Enhanced Diligence for Syndication Investing

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By Bruce Kellogg

What About Enhanced Diligence?

In the beginning, commercial real estate brokers invented the term “due diligence”. Lacking a specific definition, it basically means, “Check it out”, when making a real estate purchase. Nowadays, the term has received wider use in home purchasing, turnkeys, syndications, and more, but its application still has no formula. This article aims to correct that for syndication investing with what can be called Enhanced Diligence.

Initial Philosophy

When an investor purchases a syndication share in a distant location from a promoter, the investor is investing in the promoter as much or more than in the property. The property could be bad, or good, or so-so. The promoter could be competent and honest, or incompetent and honest, or competent and dishonest, or incompetent and dishonest. BUT the investor’s funds are tied up for 3, 5, or 7 years, and the success or failure of the project might not be known until the end of the holding period. This is why Enhanced Diligence is so important.

A Recent Example

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There was a “meetup” attended by about 70 people with an attorney speaking on the subject of “Asset Protection”. At the close, the organizers called out, “Who here is an accredited investor? Come up to the table to learn about our multi-family syndication in the south side of Chicago.” Now, Chicago has the highest murder rate in the country by far, and the south side is where it happens. Can you just imagine the robberies, the violence, the drug dealing, the arrests, the vacancies, the turnover costs, the lawsuits, and the insurance claims? And some “real estate entrepreneurs” from the Bay Area of California are going to successfully nurture this syndication for 5 years? Uh, huh. No doubt they just graduated from some “guru’s” “boot-camp”.

The Basics

Syndication” is a generic term for a group investment. It can take the form of a joint venture (JV), Limited-Liability Corporation (LLC), Limited Partnership (LP), Tenancy-in-Common (TIC), or possibly another legal structure. The LLC is most popular lately due to the ability to pass through to the investors such things as depreciation, interest expense, operating expenses, and other deductions. A “sponsor”, or “promoter” puts the syndication together and runs it during its term.

Diligence and the Promoter

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An article appeared in the November/December, 2013 issue of Personal Real Estate Investor Magazine, entitled, “12 Ways to Earn Money as a Real Estate Syndicator”, written by Kim Lisa Taylor, Esq., a securities attorney. It very thoroughly laid out the many ways an enterprising person can get rich investing other peoples’ money. Today, there are “gurus” traversing the countryside teaching syndication. When evaluating a promoter, several things need to be investigated, as follows:
  1. What is the promoter’s background, education, and experience with similar projects?
  2. Who are the promoter’s team—accountant, property manager, attorney, etc., and what are their qualifications?
  3. How much is the promoter investing? Is it CASH, or is it “equity”, which could be anything. Beware of non-cash promoter contributions!
  4. What other projects and assets does the promoter have? Is the promoter spread too thin?
  5. Does the promoter put together serial syndications, leaving the older ones to neglect?
  6. What provision is there for removing the promoter if they are not working out? Is there any?
Under Enhanced Diligence a “background search” should be performed on every decision-maker involved in the syndication. Certainly, this is the promoter, but it also includes anyone else in authority. This involves ordering a report from Lexus-Nexus, Trans-Union, or another data base firm. The report will usually include any liens, judgments, and bankruptcies, along with addresses, professional licenses (including any revocations), relatives, phone numbers, and email addresses. Costs of reports are only a few dollars for those with subscriptions to these companies. Otherwise, call 3-5 private investigators for quotations. Their costs are under $15.00, and they have the necessary systems. The Social Security number of the promoter is not needed, and neither is their permission needed because this is a public records search. They will not know the search is being done.
C’mon, is this really necessary? It depends. If you are comfortable wiring $50,000 – 250,000 to a promoter out-of-state who you don’t know very well, then go for it. The author has discovered syndicators in bankruptcy, with federal tax liens, and civil judgments. Would you trust them with your money? You can’t know your promoter too well!

Diligence and the Property

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When it comes to the property, bear in mind that the promoter will be presenting it in its best light. Here are the primary items that need to be investigated:
  1. Age: Nothing older than age 30-35 should be considered. Syndications intended to add value to deficient older properties usually turn out poorly due to excessive rehab costs.
  2. Building Class: A=Luxury, B=Professional, C=Working Class (“Blue Collar”), D=Low Income (“War Zone”). Luxury apartments don’t cash flow as well, and low income units are, frankly, treacherous. Stick with class B or C.
  3. Pictures: Hire a service such as wegolook.com to take pictures of the property and its surroundings, or go to Google View, or Bing Street View. Properties need to be fairly clean-looking. No industrial properties or strip centers close by. Schools, a hospital, and houses of worship are a plus. You probably know “nice” when you see it. Tenants do, too!
  4. Crime Rate: Go to ciity.data.com and check out the neighborhood crime rate. While you are there, check out the school ratings and the household income. Renters are attracted to low crime areas with good schools, and you need that to keep your building full.
  5. Unemployment Rate: Go to the Bureau of Labor Statistics website, BLS.gov and check this out. It shouldn’t be more than 20% above the national average at the most.
  6. Unit Mix: The Offering Circular from the promoter will normally say how many units are studios, 1-bedroom, 2-bedroom, and so on. Avoid projects that are largely studios and ones because turnover is higher, and so are related costs.
  7. Project Plan: Also in the Offering Circular there is usually the promoter’s plan for the project to add value by remodeling, adding amenities, raising rents, and so on. Consider this carefully because all of the projected returns from the promoter depend on the plan succeeding.
  8. Rents: Go to zilpy.com and accurent.com to check out the rents given presently and projected by the promoter. If not satisfied, feel free to call the property manager to discuss them. Don’t be shy. Your investment is at stake.
  9. Market Conditions: Oftentimes these are discussed in the Offering Circular. There is no formula for evaluating this, but see if they make sense to you.

Diligence and the Deal

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Lastly, you need to evaluate the deal itself, which is described in the Offering Circular. Here is what you need to consider.
  1. Holding Period and Exit Strategy: See if this makes sense to you and fits your time frame.
  2. Dispute Resolution: How are any disputes between the investors and the promoter going to be resolved? Can the promoter be removed and replaced if necessary?
  3. Voting Rights: What voting rights do the investors actually have? Are you comfortable with that?
  4. Reporting: Reports should be monthly or quarterly.
  5. Promoter’s Fees: The Offering Circular will disclose these. There will be plenty because syndicators often set up a certain return for the investors, then pile on the fees wherever they can. See the article by Kim Lisa Taylor on the 12 ways syndicators can make money, under “Diligence and the Promoter”, above.
  6. Cash Distributions: When are cash distributions made to investors, and what are they for?
  7. Leverage: How much cash down-payment will be made, and what loan(s) are there? 30-40% down-payment is common. Be suspicious of overleveraging with anything less.
  8. Overpaying?: The commercial real estate market, especially multi-family, is “hot” right now with syndicators competing for properties and bidding them up. Your promoter could be overpaying, which would severely reduce your investment return. Usually some Comparable Sales are presented in the Offering Circular along with some discussion. Study these carefully. Does your project make sense?
  9. Project Financial Measurements: Projects are measured primarily on Internal Rate of Return (IRR), which is used to compare investments of all kinds, and on Cash-on-Cash Return, which basically expresses the productivity of the investor’s cash in the project. Promoters provide estimates of these and others in the Offering Circular. Familiarize yourself with these if you intend to invest in syndications, or hire an accountant, financial planner, or real estate consultant who is versed in them.
  10. Investor Returns: Usually there is a Preferred Return, which is paid to investors monthly or quarterly from ongoing operations. It runs 6-10%, with 8% being typical. Anything outside this range should be questioned. Beyond the Preferred Return, there can be additional distributions in which the promoter will probably participate.
  11. The other primary return is the Split, which applies to profits and distributions above the Preferred Return, plus proceeds from any refinancing. These rates can be 80/20, 75/25, even 50/50. They are described in the Offering Circular, and you need to decide if they are acceptable to you.

