit longer?”

On the one hand, John thinks it would be a shame to pay interest on money he doesn’t need at the moment. But … he is concerned that those lines of credit could freeze up in the near future. 

Short answer … we would draw them out completely. 

You see a lot of big corporations doing this right now. Ford Motor Company famously did that going into the 2008 crisis … and unlike GM, Ford didn’t need a bailout. 

Banks are nervous. The Fed is acting pretty nervous. So, if you have access to credit lines and equity … we would put the two together and get liquid. 

Having liquidity is good insurance. 

More Ask The Guys

Listen to the full episode for more questions and answers. 

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


More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

COVID-19 Crisis – Tips for Property and Portfolio Management

Managing multi-family properties has always had its own challenges and considerations … but the COVID-19 crisis makes it considerably more complicated. 

How are landlords managing the risks and the responsibilities during these difficult times?

We’re checking in with The Apartment King, Brad Sumrok, to get his practical tips for property and portfolio management in the COVID-19 world. 

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

  • Your managerial host, Robert Helms
  • His unmanageable co-host, Russell Gray
  • The Apartment King, Brad Sumrok

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!


Management in a COVID-19 world 

COVID-19 has affected all kinds of industries … and real estate has certainly felt the blows. 

Everybody is figuring out how to reinvent themselves and reinvent their businesses. 

Real estate is at its base a brick and mortar business. You don’t have virtual real estate. People go in and they live somewhere. 

For the last few weeks, we have been talking about the various ripple effects of what has happened. When your tenant is suddenly unemployed and can’t pay rent, you can’t pay your mortgage servicer … and they can’t pay the underlying investor. 

So, today we’re talking about how investors like YOU can manage your properties and portfolios in a COVID-19 world. 

We’re talking with someone who has got a big, big portfolio and lots of people he works with … but he also knows how to be proactive in a crisis. 

What apartment investors need to know

We call Brad Sumrok “The Apartment King.” He is a gentleman and no stranger to the ups and downs of real estate.

“Obviously, none of us have been through a crisis like this before, but as an apartment investor since 2002, I not only survived the 2008 depression, but I thrived during that time,” Brad says.

Brad says he implements a strategy of “winterizing” his portfolio … and he teaches his students to do the same.

“This is what we call an economic winter, so it’s important to winterize your portfolio,” Brad says.

There are specific actions that apartment investors need to be taking in the midst of the coronavirus storm. Ideally you do these things while the sun is still shining … but if you didn’t, it’s not too late.

The vast majority of Brad and his students’ deals have these Fannie Mae and Freddie Mac loans. As it stands, those people have 120 days during which they cannot provide notice to vacate for nonpayment of rent.

The good news is that these moratoriums don’t allow a resident to break the lease. They don’t allow the resident to never pay the rent. They simply have to pay later if they can’t pay now.

The reality is that most tenants in B and C class properties don’t have several months’ worth of savings set aside.

So, owners need to be in contact with their managers, and managers need to be in contact with the tenants.

“I’m having biweekly calls with my management companies and frequent emails just checking in on collections. We’ve been talking about strategies to preserve capital,” Brad says.

Those strategies include suspending investor distributions, capital improvements, and value added upgrades.

Leasing has also gone from physical tours to virtual tours … which Brad says may have its advantages.

“I think as we come out of this and move forward, we are all going to be looking at how to do online business even better,” Brad says.

Brad and his team have also been proactive in providing notice to their tenants on what to do if their income has been impacted.

This includes informing them of the resources they can get under the Cares Act, how to get government assistance, and when they should be expecting stimulus checks.

“We want to position ourselves as a resource for our residents during this time,” Brad says.

Residents are home more than they ever were before … so it is even more critical that they have a safe, clean place to live.

Managers should also be thinking about how to help residents maintain social distancing in the complex and in common areas like the laundry room.

Navigating mortgages

Agency lenders, primarily Fannie and Freddie, came out with guidance on what is being known as forbearance.

Forbearance is a process where the property owner can delay paying the principal and interest. Brad recommends these things be considered as a last resort … but it depends on your situation.

Entering into one of these programs gives you the ability to delay payments. You can get up to 90 days or three months of your payments delayed.

