Millennial Real Estate Investor

Latest Episodes:

97: Small Multi-Families & Project Managing with Gerrit Van Maanen Aug 20, 2020

Show notes

If you were 19 years old in college, recently just discovered real estate investing, and wanted to get started, how would you propose to do it? Affordably.

Gerrit Van Maanen embarked on his journey to financial freedom almost accidentally. It took place early in college when he and his buddy had to do a reading assignment. Borderline jokingly, the two of them chose Rich Dad Poor Dad as their selection and like most others in this line of business, the rest is history.

As an adolescent, Gerrit was already very entrepreneurial. Growing up in Iowa, he and his brother started and ran a sweet corn business. It would be this same exact brother who Gerrit would partner up with to buy their first duplex together.

Remember how we mentioned Gerrit was in college during this time? Affordable meant that this duplex cost only a tad over $50,000! But that also meant they DIYed the property for over a year! But like any good zero-to-hero story, this was sure to be filled with lessons learned.

From there, Gerrit continued to grow his portfolio through steady rentals, and is looking to experiment with different strategies to spice up his investing a bit. Up to date, Gerrit is the acting project manager for Spartan Investing Group, who specialize in value-add commercial properties all across the United States.

Our takeaways from our conversation with Gerrit: 1) Have reserves available. This was the biggest lesson Gerrit learned from his very first investment purchase. Just because you run your calculations and the pro forma looks good, it doesn’t mean that reality will go as smoothly as the plan. Furthermore, just because you can afford the down payment, it doesn’t necessarily mean you can afford the investment! Costs will add up and budgets will be disrupted. Have reserves available!

2) Simplicity. When working on his first house flip, Gerrit was unsure of his renovation plans. He had many ideas, but that only made making decisions even harder. Having options is a good problem to have (that’s what makes real estate investing so attractive to many people). But at the end of the day, a good problem is still a problem. All too often, in our effort to be great, we lose our footing. Investing is done with the intention to stand the test of time. That is accomplished through simplicity.

3) Versatility. Investors with access to more capital may disagree, but Gerrit prefers small multi-family investments (1-4 units) due to the fact that you can do a lot with these types of properties, in terms of strategies. Generally speaking, what makes larger multi-families more attractive to investors are the paper profits. However, paper profits don't necessarily mean more profit in reality. With small multi-families, Gerrit says, you tend to have longer term tenants. And having low maintenance tenants combined with low turnover units can more than make up for the profits you would otherwise not receive.

4) High quality talent is difficult to find, provide value to the people who need it. When Gerrit discovered Spartan Investing Group (SIG), he instinctively provided value to the company by doing research on his market and presenting it as a potential investment opportunity. Although SIG has yet to take Gerrit up on his offer, that was enough for them to notice Gerrit’s qualities as an important person to have on their team. So when looking for a mentor, employer, or partner, be someone who has high quality talent. The other party is more likely to take notice, and the benefits will be reciprocal (win-win!).

If Gerrit could go back and talk to his 16 year old self, he’d tell him, “Focus on school. Learn more by doing more.”

An unexpected benefit of real estate investing, Gerrit said, was the ability to have so many doors open to mentorship.

A piece of advice Gerrit would tell his friends looking to get started in real estate would be to “Have $10,000 more than your down payment.”

Gerrit recommends using Smartsheet to help you run your real estate business smoothly and efficiently.

Gerrit recommends reading Creating and Growing Real Estate Wealth: The 4 Stages to a Lifetime of Success by William J. Poorvu to help you envision real estate investing holistically.

If you’d like to get in touch with Gerrit, visit: spartan-investors.com

96: Using Retirement Accounts to Buy Multi-Families with Josh Plave Aug 12, 2020

Show notes

It’s not often that people get started investing in real estate by being the one who helps others fund the deal. Why? Simply because people usually don’t have a lot of capital starting out. So they turn to institutional or private lenders for support.