The Syndicator’s “Flip”

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Enhanced Diligence requires that you research the property’s history. To do this, contact the Customer Service department at a major title company at the location of the property. Ask for “a Property Profile” that has transactions going back 10 years. Usually, this will be provided at no cost. Look it over to see if the promoter already owns the property that they are trying to syndicate. If so, they are trying to do “a Syndicator’s Flip” as their exit strategy from ownership of the property. Usually, they will build in a nice profit for themselves upfront such that the investors pay retail or above. Then, since the promoter has their profit, they usually go on to neglect the syndication. Is this common? Not so much. But it happens, and you need to guard against it. Is it legal? Good question! Don’t bother to find out!

Conclusion

Many syndication investors take the easy path by reading the promoter’s Offering Circular, maybe seeking an advisor’s opinion, then wiring funds or writing a check. This is nowhere near enough! They need to go beyond even “due diligence” to Enhanced Diligence. This article equips investors to do that.
Good Luck! NOTE: The author is available for Enhanced Diligence of Syndications, Turnkeys, Joint Ventures, and other investment acquisitions of most kinds. Compensation is based on an hourly rate.
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Bruce Kellogg

Bruce Kellogg has been a Realtor® and investor for 40 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches.

He writes and edits copy for Realty411 and REI Wealth Monthly magazines.

Mr. Kellogg is a recipient of an Albert Nelson Marquis Lifetime Achievement Award, listed in Who’s Who in America – 2019.

Mr. Kellogg is available for consulting about syndication, “turnkey” investments, joint-ventures, and other property purchases nationally, and other consulting assignments. Reach him at [email protected], or (408) 489-0131.

California’s Gold Rush for Valuable Land

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By Rick Tobin

California’s nickname is the “Golden State” for many reasons as it relates to the gold discovered at Sutter’s Mill by James Marshall near the city of Coloma in 1848, skyrocketing real estate prices, a Top 5 global economy ranking, and consistent warm sunshine. Of all of the assets ever discovered in California’s history since it joined the union as the 31st state in 1850, land that is buildable has been proven to be the most valuable asset of them all.

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By the end of December in 2020 during a global pandemic designation, the median price of a California home was published by the California Association of Realtors (CAR) as being a shocking $717,930 value. In January 2021, CAR reported that statewide median home prices rose +21.7% year-over-year. Statewide home prices surpassed $700,000 in August 2020 for the first time ever. For example, a 21.7% price gain for a $700,000 home would be equivalent to a staggeringly high $151,900 equity gain in just 12 months. For more expensive coastal homes that are valued near $2 to $5 million, a 21.7% year-over-year price gain would be be as follows: ● $2,000,000 home value = +$434,000 annual price gain ● $3,000,000 home value = +$651,000 annual price gain ● $4,000,000 home value = +$868,000 annual price gain ● $5,000,000 home value = +$1,085,000 annual price gain

The Priciest California Counties by Region

Let’s take a look below at recent county price trends for California to better understand how high median home prices have risen so high. For January 2021, the California Association of Realtors (CAR) reported the following most expensive median prices for these Southern California regions:

Southern California Counties

#1 Orange: $971,000 #2 Ventura: $776,000 #3 San Diego: $730,000 #4 Los Angeles: $697,660 #5 Riverside: $495,500 #6 San Bernardino: $390,000

Central Coast Counties

#1 Santa Cruz: $1,100,000 #2 Santa Barbara: $920,000 #3 Monterey: $860,000 #4 San Luis Obispo: $698,000

Bay Area Counties

#1 San Francisco: $1,745,000 #2 San Mateo: $1,605,000 #3 Santa Clara: $1,375,000 #4 Marin: $1,350,000 #5 Alameda: $1,060,000 #6 Napa: $835,000 #7 Contra Costa: $765,000 #8 Sonoma: $715,000 #9 Solano: $510,000 https://www.car.org/en/marketdata/data/countysalesactivity

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California’s Top 5 Global Economy

By 2018, California had surpassed the United Kingdom as the 5th largest economy in the world if it were listed as a separate nation. The fact that London, and the rest of the United Kingdom, is one of the most powerful, wealthiest, and historic regions in world history and is behind the Golden State in terms of economic size is quite impressive. Listed below are the Top 10 largest world economies: 1. United States $19.391 trillion 2. China $12.015 trillion 3. Japan $4.872 trillion 4. Germany $3.685 trillion 5. California $2.747 trillion 6. United Kingdom $2.625 trillion 7. India $2.611 trillion 8. France $2.584 trillion 9. Brazil $2.055 trillion 10. Italy $1.938 trillion Source: International Monetary Fund (2018 data) In 2019, it was reported that California was closer to $3.2 trillion in annual economic output. Because California has such a diverse employment market that ranges from entertainment in Hollywood to multi-billion and trillion dollar digital media and marketing companies in Silicon Valley like Apple, Alphabet (parent of Google), and Facebook, the future continues to look bright for the Golden State’s economy.

California’s Population Base and Finite Land Supply

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There are approximately 40 million residents in the Golden State. As of January 2020, the US Census Bureau reported that the US had a population base of 330 million. This translates to California residents representing 12.12% of all US residents.
The famous film and stage actor, writer, and witty humorist from Pacific Palisades, California named Will Rogers once said: “Buy land. They ain’t making any more of the stuff.”
Another historic quote by Harold Samuel, the founder of Land Securities which was one of the United Kingdom’s most successful property companies, about the key to success in regard to how to make money in real estate is as follows: “Location, location, location.” California is filled with an abundant supply of land that is adjacent to the majestic Pacific Ocean and includes scenic rivers, mountain ranges, and forests up and down the state which borders Mexico, Nevada, Arizona, and Oregon. Our state is 1,040 miles in length and 560 miles in width. There are an estimated 156,000 square miles of land and an additional 7,734 square miles that are covered by water for a grand total size of 164,000 square miles. If you flew on an airplane between two airports in the state that didn’t fly over the Pacific Ocean, you’d probably see primarily empty land regions. Did you know that our 40 million residents live on approximately just 5.4% of the state’s entire available land supply?

