I’ve been hanging out in St. Barth’s and I decided every Monday I’m going to do a show on GrantCardoneTV where I show you real estate deals I’ve bought and why I bought them. This is better than doing any book. It’s going to give you the tools you need to know why you should buy a property and how to buy. You need to know the real estate game because it’s a great way to build passive income and secure wealth.
There is risk in any investment. The only way to reduce your risk is to know what you’re doing. I have a magic touch when it comes to real estate deals, no doubt about it. I’m going to continue to expand my real estate portfolio and as I do, I’m going to be sharing the things I do and even the mistakes I make.
I’ll share with you a deal I’m going over right now. It’s a $20,175,000 price but I will round it off to $20 million to keep things simple. I need to put 25 percent down to get my best debt. I put $5 million down and get $15 million in debt. This is a 75 percent loan devalue. The beauty about real estate is that I can buy a $20 million property for only $5 million.
Of course, I’m speaking in generalities here, I haven’t always put 25 percent down. The last deal I bought was in Boca Raton for $12 million. Usually, I would put $3 million down, but that deal already had debt in it and the expenses could not be paid off so that deal needed $6 million down. It was still a good deal for me for other reasons.
I’ve been doing the real estate thing for a long time. I looked at properties every weekend for five years before getting into the game. My first deal was in San Diego in 1995 for 38 units. My second deal was a month later for 48 units, and my third deal three months later was 92 units. Within about 18 months I had 500 units. Fast forward to 2016 and I have much, much more — nearly 4,000 units.
I’ve never read a book on real estate, nor did I ever have a coach or a mentor in real estate. I got rejected by the first two lenders I went to in California, even though I could have written a check for the deals. They told me I had no experience. I kept at it and the third lender gave me the green light.
You will put 25 percent down if you have good credit and have management experience. The lenders don’t care how rich you are, they’ll say “yeah, you got some money, good” then they’ll look at your credit and say, “yeah you have good credit but so does everyone else.”
Then, the third thing they will say is, “What is your management experience?” They will also ask about your experience in that particular area. A guy who used to have eight units in Tulsa may get turned down for a loan in Florida because he doesn’t know the area.
Before you pull the trigger on any deal, get great with looking at financial statements. Real estate is basically a numbers game. It’s about a certain amount of money coming in and a certain amount of money going out. The difference in this business is that you actually get to use debt. This means you get leverage. Every $100K buys $400K in real estate. Every $1-million buys $4-million. If I bought $1 million in the stock market, I would get $1 million in stock. If the stock market was like real estate, I would buy $1 million in stock and get $4 million in stock.
There are three main things you need to keep in mind today with real estate:
1. Know real estate.
Do you even want to be involved in real estate? If you aren’t sure, don’t do it. You have to know for sure that’s what you want your money in. Know what kind of real estate you want to be in. I don’t do shopping centers or offices — and certainly not houses. I do multi-family, which means basically apartment buildings. I rent 10 to 15-month contracts. I know what I want to do and why I want to do it.
2. Know the market.
Not just location, you need to know the market. There was recently an article written about how New York and San Francisco are already pulling back. I’ve been telling people for a year to stay out of those markets because they are hyper-inflated. They will bust because all bubbles do. Bubbles are pretty and everyone wants to hold it and then POP — everyone loses interest and they go start blowing another bubble. I stay out of markets that blow bubbles.
3. Know the deal.
Finding the deal today is the biggest issue for many small investors. There’s no such thing as a bank owned deal. If the banks got deals, they are calling guys like me. If everyone passes on a deal, it’s not a deal. It’s like if I told you that you can eat everything off my plate after I’ve already eaten all the good stuff off. You need to know what a deal is and what isn’t a deal.
You want to scale, which is something most small investors can’t do. I don’t advise doing multi-family unless you start with at least a $2-million-dollar deal. Otherwise, it won’t produce enough income and is not worth the trouble. If I’m going to get a splinter in my toe, the adventure better be worth it. I don’t want a splinter in my toe because I was eating a hamburger but if I get it running to my naked wife on the beach, the splinter would be worth it. You don’t want to invest in a deal where the payoff is too small.
That’s why I say don’t do anything with fewer than 16 units. Don’t do little. Don’t start early and don’t start small. People hate when I say this. Keep saving your money. You reduce risk not by diversifying but by knowing what you’re doing. Leave alone the high-end stuff that has rents of over $3K and the cheap junk. You want to have an exit plan or you won’t ever get your money out. I invest in places with rents around $1,000.
If you do a $2 million-dollar property you will need $500K and finance $1.5 million. The property will take care of your financing, your expenses, and it should pay you about $50,000 a year. If that sounds scary, consider other options — I know if I could do it all over again from the beginning I would have just ridden with a guy like me. I’ve got a brother and a sister, and some close friends that came in and wanted in on some of my deals. They get the leverage where it’s my name on the debt, my experience and my management company.
For 25 years, I have allowed only close friends and family to invest in my real estate deals. I recently put 460 units, worth $55 million, under contract to purchase and for the first time offered investors outside my family to come into these deals. The entire investment required was filled in two weeks.