In the case of Josh Plave, thanks to familial upbringing and financial savvy, he embarked on his real estate journey being on the other side of the table, the lending side. Having been raised by a CPA, he grew up understanding the importance and power of planning for one’s future.

So starting at just age 16, Josh opened his first individual retirement account, and began investing for his future. Somewhere along the road, having secured a good paying job, he stumbled across the awesome power of real estate investing. Up to this point, he’d only been putting money away for retirement paycheck by paycheck. (Real glamorous, we know…) He put two and two together and realized that he can jump straight into multi-family real estate with the capital he already had and grow it even further by lending it out to others.

This allowed him the opportunity to save himself some growing pains and develop a scalable system much faster.

Up to date, Josh focuses on multi-family syndications and looks to continue growing his wealth with an emphasis on having enough passive cash flow to provide for his growing family.

Takeaways from our conversation with Josh: 1) Understand how retirement accounts work. This can be a very beneficial thing to learn about because it grants you access to a whole new realm of private money. Most people already have their money tied up for retirement anyway, so they’re basically just sitting there waiting to be used. By having the knowledge to leverage this money, as well as the creativity to create winning scenarios, you can use that to your advantage to grow wealth all around.

2) Tax savings combined with compound interest. On their own, these two items are already quite powerful. Put them together, and their power becomes ten-fold. Being able to save money from paying taxes and reinvesting it into something that grows passively, you really do create two pennies with a single penny. The tax code is your friend, use it.

3) Josh’s steps to invest in syndications while working a full time job: 1. Be aggressive with your contributions. 2. Understand how much control you have over your account(s). 3. Roll over your 401(k) into a self-directed IRA.

Key Terms: 1) Unrelated debt-financed income (UDFI): This is what you use in order to finance your investment, i.e. The mortgage for the property. Your 30% down payment is being leveraged. The other 70% becomes…

2) Unrelated business income tax (UBIT): This is the part of your investment that gets taxed, even when using a Roth IRA. But because these are technically business expenses, you can depreciate the leveraged part of the investment.

3) Deprecation: A paper loss that you claim on the value of the property because of perceived wear and tear. This so-called “loss” can be taken for a certain amount of years at a fixed amount. This results in the ability to deduct against taxable income, thus reducing the amount of taxes owed.

4) Cost segregation: In essence, this is itemizing the expenses of an investment in order to accelerate the depreciation. This is done to frontload the tax write offs and have access to capital sooner rather than later. And with multi-family real estate, cost segregation is sure to have more leveraging power. It doesn’t mean less taxes are paid, it just gives you more flexibility of when to pay them.

5) Depreciation recapture: Remember those sweet tax write offs from depreciation? Those costs are then paid (or recaptured) when the investment is sold, as a way to make up for some of the taxes that were deferred or otherwise not accounted for.

If Josh could go back and talk to his 16 year old self, he’d tell him, “Trust [your] gut.”

An unexpected benefit of real estate investing, Josh said, was the ability to have the flexibility to dictate his schedule and have the total control of his time.

A piece of advice Josh would tell his friends looking to get started in real estate would be to “Educate, educate, educate!”

Josh recommends using Expensify to help you keep track of your receipts and expenses come tax time.

Josh recommends reading Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits by David Lindahl to help you learn everything you need regarding apartment syndications.

If you’d like to get in touch with Josh, visit: www.walltomain.com

95: DIY Duplexes & Creative Commercial Properties with Reinhard Kurzen Aug 05, 2020

Show notes

Sometimes we just need a guiding hand to help us get started. Thankfully for Reinhard Kurzen he had a family member introduce him to the idea of House Hacking. Working a professional job and advancing in his career, Reinhard originally had intended to settle down and live out a more traditional middle class life. But ever since discovering the wealth building power of real estate investing, his life has taken a turn for the better indefinitely.

From investing across state lines to dealing with homeless intruders, Reinhard and his wife, Samantha, have steadily grown their portfolio over the last several years and have no intention of letting up. They House Hack their main residence and utilize the BRRRR Method on their larger properties. Up to date, they own 32 units and look to grow exponentially from here.

