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A Behind-the-Scenes Look at How to Grow a 7-Figure Real Estate Business

Image by Nattanan Kanchanaprat from Pixabay

By Victoria Kennedy

When you’re a successful business owner, one question comes up in nearly every conversation: “How do you do it?” If you’re killing it and seeing revenues topping 7 figures, everyone wants to know your secret.

When Aaron Ace Harris launched Key Marketing Interventions, which offers end-to-end real estate marketing and lead generation solutions, he was starting from scratch. Three years ago, he had no online presence, very few connections, and not much more than a deep desire to serve others.

But, today, the tides have turned dramatically and Aaron is on a mission to share not only how he did it, but to pull the curtain back and give a behind-the-scenes look into what goes into running a 7-figure business daily.

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Image by Pete Linforth from Pixabay

5 Steps to Building a 7-Figure Business from Scratch

Of course, every entrepreneur’s journey looks a little different, but what follows are the 5 steps that Aaron swears by.

Step 1: Go all-in on ONE idea.

Every business starts in the same way—as an idea. Clearly then, the first thing you need to build a business from scratch is a big idea.

Now, if you’re like most entrepreneurs, you’re thinking, “great, I’ve got tons of ideas.” But the key is finding that ONE big idea that you can go all-in on.

“I always shake my head when I meet an entrepreneur who brags about running 6 businesses at once,” says Aaron. “What this tells me is that this person isn’t all-in on any one business. They’re spread too thin and trying to hedge their bets.”

To get to 7 figures, you need consistency, focus, and patience. This means choosing one idea and going all-in.

Step 2: Do your research.

Once you’ve found your big idea, the real work begins. It’s time to do your homework so you can figure out how to turn that idea into the revenue-generating machine of your dreams.

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Image by StockSnap from Pixabay

But before we get ahead of ourselves, let’s break this step down. Here’s what to research:

  • Study your competition
  • Find the gap in the market
  • Figure out who your ideal client is
  • Identify the pain points of your ideal client

“When I started my real estate lead generation company, I had already learned a lot about what my ideal clients’ pain points were. I had been doing the agency thing for a few years. So I knew exactly what real estate agents needed most,” says Aaron.

Step 3: Create your way forward.

Now that you have your idea and you’re confident there are clients out there just waiting for your product or service to hit the market, it’s time to create.

This phase is full of experimentation, rejection, and even what might feel like failure. But remember, according to professor and motivational speaker, Steven Redhead, “the difference between success and failure is not giving up.”

If something you create doesn’t work out, take what you can learn from it and move on.

Step 4: Shout your idea to the world.

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Image by Yvette W from Pixabay

You have created something you know has value and now it’s time to share your idea with the world. Sharing this big idea can come in many forms:

  • On social media (choose 1-2 channels where you know your ideal client hangs out)
  • In online communities
  • As a guest on podcasts
  • As a guest blogger
  • With joint ventures
  • By participating in virtual summits
  • By hosting webinars
  • Through paid advertising (Facebook, Google, YouTube, Instagram)

Not all of these platforms will work for you, so keep testing and tweaking your process until you figure out what pays off.

Step 5: Work your systems.

Finally, the key to really building up to that 7-figure goal is not taking your foot off the gas. One of the ways to stay on top of your business and make sure you’re doing the small things that will lead to serious growth, is to build systems everywhere.

When you have strong systems, you will work most efficiently. This will free you up to develop multiple revenue streams within your business, which is critical for taking your business to the next level.

There’s no secret to building a 7-figure business, but these 5 steps will take you from zero to 7 figures in less time than you might think. And as Aaron Ace Harris will tell you, it takes hard work and dedication, a lot of heart, and a little luck.


Aaron Ace Harris is the CEO of Key Marketing Real Estate and is a devoted husband and father. He was able to grow his real estate marketing business to 7-figures during the pandemic. Click here to find out about his 3 Closings Guaranteed System: https://www.keymarketingint.com/optin28970799


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Victoria Kennedy

CEO of Atlas Real Estate

victoria@goatlasdigital.com 

(561) 529-9077

www.goatlasrealestate.com

Nominated as a 2020 Brand Ambassador for Inman, Victoria Kennedy is a well-respected authority in Real Estate marketing. She is the CEO of Atlas Real Estate, a lead generation agency that is committed to providing more leads and closings for Real Estate professionals.

She is a highly in demand speaker on all things digital marketing, and has helped many clients boost their visibility and revenue. Because of her expertise in real estate, she has been a trusted speaker and contributor to such organizations as the National Association of Real Estate Brokers, Inman News, and Yahoo Finance.

In addition to running a successful marketing agency, she also has given talks, workshops, and has worked as a trusted consultant for Realties, Title Companies, Investors, and top producing agents. She has been featured in over 175 publications and podcasts both nationally and internationally.

In addition to her marketing expertise, Victoria is a #1 selling classical-crossover singer and has sung with the likes of Andrea Bocelli, as well as toured all over Europe with her music.

She is excited to share with you the power of her Closing Maximization Method and how it can exponentially grow your business.

Find out more here: goatlasrealestate.com


Atlas Real Estate

Here at Atlas Real Estate, we are all about connecting motivated buyers and sellers to top producing agents nationwide.

We guarantee you will get a set amount of exclusive leads a month coming out of your personal Facebook page to brand you as the agent or your money back.

We will call, text, and email every lead for you and connect you with serious buyers and sellers. We will continue to nurture each lead for up to 12 months so whenever they are ready to buy or sell, you are the agent they call.

We will qualify all your leads and set appointments for you so all you have to do is show up to meetings with serious buyers and sellers. We will provide you with proven scripts and sales techniques so you can close more leads and exponentially grow your business.

Give us a call today to get the EXACT marketing strategy that is bringing our Realtors an additional 2-4 closings a month!