I am going to open up my next deal to accredited investors. With many of you reaching out to me interested in investing in apartments as a way to protect capital and create passive income flows, I’m opening it up to accredited investors. I can’t open it up to everybody just yet because of some regulations, but I’m working on it. Accredited means you need an income of $200K a year for the last two years or a million dollars in net worth, excluding your home. The minimum investment is $100k and the maximum is $1 million.
Apartment investing has been extremely lucrative for me over the last 25 years. There are no promises or guarantees this can or will continue, but you can see where I am putting all my money. If you don’t yet make $200K a year, get on my Playbook today. Before you get in the real estate game you have to learn to increase your income — there’s no way around it.
As a real estate investor, author and podcaster, I’m often asked if it is “too late” to buy real estate. After all, prices have climbed dramatically over the past several years, and many homeowners and investors are worried that they’ve missed their chance.
My answer is always the same: No, it’s not too late.
However, today, unlike the past, when almost every property was a good deal for buyers, you have to hunt for (and buy) only the best. And one specific way to do that is to purchase a property and increase the value significantly. That way, if home values do drop, you’ll avoid being “underwater.”
But how do you add value on a piece of real estate without spending tens of thousands of dollars? While there are potentially hundreds of techniques, here are my favorite ten methods for helping the value of your properties to increase.
1. Don’t buy stupidly.
While this first item technically does not require you to do anything special to the property, it is nevertheless the most important step in building quick value. If I buy a home for $20,000 less than it’s worth, I’ve forced an appreciation of $20,000. While I don’t need to go into detail explaining exact methods, just know that your profit is made when you buy, not when you sell. For more on finding great deals, read 4 Simple Tips for Finding Incredible Real Estate Deals.
2. Try out the ‘Ikea bedroom miracle.’
One of my favorite ways to quickly improve a property is to simply turn a “bonus room” into a bedroom. The best transformation involves turning a two-bedroom home into a three-bedroom one. Oftentimes. this can be accomplished for the price of an Ikea wardrobe, but can add tens of thousands of dollars to the value of the home.
3. Increase your property’s curb appeal.
It may be obvious but it is still shocking: the number of investors who spend thousands remodeling a home but neglect to do any more to the outside than a quick paint job. While fresh paint is a great way to add value, there are many more steps you can take as well to spruce up a home’s curb appeal. A nicely manicured lawn with well-defined landscaping can help achieve higher rent or a quicker sale — both of which can make the value climb.
4. Raise the rent.
If we’re talking about rentals — especially multifamily properties — raising the rent can be the key to increasing a property’s value. If your rents are low, a small increase can add significant value to your property. This is especially true for multifamily properties. Raising rent just $25 per month per unit on a four-plex can add $1,200 per year in extra income and (depending on your area’s cap rate), up to $20,000 in forced value overnight.
5. Rent out those nooks and crannies.
You may already be at the top of your rental price capacity, but that doesn’t mean you are getting all the income you can out of your properties. Are there any storage sheds, broom closets, garages or simply vacant land that you can rent out to increase your income? Mini-storage is a multimillion dollar industry, and you probably have more space to rent out than you realize. As happens when you raise the rent, additional income often means more value.
6. Increase your fees.
In addition to capitalizing on all the physical ways you can increase the income in your investments, how about the fees? Are you charging for background checks, late-rent fees, missed maintenance appointments or parking violations? How about your laundry facilities or paid parking? Are you getting all the fees you deserve?
7. Lower your expenses.
You are probably paying too much for too many things. As an investor, one of the “hats” you wear is auditor for your business. Perhaps you can negotiate a better rate for garbage pick-up. Perhaps you can transfer the water/sewer/garbage expense to your tenant. Perhaps spending a few hundred dollars getting all those dripping faucets can cut down your annual water bill by thousands of dollars. Whatever your strategy is, if you decrease expenses, you will be able to increase the value of a property.
8. Add a bathroom.
In the old days, one bathroom was standard in most homes. If you are remodeling a home and find this is the case, take note of where the plumbing is located and what extra space there is around, above, or below that plumbing. Oftentimes, you can add a small half bath for several thousand dollars and add tens of thousands in value in the process.
9. Tear down those walls.
As long as a wall is not “load bearing” (and sometimes even if it is), you can take down a wall (or half of one) in a matter of hours and create a much more “open concept” feel. This can help increase the desirability of a home and thus improve the value as well.
10. Paint the neighborhood.
One of the biggest detriments to your property’s value is not your property at all — it’s your neighbor’s home. A quick paint job, landscaping or simply a run to the dump can often be the best money you’ll spend, trying to increase the value on your own property. Obviously some tact is needed and many people are opposed to getting “charity,” but it’s hard to turn down a free paint job or yard clean-up.
I think that we all find ourselves getting stuck finding money, I mean we all think we have a good deal, we all think that we have the knowledge, but when it comes to the money we find ourselves short. Our friends and family are telling us no, the banks tell you no, and most of all you say no to yourself. Without a target, you won’t get anyplace. You look at your first deal based on the money you have, and many of you give up on the real estate game because you don’t have any money. When you get started you don’t have any money, right?