Takeaways from our conversation with Reinhard: 1) Buy quality materials. Starting out, Reinhard and Samantha decided they were going to rehab their own investment property. Without intentionally meaning to do so originally, they ended up with a house that was all but gutted out. What was intended to be a “light paint and finishes” type-of-job, turned into a full blown home makeover. The worst part is that they then had to redo some of the work because they went with cheap materials. The lesson here? Buy quality products and materials so you don’t have to do the labor more than once! It costs less money and takes up less time to do the job correctly the first time then it does to put half effort and have to do the same job a second time.

2) Budget your time. If you do plan on going down the DIY route of real estate investing, whether it be rehabbing, managing, etc., make time for your business. Because after all, it’s a business! Growing a business takes time, and that time has to be put into the business.

3) Understand the different rent models available. Depending on your market, as well as the type of tenants you house, some models are preferable to others. While on one hand it benefits the landlord to individually meter each unit for additional housing costs/fees, on the other hand, many times tenants just want one lump sum to pay each and every single month. You as the landlord must decide which model works best for your situation, on top of establishing clear and concise guidelines and lease agreements from the get go with your tenant(s).

4) Declare it to the world! At the start of his investing journey, Reinhard decided he would follow the “Stack,” a method in which you double your number of units every year, or established time period, allowing you to geometrically grow your portfolio (i.e: 2 units, 4 units, 8 units, 16 units…). After Reinhard obtained several units, he began letting everyone in his network know he was searching for a commercial eight unit property, so he could continue his “Stack.” Lo and behold, he was introduced to a 26 unit value-add apartment complex. While quite a jump from eight, the point is to network and tell others what you are seeking. You never know what others come across that is perfect for you and vice versa. Like the Stack itself, the power of your network is, too, geometrical (Refer to Metcalfe’s Law).

If Reinhard could go back and talk to his 16 year old self, he’d tell him, “Get educated. Learn everything you can about real estate.”

An unexpected benefit of real estate investing, Reinhard said, was the ability to save and invest those savings that he would otherwise be spending on housing.

A piece of advice Reinhard would tell his friends looking to get started in real estate would be to “House Hack!”

Reinhard recommends using Appfolio to help you stay connected with your team and keep your documents organized.

Reinhard recommends reading The Miracle Morning by Hal Elrod to help you live out your goals every day.

If you’d like to get in touch with Reinhard, contact him at reinhardpkurzen@gmail.com`

94: Agent To Flipper To Multifamily with Steven Libman Jul 23, 2020

Show notes

One of the beauties of real estate investing is the abundant strategies available at one’s disposal in an effort to achieve their financial, career, and life goals. Our guest in this episode is no stranger to the industry. He’s been involved in real estate for over a decade. He’s gone from collecting commissions to selling his start up company, from wholesaling to commercial real estate.

Steven Libman began his journey in real estate as a licensed agent. Soon after that, he became a licensed broker, and then eventually a managing broker. That was going pretty well for a while until one petty demand too many pushed him over the edge. Right then and there, he decided to uproot his career and look at this life. This would not be the last time, either.

Steven decided to take a long trip with his soon-to-be business partner and came up with the startup business plan. It was going well, despite the tough learning curve, but still, yet again, it didn’t feel quite right. They were profitable, and they were growing their business, but nonetheless still didn’t have quite the lifestyle they wanted.

Long story short, and some Masterminds later, Steven has created two separate businesses in real estate, one of which he sold off, and the other thriving now more than ever. He’s learned valuable lessons along the way, and has the unique experience of being involved in different facets of the industry. Not only does he share the importance of financial literacy, but also the importance of lifestyle design.

Takeaways from our conversation with Steven: 1) Don’t be an island. Starting out, Steven and his partner only knew one way to learn and conduct business. They had to do it themselves. Early on, they didn’t consider hiring out jobs or expanding their team. They came from the assumption that experience is the best way to learn, which it is, but long term, it doesn’t always mean it’s the best way to grow.