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High Cap Rates, Low Cap Rates, and Successful Real Estate Investing

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By Rusty Tweed

Using Cap Rates to Make Informed Real Estate Investing Decisions

Don’t be fooled by the simplicity of the cap rate, or capitalization rate — this simple calculation can reveal a trove of insight on potential real estate acquisitions. Some have even argued that this number is the single most important metric for any budding real estate investor to understand.

Our guide makes it easy to wrap your head around cap rates and use them to your advantage. So, without further ado, let’s jump in and learn.

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What Can a Cap Rate Tell Me?

In a nutshell cap rates provide a quick and simple way to help get a feel for a property’s overall investment potential and a balance with the property’s levels of risk and return on investment. To better understand how to achieve this, we’ll look at a few examples.

Cap Rate Formula: How to Calculate Cap Rate

The cap rate formula is simple: Divide net operating income (NOI) by the property value (or the purchase price).

Cap Rate = Property’s Net Operating Income/Property Value (or Purchase Price)

We can find net operating income by subtracting the property’s annual expenses from its annual gross revenue. Expenses will include things like operating expenses, management, taxes, and anything else you must pay to keep the property running.

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Careful though — debt payments, capital expenditures, and depreciation deductions are NOT included in the calculation. This is because we are trying to get a sense of the property’s performance irrespective of any mortgage arrangements, improvements we might make or depreciation schedule that may be selected.

For revenue or cash-flow, you’ll simply plug in what tenants currently pay in rent (total rental income), as well as any other sources of income (Ex: a laundromat or a parking garage).

Should I Use Market Value or Purchase Price as my Denominator?

For the bottom of our capitalization rate fraction, market value is generally preferred. A purchase price can be used if the property has sold recently, but using a purchase price from ten years ago won’t result in a meaningful cap rate. If we are considering purchasing the property, it would be very useful to plug in various possible purchase prices to see what rate we’ll achieve. This can be a helpful guide when determining an acceptable offering price.

Examples

Suppose you’re an investor considering buying Property A. The property is valued at $1,000,000 and generates an NOI of $50,000 annually. Plugging this into our equation we get:

Cap Rate = $50,000/$1,000,000 = 5%

Suppose you compare Property A to a similar property that is valued at $1,000,000 and has an NOI of $60,000. This gives us a Cap Rate of 6%. If all else between Properties A and B is equal, the higher cap property is the better buy.

Investors can also think of cap rate as a measure of their rate of return on their investment. For example, with the 5% rate, an investor earns 5% of their purchase price annually and will recoup the purchase price in the 20 years.

What Does a High Cap Rate Mean? What About a Low Cap Rate?

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There’s a lot more to cap rates than “higher cap = better investment.” No two properties are created equal, and in practice, properties with a very high cap rate often turn out to be higher risk as well.

Let’s think about our capitalization rate equation again, and what factors might contribute to driving it higher. We’ll look at Property A again, which had an NOI of $50,000, a property value of $1,000,000, and a 5% cap rate.

If we want to raise our rate by changing NOI, then NOI will have to increase. This could be accomplished by increasing revenue, or lowering expenses. In either case, increased NOI is typically a good thing.

Now, let’s say we want to raise our cap rate by modifying property value. In this case, property value will have to decrease. A decrease in property value could be driven by several things, including the worsening reputation of a location or the revelation of some costly deferred maintenance.

To summarize: high cap rates are great, but they can also point towards factors that increase the risk of an investment. A property with an 18% cap rate might need work, and might not be in a highly desirable area. Ask yourself, “Is this amazingly high cap rate stemming from high NOI, or low property value?”

What Drives Cap Rate Lower?

Let’s consider what factors might contribute to driving a cap rate lower. If NOI decreases, our cap rate will decrease as well. We also see lower cap rates in the case of property appreciation — and appreciation is a very good thing.

If a property appreciates significantly, but revenue trails this appreciation, the property’s cap rate will go down. Lower cap rates can indicate high-value properties, suitable for investors seeking lower risk. Generally, better neighborhoods trade at lower cap rates.

High vs Low Capitalization Rates

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High cap rates are driven by two things — higher NOI, and lower property value. If a building needs renovation, this could result in a lower property value and, therefore, a high cap rate. With large amounts of maintenance needed to bring a building up to date, that high cap rate might mislead the investor and leave him with far more work and expense than he bargained for. But, if an investor is interested in updating a property, these high cap properties can potentially provide large rewards.

These property types are best left to investors who have experience, or who have a trusted guide that can help them find the right properties that balance their investment goals with their risk tolerance.

Figure Out What You Need to Know

If you know any two of the three variables of the capitalization rate formula, you can figure out the whichever variable you’re missing. This can be useful in a range of situations. For example, suppose you are trying to determine what you should offer on a property. If you know the property’s NOI and have a cap rate goal you want to target, then you can calculate what purchase price will give you the result you’re looking for.

For example, suppose your target is 8%, and you’re looking at a property that generates $100,000 in NOI:

8% = $100,000/Purchase Price

Purchase Price = $100,000/.08

Purchase Price = $1,250,000

Or, if you have $500,000 to spend on an investment property, and are targeting a 7% cap rate, you can figure out what level of NOI is required for you to meet your goals:

7% = NOI/$500,000

NOI = 7% * $500,000

NOI = $35,000

Re-Cap

There’s no set range for which are “good cap rates” — they’re most useful as a comparative tool between a few potential purchase opportunities that are similar in terms of location and kind.

High cap rate properties can be lucrative, but also come with an increased level of risk. If you’re new to high-cap real estate investing, it’s best to partner with someone who has the experience and know-how to get a deal done right. At TFS Properties, we specialize in pairing investors with properties that match their investment profile and risk comfort-level while guiding them through the journey of building a secure investment portfolio.

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AM I TOO YOUNG TO START INVESTING IN REAL ESTATE?

By Glenn Mananeng

Real estate investing is a journey. The earlier you muster up the guts to take that first step, the sooner you’ll reach your financial goals. Beginners in real estate usually start their careers around their 30s or 40s. It may be due to fear, inadequate knowledge about the field, or the lack of capital to start investing. In real estate, there are no age limit nor requirements. Anyone with the right mindset can invest with as little as a few thousand dollars in their pocket. Unique Wealth Education wants to pave the way for young real estate investors who want to start in the business and leave their mark on the real estate world.

