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Best Tips for Finding the Right Assets in an Emerging Market

I constantly hear of people that want to invest in an emerging market, the proverbial golden goose of the real estate industry. I believe much of this has been stoked by the somewhat recent opportunity zones that many are trying to invest in. To find the right area, there are many factors to take into consideration. Some of these are time-proven techniques that developers have used for decades to forecast rent growth and desirability to a neighborhood, others are more common sense, and straight economics.   1) Risk Appetite - Being part of the first wave into a new market can be daunting, you will need to be prepared for the long haul.  Are you willing to be the first trailblazer into a sub-market, where you may get the lowest cost, but also potentially the longest time to see the change, if at all? 2) Look for City programs - Most cities are seeking ways to drive business to these communities, check with your city to see what programs are in place to drive business to this community, there are cities that have programs that incentivize non-profits to help turn an emerging community around. 3) Has there been a dramatic change in the demographics for the immediate neighborhood? Is there new residential construction that is driving higher prices, and denser neighborhoods? If so, it is likely that the commercial market will follow within a few short years. 4) Check the affordability - Can the community afford higher rents at this time, if......
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Finding The Best Rate Of Return On Your Commercial Property

Capitalization rate, or cap rate for short, is a measurement used by all real estate investors, whether they are commercial or residential investors. It shows them the potential rate of return on a property. Knowing the cap rate is advantageous in deciding whether or not a property is worth investing in or purchasing.  In this article, we wanted to go deeper into everything you need to know about the cap rate and what a good one is. How the Cap Rate Works and Why It Matters The cap rate is a formula, and a very simple one as well:             Cap rate = net operating income / current property value The rate is based on a one-year period, and this simple measurement is usually enough for most investors to determine how valuable a property is. Naturally, something so simple can’t always be enough for determining the value of a building. For that reason, we highly advise you to use the cap rate together with a few other evaluation tools. By doing that, you can get a more clear picture of how valuable a property truly is. We advise this because the cap rate is based on annual returns, which can't always reflect the actual value of a property. Sometimes they only have a single good year, and you can end up investing in a property without the full picture. Plus, cap rates don’t take into account things like mortgage payments, lender fees, closing costs, and more.  Des......
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Tips For Investors That Want To Invest Out Of Their Area

Many Investors feel they can expand their portfolio by acquiring assets out of the area they are currently operating. There are numerous reasons for this (higher rates of return in secondary markets, better tax benefits, etc…). Now, this may be true but it can also be a good way to lose your investment. I have experienced both wins and losses from investing in other areas and I had some tough lessons to learn that I will pass on to you. I will say that many of the assets we have acquired out of the area were also owned by other absentee owners and these assets were being sold because they were not profitable for the past ownership, the management companies had run these assets into the ground and were taking revenue that was not rightfully theirs. Find a reputable property management company and due your due diligence, lots of references and check their online reviews. Be sure you have a good accountant that can watch over the books every month, know where every penny is going and that all reconciliations have been done. Make sure you are aware of all of the local and state laws that may be different in the new area. Be aware of insider tips for reducing expenses (i.e.: hiring local specialist that can appeal taxes, utility costs, etc…) Before buying out of your area be sure to budget regular visits to your investments (I am currently on a plane from Los Angeles to Dallas to check on ......
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Critical Steps Too Becoming A Top Commercial Real Estate Agent

The steps I am about to give you are time tested and proven over the years by many successful commercial real estate agents. These steps are a great way for you to build your business.  These steps are worthless if you don’t create a structure that allows you to execute these steps on a regular basis. Find a quality CRM, put your head down and get to work. 1) Cold Calls - I recommend 100 calls per morning to a targeted group- either to an area or to a specific asset class, with every call you need to bring value…tell them something about the market in their area or a specific asset they may have interest in hearing about. Do not call and just leave a voicemail to call you back.  If you don’t have their emails be sure to ask for them and immediately but them into your CRM to add to your email list; 2) Social Networks - Most commercial agents frown on this, however, it’s a critical part to your branding. Create posts twice per week that have critical information about your market (create value for yourself).  Don’t just post about business though, also mix in some personal posts.  After all, people like to do business with people they know and like; 3) Sphere of influence - You need to reach out to friends, family, past coworkers and clients on a regular basis, there is no worse feeling than sitting next to a friend and having them say “we just ......
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The Best Ways for Beginning Real Estate Investors to Learn About Investing

Today with the internet and available social media platforms there are many ways you can learn to become a great real estate investor.  Here are some of my favorite places to go for quickly accessible information.  1) YouTube - There are thousands of videos on real estate investing, just don’t waste time with the ones trying to sell you something, invest with them. or try to get you to listen to them speak. Find someone that posts regular content with good value. We do post videos on real estate investing on our channel but there are many to choose from. It’s also good practice to check and see if the person doing the posting has actual investment experience, and what type.  2) Books - This has always been one of my favorites. I prefer real hardcover books not the electronic / kindle or other readers as I love the feeling of having the book.  Most books also allow you to go into more detailed explanations and examples of investing that can’t be achieved in your typical video.  3) Podcasts - This is probably the newest medium, but it is growing very quickly. One that I listen to on a regular basis is https://www.ellieperlman.com/podcast and Ellie does a nice job of explaining complicated topics easily. There are many others out there though. 4) Blogs - These are always a great way to pick up some great investing tips. We post weekly on our blog but again there are many to choose from espec......
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How Useful Are Commercial Real Estate Attorneys? Why You Should Still Use an Agent for Commercial Real Estate