Let me tell you there is no such thing as no money down. No bank will lend you money with no money down, and no seller will carry a note without you putting some money down even if it’s a promise to do money in the future. There is no such thing as no money down because the money is going to come from somewhere. It’s money down if you’re going to have to do something if you have to exchange something with the person giving you something. If they’re going to give it to you for nothing, then trust me, you don’t want it. So the question becomes, how would you raise money if you don’t have any money?
The first thing I say, and I say this over and over, is that the deal is what matters, not how much money you have. I say it doesn’t take money to make money, it takes guts and courage. The thing you should be chasing is the deal, not your budget. Most people make decisions on how much money they need based on their job and on how much money they spend, but this is backward. You should make the decision on how much money you want regardless of how much money you spend. This is why people never get ahead. The deal is senior to the amount of money you have.
The secret is called OPM — other people’s money. It’s going be somebody’s money. Somebody’s money is going down because there is no such thing as no money down. How do you get the money from other people? Finances are about playing offense, not defense. Don’t chase your budget. Instead of chasing a $200,000 deal, chase a $2.5 million dollar deal. Do not buy less than 16 units, because without 16 units you cannot have a manager. If you can’t have a manager you’re either not going to have your attention on the property or your property will become your full-time job.
Go to investors, people that have $100,000 each, $20,000 each and give them a good deal. You’re going to have to offer a good deal because people are taking a chance on you. Who would you go to first — mom, dad, uncle, brother, sister? You can go look for investors in your local area, maybe a real estate investment club because those are the people who maybe don’t have enough time but want to put $50,000, $100,000, $200,000 into it. There’s a lot of people out there right now that have money sitting in the bank.
You’ve got friends and relatives giving their money to Wall street right now, and they don’t know anybody in that place. They are putting it in mutual funds, IRAs, and 401ks. You need to convince them to go in with you. Their money has been reduced to little digits and it’s backed by nothing. Money basically represents an idea backed by confidence. You need to raise money.
I want to look at bigger deals, and if I want to look at bigger deals, sooner or later everybody runs out of money. I don’t care how rich somebody is, sooner or later you run out of money. You’re buying a business so get creative. There’s nothing set in stone. If you want to get into the game, you either go out and tell your mom, your dad, your uncle, and find others to go in on a deal, or you find a guy like me and ride his deal. Either way, you will have to raise money.
I suggest you don’t invest until you can learn how to make enough money on your own to save at least $100,000. If you can earn enough to save that, it shows that you are ready to begin multiplying your money. Until then, rather than worrying about real estate, concentrate on increasing your own income. Get skills so that you can make enough to save rather than living paycheck to paycheck.
I’m giving lifetime access to Cardone University right now, and it’s a lot cheaper than any real estate. It will teach you how to start increasing your income so that one day you will have money to put down on a piece of property. If you want to do real estate with no money down, you will have to sell others on you. Cardone University is the #1 sales training platform in the world and will help you in any industry, in any town, and in any country.
It is always an easy task to tell whenever a organization genuinely cares about its personnel. It shows in the way the operations staff behaves towards the personnel. Even though this firm may well limp along for a lot of years, whenever the management behaves towards the personnel just as if they were all slaves, bitterness gathers and quite a few employees contain the inclination to get hostile in terms of their thinking. Whenever the managing staff along with the workforce will be embroiled in raging struggles, it doesn’t matter how refined it might be on the surface, it is a very sure thing that that company won’t know its true potential if that scenario is permitted to continue. Supervision would do well to actually recall the old proverb it is simpler to reel in flies with honey as opposed to utilizing vinegar.
There are a lot of approaches which a management staff that wishes to indicate great good will to its staff will do so. Most likely the most significant is always to deal with these people with regard. Simply mastering peoples’ names, creating eye-to-eye contact, grinning, and then stopping on occasion to be able to pass the time of day is certainly involving wonderful appeal. Excellent operating places, very good pay pertaining to good work, chances pertaining to advancement plus the expression regarding authentic thanks regarding the work that staff members carry out almost all produce great outcomes. Workers ought to have a decent break area for them to have to use.
Going in conjunction together with opportunities to move forward within the company may be the arrangement connected with educational prospects, for example injection molding seminars. If staff members are furnished a chance to enhance themselves as well as take seminars for injection molding, or maybe injection molding classes, it often seems to not only signifies that the management tends to value them, but furthermore, it signifies that administration really wants to invest with regards to them, as people. Not only will the actual qualifications obtained from gaining from possibilities like scientific molding seminars tend to make these folks much better personnel, a victory from the firm’s standpoint, though furthermore, it positions these people to generate raises, be given special offers and proceed to brand-new opportunities throughout the company. It’ll make their particular present work opportunities more secure, and makes it easier for such individuals to find brand new careers if ever they have to relocate to a completely new area.
Quite a few folks are seeking to leave the town and to get a property together with a lot of land. Even if this life just isn’t for everyone, whenever it is exactly what an individual desires, they’re going to desire to ensure they will have the appropriate help to find just what they’re looking for and also discover a home that suits their particular budget. It is important for someone who wants to Find ranches to consult with a broker who is familiar with the region and also who is aware of what exactly is accessible in order to help them locate what exactly they are searching for.