How old do you have to be in order to start investing?

If you skip the cartoons and drop your phone down to skip posting your social media drama and think about investing instead, then good for you! That’s one way of being responsible and your first step to being financially independent. Take note that from a legal standpoint, you need to be at least 18 to sign legal documents. There is still hope for ones younger than 18 though cause a guardian who’s over 18 can legally sign for you. However, you won’t technically own the properties you’ve bought until you turn 18.

Perhaps the best time to start investing in real estate would be during your ripe years in the 20s. If you’re serious enough, at this age you must have mustered up enough courage and researched about the basics of real estate. Start early to earn early.

Common excuses of young investors

“I won’t be taken seriously”

This is a pretty legitimate fear but one that can definitely be worked on. Many businesses are constantly on the lookout for youthful individuals since they are generally considered strong assets. There’s a term in the business commonly known as “analysis paralysis”. Feelings of self-doubt can start creeping in right before you even make the leap of faith and causes you to get paralyzed in fear.

One way to combat this is to put in the right time and effort to gain experience and confidence so you can plow through any negative emotions you might have lingering at the back of your head. Don’t stop midway, push forward and it will bring you much-wanted results! Believe it or not, your hard work will serve as your resumé.

“I don’t have the cash”

Another common excuse especially for those currently working or fresh out of college. The reasoning behind this is that most of them are still carrying student debt or loans with no well-established credit history yet. It is true that credit score can be a factor in some real estate investments. However, you don’t even need that good of a score to start investing. Remember, the reason why you thought about investing in the first place is to make yourself financially stable, the better credit score will just be a by-product. Use this as a means to pay off your student loans. Don’t let this excuse rob you of your great potential!

“I’m too young for this”

It can be difficult when you’re young since investing isn’t something that we’ve been taught very deeply at school. You think that most of these young investors were already wealthy to begin with. However, the most recognized investors started from the bottom and they clawed their way up until they finally gained success and became financially stable throughout the years. Just to remind you again, the sooner you do it, the more opportunities you have to make money.

Benefits of starting young in real estate investing

You have more free time

Real estate branches out to a lot of aspects that may be overwhelming for some. It requires a lot of knowledge and experience to know where to invest and learn about different market trends. By starting early, you increase the time frame of you learning more about the important factors in the industry which can benefit you with making the right choices on your hard-earned money.

You get to have tax benefits

A common misconception about earning well in real estate is that the bigger part of your income goes into taxes. This is wrong though as real estate is actually a very wise choice that can help you save taxes. At a young age, you can claim tax deductions in case you have applied for loans. Tax incentives are even offered on repayment for some particular transactions.

You have the marketing advantage

This is where spending most of your younger years on social media pays off. Tech-savvy youngsters have the advantage as they can use a wide variety of online platforms to market their real estate business. No matter what age they are, people are more keen to use online sources in their daily lives – especially when they’re looking to rent, buy, or sell a house.

You can retire early

Investing at a young age allows you to reap its benefits as soon as possible. This gives you the option to tick the boxes off from your bucket list. It normally takes at least a decade (or even less) to achieve what you want when you retire. Imagine starting in your 30s only to retire around the age of 40. You have more time to let yourself grow in the real estate business, and that my friend is a ticket to the comfortable retirement everyone is dreaming of.

Paving the way for young investors

It’s admirable to see you strapped-in and ready to take in your first real estate investment! We might want to back up a bit and think about how we’re going to do this – and we need to do this right. Let’s look at a few pointers before you take off.

Research, research, and more research

Be aggressive with your education. Aside from investing in real estate properties, spend your time and effort in books on real estate investing. For those that aren’t too keen on reading any sort of literature; podcasts, webinars, blogs, and even audiobooks are readily available for a fair price (some are even offered for free!). Make due diligence in your research because if you do, this will take you a long way.

Start small and build yourself up. Although there are a lot of real estate strategies out there, read on what would be the best fit for you. Investing in rental properties can be a good start for young investors. Learn to weigh out the pros and cons of each investment strategy which now brings us to our next point.

Risk management

A good investor knows that with every strategy that they plan to take on, risks come with it. It’s a matter of how you approach the risk and how you manage it. Every individual has their own take in cases of risks or conflict. Luckily for young investors, you will be able to handle it in a different manner compared to your older age bracket. Young ones have a fresh and appealing approach to the business. The enthusiasm and motivation levels are quite high which helps mitigate and manage any risks that come your way.

Remember, no matter how seasoned and experienced an investor is, they definitely encountered risks along the way. Managing these risks are what made these pros hardened and successful in the real estate industry. Understanding what is the worst case scenario in each investment, potential turbulence, and how to handle it if it occurs is key to mitigating risk and achieving success.

Have a mentor

You might be thinking that you don’t know anyone who might have the same interest in the real estate business as you do. People you know are probably out there partying, slaving their time playing video games, or acting out there bachelor/bachelorette fantasies which means you don’t have the helpful and motivating support from your peers.

Use your tools to your advantage. Join local real estate investing groups on Facebook or join similar conversations in twitter and actively participate in them. Your network should include a wide range of real estate investors, contractors, realtors, wholesalers, and property managers. Pick up the phone and don’t be afraid to ask for referrals.

A mentor who deals with “A-Z real deal training” is your best bet. Unique Wealth Education offers such a training program and many more which are facilitated by real estate professionals who work with you from start to finish on locating deals to selling them. Your net worth is directly proportional to your network. Start it right by having the right mentor.

If you feel like throwing in the towel, hold up a bit and let us help you. Try to do a little bit of trial and error and don’t be afraid as we’re here to guide you so you don’t commit irreparable mistakes in the first place. This allows yourself to keep things at your own pace and eventually succeed. If you want to get started but you still have doubts, Unique Wealth Education is here to help you out. Feel free to join our monthly meetup every first Thursday of each month where investors young and old share experiences and make business ventures with one another. Contact us at (734) 224-5454 to learn more.