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Almost 95% of California has no people living on it due to very strict zoning and usage laws and incredibly high building costs like environmental-impact study and “sustainable living” or green home building fees. Lumber prices have reached all-time record highs in early 2021 after topping $1,000 per 1,000 board feet for the first time ever. The combination of costly environmental-impact fees and rising lumber supply costs are two of the main reasons why there haven’t been many affordable homes or apartments developed in the state. If we divide 156,000 square miles of available California land supply by the estimated 5.4% of land that’s allowed to have residents living there, this means that only 8,424 square miles of California has residential or commercial real estate and residents on it. If so, this is equal to 4,748 California residents per square mile of the buildable land supply. Let’s put this 8,424 square miles of buildable land in the Golden State into better perspective by comparing it to other US regions: ● All of the Hawaiian Islands combined: 6,422 square miles ● The Big Island of Hawaii by itself: 4,028 square miles ● The state of Connecticut: 5,543 square miles ● Puerto Rico: 3,515 square miles

Money Supply + Land = Golden Returns

Most California residents created the bulk of their family’s overall net worth from the acquisition of residential property, both owner-occupied and investment. Few places in world history have experienced real estate booms like California as seen in recent years especially. Most California homebuyers or investors need third-party money sources to get into and out of a property. This is because generally there are more buyers who need mortgages to purchase a property than there are all-cash buyers. Conversely, the same homebuyer is likely to later become a home seller who needs a qualified new homebuyer who has access to his or her money sources to close the sales transaction. As California home prices skyrocket, the loan limits for conforming, FHA, VA, non-QM, and other types of creative money sources from places like hedge funds, insurance companies, and banks rise as well. For example, the high-cost conforming loan limits for the more pricey California counties were increased to $822,375 (97% loan-to-value). Or, a home, condominium, or townhome may be purchased with as little as 3% down payments up to almost an $850,000 purchase price.

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More flexible FHA loan products which allow lower credit scores and cash reserve allowances may require 3.5% down payments up to the similar $822,375 loan amount. Quite surprisingly, VA loans for qualifying active military or veterans have the option to purchase a single unit property (home, condominium, townhome) up to as high as $1.5 million with no money down and with 100% loan-to-value financing. After June 2020, both Fannie Mae and Freddie Mac began really tightening up their underwriting requirements for self-employed borrowers partly due to serious concerns about rising unemployment rates and collapsing small to midsize businesses. Fannie and Freddie are the two largest secondary market investors in America that purchase a high percentage of 30-year fixed mortgage loans and other loan products. The Jumbo mortgage market also started to freeze up after an increasing number of lenders stopped lending on larger mortgage amounts for owner-occupied, second home, and rental properties for one-to-four units. As a result, it forced more self-employed and high net worth borrowers to seek out non-conventional mortgage alternatives with funding sources from mortgage companies like mine who are partnered with more flexible hedge funds at prices that are very competitive with other loan products with or without income verification up to several million dollar loan amounts. There’s a finite supply of both prime buildable California land and access to affordable and flexible money to purchase and sell these same property assets. As the number of buyers for California properties continues to far exceed the diminished available listing supply, you should better understand why homes have increased 10%, 20%, 30%, and 40%+ annually in various statewide regions. If you have access to land and money, then you’re well on your way to prospering here in the Golden State just like how the early Gold Rush settlers panned for gold.
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Rick Tobin

Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.

A Third of Realtors® Assisted Their Clients With Buying or Selling a Property That Had “Green” Features in the Past Year

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Key Highlights

  • Sixty-five percent of Realtors® said promoting energy efficiency in listings was valuable.
  • More than a third of respondents – 36% – reported that their multiple listing service had green data fields.
  • Over half of Realtors® said their clients were interested in sustainability.

Thirty-two percent of Realtors® said they had been directly involved with buying or selling a property that had green or eco-friendly features in the past 12 months, according to a new report from the National Association of Realtors®.

NAR’s 2021 Realtors® and Sustainability Report surveyed Realtors® about sustainability issues facing the real estate industry. The association released the report in recognition of this year’s upcoming Earth Day celebration.

Sixty-five percent of respondents said promoting energy efficiency in listings was valuable, with 36% reporting that their multiple listing service had green data fields. Among Realtors® who did have MLS green data fields, 36% used them to promote green features, 25% highlighted energy information and 13% listed green certifications. More than half of those surveyed – 55% – said their clients were interested in sustainability.

“A growing number of consumers are seeking homes with features that are good for the environment and, by extension, good for their wallets by reducing utility expenses in the long run,” said Jessica Lautz, NAR vice president of demographics and behavioral insights. “The pandemic has led to an increased focus on wellness and sustainability is an important variable in that overall equation for some people.”

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A strong majority of Realtors® – 82% – said properties with solar panels were available in their market and 40% said solar panels increased the perceived property value.

Twenty-two percent of respondents said that a high-performance home – defined as a systematic building science approach to home improvements that enhance indoor comfort, health, operational efficiency and durability – increased the dollar value offered compared to other similar homes.

The home features that Realtors® believed were most important to clients included the windows, doors, and siding (39%); proximity to frequently visited places (38%); a comfortable living space (37%); a home’s utility bills and operating costs (23%); and commuting costs (15%).

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A quarter of respondents – 25% – had clients who frequently or sometimes requested to see properties close to public transportation. Fourteen percent of those surveyed said that a neighborhood’s walkability was very important to their clients while 8% said the same about access to bike lanes and paths.

Methodology

In March 2021, NAR invited a random sample of 65,471 active Realtors® to fill out an online survey. A total of 5,048 useable responses were received for an overall response rate of 7.7 percent. At the 95 percent confidence level, the margin of error is plus-or-minus 1.38 percent.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

Rx for Growth and Security

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Photograph from Pexels

Article By Bruce Kellogg

The Next Level?

How many times have you heard a “guru”, or “trainer”, offer to help you take your real estate business “to the next level”? Most of the time they are referring to investing skills, but there is a whole other area which they do not address, and that can be labeled “support”. Three areas in particular are important:
  1. Affordable Healthcare
  2. Personal and Business Legal Solutions
  3. Identity Theft and Privacy Protection
Innovative, proven solutions in all these areas are offered individually, or in combination, by Remmel Solutions.

Affordable Healthcare

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Remmel Solutions offers healthcare strategies for individuals, employees, and their families that are superior to traditional insurance programs. Monthly healthcare costs are typically reduced 30-50% for individuals/families, business owners, and any size enterprise. Team members win by living happier and healthier with low out-of-pocket costs, even for large or catastrophic health events. The business can usually pay for their team members’ healthcare while still saving money. This makes them an employer of choice, attracting and retaining top talent versus their labor competitors. For “solo”-preneurs and investor businesses, the significant savings can improve cash flow and liquidity.

Personal and Business Legal Solutions

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Instead of paying lawyers expensive hourly fees, Remmel Solutions offers a plan for personal legal work based on a small monthly payment, starting at just $25.00 per month. Lately, the author’s experience is that most attorneys charge $300.00-400.00 per hour, with some specialists charging $600.00 and up. Remmel Solutions’ legal services membership provides access to experienced attorneys who can help with any legal issue. Services include consultation, letters and phone calls on your behalf, review of contracts and other documents, 24/7 emergency access, trial defense services, court representation, and other benefits. Most investor businesses can use the membership’s business features which include legal consultation, contract and document review, debt collection letters, legal forms, trial defense, and tax attorney assistance for IRS audits.

Identity Theft and Privacy Protection

Identity theft is becoming increasingly sophisticated as swindlers deploy an ever-evolving array of techniques and tools to hijack personal information. Remmel Solutions has the most comprehensive identity protection and privacy management solution available. Monthly rates start at $12.00 for family coverage. This is accomplished in three ways:
  1. They alert you whenever there is a problem with virtually any aspect of your identity, including social media.
  2. They provide access to expert advice when you need it, proactively and reactively.
  3. They assign you a licensed private investigator to restore your identity when you become a victim. This means that your identity is restored to what it was before it was stolen, no matter how long that takes.

Learn About Remmel Solutions

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During a 25-year human resources career, Steve worked at global corporations including Hewlett-Packard Company, Agilent Technologies, Beckman-Coulter, and Foxcomm Electronics. In 2013 he transitioned to being an independent Empowerment and Protection Consultant. Today, Steve enjoys helping businesses, individuals, employees, and their families by connecting them with Legal Services, Identity and Privacy Protection, Debt Elimination, and Affordable Quality Healthcare. Steve’s mission is to help others be better citizens, parents, business owners, and teammates. He is proud to have helped many people all over North America live better and experience peace-of-mind in a world that often seems increasingly complex and dangerous.

Following Up

Steve can be reached at [email protected], or by phone at (408) 509-5315. Read his blog and watch videos at www.RemmelSolutions.com.
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More About Bruce Kellogg

Bruce Kellogg has been a Realtor® and investor for 40 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches. He writes and edits copy for Realty411 and REI Wealth magazines. Mr. Kellogg is a recipient of an Albert Nelson Marquis Lifetime Achievement Award, listed in Who’s Who in America – 2019. Mr. Kellogg is available for consulting about syndication, “turnkey” investments, joint-ventures, and other property purchases nationally, and other consulting assignments. Reach him at (408) 489-0131.

Solar is Disrupting Real Estate – Learn How Investors/Brokers Can Benefit Now

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Investors, it’s time to take our Powur back. How will we take our Powur back? Powur delivers home-energy solutions that save residents, investors, builders money and lower their carbon footprint.

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Homeowners have had a variety of reasons why they’ve switched from traditional to solar energy. Many have done it for the long-term financial savings it provides. In this enlightening episode, we interview Powur Ambassador, Robyn Mancel. She will discuss creative ways real estate investors are utilizing solar for more than just financial benefits.

Here are some examples:

Solar is a great way for sellers to make their home more attractive for buyers. Powur offers 12 months of zero payments, so sellers won’t feel the pinch while adding value to their largest investment. Landlords can add solar to their multifamily properties and then lease back the energy to their tenants, while increasing profit and cash flow. It’s time to learn about the benefits of solar with Robyn Mancell. Solar provides a great opportunity for Realtors® to provide homeowners with a solution to rising electricity costs and to add value to their homes.
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Robyn has been self-employed over 30 years and is very much a serial entrepreneur. After a divorce that left her to raise three sons, Robyn went back to school for Environmental Studies.
Since then, she became active in spreading the word about solar and renewable energy. Powur has a program specifically designed to educate agents, Realtor.com®, and brokers to add another stream of income to their existing portfolio of business. It’s a win/win for everyone.

Listen to our latest Realty411 Radio podcast below to discover how the solar industry is impacting real estate on a national scale.

Learn more about Powur: CLICK HERE

How the Opening Back up of the Economy should affect Private Lending

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Image by Gerd Altmann from Pixabay

By Edward Brown

When the COVID-19 pandemic first hit the United States in March 2020, it was anybody’s guess as to how the private lending market would be affected. At first glance, one would presume that loan demand would have been negatively affected due to the expectation that borrowers were going to “hunker down” and not ask for, nor spend money, as we, as a nation, even the world, had not experienced a shutdown of this magnitude since the pandemic during WWI.

In the early stages of this effectual shutdown of most of the economy, this was the case. Borrowers were reluctant to take on debt, as the future was uncertain as to how they expected to pay back loans. However, as time went on, even though most businesses saw a large decrease in revenue, the lockdown/shelter in place, had another affect; many people were frustrated, feeling cramped where they lived, as a large part of the workforce had to work at home, and many households were not prepared to be at home 24/7. This put an undue hardship, emotionally, on people, as they tried to balance work with home life; especially if they had younger children who were not able to go to school.
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Image by Alexandra_Koch from Pixabay

Since many businesses were closed, people were able to save money, as they had no place to spend it, so to speak. This lent itself to the thinking that this was the new norm – working from home. This thinking made people start to ponder the future regarding the work/home life balance, and many chose to increase their living space. This, culminating with the fact of no commute for most workers, produced increased prices of homes in the suburbs where one could buy a larger house than in metropolitan cities. The frenzy that ensued for house purchases was a boon for private lending, as, not only were banks a bit gun shy due to the pandemic, but buyers were facing competition from other buyers and needed a competitive edge – quick closing offers. These two factors [banks slowing down on lending and the ability to provide capital very quickly], saw many private lenders having their best deal flow, by volume, in decades.
The question, for private lenders, is what happens after the economy eventually loosens up restrictions for most businesses, so they can get back to a somewhat normal cycle? There are those who believe that working from home will be the new norm for many workers.
The thought process is that companies that have been use to having workers work from home have proven that they can be productive over this past year. These same companies looking to cut costs will point to believing that they can shave off a lot of fat off of their income statement by lowering a large part of their expenses – rent. Since workers do not need to come into the office, and, with the technology of Zoom, rent expense can be significantly eliminated.
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Image by Joshua Miranda from Pixabay

Case in point; SF Gate reported that Sales Force cut back 325,000 square feet of space it was planning on occupying in San Francisco after adopting a permanent remote work policy. Many companies have followed such as Drobox, Twitter, and Facebook. Rents in the surrounding areas have decreased as much as 20%; however, prices for homes have not seen such a decrease, and, homes that have more square footage command a premium.
However, there is the possibility that, once a vaccine is widespread and we have moved on from the pandemic, many companies will start to require workers report back to the office. Some companies are already requiring employees go back to working in the office, as they believe productivity will increase compared to at home workers. This may start to force a shift of people moving back to the city from the suburbs.
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Image by hakan german from Pixabay

Interest rates are still relatively low, but they are starting to creep up. Many home buyers believe they should find something soon before the rates for mortgages go higher. The demand for capital is still strong and it does not appear that it will taper off anytime soon. Banks still have strict criteria regarding lending standards, and recent changes in the Dodd Frank rules did not dimmish these standards. In addition, borrowers who requested deferments from their lender may not have had their credit scores lowered due to these requests, but a memo recorded in the credit report has effectively prohibited conventional financing for them; at least, for a while. Other reasons many believe demand for housing will continue is due to a housing shortage. Too many restrictions by city or county officials hamper housing starts, and costs of both material and labor have dramatically increased. This put an undue burden on builders, as their profit margin gets squeezed; thus, the law of supply and demand as well as low interest rates [that appear to be relatively stable] should keep housing prices strong. During the Great Recession, many homeowners lost their houses to foreclosure. Many Millennials remember how their parents lost their home, and this lent itself to many people choosing to rent instead of purchase. Over time, however, these [now grownups] are starting their own families and have healed from the wounds of the Great Recession to where they are deciding it is better to buy rather than rent. This, too, is expected to fuel higher housing prices.