Anytime a person will be searching for land, they are going to wish to be sure they’ll take into consideration just what they want. If perhaps a person won’t know a lot concerning caring for considerable amounts of land, they may want to be mindful with how much they’ll purchase. Also, in case they will not have sufficient time in order to care for a larger lot, they may wish to contemplate purchasing a smaller sized volume of land or choosing somebody to be able to help them to look after the land. It really is essential to think about this before choosing a lot that is too substantial and ending up with overgrowth they are unable to manage since they do not have the time.
They’ll in addition desire to take into consideration they’ll be required to buy brand-new tools to be able to help them to care for the land. They will additionally be far away from the city, therefore it might be more tough in order to have larger items shipped and also far more expensive to be able to enter into town whenever they need something. This can be something they will wish to plan for and contemplate, even if perhaps it is something they need, to make sure they are not shocked whenever a firm estimates a higher volume for delivery or perhaps whenever they’ll have to obtain far more gas to get into town for the things they’ll need.
If perhaps you happen to be prepared to move out of the city, RMA Brokers may help. They are going to work with you in order to figure out the right size of land to buy and also help you find just what you’ll need to have so you can make certain you will be satisfied with your brand-new property. Get in touch with the Ranch Marketing Associates now or visit RMABrokers.com to learn more regarding exactly how they can aid you.
When I was a child, every Saturday morning was the same: Wake up early, pile into the minivan with my mom and three siblings and start looking for . . . garage sales! Yes. I was raised by a “garage sale mom.”
Because we didn’t have a lot of money, we bought nearly all of our clothes, furniture, toys and pretty much everything else from someone who no longer wanted those items. And, let me tell you — my mom was the master at those sales. She knew how to find the coolest gadgets, toys, games and appliances for pennies on the dollar. She could negotiate a 50-cent t-shirt down to 10 cents, and regularly did. She would even buy far more than we needed, just so she could resell those items at her own garage sales and make a profit to fund our family vacations.
Today, I do far less garage-sale shopping than my mom, but the lessons I learned from her haven’t changed. I still want to find a great deal. Today, however, instead of 50-cent t-shirts, I spend much of my time hunting down great real estate deals, because I’m a real estate investor.
Whether I plan to flip that house, hold the property as a rental or go for something entirely different: Everything begins with a great deal. Here are four simple tips you too can use to find better deals on your own real estate, whether you’re looking for an investment, a property for your business or simply a home for your family.
1. Consider buying a bank-foreclosed property.
When someone fails to pay a mortgage payment for an extended period of time, the lender will ultimately repossess the home and remove the occupants. Once the home is empty, the lender generally lists the house for sale on the market, using a local real estate to list it.
While the foreclosure, in itself, is of course sad (no one rejoices when someone loses a home), once the deed has been done, these properties can be some of the best deals you’ll find in real estate. Banks want to be in the business of lending money, not managing property, so they are often quick to offer large discounts just to get the deal off their books. Translation: You can get a great deal on foreclosed properties, if you know how to buy foreclosures right.
Because the foreclosure process can take several years, these properties are often in need of some serious repair or updating. So, further discounts may be given to compensate — for buyers willing to brave a rehab.
Talk to a local real estate agent about the foreclosures in your area, and start checking some out. You might be surprised at the deals you can get.
2. Be the first . . . or the last.
In real estate, often the old adage holds true: The early bird gets the worm.
Oftentimes, it’s not the highest offer for a property that gets accepted, it’s simply the first. Therefore, if you are looking for a great deal, be quick about it! Get a pre-approval from a bank so you can jump at any property right away, and have your real estate agent set you up with automatic email alerts notifying you of any new property that hits the market.
Then, don’t delay — check it out quickly, and make an offer the same day if possible.
Conversely, another way to find great deals is to look for properties that have been on the market for a long time. Those owners are often far more willing to sell for a discount, because they are tired of holding on to that property. Many times, they will have been making two mortgage payments for months (or years) and will entertain almost any offer.
Related: The 7 Tips Entrepreneurs Need to Know Before Investing in Real Estate
3. Approach absentee owners privately.
In a hot real estate market, like the one most of the United States is experiencing today, great deals can be hard to find because of the large number of people looking for a home. In some areas, a single house for sale might get a dozen or more offers in the first several days.
Therefore, one of the best tactics real estate investors use today is to look outside your multiple listing service and instead contact owners directly, asking them to consider selling. At any given time, a good percentage of the population will entertain that option, so why not reach out before they list the home with a real estate agent?
One of the best kinds of people to target is absentee owners, which simply means someone who owns a property but doesn’t live there. They might be landlords (who hate their tenants) or owners who inherited their houses and are simply unsure what to do with them. You can find these deals in a number of ways, such as:
driving around, looking for houses that look vacant, and using online public records to track down the owner
buying a public record list using an aggregate-list site like ListSource.com
calling mom-and-pop landlords who are listing properties “for rent” on Craigslist. Let them know you aren’t interested in renting, but you would like to talk to them about buying.
4. Look at a lot of deals.
Finally, understand that finding good deals is largely a “numbers game.” You often have to kiss a lot of frogs to find the prince!
For me, I look at deals in terms of a funnel. At its top, numerous leads come in, but at the bottom, only a few come out. Therefore, if I want more deals at the bottom, I need to improve each aspect of my funnel, including the quality and number of leads at the top. For example, my funnel might look like the following:
Raw leads from my real estate agent — 200
The location is somewhere I would buy — 100
A quick analysis shows promise — 20
A deeper analysis still shows promise – 10
Deals I’ve made an offer on — 8
Offers I’ve made that have been accepted – 1
Notice that, in the above funnel, my agent sent me 200 possible properties, but at the end, I ended up making offers on only eight and only one offer was accepted. If I wanted to buy two properties, I know I’d need to look back on my funnel and find a way to increase my numbers. Because, again, it’s just a numbers game.
Whether you are looking to buy an investment property, purchase a home for yourself or buy real estate for another reason, remember: You make your money when you buy. If you want to have immediate equity in your property, which can help you build wealth in the future, or save you in case of an economic turndown, you must find great real estate deals.
People begin a Landscape services powell ohio cutting solution for a number of reasons, yet the most popular is that it is simple to launch and also run, and also there is constantly a demand for the solutions of a specialist. If you are in a big residential area, you are already positioned making an excellent begin by getting in touch with people in your area and also creating stable income
Having a positive mental attitude together with a couple of devices you will certainly require, you could quickly take a basic grass cutting task into a full time occupation with a bright future for growth.
A yard mowing organisation is a relatively simple company to begin.
The first thing you should do to obtain started is to locate clients that will certainly pay you often to keep their front and also back yards. While you have the choice to bill whatever prices you want, try as well as keep it competitive and also affordable.
To begin, the only thing you really require is a mower. Consider just what type of job you will be doing with it as well as try and also locate one in your spending plan that will assist you finish the job conveniently as well as successfully. Bear in mind that the much more you invest in equipment, the a lot more comfortable you will be.
Think about this tip. Expand your service enough to hire a couple of individuals to do the work while you can after that be totally free to develop more clients while managing the company.
If you truly wish to begin your own grass mowing business, there are a pair things to consider that could help you to be successful. Think about having a plan of action for marketing to obtain words out, as well as rely on word of mouth from acquaintances to assist get the preliminary customer base started.
Likewise, remember to do some research and also learn about the business from those who achieved success upstarts. Speak with them and pick up from their mistakes. These are terrific ways to offer on your own a distinct advantage with starting your new money making endeavor.
Crowdfunding is rapidly gaining popularity as the must-have investment option. In 2015, real estate crowdfunding was expected to grow into a $2.5 billion industry. According to David Drake, founder and chairman of The Soho Loft Media Group, real estate investors have started to value crowdfunding as an avenue that helps stabilize and diversify investments. As the real estate crowdfunding industry continues to grow, investors are more apt to embrace real estate crowdfunding instead of traditional investment options because of the higher rate of returns, ease of access, and limited liability.
If the stats weren’t enough, here are seven definitive reasons why you should start investing through real estate crowdfunding.
Offers more control
It’s natural to want control over your investments and real estate crowdfunding does exactly that. Unlike real estate investment trusts (REITs), investing through real estate crowdfunding gives you the power to control which real estate properties you invest in. With real estate crowdfunding, investors are presented with all relevant information about the property prior to investing. They are even encouraged to monitor the progress of each project over the term of the investment.
Promotes asset diversification
If you want a diversified portfolio, then real estate crowdfunding is right for you. Previously, investors would make a large investment in a single project, leaving them susceptible to a higher risk. With real estate crowdfunding, investors can now contribute smaller sums of money into multiple projects, thus diversifying their risk.
Lower investment buy-in
There are many potential investors who don’t have ready access to large amounts of capital for investments. Traditionally, investing in real estate was an opportunity reserved for the wealthy. “Investing in commercial property is generally very capital intensive,” said Heather Schwarz Lopes, chief strategy officer of Early Shares. “Now investors can start at a lower price level,” said Lopes. Today, real estate crowdfunding provides more opportunities for those who have $5,000 (the minimum for many crowdfunding sites) that they would like to invest.
Latest path to passive income
The best type of investment is one that requires minimum effort to earn funds. Real estate crowdfunding has a significant advantage over the direct approach of investing. Direct investing requires that the investor be directly involved in the day-to-day operations of a project. With real estate crowdfunding, an investor simply invests in a project and enjoys the benefits of passive income, which includes monthly interest payments.
Access to more properties
Traditional investing practices don’t allow investors any kind of access to the projects they invest in. Real estate crowdfunding gives the investor access and updates to diverse, profitable properties. With the growing popularity of online real estate crowdfunding platforms, new screened and unscreened properties are added on a daily basis.
Traditional investing requires additional funds for investments and has no protection with respect to the financial liability of the investor. Through traditional investing, investors are required to pay the direct costs and any liabilities incurred as a result of the investment. With real estate crowdfunding, the financial liability of the investor is limited only to the extent of their investment.
Higher rate of return
In traditional real estate investing, there are many players handling multiple aspects of the deal. With real estate crowdfunding, investors directly invest in a property. This reduces the associated fees, allowing for additional profits that go directly to the investor.