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4 Real Estate Investing Strategies for New Investors

By Corey Tyner

Getting into the business of buying and selling homes can be daunting — especially for new investors.

However, just like any other investment, everything revolves around the fundamentals. We’ve created this infographic to guide new real estate investors and help them get started on achieving those long-term financial goals.

There are many ways to buy land and invest in real estate, but we will be going over four of our most commonly used strategies that are favored by seasoned real estate investors because they are tried-and-true. These real estate investment strategies cover most of the properties that you will want to purchase as a beginner, from a quick flip where you buy and sell your house fast, to the regular passive income you receive from a buy and hold.

When you are investing in real estate, you may hear some terms you are unfamiliar with:

  • Lipstick Flip – A “Lipstick Flip” refers to flipping a home with minimal cosmetic updates, to quickly see a return on your investment. Lipstick Flips are a fast way to get into real estate investment, but you need to be more selective when you choose a home; if the market sees homes in the area selling quickly this may be viable, however, if homes are selling slowly, you may want to consider a different type of investment, since it may be difficult to sell your house.
  • Wholesale – Wholesale real estate investments are usually done quickly. You buy low, and often sell low. Wholesale real estate often focuses on distressed properties you would otherwise overlook.
  • Buy and Hold – Buy and hold usually means when you buy a property for the purposes of renting or leasing it out, but you can also buy land you think will appreciate in value. We will be going over how to buy and rent properties.
  • BRRR&R – Buy, Renovate, Rent, Refinance & Repeat. This is the way many people build a huge real estate portfolio because it offers both short term and long term gains. This strategy is best used in areas that are still low but have property values rising quickly due to gentrification or an otherwise fast-improving neighborhood.


Corey Tyner

Corey Tyner is a writer and business owner who helps sell houses fast. He is the founder of Austin Fast Sell Home Buyers and is one of the top real estate investors in Arizona. With over a decade of experience, his work has been featured on Bigger Pockets, Real Estate Agent Magazine, and several other mainstream real estate investor publications.

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IS IT POSSIBLE TO INVEST IN REAL ESTATE PART TIME?

By Glenn Mananeng

Real estate investing is a great way to build wealth. This is an opportunity to invest your savings while working, studying or just enjoying life with family and friends as a passive investor and spending minimal or spending more time on projects as an active investor. This surely is a big decision; therefore, you need all the pros and cons from experienced individuals in the real estate industry.

New investors often find themselves lacking in time or resources to commit 100% in the business, leading them to ponder if it’s possible to do it part time. But is it possible though? Short answer, of course it is! Allow us here at Unique Wealth Education to show you the pros and cons of real estate investing.

PROS

Supplementary income – If you have another job on the side, you basically have two sources of income. This gives part time investors the advantage of having steady cash coming in while your real estate investment is generating cash flow or appreciation.

Fallback career – Part time investing lets you test out the waters. As good as it may seem, no industry is perfect and some have more risks involved compared to others, especially if you don’t have a mentor guiding you. Your investment properties will generate the income by itself and you can continue your current job. A win-win situation if you ask us!

Brand new network – Since you’re doing this part time, you probably have someone working with you. This gives you the opportunity to meet up with clients and fellow investors who can share valuable experiences. You might even pick up life lessons that will help you in other aspects along the way.

Flexibility – If you decide to have your investment driven by a reputable property management company with a reputable track record, you can go on your with your daily routine and agree on a convenient time to address any questions/issues. This is the case with many investors and it works out great.

CONS

Time-consuming – If you are a landlord, handling two jobs isn’t easy, especially if you decide to oversee your investments, such a rental homes (depending on the # of properties/units) without the expertise of a property management company. Dealing with the issues of getting a qualified tenant, maintenance issues that arise, and bottom line keeping your property rented continuously is a job.

Avoiding bad deals – If you are flipping, it is crucially important to be able to locate and asses properties in the right location, that has either a high rental demand or saleability. This is something that you can learn by being around experts that can help you assess the property by using current and future projected market data, a proforma and specific strategies. You will lose a lot of money if you buy in the wrong location and use the wrong (highest or wrong comparables) comps.

Not having a reliable construction contractor that can give you an accurate bid for the renovations prior to the purchase, can really hurt you if your budget is off. This is why investors (wholesaler or fix and flipper) should learn how to roughly budget the cost of renovations, as you never want to have the fate of my investment put into 1 contractors hands.

Lastly, weather your renting or flipping, have the right finishes. Take great pictures (before and after) when the project is completed, try to time the listing between school years which is the hottest selling and rental season.

By now, you probably realized that doing this part time or not, you need guidance from experienced real estate investors. Real estate investing can demand a lot of work part time or full time and this is particularly true when you have multiple properties already. Here are a few tips to do it effectively:

Find the right niche

You’re going to have to look into a strategy that has a more hands-free approach. It can get hard to choose from a vast array of real estate strategies out there. You only have a limited amount of time to commit therefore try looking into one what works for you and stick to it. The more you familiarize and master that particular niche, you’d be surprised how much less time you’re able to spend to produce results.

Generate leads

Focusing on lead generation can score you with the best deal in the real estate industry. Setting at least an hour or two a day (preferably at least 20 hours a week) marketing your business to generate leads can be a good start. Just a reminder, you have to understand that not all goods leads convert into successful deals prompting you to work even harder. You can ask around for suggestions to an effective lead generation program that can help you have a source of qualified leads and help yourself to a lot of data that meets your business criteria.

Expand your network

You need to have a network of professionals in real estate. Investing in this industry is a “people” business. You need to work with different types of people such as buyers, sellers, loan officer, mortgage brokers, appraisers, and the list goes on. Each person can provide a link for you to build a strong network.