Remember … these payments are not forgiven. You have up to 12 months to pay back the amount you delayed.

And, investors have to apply for these programs. It isn’t guaranteed that you will be accepted to delay your payments.

You’ll have to show a decline in collections. For example, you would need to show your collections for January, February, and March … and then show a substantial drop off in April.

You’ll also need to be in a position where you have no positive cashflow. And, you’ll have to agree not to evict residents until you pay all of the money back.

Communicating with investors

Brad suggests sending out weekly updates to your investors. Be open and transparent.

“I will say that there is always going to be that one out of a hundred investor that is going to be really upset that they aren’t getting distributions right now,” Brad says. “There isn’t a lot you can do about that.”

But outside of those few individuals, Brad says everybody really understands that this is temporary to keep things running until we start to come out of this crisis.

For more on how to manage properties and portfolios during the COVID-19 crisis … listen in to the full episode!


More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Mark Victor Hansen on How Big Thinking Leads to Big Results

As you look over your portfolio remember … the MOST important asset that you manage is your mind. 

Our minds are the source of all our best ideas … our dreams, our plans, our actions, and our results. 

Today we’re talking to the world’s biggest-selling author in history … and he is revealing how and why to train your brain to think BIGGER. 

Because Mark Victor Hansen knows … big thinking leads to big results. 

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

  • Your big thinking host, Robert Helms
  • His pea-brained co-host, Russell Gray
  • Biggest-selling author in history, Mark Victor Hansen

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!


Your mind matters

Today we’ve got an incredible guest that’s going to challenge you to think big … and if there ever were a time when you needed to empower your amazing mind … it’s right now!

We say it all the time … how you think and what you believe affects what you do. And what you do affects the results you produce. 

Every day, the world is going to give you things to freak out about … and if you let that get inside your heart and mind, then it’s going to affect the decisions you make. 

You’re only going to see doom and gloom. You’re not going to see the flip side of all of that, which is opportunity. 

There have been people who have both failed spectacularly and have been ruined forever and people who have failed spectacularly and have bounced back. 

Then there are the people that have managed to not only survive those things, but thrive through them. 

So, what’s different?

Obviously it wasn’t the circumstances, because we are all being hit with the same situation. The difference is what’s between your ears … and the decisions you make with the resources you have. 

It all starts in your head. 

Dreams don’t have deadlines

Mark Victor Hansen is one of the biggest best-selling authors in the world. He has written hundreds of books and sold millions of copies. He’s the founder of Chicken Soup for the Soul. 

And Mark has things to say to those of us that can be our own worst enemy. 

“You got to hang out with other people that are doing bigger, better, more extraordinary things than you are,” Mark says. 

You can’t control the timing of everything … but luckily we live in a pretty amazing time in terms of technology. 

Technology creates fundamental abundance. You have access to the best and the brightest ideas at your fingertips. 

That means you can fill your head with crisis and despair … or you can listen to positive things that build you up, thrill you, and encourage epic experiences. 

Mark also encourages people to think long term. What is your big goal? Once you set it, your mind will focus in and start to go to work. 

Dreams don’t have deadlines … so find something that you want to do with your whole heart, mind, and soul and go do it!

“If you go for excellence, the money will show up,” Mark says. 

But remember … you don’t get in life what you deserve. You get in life what you ask for. 

Mark shares the story of wanting his own bicycle … so he decided to sell greeting cards to raise the money. 

“I’d go up to a neighbor’s house and say, ‘I’m earning my own bicycle. Would you like to invest in one box of Christmas cards or two?’ And because I was taking the initiative to ask, people would buy,” Mark says. 

Lessons from Chicken Soup for the Soul

You may not think of real estate when you first think of Chicken Soup for the Soul … but the two are definitely connected. 

The connection is your mind. As we’ve said before, what you put into your brain affects the way you behave … and what could be better than stories full of joy?

“The principle here for each and every one listening is that the creator is greater than his or her creation,” Mark says. 

Ever since he was little, Mark says he wanted to talk to people about things that mattered. “I wanted to enthusiastically get inside people’s minds and hearts with stories,” he says. 

Mark took that idea and ran with it … but that doesn’t mean he didn’t face uncertainty like we all do. He was simply able to keep his eyes on his big goal and work on the resources he had. 