2) Explain your business. If anyone is worth doing business with, it is worth it to explain to them how your business model works and how your relationship will dividend one another. Being in the investing space, many real estate professionals won’t know how different strategies work or why they should be involved. But by explaining your business and intentions clearly, not only will you be more likely to develop profitable relationships, you’ll be better able to serve your clients (tenants).

3) Taxes are all about perspective. Many entrepreneurs coming from the W-2 world tend to only view taxes as schemes designed to unjustly take your earnings. But viewed as incentives the government has laid out for you to better serve society and the economy, taxes become a very important leg in your business. The tax code is written in a way where the government rewards people who do what they want through tax breaks. When an entrepreneur starts using the tax code, as opposed to avoiding it, not only does your business become more profitable, but you fulfill your end of the social contract as well.

4) It’s important for entrepreneurs to ask themselves not if they can, but if they should. The reason? Because if it’s a matter of “can,” through sheer grit and determination, you will. But if it’s a matter of “should,” you force yourself to think about all aspects of your life and what’s truly important. This same exact thought process is what led Steven to change paths so many times in his career, despite them going well.

If Steven could go back and talk to his 16 year old self, he’d tell him, “Understand how money works… Compound interest is really the eighth wonder of the world.”

An unexpected benefit of real estate investing, Steven said, was the ability to give back in ways that he never could’ve done on his own.

A piece of advice Steven would tell his friends looking to get started in real estate would be to “Know at least what [getting started] looks like and why that is… [then] find somebody who's doing what you want to do and add value to them.”

Steven recommends using Boxer or WhatsApp to help you communicate with those on your team.

Steven recommends reading Never Split the Difference: Negotiating As If Your Life Depended On It by Christopher Voss and Tahl Raz to help you communicate and negotiate effectively.

If you’d like to get in touch with Steven, visit: www.integrityhg.com

93: Wholesaling, House Hacking and Multifamily with Bryan Rodriguez Jul 15, 2020

Show notes

If you’ve listened to our show for any time now, you know that we have a network of agents across the country that caters to the specific needs of real estate investors. Well… in this episode, we get to showcase the journey and share lessons from one of our trusted agents, Bryan Rodriguez.

Before Bryan became a real estate investor/agent, and before he knew all that he knows about the business now, he was previously an active member of the United States Army (which actually benefited him a ton starting out because he was able to utilize a VA Loan!). However, his life would change when he met his soon-to-be wife right before he got deployed to Afghanistan.

Bryan basically knew nothing about real estate, but Lana’s parents had decided to not pay for their wedding expenses, but rather, purchase a starter home instead. Instantly, Bryan understood the power of wealth building and storing that wealth in tangible assets. So as he left for overseas, Bryan read as much as he could about personal finance and real estate investing during his time there. Upon returning back to the homeland, Bryan made an executive decision that the next property they were going to buy would be a 4-plex.

And that they did. Bryan learned a ton from that first property (as most investors do), but they, Lana and Bryan alike, only got better as time went on. Up to date, Lana and Bryan are at the top of their field respectively, both as a team and as competitors.

Main takeaways from our conversation with Bryan: 1) Ignorance is bliss. After purchasing the questionable property in a questionable neighborhood and then implementing questionable tenants, Bryan got, as he called it, “A rude awakening.” He realized that despite his experience with order during active duty, property management and dealing civilians was a whole other animal. But with every challenge comes opportunity. Not only did these problem tenants teach him valuable lessons, it also allowed him to hire a brand new property manager and teach her valuable lessons as well. And to this day, that property manager still takes care of that same unit.

2) Understand landscaping. This is one of those items that usually comes with experience. So take it from Bryan. Understand how landscaping and drainage works! Water flowing into the wrong areas can easily become the silent destroyer of your property, right out of its foundation in fact. However, that also goes to say that don’t fear the unknown. Just like all aspects of real estate, items are only scary until you learn how to address them and/or deal with them firsthand. Find competent minds and find competent hands.