Find a reputable mentor

Even the best investors were under the tutelage of a mentor. Joining a real estate team or finding a partner who does investments full time can provide insight and many benefits. These professionals are experienced, they know amazing deals. Factors like the right time to buy or sell, managing any risks that may come along the way, and increasing your chances to close the deal is a daily routine for them.

MORE INFORMATION:

Unique Wealth Education has a broad network of individuals who share the same passion in the real estate business. To help you expand your knowledge about the industry and be involved with professionals who are already active in the business, we invite you to our monthly meetup every first Thursday of each month. To learn more, call (734) 224-5454 or email us at info@uniquewealtheducation.com

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Generational Opportunities For Creating Cash & Wealth In Real Estate

Featuring Gerry Guterman 

The real estate market cycle appears to have come full circle again. This is one of those moments in which many will go broke, while others achieve substantial leaps in their wealth and incomes. It’s all about knowing how to take advantage of the market and the negligent moves of others.

While there are plenty of real estate investors still blindly and bullishly thrashing away in the market, and many uneasily eyeing where things are headed from the sidelines, the truly experienced are stepping in with predictable investment strategies. They see the same careless blunders being made by many of the same characters. They know where the market is going. They see the big opportunities to buy smart and convert assets into cash.

Where We Are in the Real Estate Cycle Now

It’s not rocket science. It’s no longer a closely guarded secret that only a few have the data on. All real estate professionals really need to do is look back at what was happening in 2005 to 2010. Then compare that to what’s happening around them today. You’ll see the same glaring mistakes.

Interest rates are going up, lending is tightening, oversupply is becoming an epidemic and too many people are paying too much for units that aren’t really a good fit for the market.

There are really only one of three choices to make in this phase of the market:

  1. Keep blindly investing and hold on as the sinking ships go down
  2. Do nothing and miss out on the best asset prices
  3. Replicate the successes of the biggest winners in similar historical cycles

Gerald (Gerry) Guterman and his firm sold out all of their real estate assets in 2006. They did it again in 2016. Since 1978 they’ve delivered 58.3% returns to their investors. Now Guterman Partners is in acquisition mode again.

Experience is Everything

Guterman Partners has managed almost 100M rentable square feet of real estate since 1969.

Among the buildings and locations they’ve been involved in that you may recognize are:

  • Galt Towers, Fort Lauderdale
  • Gramercy House, New York
  • Sutton Tower, New York
  • Ibis Club Apartment, Naples
  • Memorial Building, Houston
  • The Stanhope, New York

Gerry who is Senior Principal Partner and Chief Investment Officer at Guterman Partners has what is probably one of the strongest resumes in the business when it comes to being a sought out industry expert as well.

This includes being a guest lecturer at Cornell University. Being the founding benefactor of several charitable organizations and medical research facilities. Plus trusteeships and directorships with the Metropolitan Museum of Art in New York, New York City Opera and Dallas Opera, as well as The Rent Stabilization Association of New York.

On an international level Gerry has been Chairman of the Committee on Banking and Finance at the United States Center for Strategic and International Studies in Washington, DC. He has been an advisor to the governments of Romania and Austria.

So, if anyone has the depth and breadth of experience to really understand what’s going on in the market, and the track record of knowing how to manage real estate assets during these times, Gerry is definitely up there at the top of the list. We were hugely blessed with the opportunity to catch up with him for an exclusive interview and his take on what’s happening now.

Once Again, Generational Real Estate Opportunities

Gerry recently published the latest of his white papers covering the state of the market, and where he sees the opportunities now.

Among the current challenges he tackles in his report are:

  • The increasing number of rental to condo conversions
  • Reducing value of condominium units
  • Cash flow problems due to rising costs and rates
  • Difficulty in refinance for developers
  • Over-leverage by builders
  • Lack of product to market fit
  • Reluctance of lenders to provide more debt
  • Oversupply of luxury condo units

What this all leads to is that many of these developers are sitting on a huge amount of inventory. Inventory on which they can’t really reduce retail prices on themselves. While they are facing more cash flow crunches and challenges in restructuring debt. In some cases individual developers in NYC are sitting on 1,000 or more unsold units. They need out.

It’s a repeat of 2004 to 2008 all over again.

Though when the same problems show up, the same opportunities for creating great cash and leaps in wealth arise too.

Strategies for Taking Advantage of the Current Market

Gerry told us his firm currently sees opportunities in:

  • Medical offices
  • Retail strip plazas
  • Family sized apartments

This is of course restricted to certain states and markets. Most notably outside of some of those facing some of the most fierce political and regulatory uncertainty at the moment.

Among Gerry’s favorite strategies in this phase of the market is bulk buying of condo units. For example, 80 or so units at a time. Those units are converted or resold. Typically within 19 months.

3 Big Differentiators

Three things that Gerry tells us have really helped the firm continue to excel include:

  1. Making your money on the day you buy
  2. Focus on demographics and market fit
  3. Focus on the wife as the decision maker

Gerry says you don’t make a dollar on the day you sell. It’s all about what you are buying at. Guterman Partners targets prices of 45 to 55 cents on the dollar. That gives them plenty of room to absorb market fluctuations and to move units fast at a discount from the original list price, while still enjoying hefty profit margins.

However, not any product will do. It has to be desirable to the consumer. He says many speculators, converters and developers have had no interest in doing any homework on what consumers really want. They may put up stylish buildings. Yet, there aren’t many families who are really trying to move into micro-apartments in some of the better neighborhoods of Manhattan. He adds that you also have to consider who the real decision maker will be and what is most important for them. That often includes size of the unit and security features.

Guterman Partners is now raising capital for its 47th year. The current fund is a 506c offering for accredited investors, which pays out a cumulative preferred return of 7% to 12% and 50/50 split of profits.

Find out more about the new fund, the firm’s track record and Gerry’s white papers on the outrageous pricing of real estate, the tricks funds are using to try to get investors to accept lower returns, and the rules to successfully investing in real estate at GutermanPartners.com.

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Does it Make Sense to Buy a New House Before Selling the Old One?

