Top Three Tactics To Drive Up Investment Property Values
Whenever I acquire a property, my goal is to increase the value of the property. This is an important strategy because when I ultimately sell, I want to have maximum appreciation on the property after the hold period ends. Unlike single-family homes, whose values are significantly affected by the value of nearby homes, multifamily property value is directly related to the income the property produces: The higher the income, the higher price you can sell it at.
Biggest Risks When Investing In A Syndication And How to Avoid Them
Many investors are now putting their money into real estate, especially multifamily properties. There are a number of good reasons to do this. Prices for multifamily properties have skyrocketed over the past several years, and because of their limited availability and the fact that downsizing retired baby boomers are keeping vacancy rates low, prices will continue to rise.
How An Economic Crisis Can Impact Real Estate Investing
The top story on all news feeds over the past several weeks has been about the coronavirus. While the concern about the virus is deepening, it is impacting the economy in many different ways. For example, I personally pulled all of my money out of the stock market before the first crash, as I saw how the international concern would negatively impact the stock market. The market has since seen its worst drop in value since the Great Recession of 2008.
The Three Most Common Mistakes Passive Real Estate Investors Make
The multifamily real estate market is booming, and many new passive investors want to get in on the potentially lucrative investments that multifamily properties offer.
In the 10 years I’ve been in the real estate business as a real estate lawyer, property manager and syndicator, I’ve seen some investors make the same mistakes over and over again. By pointing them out and discussing how they can impact a multifamily real estate investment, I’m hoping that I’ll be able to help others avoid making these common mistakes.
Angel Investing Versus Real Estate Investing: Which Strategy Would Win?
I’m often asked what my preference is when comparing angel investing to real estate investing, since I participate in both investment avenues. I invest in multifamily properties across the U.S., and I like to diversify and invest in local and foreign technology startups. Both real estate and angel investing have their pros and cons, so let’s take a closer look at each before revealing which one is my preference.
Investment Showdown: Stocks Versus Multifamily Properties
There is no question that many people have built their wealth over time using multifamily real estate investments. Likewise, many people have amassed significant amounts of money by investing in the stock market. So in a strategic showdown, which investment takes the prize — multifamily real estate investments or the stock market?
Five Reasons to Invest in Multifamily Properties Instead of the Stock Market
When speaking with passive investors about participating in one of my syndication deals, I am often asked, “Is a multifamily investment better than buying stocks?” I’ll be honest: There is no easy answer to that question. Each investment vehicle has its pros and cons, and both can help build wealth over time. Frankly, it’s all about the individual investment.
The Biggest Misconception About Investing In A Real Estate Syndication
Many passive investors turn to real estate syndications when investing in multifamily properties. The reasons may vary, but they all come down to the fact that passive investors don’t have the experience, time and necessary funds to purchase multifamily properties on their own.
Three Important Questions To Ask Your Syndicator Before You Invest
When you choose to invest alongside a syndicator, it is crucial that the deal’s numbers make sense, meaning the returns should match your investment criteria. Some investors aim for minimum 15% internal rate of return(IRR) and some are satisfied with 13% IRR. However, it is key not only to invest in the right deal, but also with the right syndicator. After all, the syndicator is the one who handles your money.
Predictions On How The Pandemic Will Continue To Impact Real Estate
Back in early April, a few months after the World Health Organization listed the coronavirus (Covid-19) pandemic “a public health emergency of international concern,” I predicted in a Forbes article I wrote that there would be a serious downturn in the economy. Recently, financial experts agreed that the recession in the U.S. began in February and indicated that the recession could continue until Covid-19 is under control.
Seven Proven Tactics To Maximize Rent Collections During A Crisis
COVID-19 has taught me a great deal about real estate investing. Though I was part of the real estate scene back in 2008, nothing had prepared me for the current crisis. Like many investors, I too was concerned about collecting rents from my tenants. Not only have some of my tenants lost their jobs, but because I put an agency debt on the property, according to the CARES Act, I am not able to evict tenants, regardless of whether they have lost their jobs or not. Though nationwide only 69% of tenants paid their April rents on time, my company was able to collect over 96% of rents during April and May.
Is Everyone Really Making Money In Real Estate Right Now?
When you look at the prices of multifamily properties, you’ll find that they’ve skyrocketed over the past several years. In fact, there are often bidding wars that drive up the prices due to a limited availability of properties along with the desire for new investors to jump on the multifamily bandwagon. Will the good times ever end?
What the Market is Telling Us About The Upcoming Recession
Will there be a recession anytime soon? Many economists say yes, and many investors assume that there will be a recession in the coming year. In fact, an August survey of 226 top economists showed that 38% believed it would hit sometime in 2020, and 34% felt it would happen in 2021. While nobody can accurately predict exactly when it will begin, it’s definitely on the horizon.
Why Do Investors Keep Overpaying On Properties, Even At This Stage Of the Cycle?
I recently met with an acquaintance who owns thousands of doors across the United States. As we were chatting, he told me that he recently sold a property at $3 million above what they thought they would get for the property. Yes, $3 million. I couldn’t imagine who would overpay so much, especially in a mature market.
Why Assuming The Worst Is Best When Investing In Real Estate
Let’s start by saying that I am an optimist by nature. I see the glass three-quarters full, not half, and I am passionate about real estate and its role in growing my wealth. That being said, I often speak with investors about their real estate investments, and often hear how optimistic they are about the multifamily real estate market and how they don’t see any reason to doubt that the prosperity and price appreciation will continue. Don’t get me wrong: I believe multifamily is one of the most recession-proof asset classes out there. But at this stage of the cycle, over-optimism is not always the best approach. As a former lawyer, I a firm believer in staying conservative and preparing for the worst.
Why Passive Investors Should Not Focus On Fees Syndicators Charge: A Perspective
First, a disclosure: I am a syndicator, which means that I buy properties with other investors and together we pay for the down payment. Since I spend months looking for deals, analyzing them with my team, negotiating with the seller, signing the loan, organizing the syndication deal and managing the asset, I’m being compensated by collecting fees from my investors, as well as splitting the equity with them. I know what you think: “Well, of course you are going to say that investors should not focus on the fees you charge. How convenient.”
The Crucial Real Estate Deal Component Most Investors Miss
If you’re like most real estate investors, you probably receive deal packages from real estate syndicators, also known as sponsors, on a regular basis. Often, these packages contain executive summaries that position the deals as excellent investment opportunities. This should come as no surprise, as the job of the real estate sponsor is to screen out the bad and average deals and only focus on deals that present true opportunity.
Before answering that important question, it’s best to gain an understanding of why some investors avoid out-of-state investments while others embrace the concept. Investing in real estate, particularly multifamily properties, that is close to home has many advantages. You’re familiar with the area, and you often know real estate agents and brokers who can recommend properties that come up for sale.
How To Create Generational Wealth With Apartment Syndication
There’s a famous Chinese proverb that says, “Wealth never survives three generations.” America has its own version, which says, “Shirtsleeves to shirtsleeves in three generations.” But while 70% of wealthy families will end up losing their wealth by the second generation and 90% will lose it by the third, there are ways to avoid that from happening.
Why And How To Raise Capital Before You Have A Deal
While finding the right deal in the right market is critical to achieving success as a syndicator, the ability to raise capital is equally, if not more, important. I've found that having capital from investors in place before you have a deal in hand is the best way to ensure success.
The Misconception About Starting Small Before 'Graduating' To Large Multifamily Properties
I’ve met many investors who believe that the smart way to enter the multifamily market is to start small and then “graduate” to buying larger multifamily properties. From my experience, that is a misconception that should be addressed because it prevents those investors from enjoying the many benefits associated with larger multifamily assets. I skipped the small multifamily properties and single-family homes and went straight to large multifamily properties, and I have learned that these are the three most common misconceptions that prevent others from doing the same.
I'm a paragraph. Click here to add your own text and edit me. It's easyWhen most people think of owning multifamily properties, they believe that the cost would be prohibitive. After all, you can find solid apartment building in many markets, such as Texas, Florida and Georgia for $70,000–$150,000 per unit. So how could it be possible to own 100 apartments for just $100,000?
Should You Shy Away From The Best Class A Apartment Buildings?
When it comes to multifamily properties, some investors stick with Class A properties and see them as the best asset classes in the multifamily sector. After all, they are usually fully leased with top tenants, fetch market-leading rents, require little if any repairs or renovations and have a stable monthly income. Since investors pay a high premium for Class A properties, cash flow is not as high as in other asset classes. Hence, appreciation is the main factor that drives profits in many Class A properties.
Should Investors Wait For The Next Real Estate Crash to Make a Move?
There are many investors who decide to wait until the market crashes before purchasing real estate. After all, some investors reason, if the market is down, then prices are probably at their lowest point, and any investment is sure to show gains. The problem is, that philosophy just doesn’t work for multiple reasons.
The Three Most Common Mistakes Passive Real Estate Investors MakeHow Investors Can Ensure Their Opportunity Zone Investment Is A Smart Deal
While the term “Opportunity Zones” may sound familiar now, it’s a relatively new term, and plenty of investors still know little about what they are and how to use them to their benefit. Whether you're considering your first property investment or your thousandth, it's smart to understand what they are, and whether this is the right program for you.