“There’s unlimited opportunities in America. You just need to find a way to use your talents. Be the best you can be, and have a passionate purpose,” Mark says. 

Even with all that is going on, the world has never been richer than it is right now … and that goes for both dollars and opportunities. 

So, hang around big thinkers … people who can help you solve big problems and aren’t afraid to take things on. 

The size of your thinking determines the size of your results. 

For more from Mark Victor Hansen … listen to the full episode!


More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Crisis Investing Lessons — Navigating Uncharted Waters

Crisis is part of the investment game … and while the COVID-19 virus crisis is unlike any we’ve seen in modern memory, it’s not the first … or the last … crisis you’ll face as an investor. 

The good news is that history shows us two things. 

One … the human race will survive. And two … the backside of all busts is a big boom. 

Until the crisis passes, we all need to find a way to survive … physically and financially. 

Today, we’re talking about how lessons learned from the 2008 crisis can be applied to what we face today. We are focusing on how you can not only survive … but also thrive!

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

  • Your thriving host, Robert Helms
  • His surviving 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!


Think and do

With so much going on in the world today, it is easy to get overwhelmed. 

Today, we’re talking about how to manage life when you find yourself in uncharted waters AND what lessons learned from previous crises can do for us in our current situation. 

We’re not here to tell you what is right and what is wrong. We’re here to talk about the facts and our own experiences. 

We haven’t seen everything … but we’ve seen a ton. We don’t know all the answers … but we have gotten pretty good at asking the right questions. 

One of our favorite sayings is, “Think and do is better than wait and see.” 

When there’s a crisis, the tendency is often to hunker down and wait to see what happens. But waiting and seeing has economic consequences. 

The big question now is …  what should we be thinking about?

Understanding what is happening in the market

Calmer heads always prevail. 

As real estate investors, we have a huge advantage. Markets like the stock market … or even the metals market … move instantly. That’s not true with the real estate market. 

If you look at what has happened in the stock market, with equity prices, and in bonds compared to what has happened in real estate … you’ll see a drastic difference. 

People who invest in stocks are seeing a market drop that appears already worse than the Great Depression. But your mortgage or your rent haven’t changed. 

That means that the person on the other end … the landlord or mortgage holder … their income hasn’t changed either. 

Now, that doesn’t mean it won’t. But the difference between now and 2008 is that in 2008, lenders were not ready to negotiate. They couldn’t see the ripple effect that would go through the financial system. 

But today, the Fed clearly sees it. Their reaction tells you they are bringing out the big guns early … and lenders are already beginning to contact people about ways to work things out. 

Even with all this intervention, there is still a chance that real estate investors will run into a cash flow problem … but the advantage is that real estate moves slower. You have more time to react now to future possibilities. 

Remember, the stock market doesn’t really reflect what’s going on in the economy. Stock prices are reacting to an anticipated slow down of corporate profits. 

There is plenty of cash out there. That’s not the problem. The problem is that it isn’t flowing. 

We’re basically watching an economic heart attack take place. It doesn’t matter what the blood volume is. The concern is that the blood isn’t flowing. 

So, you have to look at what is happening right now and make adjustments. Now isn’t the time to be a deer in the headlights investor. Now is the time to think and do. 

Making smart choices for your portfolio

We think that everybody listening in is going to want to own more real estate 10 years from now than they own today. 

Some of you may see opportunities … but you don’t have enough resources to take advantage. 

You can see bargains … quality assets going on sale. What do you do?

That’s why we are big proponents of syndication. 

We’re hearing on the street already that lenders are beginning to back off on their lending. If that is the case, it’s going to be a resurrection of private equity. 

When money goes looking for a safe haven after a nauseating ride on the Wall Street roller coaster … it often ends up in real estate. 

These investors are either on the equity side buying into real estate deals or on the debt side buying private mortgages and getting the yields. 

You have to be smart … but there is going to be a lot of money coming into real estate because of what’s happening. 

If you’re well-positioned and you underwrote your property correctly and you have a good lending partner, you’ll probably be ok. 

If you didn’t … well, there are going to be people who have to give up some real estate. 