3) When describing his experience with commercial multi-family real estate, Bryan described the whole process in one phrase: Due diligence. It’s all about understanding your property, what you can do, what you want to do, and what you’re ultimately allowed to do. But we believe that this advice doesn’t apply explicitly only for large real estate developments. This applies to your very first investment property and all future ones after that.

If Bryan could go back and talk to his 16 year old self, he’d tell him, “Love your significant other [and] be patient, it’s going to come.”

An unexpected benefit of real estate investing, Bryan said, was the ability to preserve your capital and wealth in tangible assets.

A piece of advice Bryan would tell his friends looking to get started in real estate would be to “Take action… Worst case scenario, you get educated.”

Bryan recommends using Redfin to help you with your real estate needs because of their intuitive and user friendly interface.

Bryan recommends reading Sell It Like Serhant: How to Sell More, Earn More, and Become the Ultimate Sales Machine by Ryan Serhant to help you learn how to close deals like a pro.

If you’d like to get in touch with Bryan, contact him at (512)944-7900

Thank you to everyone that has reached out to us to connect them with our trusted real estate agents (like Bryan!) in their area! And congratulations to those who have even closed deals using our referrals! For those that didn’t know, we can help connect you with real estate investor friendly agents in your area to help you get started investing in real estate. We recently made some changes to our website that we believe will better suit you in your real estate investing needs. For more information, visit www.millennial-realestate.com and head over to the “Start Investing” Tab. Best wishes and see you in the next one!

92: Non-stop Networking and Multi-Family Syndications with Kyle Marcotte Jul 08, 2020

Show notes

Not everyone who invests in real estate does so out of passion. For many, real estate is only a means to passive income, a strategic and technical machine that pumps passive wealth for as long as they choose. On the opposite end of the spectrum, there are investors out there who immerse themselves in all things real estate not only as a career, but as a lifestyle. Regardless of where successful real estate investors may fall on the spectrum, oftentimes, they can pinpoint one or several defining moments in their life that changed their trajectory forever. Kyle Marcotte began his journey at the same time he was beginning his adult life. For most of his life, he had done what he was told were the right things to do. He did well in school, behaved himself, and eventually even landed himself an athletic scholarship while attending University of California, Davis. What he quickly came to realize was that such a life may not be for him. He did not want to be told what to do for the rest of his professional life, nor did he want to lose his time at the will of others only for their benefit. Several months later, Kyle discovered Rich Dad Poor Dad and dropped out of college before the start of the next semester. He dedicated the next half of a year to learn as much as he could about investing in multi-family real estate, while networking with as many people as he can. In a relatively short amount of time, thanks to that same dedication to education and networking, Kyle was able to find a partner with experience investing in multi-family real estate and closed their first deal, which was a 107 unit apartment building. At the time of this recording, Kyle owns a total of 119 units worth over $5.5M. And aside from expanding his investment portfolio, he plans on making an even greater impact on the real estate community by teaching aspiring investors to achieve what he was able to by the age of 21.

Some key takeaways from our conversation with Kyle:

1) Get on the same page with your partner(s). Work out a budget for your business, implement systems to maximize efficiency, and leverage software and services that will allow you to manage your business more effectively.

2) Go with a property management company that has an in house team that can do the work/labor for you or will help you find people who can. As a business owner, the more time you can spend working on your business, as opposed to working in it, usually the better off everyone involved will be. In Kyle’s experience, by selecting a trustworthy and dependable property manager, he’s usually left to overlook projects instead of doing the manual labor himself.