Hire a commercial real estate agent, or use an existing attorney? It’s one of the oldest dilemmas for real estate investors. If you ask most realtors, they will usually tell you to hire an agent. If you ask an attorney, they will tell you that attorneys are a better choice.  When you consider all of that, it’s no wonder this is a real dilemma. For that reason, we wanted to give you a detailed explanation of why you need to hire an agent for commercial real estate, even if you already have an attorney.  Some would consider this to be a waste of money, but you’ll soon see why having both is a necessity. The Role of the Attorney vs. the Role of a Commercial Real Estate Agent Attorneys always have a role to play when you’re an investor. Most investors and landlords have attorneys.  However, many would say that having an attorney is enough. The problem is that attorneys deal with the law, not professional real estate. They can offer you advice on legal matters behind your investments, but they do not specialize in real estate. In essence, an attorney can help you with legal matters related to real estate, while an agent can help you with the real estate itself, as well as its purchase or investment. If you need to find a great property to invest in, an agent can help you. However, if legal problems arise, you will need an attorney. Since commercial real estate is usually a compl......
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Mastering Multifamily Maintenance Challenges Feature with Joe Killinger

By Meeghan Fuhr  with Joe Killinger Experts weigh in on best practices for finding, training and retaining the skilled maintenance techs that every multifamily property needs. In the current tight labor market, finding and retaining good multifamily maintenance technicians is often challenging. Emerging operators, in particular, are well advised to look for someone who can do it all. “If you have a smaller property and you’re a new property manager or a new landlord, you want to have somebody who can really handle almost everything on the property—and those people are worth their weight in gold,” said Joe Killinger, co-founder of Los Angeles-based Pono Asset Management. Those 24-karat team members don’t just happen by accident, however; after they come on board, it’s up to management to train them properly in the company way. As Killinger explained: “You want somebody who’s always looking for a way to get it done that is going to last, not a temporary fix. If they fix an issue right the first time, it’s going to save on callbacks, so you’re not doubling up your work.” Finding and keeping good maintenance techs requires attention to a variety of other issues: compensation, incentives, and making them feel valued. Pamela Sullens, COO of Golden Mountain Real Estate makes the case for rewards and incentive programs as a strategy to cultivate loyalty. “I think it’s about employee treatment and how you treat your employees, and I think if they have good performance, you have to recognize that,” said Sullens, who served as the Institute ......
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Successful Real Estate Investors Know These Pitfalls

Not Giving It 100% If you feel you are ready for your first real estate investment and you think it will be an easy source of passive income then I would recommend you sit this one out. There are certain asset classes such as Single Tenant Net Lease investments that have less risk, but most other investments come with a degree of risk and are definitely in need of supervision on a regular basis. Your first investment is most likely the one that will set you on a solid path so if you do not give it 100% you may end up missing out on the future opportunity to really create some satisfying wealth Knowing The Numbers Over the years I have seen new Investors focus their attention on numbers that are less critical to your investing success, you must know what numbers are the true outliers to making a critical investment decision. Here’s some examples. 1) Rent Ratio - The rent ratio is calculated by dividing the monthly rent by total cost of the property (purchase price + financing costs + rehab costs); 2) Cap Rate - Cap Rate = Net Operating Income / Total Cost – This will show you what your investment will generate if you paid cash. Also, a lower cap rate compared to similar properties in the same asset class, with similar rent ratios, may show you that there are areas to decrease your expenses, and thus increase your income. 3) Cash on Cash Return -Cash on ......
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10 Questions a Landlord Should Ask When Interviewing Management Companies

Finding a reputable property management company can be quite daunting as it is difficult to really know how well the company is run. We have put together a list of items you should ask when interviewing a potential property management company.   1. How long have they been in business? You want to associate yourself with an established company, as this speaks to a company’s length of service in the community.   2. Do they manage other assets in your area? A property management company should have a presence in your local area, managing properties that are in the same asset class as your property. For example, if you own an apartment building in West LA, you should look for companies that manage apartments in West LA. The properties they manage may be available on the webpage, if not, ask this question while interviewing them in your initial conversation over the phone.   3. Are they carrying the proper insurance coverages? The company should at a minimum carry general liability and workers compensation for their business. In addition, it is always wise to look for a company that also carries Errors and Omissions insurance.   4. Do they have their own experienced maintenance team or do they have to hire maintenance companies? Many times smaller property management companies will outsource their maintenance. In addition to asking if there is an additional service charge for this, also ask how the management company vets their vendors (do all of their vendors carry liability i......
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Expert Insights with Joe Killinger: Companies Should Look towards Transparency

For our latest entry in our Expert Insights series, we had the pleasure of sitting down with Joe Killinger. We asked Joe to tell us more about where he got his passion for real estate, what he thinks the state of the industry is at this moment and where he thinks it will go next. Read on to find out more about his journey to being a successful real estate professional. Q: Tell us a little bit about your background and why you chose a career in real estate. I grew up on a small farm in central Nebraska and my father saw that the farming industry was going to go through a significant change and quite honestly he wanted to have a better life for his family so he trained and became a licensed Auctioneer and Real Estate Broker. Killinger Auction and Real Estate launched and I immediately got the real estate bug. When I graduated high school I immediately began taking courses to get my Nebraska real estate license and when I went off to college I got my license and was lucky enough to be introduced to Pace Woods that was the CEO of Woods Bro’s Realty in Lincoln, Nebraska. I am not sure why he gave this 18 year old with no experience a start but he gave me a phone book and said there’s your potential clients…good luck! I chose to go after selling and leasing farm land as I thought there may be less competition and I......
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