If you’re in a good position, syndication can be a great way to get you ready to buy when those who need to sell make their move. 

And don’t forget that this doesn’t apply to just real estate. Real assets like metals and oil will have good deals, too. 

One of the biggest lessons we gleaned from 2008 is to keep your finger on the pulse of your markets and niches. 

Wherever you are in the world, whatever niche you’re in, whatever market you’re in … lean on your tribe. Enhance your participation in whatever forums or virtual meetups you have the opportunity to be part of. 

The closer you get to the front lines … the more real-time your information is … and the better you will be able to make decisions. 

For more lessons learned on investing during a crisis … listen in to the full episode!

More From The Real Estate Guys™…

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


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Old Capital Lending

Old Capital Lending

 

Your Multifamily Lending Experts. A Trusted Source to get Your Apartment Loans Funded 

What we like best about the Old Capital Lending team is that they do one main thing … and they do it REALLY well. 

That’s Commercial Loans on Multifamily Apartment Buildings! 

They’ve been the go-to provider for real estate investors looking for apartment loans for over 20 years … Have we mentioned they do this really, really well? 

You can tap into their extensive network of equity and lending sources …Fannie Mae & Freddie Mac agencies, life companies, conduits, wealthy individuals, family offices, institutional investors, and even hard money lenders. 

Their sources trust their underwriting practices and decades of experience … That means YOUR DEAL gets FUNDED. 

Syndicators can benefit from the Old Capital Lending team’s experience funding apartment projects for syndicators … helping you structure your “capital stack” just right. 

Their prudent advice and proactive transaction management drives investors to come back to them again and again for deal after deal. 

The Old Capital Lending team regularly contributes to our Secrets of Successful Syndication event! 

Simply fill out the form below to discuss your Apartment Loan questions with their expert team …

 


Reviews

Here’s what your fellow investors are saying …

“Once again Old Capital came through on their word and executed flawlessly. I always trust your professional opinion and feel confident when you’re on the deal. I would be glad to recommend you to any brokers or investors looking for a trustworthy debt source. Thanks again for your work, I am looking forward to the next one.”  – Michael W., Dallas, TX

“We want to thank you so much for getting this refinance done. Not only was it pretty quick, but painless to boot. If we need any assistance, you’ll be the first one we’ll call. Thank you again, for all the effort and energy that help make this finally happen.”  – Bill K., Santa Barbara, CA

“Old Capital was great to work with. They were able to help secure the financing needed for my first multi-family purchase and get started off on the right foot. It was a pleasure working with Old Capital on this transaction and they guided me through a smooth purchase.”  – Al M., Phoenix, AZ

Is this a cure for coronavirus?

There are SO many things happening in the financial news and markets right now, it’s hard to focus on any one thing and say it’s the biggest story.

Obviously, the coronavirus panic is dominating headlines and airwaves everywhere.

And many of the other major stories such as stocks, bonds, interest rates, and oil prices all seem to be considered somehow a derivative of the coronavirus.

Of course, we just keep asking … what does all of this mean to real estate investors?

Two weeks ago, we posited interest rates would fall as investors piled into U.S Treasuries for both safety and speculation.

Of course, we were right … but not because we’re brilliant, but because it was SO obvious.  As Treasury yields collapsed, mortgage rates followed.

And because you never know how long these “sales” on cheap money are going to last, it’s a good idea to watch for clues … and then move quickly when opportunity presents itself.

The odds are the coronavirus scare will last months … but your uber-cheap mortgage can last for decades. Nice.

Last week, we dug a little deeper into the WHY behind collapsing rates after the Fed came out with an “emergency” rate cut.

Though billed as a preemptive strike to stop recession, most pundits viewed it as a lightly veiled attempt to calm traders and boost stock prices.

How’s that working out so far?

Of course, WAY before coronavirus, we’ve been pointing out …

… the financial system is fragile,

… the Fed’s intervention in the repo market is a potentially ominous sign,

… and gold could be flashing a “bridge is out” warning even as the U.S. economy is hurtling down the highway at a decent clip.

In other words, the coronavirus might not be a cause, just a catalyst.

Which brings us to the theme of today’s muse …

Insulation matters. And when the climate is extreme, people who don’t have it, want it.