The rise of real estate crowdfunding has paved the way for a new and more accessible form of investing. More “Average Joes” are getting into the game and investing without having hundreds of thousands of dollars in their bank accounts. With investing minimums as low as $5,000, a higher rate of return, and more diversity in properties available than ever before, there’s no reason not to invest. If you’re still a laggard and investing through traditional avenues, get with the times.
After ages of institutional disadvantages, women today are quickly gaining power in the workplace. Time and again, they’ve proven their worth in academic and professional settings, and in all tiers of business have made clear the importance of female representation — leadership included.
When I began as a secretary in the 1970s, I was among a minority of women in the real estate industry. With hard work and luck, however, I was able to climb the corporate ladder and build a successful business from scratch, forging the way for a new generation of female entrepreneurs.
The environment in which I did that — New York City — has always been a progressive microcosm. Here, where the country’s best-paid family-leave law was just passed, some of the nation’s finest female leaders and entrepreneurs are flourishing, thanks to a combination of ambition and diversity and growing cultural support for equality.
Still, as a born and bred New Yorker, I admit that the rest of the country remains a bit of an enigma to me. In fact, I have come to realize that my own success in the real estate industry may be an outlier. According to a survey of female members of the Urban Land Institute (ULI), a multidisciplinary real estate organization with more than 37,000 members, there exists a deficit of women in our industry’s executive roles.
Women in real estate
My wish is for all women to have the opportunity to advance in the workspace if they have the talent and desire. But, according to ULI’s survey, there is still a clear gender imbalance, especially when it comes to leadership.
The survey found that women make up about 25 percent of ULI members but represent just 14 percent of CEOs. Female leaders are also more likely to be at the helm of smaller firms than larger ones. ULI speculates that this is likely because roadblocks in larger organizations box them out of senior roles, leading them to either start their own businesses or leave for smaller firms where less bureaucracy prevents their advancement.
Fortunately, the women surveyed displayed great optimism about their careers: 70 percent said they felt they were on track in their career advancement, or else were moving even more rapidly ahead than expected.
Supporting women’s career growth
Clearly, women in real estate are ambitious, talented and hungry for advancement: Roughly 68 percent of those surveyed said they aspired to hold executive positions in their companies or own their own business. In New York City, I’ve found, conditions are right to encourage such female success.
But the fact is that many women still face obstacles in seeing their ambitions come to fruition. That is why I believe we need the right support to develop their talent, to carry them forward unhindered by “gender” limitations.
ULI makes some astute suggestions for real estate companies to help women in the industry not just succeed, but earn positions at the top of the totem pole. Here’s what they propose:
1. Accelerated learning
One of the most important requests by women surveyed was the provision of visible and challenging assignments to accelerate on-the-job learning. When high-profile assignments and job openings arise, organizations should think and act with an eye toward both talent and diversity, then challenge those with potential.
Giving female employees responsibility and testing their ability to act under pressure opens doors for those that might not be obvious choices, giving them the chance prove their worth and exercise their skills.
2. Culture creation
Another important factor is an inclusive workplace culture, within which both men and women have the tools to succeed. Inclusivity starts from the top, with leaders taking actions to include women as mentees and to demand the same quality from all, regardless of gender.
Already, many millennial women report being paid and treated as equals with their male counterparts. Since mid-career women are more likely to report their careers stalling, it is imperative that this culture extend to women of all ages.
3. Talent mindset
According to women in the industry, having managers who coach them on the job is more beneficial than formal female leadership programs. Programs as stand-off interventions — while potentially helpful — aren’t considered as important to career growth as internal attitude and mentorship.
For example, a senior-level executive advocating for a woman goes much further than a simple HR training session. Managers should practice objective hiring and mentorship to challenge those with raw skills and ability.
4. Flexibility for all
The ULI survey found that the women surveyed indicated workplace flexibility as a sign of trust by senior leadership. These women wanted to be trusted with flexible working hours while also being measured on results; in the survey, this goal was even more important than family leave.
Work flexibility allows both women and men to dictate their own schedules, to optimize work time and family time without sacrificing quality in either. As long as these offerings don’t put an undue burden on other colleagues or lower the performance bar, those able to take advantage of it will have ample room to thrive.
Internal mentorship can be crucial in allowing women to hone their leadership skills.. But challenges persist in regards to gender dynamics that may impede coaching’s efficacy: For example, a male superior may feel uncomfortable critiquing or bonding with a female inferior, and vice versa.
Women may want to turn to female superiors, then, for advice. But as long as men occupy leadership roles, they shouldn’t hold back from offering support. Organizations can also offer women the opportunity to form external networks fostering professional relationships with men and women outside their firm. Both outsiders and insiders can become future work connections and provide valuable feedback to working women.
Women in the real estate industry have reason to be both optimistic about and hopeful for the future. Progress comes when culture shifts, equity is sought,and respect is earned; every year, more women are earning advancements due to organic change. I’ve witnessed this first-hand, and am confident that women around the country are capable of the same success.
Investors in real estate are not quite the same as landlords. Investors take more business risks and often times get better results and profits. It’s the big leagues of property investments.
The good news is that anybody can join the big leagues. Real estate investment entails more risks than merely leasing and overseeing a house in the case of landlord ownership. But the risks are worth taking as the result of good investment far outweighs any risks.