3) How to network as a young person in a nutshell: Find a meetup and introduce yourself to the host. For the next meetup, bring a friend. For the one after that, ask the host how you can help them. And finally, ask to be a speaker for future events. By doing so, not only will you show everyone attending the meetup that you are serious about investing in real estate, but you also establish credibility and expertise. Pro tip: When joining a new meetup, don’t come in too strong, but don’t wait too long to build your credibility. Present yourself in a professional way and you will be perceived as a professional. Don’t lie about what you know, but experience always helps when establishing expertise. Above all, add value to others’ life! 4) Find ways to help people doing what you already enjoy as opposed to focusing on only making every single endeavor profitable. In the long run, we believe an investment in someone will produce a greater ROI than any monetary one will. Kyle understands that the happiness found in financial freedom eventually plateaus, but if you can stay humble and help other people, happiness is never in short supply. If Kyle could go back and talk to his 16 year old self, he’d tell him, “Define your worth internally and not how other people perceive you.” An unexpected benefit of real estate investing, Kyle said, was the ability to spend more time with his parents. A piece of advice Kyle would tell his friends looking to get started in real estate would be to “Learn the most difficult parts first.” If you can learn the things you’re not so interested in sooner, the faster you will be able to learn the things you are interested in. Kyle recommends using Slack and Asana to help you streamline your business and be more efficient online. Kyle recommends reading The Bible for the simple reason that he believes not enough people are doing it or are recommending it. If you’d like to get in touch with Kyle, visit: www.kylemarcotte.com

91: House Hacking For A Nomadic Lifestyle with Sarah Weaver Jul 01, 2020

Show notes

Many people, investor or not, dream of traveling the world while having the freedom of location independence. And that’s all many of those people will ever do—dream. A great deal of said individuals will choose to not look past the self imposed limitations they have placed for themselves whether it be finance, mindset, or current circumstances.

In the case of our guest, Sarah Weaver, she began her real estate investing career without the intention of ever becoming an investor. Despite her skill and aptitude for the job, Sarah suddenly felt that in order to scale and grow her business as an agent, she had to be tied down to one place. This would be a defining moment for her in life.

Not two weeks after realizing she had been bitten by the travel bug, she began working for a company that allowed her to work remotely. Since then, she has not looked back. She has lived on four different continents and is slowly but surely approaching her 50th country to visit!

As a matter of fact, at the time of this recording, she is halfway across the world in New Zealand managing her units from a van, #vanlife, helping aspiring investors to get started doing what they love, and looking to further grow her portfolio regardless of what curveballs life throws at her. She works for a broker helping to connect real estate agents and investors together, while traveling as a digital nomad.

Some key takeaways from our conversation with Sarah: 1) When renting by the room (House Hacking or traditional investing), you can use a current tenant as a property manager. There’s already trust between you both because they have been renting from you, and they are going to be more pragmatic about choosing new, potential tenants because they are the ones who are going to be living with them. Sarah wouldn’t recommend this for every property and every situation, but if you can play your cards right, there is a great deal of leverage to be had.

2) Have real estate agents and other personnel on the ground as your eyes and ears. As much as you can look at neighborhoods on Google Maps and research crime in a given area, you won’t really know how those areas feel until you are there in person. Neighborhoods can change dramatically (for better or worse) and Google Maps doesn’t update regularly. But what if you can have other, more knowledgeable people do that for you? That’s what your team is there for! Use their professional insight to create winning scenarios.

3) “Buy the damn ticket and at least try it!” For those that want to work/invest remotely, don’t let your fear or discomfort stop you from giving yourself the opportunity to. Don’t sell your car and all your belongings right away, but give yourself a few weeks to try it. AirBNB makes it so easy nowadays to live in a fully furnished unit so there’s really never been a better time to make this dream a reality. If you feel you’re tied down to a desk, ask your boss to give you a trial run working remotely for a month. Just be an amazing employee during that month and go from there! Just like becoming an investor, get pre-approved then take action.

4) Figure out what you want, see what your options are, and pick one. Whether it be traveling, buying a property, or making a career change, there’s nothing more saddening and aggravating to the three of us than seeing someone with a lot of potential waste it through paralysis by analysis. Sometimes, all you really have to do is look at the cards you are dealt with and roll the dice.