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Many housing sectors are still seeing multiple offers or houses that are being sold in less than a week. This phenomenon puts the would-be buyers in a predicament as to how to put in an offer that will be accepted to a seller. This is where private capital is a huge asset to potential buyers, as they can use private capital to make their offer much more attractive to the seller in that they can close the transaction very quickly without contingencies. Mark Hanf, president of Pacific Private Money has seen these buyers come to him in droves for capital and reports that his company had its best quarter in the last quarter of 2020.
One of the main advantages to private capital markets is that they do not have to rely on asking for new appraisals in every situation. Each case is different, and, many times, a recent appraisal that the borrower provides to the lender or a broker price opinion might suffice. Banks need to follow FIREA guidelines where the appraisal process is much longer, and this lends itself to a lengthy process to which the borrower may not have the luxury of waiting.
How long will the demand for private capital last? As long as banks continue to drag out the lending process, demand for housing stays consistent, and borrowers desire to purchase before interest rates and housing prices increase beyond where the borrowers feel comfortable, there should be a steady flow of requests for the foreseeable future.

ABOUT EDWARD BROWN

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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. Additionally, 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. Edward Brown, Host The Best of Investing on KTRB 860AM The Answer on Saturdays at 8pm and Sports Econ 101 on Saturdays at 1pm on SiriusXM channel 217 21 Pepper Way San Rafael, CA 94901 [email protected]

How To Scale Your Real Estate Investments In A Highly-Competitive Market

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Image by ar130405 from Pixabay

By Tim Houghten

Are you looking for more investments and ways to grow your real estate holdings? What are some of the ways that you can maintain and scale, despite the 2020 mayhem?

Brandon Cobb’s company The House Buyin’ Guys has been able to successfully sustain and even grow his real estate business by double-digits through the pandemic and chaos of 2020.

How has he done it?

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The House Buyin’ Guys

Brandon Cobb and his co-founder, Vagif Seidov, have been wholesaling houses to other investors, rehabbing properties, and creating win win solutions for his investors in the Middle Tennessee real estate market for years.

Prior to getting into real estate Brandon sold medical devices. After losing his job in medical device sales, he transitioned over to real estate. Brandon found his unique sales skills sharpened by the world of sales gave him a unique edge in the real estate industry. He built his company based around that sales approach, something the real-estate industry lagged.

Since then, he and his business partner have done over 100 deals in this space, During our exclusive interview, Brandon shared how business has been picking up through the pandemic.

He says that the local Nashville market has kept blowing up, with growing demand despite the pandemic. As of October 2020, they were still seeing new deals going under contract in one week, if not within one day.

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Brandon and his team challenged themselves to complete a $51,000 renovation in just 10 days while filming every day and posting the daily walkthroughs for all to see on his Facebook. After having huge success with that renovation, they challenged themselves to do two seven-day flips simultaneously.

The two seven-day $32,000 flips were a failure because they took nine days to actually complete, but to Brandon and his team they were a huge success because they learned a lot about how to better systemize their rehab processes and become more efficient. He and his team are always pushing the boundaries of what is possible in the real estate space.

So how can you compete and win deals in this highly-competitive market?

Tips for Winning In this Competitive Market

This has been an interesting year in real estate for investors and business owners. During crisis, many fold and lose, and few know how to use the opportunity to create new levels of wealth.

Right now, Brandon says it is an extremely-competitive real-estate market. Since the birth of the travel roadshow real estate guru’s coming to town and pumping out hundreds of new investors in a weekend, it’s become much tougher to find deals.

So, how do you still get the deals?

Here are some of Brandon’s top tips.

Do What Others Won’t

As with any business or career, standing out and blazing a trail for yourself, and becoming a valuable go-to resource for your clients, is all about doing what other people won’t.

You can put in the extra hard work and hours, be more responsive, and go the extra mile to make customers happy, but it starts with identifying what your customer’s want that competitors are not giving them.

Brandon says one of the big challenges his clients face are tenants. Many retiring landlords are willing to sell, but buyers want the property vacant. When there is a tenant, it can leave the property in limbo. Brandon’s competitors make offers based on the house being vacated most of the time, so his company started offering tenant relocation services with their offers.

In his recent feature in Forbes magazine, he says this alone can get you a $10,000 to $15,000 discount on the price of the property and win you the deal, if you’re willing and able to help the tenant find a place to live and cover moving expenses.

Review Your Past Deals

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When was the last time you went through your past deals and evaluated what went well, what didn’t, and what you could have done better? What about which deals really made the most money? Or what happened to those properties after you exited and sold them off?

You might be surprised at what you find. Brandon certainly was. They found they missed out on a deal that would have made $107,312.

Even more surprising was the fact that they came across deals like this twi to three times a year and were completely missing them! So, they adjusted their strategy when they came across these special opportunities, and after acquisition, and rehab costs are now able to sell them for almost double, with around $70,000 to $100,000 in gross profit.

Select Your Customers Carefully

How selective are you being with the customers you take on?

Brandon’s construction company, HBG Construction, offers rehab services to others outside his house flipping business. Savvy business owners and independent professionals learn that they can work much more efficiently, profitably, enjoyably, and with less risk and stress, if they are more selective in who they do business with.

At first, it may seem like a good idea to take on various jobs within your space and Brandon did just this. His company would service builders, home owners, rehabbers, basically anyone who needed work done on their house.. until it became a big headache..

Just trying to work with anybody and everybody can be a big trap. You might feel busier chasing the money, but that doesn’t mean you’ll really net more money.

Brandon suggests figuring out who your ideal customers are, and to fire everyone else. Brandon discovered that his construction company loved working with other rehabbers. Because Brandon is an investor himself, he was able to understand and pinpoint all the pain points rehabbers have when it comes to dealing with contractors.

Brandon’s construction company now works exclusively with other rehabbers on their flips, and that moment when he fired all his other customers changed everything. Now, his team deals with customers whose needs they understand and serve best.

Grow Your Referral Business

Referral business IS the best business. Referrals cost the least amount of money to generate, are the easiest to handle, and are the easiest to close! Brandon’s company started their own referral program using hand written thank you cards to all their customers. Occasionally, they followed up with a phone call to ask if they knew anyone that may want to sell their home.

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His company uses email drip campaigns to stay in touch and hands out handsome referral checks every time someone brings in a referral. They broadcast the experience of the person responsible for the referral receiving the check, which prompts others to refer business!

This method alone has allowed Brandon’s company to grow by double-digits with NO INCREASE IN SPENDING.