Right now, MANY people are discovering their portfolios are naked and exposed to the extreme hots and colds of publicly traded financial markets.

Equity investors are experiencing nauseating drops and dizzying bounces … all within an overall trend which is flirting with becoming the mother of all bears.

Income investors are watching yields collapse 30-50% from already anemic levels. Savers and income investors were already suffering. Now it’s torturous.

When yields aren’t enough to live on, you have no choice but to consume equity.

And it’s hard to ride the equity roller coaster back up if you to get off at the bottom to eat.

It’s like a starving farmer who eats his seed corn has nothing to plant for food in the future. He eats now but is doomed in the long term. Equity consumption is suicidal.

So while the coronavirus might threaten your physical health, the vast majority of people who catch it will survive and go on to thrive.

But the effects of the panic on fragile financial markets are definitely making paper asset investors’ portfolios sick … and recovery could take a LOT longer.

Of course, most real estate investors are doing what they often do when these things happen … much popcorn, watch the fireworks, and cash rent checks.

Sure, if the storm is bad enough, it can blow your insulated, brick real estate portfolio over too.

But compared to the poor folks living in straw portfolios built only for sunshine, real estate looks pretty darn secure.

So it’s no surprise, that even the mainstream financial media are pointing out the safety features of real estate … at least what they think is real estate …

Don’t Panic – Buy REITs
Forbes, 3/9/20

These are the safest and highest dividend-yielding REITs as the coronavirus spreads, BofA says
– MarketWatch, 3/7/20

REITs And Bonds Rose Last Weeks As Global Stocks Fell
Seeking Alpha, 3/10/20

Of course, REITs are still publicly traded stocks … essentially a mutual fund collection of individual properties all put into one fund and offered in the Wall Street casinos.

So, while real estate is attractive in times like these, REITs are still subject to Wall Street volatility …

REITs fall in February amid broader market sell-off
Institutional Real Estate, 3/10/20

Perhaps obviously, the further you are away from Wall Street, the more insulated you are from insane volatility.

Of course, as a real estate investor, YOU already know this. That’s why you read commentaries like this, and probably don’t have much exposure to Wall Street.

But remember there are MANY MILLIONS of people who haven’t discovered real estate investing … yet. Or only think of it as Flip This House.

Of course, true real estate investing is about using low cost, long-term debt to acquire passive income and generous tax breaks …

… and enjoying superior cash-on-cash yields (compared to bonds), while benefiting from long term inflation … insulated from short term deflation.

Real estate is slow, boring, and STABLE. And right now, stable is sexy.

As we’ve said before, you’re not seeing headlines announcing rents have collapsed 50% in the last 90 days because of coronavirus. That’s short-term deflation.

And ten years from now, when this current panic and its ramifications have joined all the other freak-outs of the last 100 years in the dust bin of history … do you think it’s more likely rents and real estate values will be up … or down?

History says “up” in dollar terms … because the dollar has a 100+ year history of losing value against REAL assets.

And most of what’s going on right now … more printing, more debt, more deficits … is BAD for the dollar in the long term.

Sure, most people can’t escape the temptation to gamble. “Buy low, sell high” brainwashing makes it nearly impossible to resist Wall Street volatility.

But SOME people … especially more seasoned folks … will decide the Wall Street roller coaster is more nauseating than intoxicating … and they’ll want off.

So while we’re concerned about the coronavirus panic and its near term effects on the economy and the financial system …

…. we’re SUPER EXCITED about the lessons being learned by Main Street Americans.

Because when more of Main Street gets back to real investing … in real assets and cash flow …

… it could create a big flow of funds out of Wall Street into Main Street … where the real wealth comes from and belongs.

Last time we looked, there’s usually BIG opportunity when money starts moving. The key is to put yourself in a good position to help facilitate it.

So whether you choose to borrow lots of money flowing into bonds and acquire properties in your own account …

… or you decide to start a syndication business to raise private equity to pair with abundant and cheap debt …

… this isn’t a time to be hiding under your sheets with a bottle of hand sanitizer.

Yes, be careful and stay healthy.

But keep your eye on the long-term big picture. It’s easy to get lost in the hype and miss big opportunities that grow out of the chaos.

Next Page »