If Sarah could go back and talk to her 16 year old self, she’d tell her, “It’s all going to be better than you imagined… the world is going to be so good to you.”

An unexpected benefit of real estate investing, Sarah said, was being able to dream bigger than she ever thought possible.

A piece of advice Sarah would tell her friends looking to get started in real estate would be to “Buy a house. Get pre approved and just do something. Your first deal is never going to be your best deal… [just] make sure it’s not your worst deal.”

Sarah recommends using Wunderlist to help you keep track of tasks within a neat, digital to-do list.

She recommends reading Switch: How to Change Things When Change Is Hard, as well as Made to Stick: Why Some Ideas Survive and Others Die by Chip and Dan Heath to help you get your mindset bigger for your business.

If you’d like to get in touch with Sarah, visit: www.addictedtoroi.com or follow her on Instagram @sarahdweaver

90: BRRRR & AirBNB to 41 Units with Shelby Osborne Jun 03, 2020

Show notes

Although many individuals start out their journey to financial freedom through real estate investing on purpose, some discover it accidentally. For the case of our guest, Shelby Osborne, she didn’t realize the power of passive, rental income until she moved away from her first primary residence. For six years, Shelby served in the Military in Washington State. Not too long after acquiring her first property (not for investment purposes), she was restationed to Fort Bragg in North Carolina. Instead of selling the home, she decided to rent it out and it turned into a great asset for her. Shortly after that, she decided to pursue real estate full time by investing for herself, as well as being a top producing agent her first year, winning Rookie of the Year for Keller Williams North and South Carolina. Up to date, Shelby owns a total of 41 units which consists of a variety of AirBNB Arbitrages and multi-family rentals. Shelby prefers using private money lending as it helps her be more creative with her deals. She also finds that being creative with BRRRR (Buy, Rehab, Rent, Refinance, Repeat) allows her to do more business more successfully. Although being self-employed has its own challenges, Shelby realized that she didn’t want to be an employee for the rest of her life, and pulled the trigger (pun intended) to growing her business. Some key takeaways from our conversation with Shelby: 1) “Who knows you, likes you, and trusts you.” Many investors make it sound like private money is when random people blindly and willingly give you money to invest. In reality, it’s about finding people who know, like, and trust you with their money. It’s about creating win-win situations and making sure the private lender is knowledgeable about what you are doing and what’s happening with their money. And if you structure deals properly, not only will you create favorable terms, but you open yourself up to repeat business for future investments. 2) You can always buy cheap, but you can’t always cash flow or obtain financing. Many investors are attracted to sub-100K markets—and that’s great—but it doesn’t always work for long term buy-and-holds. Banks and other lenders typically don’t like to lend on properties worth less than $100,000 due to the little return they would be getting on their investment (the investment being financing your deal). As a result, you may be stuck with a great property that will negatively impact your bottom line because you couldn’t get financing. 3) Quick tip for investing in military markets: The property prices/values and market rents are usually determined by what the military’s housing budget is for their veterans. A simple Google search will usually provide this information for you. From there, you can assess whether it is a market you want to pursue and begin assembling your team. As an added bonus, military markets can provide solid cash flow and insulation against market downturns and recessions. Shelby Osborne’s Key Terms and Definitions: 1) BRRRRNB: The BRRRR strategy listed above with the caveat of implementing an AirBNB short-term rental, as opposed to traditional long-term rentals. (Pronounced Burr-En-Be). 2) Pentaplex: Multi-family residence consisting of five units (e.g. duplex, triplex, quadplex, pentaplex). 3) VHA: Variable Housing Allowance. The government’s compensation for active service member’s housing expenses. 4) AirBNB Rental Arbitrage: Strategy in which you rent a unit yourself, and with the landlord’s permission, sublet that unit through AirBNB as a short term rental. In other words, you act as the AirBNB host without owning the property. 5) 1% Rule: Metric that states that the rental income you receive from a property equals 1% of the purchase price. 6) Delayed Financing: Strategy in which you purchase a home with cash up front (which may or may not include the rehab costs) and then “cash out” a portion of the equity from the property. Similar to a traditional “cash-out refinance,” but you don’t finance the property in the first place because you purchased outright with cash. This can potentially allow you to bypass a typically required seasoning period for lenders. If Shelby could go back and talk to her 16 year old self, she’d tell her, “Read more and care about things that actually matter.” An unexpected benefit of real estate investing, Shelby said, was being able to turn life into a fun game. All of a sudden work becomes a puzzle, and Shelby loves solving puzzles. When Shelby’s friends looking to get started in real estate ask her for advice, she simply sends them her file of listed action steps. So reach out to Shelby and get that PDF! Shelby recommends using Audible so you can learn on the go. She recommends reading The Miracle Morning by Hal Elrod and 12 Rules for Life by Jordan Peterson to help you mentally prepare for the journey ahead. If you’d like to get in touch with Shelby, visit: www.fivepillarsrealty.com or follow her on Instagram @realestatewithshelbyosborne