Leverage Other People’s Time and Money

In addition to leveraging other people’s money, smart real estate pros and CEOs learn to leverage other people’s time, expertise, and exposure.

There are many in your market who have built up their own network and are doing their own marketing. Work with them, instead of competing against them. He specifically points to real estate agents as an example of this. While many real estate investors feel they are at odds with REALTORS, you can actually help each other and negotiate win-win deals If you understand their needs.

Summary

We are in an interesting period where the real estate business and country is evolving and changing. Many will fail. For some, this year will set them on a completely new trajectory for success and wealth.

These tips can help you protect and grow your real estate investments, regardless of the mayhem happening out there.

If you are interested in learning more about how you can get added on Brandon’s list to receive off market wholesale properties in Middle TN, learn more about how you can receive passive income secured by real estate through Brandon’s company, you can contact Brandon at: [email protected].

For more tips, follow Brandon on his Facebook page at: https://www.facebook.com/brandon.cobb.3950

Successful Turnkey Real Estate Investing

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By Bruce Kellogg

Evaluating Turnkey Rentals

A major trend in real estate has developed where investors around the nation seek distressed properties in key markets regardless of distance. They purchase dilapidated assets to rehab, add value, and build wealth. Experienced investors tend to discover the hard way that it’s one thing to rehab locally, yet an entirely different experience to do so long distance.

For those who cannot afford to purchase nearby, the risks in rehabbing in a new area with few contacts increase tremendously.

Norada Real Estate Investments

The other approach an investor can take is to select a high-quality turnkey provider and invest with their help. Norada Real Estate Investments is one of the longest-running nationwide providers with a great industry reputation.

Meet Marco Santarelli

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Marco Santarelli made his first real estate investment at age 18, and he founded Norada Real Estate Investments in 2003. This means that he progressed through the Great Recession of 2008, unlike many turnkey property providers. He has become a nationwide provider of turnkey cash flow investment properties. He says his mission “is to help one million people create wealth and passive income and put them on the path to financial freedom with real estate.”

Mr. Santarelli is a licensed California real estate broker. For over five years he has been the host of the Passive Real Estate Investing Show with over 250 episodes to-date. The show airs weekly and can be found on every podcast platform including iTunes, Google Podcast, iHeart Radio, as well as www.PassiveRealEstateInvesting.com. This format allows the listener to learn, then jump off if they aren’t ready to invest at the time.

Other podcasters often persist with a blaring selling message, but Mr. Santarelli is more respectful of his listeners’ time.

Guide-to-Passive-Real-Estate-Investing-1Mr. Santarelli has also produced the 40-page e-book, The Ultimate Guide to Passive Real Estate Investing, which covers the subject very well and makes a great primer for new and seasoned real estate investors.

Norada Real Estate Investments

The Norada website features over 25 markets where Norada offers investment properties. Surely, readers would like to know which markets Norada favors for the second half of 2020, and why. They publish regular updates on their website on the best markets to invest in today.

Norada’s website has 13 frequently-asked-questions (FAQ’s) that are as comprehensive and clear as the author has seen. Additionally, the properties presented on the website contain all of the important items that an investor needs for successful decision-making. Many turnkey vendors leave out a vacancy factor, or maintenance expense, or post unrealistically low amounts to pump up the cash flow results, and this is done intentionally. (See my article in the second paragraph for details) Norada strives for accuracy in their property presentations.

Risk and Reward

In the end, when you buy a turnkey, you get a like-new property with a paying tenant, hundreds of miles from where you are. That’s why it is crucially important to deal with a long-term, successful turnkey provider who looks forward to earning your repeat business.

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BRUCE KELLOGG

Bruce Kellogg has been a REALTOR® and investor for 38 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches.

Mr. Kellogg is a contributor and copy editor for two national real estate wealth-building magazines: Realty411 and REI Wealth. He is a recipient of an Albert Nelson Marquis Lifetime Achievement Award, listed in Who’s Who in America – 2019.

He is available for consulting with syndication, turnkey, joint-venture, and other property purchasers and note investors nationally, and other consulting assignments. Reach him at [email protected] or (408) 489-0131.

Why Should You Invest in Senior Living? Discover Why Now.

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Image by Gerd Altmann from Pixabay

By: Vinney (Smile) Chopra and Jon Roosen

Key facts on the Silver Tsunami:

  • This year, approximately 23 million Americans are over 75 years old while 8.9 million are over 83. As a general rule, most Americans transition to senior housing by the time they reach 83 years old.
  • The OLDEST baby boomers will not turn 83 until the year 2029, thus allowing the floodgates to open for the silver tsunami. The senior housing industry is only beginning and is expected to skyrocket over the coming years.
  • Predictions suggest that 2 million Americans will reside in senior housing by the year 2030, which is two times the number of Americans in senior housing in the year 2016.
  • Today, 15.6% of the American population is 65 years or older. By 2050, estimates predict over one fifth of the population will be 65 years or older.

Senior living investors should understand that the senior industries profit from a huge demographic groundswell. The Baby Boomer generation will hit the 75+ age mark by the year 2021, as they begin their retirement years. As this happens, baby boomers will seek housing in an industry that is undersupplied and heavily out of step with shifting market demands and caregiving structures. For example, according to CBRE, 40,325 units must be constructed each year in order to satisfy peak demand in the years 2020-2025. When compared to the actual pace of construction in 2014 of 16,440 units per year, construction rates fall short by far. A clear trend has formed showing that despite the overwhelming growth in senior population, growth in senior housing has remained far below the threshold to keep pace.

As such, we conclude that one of the most risk-adjusted prospects in both commercial real estate and general domestic investment is the acquisition, renovation, and growth of senior living facilities. When comparing senior housing to more traditional types of real estate such as multifamily, senior housing is much more operationally complex and demanding from a regulatory perspective. Because of this, efficient execution of a senior housing deal requires an experienced and committed investment team.

Over the past 55 years, global life expectancies have risen from 49 to 72 years of age. The world population of those age 65 and older will double todays numbers and reach 1.3 billion by 2040.

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Aging demographics have created five unique investment opportunities for Americans, one of which is senior housing. With the increased demand for housing created by aging demographics, the U.S. senior housing industry is prepped for a future of unprecedented growth.

According to Senior Housing Analytics figures cited by PGIM, the demand for new senior housing in the United States is expected to rise by around 850,000 units between 2010 and 2030. PGIM’s study “A Silver Lining: The Investment Implications of an Aging World” notes that lucrative investment prospects exist for independent living, RCFE, assisted living, and memory care classes.

Industry centered on senior care and housing is complex. This industry provides a broad array of services to seniors over the age of 75, and can be divided into four care segments. These segments include Independent Living, Assisted Living, Memory Care, and Skilled Nursing Care. Historically, nursing care has been provided in a hospital-like setting; however, a shift is underway to transition into a more homelike environment for nursing care. The remaining three care segments are traditionally delivered in a multifamily residential setting. These housing facilities, known as continuing care retirement facilities (CRCCs) generally provide all three remaining care segments: independent living, assisted living, and skilled nursing, in one community.