A landlord is anyone who owns land – a house, apartment or what we generally call real estate. He or she generally rents those houses and apartments to tenants. Meanwhile, a real estate investor is much more – clearly you still own houses — but you don’t have to wear all the hats that come with being a landlord.
I have highlighted six different reasons why it is wise and expedient to metamorphose from being just a landlord to a real estate investor.
1. Investors avoid the hassle of being a landlord.
Marketing the property, vacancy showings, tenant screenings, lease negotiations, rent collection, tenant communication, repairs and emergencies, bookkeeping, coordinating insurance policies and more – these are the hats on a landlord’s head.
Investors exempt themselves from the daily grind and responsibilities and focus more on the business and profit making part. No need worrying how to make a plumber show up on Sunday afternoon. An investor would focus on constant research and smart decision-making.
To do this requires hiring a property management company (PMC) to advertise, negotiate with clients, maintain and generally oversee property and assets on her behalf. This in the short-term might seem like great expenses, but if only to rest from the hat wearing it is worth it, plus a few more advantages as you will see.
2. Investors have the benefit of focus.
Imagine having all the responsibilities above and doing it long-term — which is what many landlords do. It could get really exhausting, to avoid using a stronger word. Investors focus on one thing, and this increases their profit in the long-term and also in the short-term, depending on how quickly they can make a property more profitable.
3. Investors avoid indigent tenants.
Almost every landlord has to face this at some point, especially in economies that are dwindling. Let’s face it, so many people all over the world are living below the poverty line. Most of these people find it extremely difficult to pay their rent when it is due. And many times these tenants would not vacate the premise, which means you can’t get a new tenant. This usually leads to the issuance of quit notice, or even as far as using a court injunction, to get them to leave.
An investor can’t be bothered by such challenges. The firm manages all of that and reports to her. And in the event that a property is not profitable, she can sell it, and move on to better investments.
4. Time, leisure and early retirement.
Good investors acquire properties that have flexibility. This includes the cost of hiring a management firm in their cashflow assumptions so they can vet out any financial deal breakers.
Because of this early planning and wise decision making they can have more time to themselves. They can enjoy vacations and travel, and it won’t affect their jobs, because they limit themselves to about 20 percent of what they would have done as landlords.
Landlords might even be so restricted that they have to live in the same property with the tenants to keep an eye out. Investors on the other hand, keep charge of their time versus money balance.
5. The better end of asset appreciation.
The valuation of property tends to increase over the years as the net operating income of the same property augments as a result of increase in rent and reduction in the maintenance cost. The latter is assured through effective property management work. Investors need only to find the best management firm they can.
6. Investors are in it for the money.
Aren’t we all? Landlords and investors alike invest in property to make profit, but investment is a less tedious way of making money.
To be a real estate investor, you only need to have business at the forefront of your mind. You buy an asset with the intention to offload such property for good profit as soon as it is profitable. This canning ability is called flipping, and it is achieved by smart real estate investors by buying undervalued assets ,or those that are not in huge demand marketwise.
Securing a commercial lease — office, retail or industrial space — is a complicated process that requires much time and effort. As a business owner, there are several different types of property owners you may encounter in your initial search and even during your occupancy, ranging from small individual owners to multi-billion dollar REITs.
Working efficiently with each kind of owner requires a basic understanding of their preferences and priorities. Here, we’ll highlight a few key characteristics of each group:
1. Mom and Pops.
Mom and Pops are owners with smaller portfolios who obtained property as a primary investment. They are not as formal in business practices as other types of owners. Often personally vested in their space, they favor tenants who will treat their space well.
Usually straightforward and easy to deal with
Great for those who desire a close landlord/tenant relationship
May be flexible on terms for the right tenant
Best fit for smaller businesses with simple needs
Communicate with a personable and warm manner
Highlight what makes you a good tenant
Convey your willingness to take ownership of the space
Share creative ideas on how your business can indirectly benefit them
2. Family investors.
Unlike Mom and Pops, family investors are “real estate families” who have amassed a sizable portfolio over tens or even hundreds of years. The tenant/owner relationship may not be as intimate but nonetheless, family owners are still materially involved in the leasing and management of their properties.
Still operate with a personal touch and often handle leasing in house
Generally cash flow driven; prefer stable tenants over the highest possible rent
Have intimate knowledge of every building in their portfolio
Tend to have long term tenants that they have accommodated over many lease periods
Best fit for small to mid-size businesses who are looking for a landlord that is willing to build space and accommodate their short-term growth needs
Check out other buildings within their portfolio to get a better sense of what they have to offer
Be warm and personable because it’s not only the bottom line that drives these owners
Clearly communicate your needs and limitations; they will do the best they can to accommodate
Be prepared to put down a significant security deposit if you don’t have strong financials
3. Management companies.
While technically not an owner, management companies act on behalf of the owners that hire them. For the purposes of leasing and day-to-day property management, they are the de facto owners. Management companies typically have access to a large portfolio of properties with a wide variety of options to fit any business needs.