By Edward Brown

You’re interested in moving. You need to sell your old house first before buying a new one, right? After all, you don’t have enough of a down payment for the new house without selling the old one, and you are pretty certain your bank will not qualify you for two mortgages.

You are in a dilemma; houses in your area are currently receiving multiple offers. Inventory is low. Sure, you can sell your house under the same circumstances, but will you be able to identify a new house so that you can simultaneously move from the old house to the new one? Unlikely. Do you sell the current house, move to a rental [or hotel] while you identify and try and close on the new house? Is the extra hassle of moving twice and the added stress of the inability to simultaneously close on the sale and purchase the new worth it? IF you could purchase a new house while still living in the old house worth the added costs involved with having a second mortgage until you sell the old house? How much is “peace of mind” worth in not having the pressure of having to purchase a new house [because you sold the old house too soon]?

These questions are a reality in today’s world in many parts of the country, specifically, the San Francisco Bay Area, because of the real estate rebound after the Great Recession. According to Jeff Stricker, a real estate professional with Alain Pinel Realtors specializing in the Silicon Valley in California, his clients are faced with these exact situations much of the time, as property is swooped up almost as soon as it hits the market, and, many times, with multiple, over asking prices. Jeff states that, although it is great for his clients as sellers, those same clients face challenging hurdles when buying a replacement property; competing against other buyers, some with cash only offers, who are willing to bid up a property far beyond the asking price in many circumstances. Some buyers are just so frustrated with the process of competing and getting outbid that they act in ways that they normally would never have thought. Overbidding. Settling for a house that they may not have originally envisioned. The list goes on.

Jeff, however, decided to think outside the box. What would happen if another house was purchased [without the added pressure of “living out of a suitcase”, if you will] prior to the sale of the old house? Is it even possible with the banking regulations that were placed upon financial institutions as well as homeowners over the past decade due to the “mortgage meltdown” that happened in 2008 and on? Dodd Frank rules that placed inordinate restrictions on the ability of homeowners to obtain financing left many people unable to get loans in which they previously were easily able to qualify.

Jeff decided to come up with a spreadsheet wherein, if he plugged in some assumptions, he could figure out if it would make economic sense to acquire a new house before selling an old house. The other part of the equation was to find a lender who would allow for a homeowner to purchase a new home without first selling the old home; thus, carrying two mortgages at the same time. Since most conventional lenders would not touch this, Jeff had to look to alternative sources. He found a company called Pacific Private Money, in Novato, CA that specializes in such a product.

Pacific Private Money can lend enough to the borrower to purchase the new home if there is enough equity in the old home to justify a combined Loan to Value [LTV] of 70% or less. Sometimes, if there is not enough equity in the old home, the borrower needs to add cash to bring the LTV to 70%, but, the ability to purchase a new home without having to sell the old one first can solve many issues for the homeowner. First, the a new home can be identified without adding pressure since the homeowner is still living in the old house until the new house closes escrow. Second, the stress of moving twice is eliminated. Third, and probably the best [and possibly most surprising] is that this solution may actually cost LESS in terms of increasing net equity to the household than selling the old house and buying a new house with the proceeds from the old house [and new mortgage] in most circumstances wherein the new house is more expensive house than the old house.

In a rising market, the earlier the purchase of the more expensive new house and the delay of the sale of the old will increase the net equity to the homeowner more than the costs associated with carrying two mortgages.

For example, let’s assume the old house is worth $1,000,000 and there is currently a 1st mortgage of $200,000. The homeowner desires to purchase a new home for $1,400,000 and has $100,000 in the bank that can be used for a down payment. We will look at two scenarios; the first is where the homeowner sells the current house, rents for a period of time, and then purchases a new home. The second scenario is where the homeowner borrows the money in order to secure the new home while owning the old home.

Obviously, there are many moving targets with the both scenarios, such as how much it will cost to rent a place [in the event of selling the old house first] as well as how long it takes to identify and close on the new house, storage costs for belongings, the cost of obtaining a private loan, and the appreciation assumptions for both houses, just to name a few.

Below, is a calculation making the following assumptions; it takes nine months to close on a new house after selling the old house; houses in the area [both old and new houses] are appreciating at 1% per month; interest earned on bank deposits are at 1% per annum; storage costs are $1,000 per month, a conventional bank loan is not available because the homeowner does not qualify and has to use a private loan company; the costs for the private loan are 9% plus 2 points; the interest rate on the old house is 3% per annum.

 

As you can see, in a rising market, where the new house is worth more than the old house, there is a significant benefit to using a private loan to purchase the new home and sell the old home at a later date. Waiting 9 months to eventually acquire the new house has tremendous opportunity costs, as compared to a net benefit of purchasing the new house right away and eventually selling the old house.

Although assuming a 1% per month appreciation of real estate may seem aggressive, the San Francisco Bay Area, and specifically the Silicon Valley, has experienced such growth. However, even if we lower the appreciation to ½% per month [insert spreadsheet showing .5% per month appreciation], we still see a fairly significant benefit to purchasing the new house now rather than waiting to first sell the old house and then buy the new house.

Aside from the economic benefit, other factors need to be considered; the lack of stress of moving twice should the homeowner decide to sell the old house first and then purchase the new house; what if the homeowner finds the house of his/her dreams now and does not want to let the house slip away? In today’s market, sellers are not willing to take contingent offers. Can the homeowner budget for both houses at the same time while waiting for the old house to sell? Is the market rising? Is the new house more expensive than the old house? How long will it take to sell the old house? These are just some of the issues to consider before deciding one way or the other; however, and this can’t be stressed enough – when a homeowner finds a house they like, they do not want to lose the opportunity of buying it. This means that they can start looking at new houses before putting their old house on the market. This also allows them time to make any repairs or fix up their old house so as to maximize its value prior to putting it on the market.

Once homeowners know that there is a potential to purchase a new house before selling their old house, they can be proactive in obtaining a commitment letter from the lender. Of course, homeowners should see if they qualify for a conventional loan for buying the new house [owning two houses at once], but they should keep their minds open to procuring a private loan should the bank turn them down. Pacific Private Money is such a private loan company.