While the senior housing industry is complex and difficult to maneuver at times, there is a simple solution for investors who want a piece of the pie without the knowledge to be involved at the level of a general partner. Investors can become passive investors by buying shares in senior housing investments. Through passive investing, investors can take advantage of this exploding market without the headache of management and general partnership. We can help direct you to these high-quality passive investing opportunities.

Senior Housing Is a Recession Resistant Asset Class

A huge advantage senior housing investors have over traditional investors is the durability of the senior housing segment of the commercial market. Senior housing lacks dependence on economic and real estate climates, and this is a key component to the sector’s success. For the last ten years, senior housing has been the number one performing commercial real estate industry. This outperformance of other industries includes the era encompassing the 2007 stock market crash, in which returns dropped as much as 20 percent for other commercial sectors.

Why Is Senior Housing Recession Resistant?

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Econ 101: Supply and Demand

  1. Huge Demand: As discussed above, the growth of the senior communities in America is unbelievable. As our baby boomers age, the number of Americans 65 and older will grow from 47.8 million in 2015 to 79.2 million by 2035. This huge rise continues to produce higher demand for senior housing facilities.
  2. Minimal Supply: While our elderly populations increase in size, you would imagine construction in senior housing would increase concurrently. Unfortunately, that has not been the case. Senior housing construction began a dramatic decline in 2008 that continued through to 2011 followed by only moderate growth through 2018. From the years 2014 through 2019, units constructed increased sharply; however, in 2020, occupancy rates are expected to continue rising while development slows once more.

Where Are Senior Housing Investments Moving?

While still a relatively new phenomenon, the senior housing sector is generating talk among real estate investors. The 2021 report by PwC on “Emerging Trends in Real Estate” named senior housing investing as one of the best for years to come. The survey results showed a growing interest from investors in independent living, assisted living, nursing homes, and long-term care facilities. These opportunities will only continue to increase as we move into the year 2021.

A survey from 2019 by the CBRE titled “U.S. Seniors Housing & Care Investor Survey and Trends Report” further supports rising interest in senior housing investing. The survey indicated that 19% of respondents were already invested in the senior housing sector, and 20% were interested in pursuing such investments in the future. This data overall shows a remarkable trend that almost two-thirds of property investors surveyed were interested in the senior housing sector. This interest is backed by several key factors and benefits of senior housing investments. Further, several forecasters have predicted that the senior housing sector will continue to skyrocket in the near future.

Below, we will detail some top reasons to start investing in senior housing.

#1. Baby Boomers Are Driving the Demand

If there is one fact becoming excruciatingly clear throughout our research on the senior housing sector, it is that more and more Baby Boomers enter retirement each day, thus driving up the demand for senior housing. This trend will continue over the next many years, as Baby Boomers will continue to need housing for decades. By 2035, 79.2 million Americans will be age 65 or older. With these numbers, the demand for senior housing is massive and is just beginning.

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The average senior housing resident is typically 83 years of age or older. With the oldest Baby Boomers today averaging 73 years old, the U.S. Census Bureau estimates approximately 8.5 million Americans are age 83 or older. Further, the U.S. population is growing. By 2025, the U.S. Census Bureau estimates that our population will exceed 10.2 million people. The key point from these facts is that in the coming decade, demand will rise for senior housing. This makes senior housing investing a reliable, savvy opportunity for long-term investments.

Another key benefit of senior housing is that not only is there a huge population demand, but there is a need-based demand as well. This demand is non-discretionary and merely a consequence of the chronic care issues that come with an aging demographic. This demand is unique to senior housing and does not correlate with other commercial real estate sectors such as office, retail, or industrial properties.

A further benefit of senior housing over other commercial real estate sector is that senior housing is far less affected by technological risk than other industries. This creates a more certain investment analysis for senior housing, while such an analysis of other sectors could be limited by technological changes.

While senior housing has its own business cycle similar to other sectors, the business cycle of senior housing is far less fluctuant. This is because senior housing does not depend on changes in employment rates and expansion and contraction of GNP. In today’s times, seniors are primed to live out their senior years using the alternate forms of income compared to a traditional job. These alternate income sources include retirement plans, stock portfolios, insurance benefits, and 401K programs, among others.

No industry is perfect, and like others, senior housing is impacted by severe inflation and an inability to sell. However, these impacts tend to be moderate. The benefits of social security payments to seniors and the need-driven demand of senior housing provide substantial backing to senior housing. With these benefits in mind, the senior housing industry is protected from traditional economic setbacks that take down other commercial real estate investments.

Finally, national operators have successfully maintained occupancy rates of 88% or higher in senior housing, even in markets that have reached temporary saturation.

#2. New Senior Housing Development and Supply

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The current inventory for senior housing is relatively outdated with 58% of the current housing units over 17 years old and 32% over 25 years old. As with any property, aging of these units only worsens with time. The existing units will become progressively more and more outdated as care amenities continue to improve, tastes evolve, and new regulations come to light. Additionally, as we’ve discussed previously, construction of senior housing units is not keeping pace with the aging senior demographic. These trends present both a challenge and an opportunity for real estate investors looking into the senior housing sector.

While it is still not keeping pace with the aging demographic, reports do indicate that senior housing development is increasing. The 2020 Emerging Trends Report concluded that senior housing is the top commodity for the development of residential properties and the 3rd prospect for development in commercial and multifamily properties.

#3. A Recession-Resilient Investment

When compared to other traditional real estate sectors, senior housing is exceptionally resilient. While it has its own business cycle, the cycle in senior housing is far more steady than other sectors and less affected by traditional economic changes. This is largely due to the key benefits of senior housing already discussed.

Additionally, the need-based demand for senior housing is an undeniable benefit. There will always be a need for long-term, quality medical and health care facilities for our seniors, regardless of economical circumstances. These characteristics allow senior housing investments to thrive while other industries suffer during recession times among other economic pitfalls.

Traditionally, the senior housing sector has proved itself to be resilient to difficult economic times. This should reassure you as an investor that you can rest easy with a senior housing investment. It is a low-risk and reliable investment with the potential for phenomenal returns.

#4. Historic Investment Performance

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Historically, senior housing investing has a track record of success. When compared to other major real estate investments, senior housing generally has increased income stream, appreciation, and total return on investment.

To be more specific, the National Council of Real Estate Investment Fiduciaries (NCREIF) 2018 property index results revealed that over a ten-year period, returns for senior housing averaged 10.2%. This average is well above the returns from overall property index (6.09%) and apartments (6.10%).

Regarding appreciation, senior housing investments produced 3.73% of total returns compared to 0.54% for overall property index and 1.03% for apartments.

Another way senior housing outpaces other sectors is total income returns. Senior housing investing produced total income returns of 6.61% while property index and apartments produced 5.53% and 5.20%, respectively.

Senior Housing as an Alternate Investment

According to the CBRE, over the past 13 years, the market share of alternative investments has more than doubled. More recently, in the past five years, annual investments in specialty properties have made up 12% of all CRE investments. This accounts for approximately $59 billion in yearly transactions.

Below, we have listed the eight major alternative investment sectors along with the percent share of all alternative investments and average annual investment volume from the years 2014-2019.

