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Category contains 1 blog entry contributed to teamblogs

Posted by on in Apartment Investment
You’re probably reading this because you’re as addicted to click-bait quizzes as most people on social media. In real estate, however, all those investor personality quizzes won’t do you much good. Spoiler alert: there are two investor personality types, and you can be both at any given moment. Personality A: The Wealth-Builder Property investors who play it smart earn 12-30 percent ROI, depending on risks and market timing. That’s a sizable advantage over stock market investment returns, which average about 3-9 percent annually. Real estate investing builds wealth, and more risky strategies like flipping can build it more quickly. Investors who are risk-averse, however, might stay more in the second personality type most of the time. Personality B: The Retirement Plan Long-term investors are those who are focused on building wealth for the long-term, specifically, for retirement. Creating a portfolio that will make ends meet after going on a fixed income is a naturally risk-averse venture—no one wants to bet their future on something that might result in a loss. Retirement Planners opt more often to buy and hold safer investments, staying out of the property trading arena as much as possible. How To Be Both A and B Different seasons and goals may require diversification of an investment portfolio. Just like when investing in the stock market, it’s a good idea to periodically re-evaluate your goals, portfolio growth, and income potential and take a multi-faceted approach to real estate investing. As long as you stick with the tenets of smart...

Posted by on in Apartment Investment
The art of raising rents is a difficult one to master for newbie investors. The fear of creating a vacancy or offending a tenant is unbearable for most new landlords. It is a touchy dilemma. You are directly impacting the quality of a tenant’s life when you increase the rent, but you are also affecting your ability to pay your obligations with the rent increases. In this article, I would like to list reasons why raising the rent on your properties is a necessary decision, how to accurately assess the market rental rate, and how to raise the rents effectively without creating a mass exodus. Let me list the reasons why rents should be raised: 1. Keep up with the rate of inflation.2. Grow the top line (revenue).3. Stay competitive in the market.4. Fight the expense creep. If you have just acquired a property, or are in the middle of a renovation, you should read our article on our Three Step Reposition. It is our framework on how to take over the operations of a property, and to effectively increase any rents that are under market. It will show you how to fill the vacant units, implement Ratio Utility Billing (RUBS), and raise the remaining tenants to market.Before you consider raising rents, you need to make sure you are delivering a quality product to your tenants. What does that entail? In our properties, we strive to deliver clean, safe, affordable units with stellar customer service. We guarantee potential tenants a same day...

Posted by on in Apartment Investment
How to Use The Four Market Phases To Buy Right Have you noticed all the real estate television shows are focused solely on fixing and flipping, and give no love to buying multifamily properties? I get it that fix and flip is sexy and produces great T.V., but does it qualify for a great investment or create generational wealth and passive income? We are going to tackle this question as well as why multifamily is crushing it and how you can jump in with both feet and join the party. Let’s also discuss what constitutes a great investment! What are the characteristics of a great investment? (Multifamily Assets meet all three criteria) 1.Leverage Leverage is the rocket fuel to creating massive wealth. There are very few investments where you can invest as little as $150,000 in capital and control a $1,000,000 asset. Try asking your financial advisor to extend you this type of leverage. I guarantee the next thing you’ll hear is a click on the other end and your phone line going dead. You receive all of the benefits; cash flow, tax benefits and appreciation. Why would a lender require a small down payment to acquire real estate? Simply put, the buyer is acquiring a revenue stream that covers the expenses of the property and throws off excess cash flow. The bank feels safe and protected with real estate. Bottom line: Multifamily real estate allows the investor to control more assets with less of his own capital, which will lead...

Posted by on in Apartment Investment
The way to increase the value of a multifamily property is to either increase the income or decrease the expenses, which will affect the Net Operating Income (NOI). The NOI is a key metric when analyzing the value of a multifamily property. For the purposes of this article, I would like to focus upon the top line of the investment, revenue, and how to grow the revenue of the asset. The asset classes that we focus upon are B & C properties. If you would like more information on NOI and increasing the value of your asset, we have an article on our website that goes into depth about NOI. Add additional units On our most recent purchase, the property had laundry rooms spread throughout. The rooms were large, and we began to consolidate the laundry and decrease the size. We were able to create three additional studio units from the extra space, which allowed us to increase our monthly revenue by $1,800 per month. At a 7 cap, the value of the asset increased $308,500. We are in the process of building additional units throughout our portfolio from space that was deemed “useless” from previous owners. One of our favorite strategies is to convert units that are being utilized as storage units back into apartments. It’s a lot cheaper to go out and buy a shed to store your supplies. Laundry Revenue When you think of laundry, you don’t think of excitement. But you should!! Laundry is a vital service...

Posted by on in Apartment Investment
Two of the most important, yet often overlooked words in investing are “Due Diligence”. To the savvy investor, due diligence is the period of time when you begin to uncover intimate details about the investment similar to peeling the layers of an onion. The deeper you get, the more you uncover, and the more problems you may run up against. In this article, I will define due diligence, introduce our framework for due diligence, focus primarily on the physical due diligence and describe the responsibilities and duties of an excellent property inspector and how an inspection can be used to your advantage when negotiating a deal. Due Diligence is defined in Merriam’s dictionary as research and analysis of a company or organization done in preparation for a business transaction. When I began investing in real estate, this was my biggest mistake. I had not done enough analysis in regards to the financial, physical and legal aspects of the deal. This transgression led me to develop a three-step framework for due diligence to follow every time I decided to invest in a property. The three steps include:   1. Financial 2. Physical 3. Legal For purposes of this article, I would like to focus on the physical due diligence. Once a contract is signed, the due diligence clock starts and an investor usually has a specified period of time before the down payment goes hard (non-refundable). An investor needs to work quickly to perform his due diligence to decide whether or not to proceed with the investment....