Edward Brown

Edward Brown currently hosts two radio shows, The Best of Investing and Sports Econ 101. He is also in the Investor Relations department for Pacific Private Money, a private real estate lending company. Edward has published many articles in various financial magazines as well as been an expert on CNN, in addition to appearing as an expert witness and consultant in cases involving investments and analysis of financial statements and tax returns.

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3 Proven Strategies for Small Business Owners to Increase Cash Flow

By Dr. Teresa R. Martin, Esq.

Is your small business struggling to make enough profit to pay the bills? Living paycheck to paycheck can be quite frustrating. Perhaps you started a small business so you could pursue your dream while earning money at the same time. If so, then you know that it isn’t always easy to get a small business to bring in the profits you’d like.

However, if you’re willing to work hard and have a good plan, there’s no limit to how far you can take your small business. Luckily, there are many ways to increase your current cash flow and free you from the threat of financial disaster.

Consider these strategies to increase your cash flow:

  1. Collect feedback. Many small business owners forget the importance of soliciting feedback from their clients. There are several effective ways to find out what your clients think about your products and services.

  • Ask the client to fill out a quick survey or questionnaire to rate various aspects of your business. These surveys can provide an excellent glimpse into your client’s point of view. There are many different websites that enable you to create simple surveys. Look online to find one that meets your needs.
  • Follow up with your clients with a phone-call or email asking for comments about your products or services. Inquire about which aspects they are satisfied with and which need some work.
  • Talk to your clients in person and ask them how they feel about their experiences with your business.

Remember, word of mouth is one of the best ways to advertise your business. If you have a bunch of satisfied customers, they’ll tell their friends and family about their positive experience and you’ll get more business.

  1. Get rid of products that don’t sell. It’s likely that you offer your customers a wide variety of products, but only a few of these products bring you maximum profit.
  • Sometimes a large inventory can work against your business. Customers often avoid buying altogether when they’re overwhelmed with options.

  • Instead of offering more products that likely won’t be sold, trash the unattractive products and offer more items or services related to your best-sellers. This is an excellent way to boost sales while reducing upkeep and inventory costs.
  1. Pursue unique marketing strategies. If your business is experiencing a steep drop in sales, there must be a reason. It could be that your marketing techniques are simply not as effective as you thought. Consider alternative marketing techniques.
  • Think about marketing your business online. It’s becoming easier with each passing day and more people are prone to search the internet for better deals. Businesses that have online order options are often much more successful. It’s a perfect way to increase cash flow.

  • Get the word out. Take advantage of social media sites like Facebook and Twitter to promote your business.
  • Radio advertisements, commercials, billboards, and flyers all increase the visibility of your business. Sometimes, door-to-door marketing is just as effective.

By using these strategies you can boost sales and increase the revenue of your business. Once these strategies have been implemented, there will be no need to worry about how you’re going to pay the next bill. You’ll finally have the money to live the life that you’ve dreamed of.

It just requires determination, persistence, creativity, and an open mind to make your business successful. Test different strategies and stick to the ones that work best for you. Your efforts will be worth it once you see those increased profits.


Dr. Teresa R. Martin, Esq.

Dr. Teresa R. Martin, Esq. is the founder of Real Estate Investors Association of NYC (REIA NYC). REIA NYC (www.reianyc.org) is a premier real estate investment association serving the New York City marketplace. Its primary focus and mission is “helping our members build, preserve, and harvest multi-generational wealth” in the areas of real estate investments, business ownership and personal development.

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Improving Quality of Life through Real Estate Investment

Featuring Dennis Henson

An exclusive interview with Dennis Henson on enhancing life while making fortunes on single family…

Dennis Henson has been investing in real estate longer than most real estate experts have been out of diapers. He’s seen the market from every angle, seen it rise and dip, and rise again. Today Dennis Henson heads up the Arlington Real Estate Association, and the comprehensive training portal Single Family Fortunes, which has seen one student recently soar to acquiring 23 properties in just 8 months. So what’s enabled him to not only maintain success, but successfully train others to get in and win?

Here’s the inside scoop…

How did you get started in real estate?

Dennis: “A combination of moving up from living in a small house to a large one, and badly renting out the old home, and then reading ‘How To Wake Up The Financial Genius Inside You’ by Mark O. Haroldsen.”

If there is one thing you could credit your success to, what would it be?

Dennis: “Maintaining a burning desire to succeed.”

How did you make president of the Arlington Real Estate Association?

Dennis: “I started the group in order to become more knowledgeable about REI Topics. For example; probate. If I had to do a class on that subject in front of 50 to 100 people – you can bet I was going study, learn about that topic, and master it.”

What’s different about your training system from what else is out there?

Dennis: “Many of the other teachers focus on one technique for examples Short Sales or Wholesaling. The biggest difference is that my training covers all areas of REI. I call it the 5 M’s of Real Estate Investing.”

  1. Mining
  2. Money
  3. Maintenance
  4. Marketing
  5. Management

You have students who report achieving very significant results, very quickly. What makes the difference between them and the rest of the wannabe investors out there? 

Dennis: “My training is one on one, and I am very interested in their success. There is nothing magic about my training. It is just combining knowledge with hard work. I have a system that works, if they do. ”

You have a slogan “Improving the quality of people’s lives through real estate investing” – what does that mean to you?

Dennis: “Well that is my motto. My goal in life is helping others become more successful so that they can enjoy a better quality of life.

What is a better quality of life?  It is being able to have the freedom to do the things you want to do, going to the places you want to go, and having the things you want to have.”

Where do you see the best opportunities in real estate ahead?

“I believe that REI always has, and always will have the greatest opportunities for those who are willing to learn and work hard. The number one need for a human is shelter. Do you ever watch those survivor reality shows where they leave someone stranded in a jungle or on an island? What is first thing they need? Not water, not food, but shelter. It is the most basic human need, and always will be. If there is a disaster people will not be needing stocks or bonds, or gold or silver, but they will be needing shelter. So I think REI will always be a great business for my students and association members.”