  1. Seniors housing and care- 31.3%/$17.2B
  2. Medical office- 22.1%/$12.2B
  3. Student housing- 13.3%/$7.3B
  4. Life sciences- 11.8%/$6.5B
  5. Self-storage- 9.0%/$5.0B
  6. Manufactured housing communities- 6.3%/$3.5B
  7. Active adult and 55+ communities- 3.2%/$1.7B
  8. Data centers- 3.1%/$1.7B

Benefits of Alternative Investments

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The key positives of investing in alternative investment sectors can be narrowed into five main benefits:

  1. The effects of cap rate compression from traditional assets can be offset by yield premium and higher cap rates of specialty investments.
  2. Market demand for alternative investments is rising due to fundamental structural changes in business, technology, demographics, tenant experience, and ESG criteria.
  3. Product availability is rising as developers rise to meet the demands of investors on national and international levels.
  4. Alternative investments offer a great opportunity for portfolio diversification for investors currently holding traditional assets.
  5. Alternative investments are improving in transparency of pricing, operations, and market performance, making such investments more appealing to investors.

Bottom Line

Whether you are a seasoned investor looking to diversify or just getting started investing, senior housing should be at the top of your list. The demand is undeniable as our Baby Boomers continue to age, providing a great opportunity for growth and development. Senior housing is a low risk investment with potential to provide exceptionally high returns.

If you’ve ever been interested in learning more about investing into senior housing, please visit SeniorLivingInvesting.Co or email us directly at [email protected].

Women in Real Estate — Build the Lifestyle of Your Dreams with Real Estate Investing

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By Laura Alamery

In 1987, at the young age of 23, I had my first glimpse of a future as a real estate investor. It all started with my love of visiting open houses, which led me to obtain my real estate license to learn the industry. At the time, I lived in Hawaii where I found inspiration from the successful women real estate agents around me. After a move to the Midwest in the early 1990s, I quickly learned that the commissions and energy around real estate weren’t as inspiring. For me, this led to the transition from real estate agent to real estate investor. Over the next few years, I launched into real estate investing while managing a young family and career. After a divorce, I realized I needed to leave my corporate job and fully dedicate myself to establishing a reliable income and building long-term wealth through real estate investment.

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Along the way, I made mistakes, learned many valuable lessons and ultimately built a lasting and successful real estate investing business. Today, I use that knowledge and experience to help other women launch and grow their real estate investment businesses at Real Estate Investing Women, a resource for training, live events and networking in a community of likeminded women.

Lessons for New Real Estate Investors

Looking back at how I built my real estate investing business, I now have the wisdom to see the ways I would change my strategies to avoid mistakes and build wealth with fewer risks. One of the big lessons I like to share with new female investors is to trust your instincts. The ability to tap into our gut feelings to make decisions is a benefit that makes women a natural fit for real estate investing.
Another piece of advice is to use money from your real estate investments to buy more real estate, instead of putting all your personal money into investments. The challenge is finding the money to start out. The mistake I made was purchasing too many buy and hold properties too quickly. This led to unnecessary risk and eventual burnout. I now tell new investors to start with one buy and hold property and grow slowly.
However, unlike my path into real estate investing where I dabbled in fix and flip, moved on to buy and hold and then finally figured out how to work wholesale deals, I suggest new investors start with wholesale deals. Wholesale isn’t easy and requires work. Yet, wholesale real estate investing has lower risks than other investment strategies. real estate womenWith wholesale investing, you learn while making money. In fact, wholesale investment is a great way to delve into the details of real estate investing without taking possession of properties. Set aside the money you make money through wholesaling to build the financial foundation of your real estate investment business. Not only does wholesaling produce quick profits, it also establishes a portfolio that you can use to attract private money. Creative financing with private money gives more control over your real estate investing business. Private money safeguards against the volatility of the market.
As your business grows, you then have the money, knowledge and reputation to tackle larger-scale investments with bigger risks. Ultimately, this is how you build a viable business and path to long-term wealth and the lifestyle of your dreams.

Three Keys to Success in Real Estate Investment

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While real estate investment offers many different strategies and paths to wealth, the keys to success come from your determination to make it. When I finally became serious about real estate investment as my career, I was newly divorced with three small children. I gave myself six months to build a business that allowed me to walk away from my corporate job.
Looking back, the three keys to my success were focus, consistency and time management. These areas were critical to get me out of my comfort zone and take real estate investing from a hobby to a true business.
women in real estateOften when I talk to women interested in real estate investing, the barrier they struggle with most is the confidence to take the first steps. Men historical dominate the real estate investing industry, which makes trusting your abilities as a female investor even more intimidating. However, with these keys to success and the support of other successful female investors you too can create a prosperous business. Focus – A serious approach to real estate investment requires focus. This means you create actual goals for your business. For me, my goal was to quit my corporate job within six months. This meant I needed to close at least one deal per month, which required willpower fueled by my excitement and inspiration. My eyes stayed on the prize. Consistency – You cannot build anything without consist dedication. To exceed my goal of closing one deal per month, I had to work daily toward that goal. Remember, I was a working, single mom, yet I put in time daily to find, connect and close deals. It was this consistent effort that led to achieving and surpassing my goal. Time Management – Life is busy. This is true of almost everyone I meet. The difference in the people who grow a sustainable business that produces wealth and those that don’t is good time management. During my six-month transition, I realized that a little sacrifice could change my life. Good time management means you don’t waste your time. Instead, you find those pockets of time to dedicate to your goal. For me, this meant working on weekends and evenings until I had the money to quit my corporate job.

Identify Your Dreams and Go After Them

shield-1519642_1280Image by photosforyou from Pixabay

Over the course of my life, my dreams have changed. Yet, the basic dream has remained. I desired to have financial freedom and independence. I achieved that dream through focus, consistency and time management. I continue to use these tools today in my new ventures.
For me, my dreams included taking care of my family, a flexible schedule, world travel and helping others. One of my passions is helping other women identify and go after their dreams by building successful real estate investing businesses. You don’t have to let a lack of confidence stifle your dreams. Instead, tap into your natural instincts to create a path to your dreams.
women powerWomen benefit by helping other women. In real estate, I’ve never feared scarcity. There are more than enough deals for everyone. My dream now is to leave a legacy by empowering other women. My work at Real Estate Investing for Women is one way I work toward this goal. Through mentoring, community building, live events and online resources, like podcast, articles, eBooks and more, women have access to unprecedented knowledge and encouragement. As I look back over my more than 30-year career in real estate investing, I see a story of hard work and determination. I also see the gift of my dream lifestyle that real estate investment empowered. You too can find the lifestyle of your dreams through a focused, consistent and well-managed real estate investment business.

Laura and Elizabeth

To Learn More about Real Estate Investing for Women:

Laura Alamery and Liz Klingseisen are a mother and daughter team, who are real estate investors and mentors to other women. Their goal is to empower and help women, who want to learn about real estate investing through a supportive and experienced community of women investors. We offer training and live events nationwide. You can learn more at www.realestateinvestingwomen.com