Posted by on in Apartment Investment
The year was 2011. My business was floundering and I was working just as many hours but earning less. Does that sound familiar? I finally built up enough anger and leverage to take action and dedicate myself to investing in multifamily real estate with the intention of earning enough passive income to allow me to quit my business (aka job). This article will outline the path I took to achieve my goal while creating a framework you can follow to pursuing multifamily real estate.   1. Create enough why2. Leverage3. Thought-desire-action-result4. Education5. Network6. Meet partner/pick market7. Dive into market/analyze deals8. Patience persistence willing to walk away9. Continue education10. Focus on getting first deal done11. Close first deal12. Start hunting for the second deal13. Close second deal14. Repeat step 13 until you reach your passive income total   The journey of a thousand miles begins with the first step, but if you don’t have a strong enough reason to begin the journey, you will never start. Or, in my case, the beginning of the journey will take you in the wrong direction. When I first began investing in real estate, I did not have a strong enough “why” and I definitely lacked a plan or strategy to achieve my goal. Only when my situation at my business became dire and I created enough leverage to take action was I able to dedicate myself to the journey. What was my thinking during the decision phase? I wanted to get out of the rat...

Posted by on in Apartment Investment
Negotiation is simply defined as the act or process of having a discussion in order to reach an agreement. An individual is trying to gain the favor of others in order to achieve something. As a parent, I have become accustomed to my children “negotiating” for one more cookie, or to watch ten more minutes of a television show.   In this article, I would like to define the three essential variables and how you need to employ them in order to become a successful negotiator (get what you want). Read my previous article on How to Successfully Negotiate Your Next Deal for keys and tips on negotiating. Here are the three variables: 1. Power 2. Time 3. Information Power: Power can be defined as the ability to get things done, to exercise control over a situation. It allows you to get from a certain point to an end result. Power does invoke negative connotations, but it all depends upon how it is wielded. To me, power is not the goal. We use power to drive us to the destination. Here are a few sources of power and how to use them: Competition: When there is competition for a product or service, the price will rise. The principle of scarcity is an enormous motivator for those considering the purchase of a product. If people feel there is little competition, the price will inevitably fall. I see this in real estate every day. The price for single-family homes in the New York metro market...

Posted by on in Apartment Investment
My life was filled with several limiting beliefs that were holding me back from attaining success.  My first limiting belief was that if you worked hard, you would be successful.  I also thought that an element of luck would factor into one’s success.  My idea of what a successful life looked like was also very different from what it is now.  Little did I realize that most successful people follow a strategy to guide them towards their goals and dreams.  In this article, I am going to dive into the five steps you need to take to usher success into your life and provide examples on how I used this framework to achieve my goal of financial freedom. Here are the five steps: Know your outcome. Know why you want it. Take massive action. Know what you are getting. Change your approach until you get what you want. Know your outcome: Most of us in life know what we DON’T want, but find it difficult to focus on what we do want.  I knew in my heart that I did not want to be stuck at my restaurant.  The problem was that I did not know what I did want.  My breakthrough came when I was able to focus on what my ultimate goal was: financial freedom and controlling my destiny.  When you begin to tell your brain what it wants, that is what you will begin to focus upon.   Here is a simple example of how your brain works.  You go to the dealership and decide to purchase a...

Posted by on in Apartment Investment
In the previous article, Jake and I discussed incompetent team members and signing an exclusive with a broker. In this article, we are going to tackle two problems and one potential value-add that we faced early on in our investing career. One situation was unavoidable, and the other could have been avoided if we planned correctly. We stumbled upon the value-add with utilities, nevertheless, it has been a vital component to our success as multifamily operators.   Let me recap the 13 mistakes: Nightmare manager Unscrupulous mortgage broker Incompetent team member Sub-par employees Deceased tenant Bed bugs Septic systems Safety net Long-term holdings Signing an exclusive with a broker Utilities Capital expenditures Negotiation Deceased tenant If you own an extensive portfolio of properties, chances are, at some point, you’re unfortunately going to have to deal with this sad situation. We’ve dealt with it ourselves; we just didn’t expect it to happen with our first deal.The tenant had been living at the property when we acquired it. We owned the property for only six months when the property manager entered the apartment and found the tenant deceased in the living room. We were completely shocked and saddened. The police were called, the woman was taken away, and we were told not to allow anyone in the apartment until after an investigation was completed.All of a sudden, family members started coming out of the woodwork trying to lay claim to this poor woman’s possessions, but we were adamant that no one was allowed...

Posted by on in Apartment Investment
I wish I could say that I woke up one morning and God had bestowed upon me 674 units. Unfortunately, life doesn’t work that way. The farmer can’t expect a crop in the summer if he doesn’t plant seed in the spring. The builder can’t complete a house unless he starts off with a set of plans and follows his plans to fruition. This article will outline the steps I took to grow my portfolio and achieve a level of satisfaction that was missing in my life. Where is the first place that I started? Let me give a brief outline of my journey and then dive deeper into the “trek”. Dissatisfaction Seeking growth/contribution Financially frustrated Began investing on my own Sought out a mentor Pursued another coach/more education Continued frustration Jumped into Tennessee market Focused on Tennessee and multifamily properties Bought first deal Continued to buy Refinanced big property and used capital to continue buying. Wrote “Wheelbarrow Profits” based on evolving investment strategy “mom and pop apartments” Launched Jake & Gino Continued buying more deals Focused on system building and growing portfolio The first step of my journey was dissatisfaction. My business was okay, but I had just lost my father to cancer and I was growing bored with working in the kitchen. I had been working with dad since I was eight years old. I guess when my dad passed away, my love for the restaurant business passed away with him. I also had a feeling of being “stuck”....