89: House Hacking and DIY Rehabs with Lauren and Kyle Clugston May 20, 2020

Show notes

88: Flip or Flop and One Year Update with David Pere May 13, 2020

Show notes

We recently had the chance to have our guest David Pere be a part of a panel where we discuss all things seller financing (see Episode 85). In this episode, we welcome him back to hear all about what he’s done since the last time we featured him on the show. Oftentimes, people who begin investing in real estate do it to supplement their income from a salary or quit their day jobs. Back in January of 2019, David introduced to us the idea and strategies to invest in real estate while serving in the military full time (see Episode 35). And since then, David has grown his out-of-state portfolio, taken part in a syndication, dabbled around with a flip, and is currently House Hacking in sunny San Diego. Up to this point, David is still serving in the Marines full time and simultaneously growing his business. He’s having a blast doing it and shows no sign of slowing down any time soon. Some key takeaways from our conversation with David: 1) Syndications are a good way to build wealth and you can definitely learn a lot about the business, but David wouldn’t recommend jumping into it as your first investment. There are many pieces to the puzzle, and it might just be a little too complex and a little too complicated for someone just getting started. 2) Be attentive to the contractors you hire. You don’t necessarily need to micromanage your contractors and handymen, but make sure you keep close tabs on their work. Make sure to look at the work they’ve done and make sure it’s done correctly. If you don’t know what to look for, make sure to have someone who does. This can be done by a trusted colleague or a property manager. 3) Be attentive to how you bill and pay your contractors. Projects can easily go over budget and become overrun because of poor planning. When dealing with the financial side of the business, you want to make sure you are on top of when your cash flows. If you want to stay profitable, do not get careless with your money. 4) Have reserves and budget accordingly. Despite having challenges with his rentals, David stays afloat because he has security in his investments. Many times, investors only focus on purchasing as cheap as possible, but ignore how to manage investments effectively as well. “Just because you can purchase a property for no money down doesn’t mean you should,” David says. Do your due diligence and create a plan with multiple exit strategies. If David could go back and talk to his 16 year old self, he’d tell him, “Start networking immediately and be better with your money!”

An unexpected benefit of real estate investing, David said, was the thrill of the hunt. David doesn’t necessarily need to work anymore, but he still does because it’s fun and he enjoys what he does. A piece of advice David would tell his friends looking to get started in real estate would be to “Learn, network, take action.” Surround yourself with people who are doing what you want to do. David recommends using Independent Community Bankers of America (ICBA) to help you find local community banks for financing and other perks that big institutions don’t offer. He recommends reading The Like Switch: An Ex-FBI Agent's Guide to Influencing, Attracting, and Winning People Over by Jack Schafer and Marvin Karlins to help you learn about the psychology involved in social interactions (because after all, real estate is a people business). If you’d like to get in touch with David, visit: www.frommilitarytomillionaire.com or follow him on Instagram @frommilitarytomillionaire

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