Very knowledgeable and can accommodate a wide range of needs
Allocated budgets for building improvements and capex
Offer standardized and less flexible lease terms, especially for smaller tenants
Best fit for businesses that have established credit, as these owners often have specific requirements and operating rules
Expect to sign a 5+ year lease
If you are a high profile tenant who’s well recognized or generating a lot of buzz, use this to your advantage, as these landlords like having notable tenants in their roster
4. Real estate developers.
As the name suggests, real estate developers develop and acquire office, residential, hotel, retail and mixed-use properties. The properties they construct are typically Class A buildings designed by award winning architectural firms and feature some of the best amenities offered by any landlord.
Extremely well maintained common areas and large lobbies with strong security
Looking capitalize on the quality of their buildings and generate the highest rents in order to maximize property value
Often limited to major markets such as NYC, SF, LA, Chicago and Houston
Usually more than willing to build space for long term tenants or provide a significant tenant improvement allowance
Best fit for companies looking for premium space
Plan well in advance as deals can take a long time to close
Ask for specific details and changes to the space that will help your business
Use time as a negotiating factor; many new buildings need to secure tenants even before new buildings are completed
5. Institutional investors (funds and REITs).
Institutional investors are money managers who invest in various asset classes, including commercial real estate. Of these investors, REITs (real estate investment trusts) invest solely in real estate properties but most funds will also invest in it as part of a diversified portfolio.
Most assets are Class B+ to Class A buildings that generate strong cash flows for investors
Driven by occupancy rates and margins, not personal preference
You likely won’t deal directly with these owners unless there’s a major dispute, you’re an anchor tenant and/or a large tenant improvement (TI) allowance is involved, but if you do, make sure you cross all your t’s and dot all your i’s. These are not your typical landlords so make sure all of the right paperwork and documentation is in order.
Inflation is defined as, “a general increase in prices and fall in the purchasing value of money.” Your money doesn’t go as far — simple. The $30k you made at your job 10 years ago and lived comfortably with barely gets you by now. You can’t control inflation (the Federal Reserve does that) and the government has doubled their debt since 2008. It’s now at $18.3 trillion and grows every day.
The government cannot save you or your family, or ensure your financial freedom. Set your mind right about earning money. More cash = more freedom! Money itself won’t make you happy, but it will give you the ability to provide a better life for yourself and your loved ones. You must invest with income streams that give you positive cash flow, learn to leverage your debt, learn to handle inflation and take control of your physical assets.
Do you currently have commercial real estate assets in your investment portfolio? Are you scared to have your money in the stock market (like I am) but also fed up with almost no return on investment with your money at the bank? Do you instinctively like the idea of being invested in income producing real estate with results you can see?
Here are eight reasons why investing income producing real estate is an excellent choice for protecting and growing your wealth:
1. Positive cash flow.
One of the biggest benefits to income producing real estate investments is that leases generally secure the assets. This provides a regular income stream that is significantly higher than the typical stock dividend yields.
2. Using leverage to multiply asset value.
Another important characteristic of commercial real estate investing is the ability to place debt on the asset, which is several times the original equity. This allows you to buy more assets with less money and significantly multiply asset value and increase equity as the loans are paid down.
3. Low-cost debt leveraged to multiply cash flow.
Placing “positive leverage” on an asset allows for investors to effectively increase positive cash flow from operations by borrowing money at a lower cost than the property pays out. For example, if a property generating a 6 prcent cash-on-cash return were to have debt placed on it at 4 percent, the investors would be paid 6 percent on the equity portion and approximately 2 percent on the money borrowed, thereby leveraging debt.
4. Hedge on inflation.
For each dollar that is created, there is a corresponding liability. Real estate investments have historically shown the highest correlation to inflation when compared to other asset classes, such as the S&P 500, 10-year Treasury notes and corporate bonds.
As countries around the world continue to print money to spur economic growth, it is important to recognize the benefits of owning income producing real estate as a hedge against inflation. Generally speaking, when inflation occurs, the price of real estate, particularly multi-tenant assets that have a high ratio of labor and replacement costs, will also rise.
5. Capitalize on the physical assets.
Income-producing real estate is one of the few investment classes that, as a hard asset, has meaningful value. The property’s land has value, as does the structure itself, and the income it produces has value to future investors. Income producing real estate investments do not have red and green days, as does the stock market.
6. Maximizing tax benefits.
The US Tax Code benefits real estate owners in a number of ways, including unlimited mortgage interest deductions and depreciation accelerations that can shield a portion of the positive cash flow generated and paid out to investors. At the time of sale, IRS allows investors a 1031 provision, allowing investors to exchange into a like-kind instrument and defer all taxable gains into the future. (See your tax advisor for full explanation.)
7. Asset value appreciation.
Over time, more and more inflation has made it into the economy, drastically reducing purchasing power. However, income producing real estate investments have historically provided excellent appreciation in value that meet and exceed other investment types. Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.
8. Feeling the pride of ownership.
The right property in the right location with the right tenants and ownership mindset can produce a tremendous pride of ownership factor that is highest among all asset classes. Homeownership is out of reach for most people. Imagine owning thousands of multi-family housing units instead?
No one can ensure the future of rental of income properties’ values, but this asset class seems positioned to continue to benefit from many other socio-economic issues that I will save for another time.