What’s the best strategy for those that fear the market may be in for a correction soon?

Dennis: “Buy lots of properties. When the people are not buying houses, what are they doing for shelter? Living in a cave? No, they are renting; so the rental market will be booming.”

Interested in learning more about Dennis Henson, his training, and the Single Family Fortunes he has empowered others to create? Look out for Dennis and his wife Norma at upcoming Realty 411 Expos, listen in to him speaking on Blog Talk Radio, and visit his website at SingleFamilyFortunes.com, where you’ll find a FREE TRIAL for an online app that helps you evaluate your deals faster.

 

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What is Your Why?

By Grant Trevithick

Are you interested in becoming a real estate investor?  Do you want to be your own boss?  Keep all the fruits of your labor for yourself, instead of making some company or someone else rich? Do you want the freedom of owning your company, working whenever you desire?

Most of us have watched the TV shows of other people buying and flipping houses. It is amazing to see that someone can search an entire city, find the property they want, do the research to determine what the offer should be, negotiate the deal to purchase the property, secure the financing, close on the purchase, prepare the repair budget, do all the repairs, market the property, find the buyer, negotiate with the buyer, and negotiate all the requirements to finally get to the closing table. It is amazing that each of these investors do all this in only 50 minutes, with 3 to 4 commercial breaks, and always seem to make allot of money out of each house.

Wow, if it were that easy, I would want to jump into the game as well. It surely would beat having to get up each day and head into an office, attend meeting after meeting, make nice with an incompetent boss, do all my work, and then go home and do the same thing every day for the rest of my life. That does not sound like fun… so perhaps we can escape this trap by being a real estate investor. After all, I can make as much money as I make in a year doing 3 to 4 houses, at least according to the television shows.

WRONG!

Virtually every real estate investor that I have ever met only talks about the glamorous part of the business. They only talk about how much money they make and how much fun they are having. First off, most of the ones that do the talking are the ones that have never bought or sold a house (at least according to my experience).

The reality is there are two types of real estate investors: the normal real estate investor and the successful real estate investor.

The normal investor attends allot of classes and reads allot of books or online. They may even sign up with one of the local or one of the traveling mentors / gurus. They attend allot of the networking groups for investors. They may look at several properties, but have never pulled the trigger to actually buy one. They talk a good game, but are more of the posers than the doers.

Then you have the 1%. Yes, only 1%. The statistic that I heard many times is that the top 1% of all real estate investors make 98% of the money. My experience proves this out. We have trained thousands of people, while we have one of the industry highest success rates for those that have attended our training (allot of our students ended up buying houses), yet very few of them have the dedication that is required to truly be successful.

To be a successful investor, you must know What Is Your Why? Why do you want to become an investor? Are you doing this to escape a boring and a mundane life? Are you doing this just to become rich?  Why do you think that you want to be an investor?

Are you willing to work hard?  Are you willing to work 6 days a week, and sometimes 7? Are you willing to work on the holidays?  Are you going to be available to do business whenever your clients are ready? (My definition of an entrepreneur is someone that is willing to work 100 hours a week so you do not have to work 40.)

Are you willing to fail more times than you succeed? Are you willing to be discouraged and disappointed?

Are you willing to spend hours and hours in your car each day? Leaving early in the morning and get home late in the evening?  Are you willing to put 30,000+ miles on your car / truck each year?

Are you willing to work when it is 105 degrees in the summer? When it is thundering and raining? How about when it is 5 degrees and snowing?  Or icing?

Are you willing to clean out dirty nasty houses? Dealing with flea and bed bug infested houses? Drug houses? Are you willing to clean dirty kitchens, with food left over for weeks or even months? Scrub toilets that just plain nasty and disgusting?

Are you willing to listen to the most heartbreaking excuses and still ask someone to get out of the house? Are you willing to spend thousands of dollars on lawyers taking houses back when the seller uses the law to avoid paying their mortgage payments and yet do not want to move out?

Are you willing to be discouraged, wonder if you will ever buy and or sell another house again, feel like a total failure?  And still get out of bed each morning and do what has to be done?

Funny, they do not show that part of the business on television, do they?

If you cannot answer, “absolutely, sounds like fun” to each one of these, then real estate investing is not right for you.

If you can think of anything else to do that would allow you to reach your goals, then my best advice is forget being a real estate investor and pursue that other avenue. If, on the other hand, you cannot imagine doing anything else, then perhaps you might have what it takes to be successful.

Real estate investing is a marathon, not a sprint. If you do investing right, it is not a get rich quick scheme. Working our model, you can become a millionaire in a short period of time, if you are willing to work hard enough and run the business in an honest manner.

But only if you know your Why.  And only if your Why is strong enough.

For me, I love helping people. In our company, our first and primary goal is to always put our clients first and do whatever we can to help them. We buy houses that people are trapped in, giving them the financial freedom move on without the burden of their mortgage. We then sell those houses to good families that desire to have a part of the American Dream, owning their own home, but cannot get a mortgage from a bank (for whatever reason). We help investors by realizing their dreams of becoming a successful investor. And last but not least, we donate the first ten percent of all our profits to charity to help those less fortunate.

That is my why. That is what yanks me out of bed every morning, excites me to make each day as full as I possibly can, with me ready to contribute and help as many people as possible. Of course, along the way we make enough money to become financially comfortable, but our Company never makes money our number one priority. And I think that is what makes us successful.

What is Your Why?


Grant Trevithick, after a successful career in EDS and AT&T, is now the owner of Owner Finance Homes LLC and Owner Finance Academy LLC. Owner Finance Homes LLC operates throughout the Dallas-Fort Worth area in Texas, buying houses and selling with owner financing. Owner Finance Academy trains people to become real estate investors using owner financing. The Company is accredited by the Better Business Bureau with an “A+” rating.