The Number 1 Risk for Real Estate Investors Now

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By Fuquan Bilal

What’s the top risk that investors in real estate are facing today?

There is still a lot of opportunity out there. There are great deals to be made. Yet, it is also true that it is taking more attention to detail and effort to find the really profitable deals. Market well, in addition to buying, structuring, and managing right, and you’ll be okay if you have good deal sources. However, there’s real risk.

The number one risk in the real estate market today is that 90% of investors have no plan for sustainability. None. Some may not even know what that means if you ask them.

The vast majority of real estate agents and investors in the market now are very green. They’ve only experienced the business during the great bull run we’ve had since 2008 and 2011. Honestly, while I’d like to say I’m pretty smart or talented, the truth is that you couldn’t really not make money in real estate for the past 10 years. It’s been so ridiculously easy. Anyone could do it, and they have.

That’s great for them. I love to see people succeed. There are a lot of guys and gals who have gotten into real estate in the last few years and haven’t only flipped houses themselves, but have been building spec homes, doing Airbnb, amassing a few hundred rental units, and then either offering turnkey properties or teaching others as newly minted gurus.

Some of these people really do know their stuff, but most have just been riding on luck. Worse, they either don’t believe a correction is coming, keep saying we’ve got another 12 to 18 months (which they’ve been saying for more than 18 months), or are seriously minimizing how impactful the next correction will be.

Here’s the real problem. They have no plan to hold things together when the market corrects, and if you’ve been watching the data, some markets are clearly correcting already, and have been for over a year. So, many are paying too much for properties, are basing their values and business models on rents and a resale market that isn’t there, and don’t have the reserves to survive a temporary crunch. They owe too much, and are only a month or a few away from going bankrupt if cash flow tightens up.

Now, it’s no secret that you can both make money at the top of the market, and that our most famous billionaire investors are those who made their wealth when everyone else thought the market was at its ugliest. The difference is in being prepared and pricing things right.

What can investors do to beat this risk?

  1. Before investing with anyone, ask what plan they have for sustainability
  2. Know your real estate and economic cycles (history repeats itself)
  3. Stay in tune with the market data, and what’s really happening out there
  4. Know the value before you invest
  5. Look for value, don’t speculate

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

The 3 Things Investors Need Most in 2019

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By Fuquan Bilal

Do you have the three things you need most out of your investing for this year and beyond?

Many are finding it hard to make sense of the market right now. The media headlines proclaim the economy is awesome and supercharged with growth and low unemployment. Yet, the hard data and other signals suggest there are some corrections in the works. The bottom line though, is that you need these three things to get you through.

1. Passive Income

Time is the most precious and scarce resource we have. The only way to really get more time is with passive income. We can only become so productive. Then it is up to passive investments to make money so we can spend more time on other things. That’s true whether you are already making millions a year, or are in a high paying career, but are still trading your time for a wage. This is going to be even more critical over the next couple of years. And it doesn’t matter whether or not you own rentals right now, or you think your company is well insulated from a recession. If you’re not getting truly passive income, then it may be time to consider a fund or other vehicle.

2. Downside Protection

Who knows, we may really be in the best economy ever, and real estate prices, stock values and incomes might just keep going up. Of course, the odds are that there is some type of temporary correction in the works. That means it’s just smart to have some tangible, underlying hard assets and to be overcollateralized in order to protect wealth and capital during the months and years ahead.

3. Stable Performance

No single asset is going to perfectly and consistently perform the same forever. And it’s those fluctuations that are really tricky and usually come at the worst times. By diversifying and harnessing great management, we can keep our total portfolio performance steady, and yet without being so over-conservative that we end up with negative yields.

We believe we’ve achieved all this, and the ability to future proof your portfolio through our hybrid fund. Check out how we’re doing it today…

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund