Passive Income Through Multifamily Real Estate

Passive Income through Multifamily Real Estate Group on Facebook

Spencer Hilligoss on Twitter

Episode #116: Investor Relations with Spencer Hilligoss Jul 24, 2020

Show notes

For this edition of Asset Management Fridays, we are joined by the up and coming Spencer Hilligoss from Madison Investing! As a relatively young mind in the multifamily game, Spencer brings enthusiasm and a sense of purpose to his work, believing strongly in communication and authenticity. Our conversation today centers on relations with investors and Spencer shares some great lessons he has learned about giving investors what they need while taking care of assets in the best way for everybody. We discuss frequency of communication, the best things to share and update on, and keeping a difficult conversation on course and timely. Spencer does not shy away from talking about the touchy stuff and states that if done in the right way, investors will be thankful. For this great chat with a fresh talent in the world of multifamily, join us today!

Key Points From This Episode:

Spencer's path to real estate and how he landed in multi-family recently.
Communicating with investors and Spencer's approach to this task.
What to include in investor reports and why Spencer focusses on pictures.
The biggest lessons that Spencer has learned thus far!
Important factors for investors; timely and adult communication.
Spencer's asset management superpowers; authenticity and communication.

Tweetables:

“We do a monthly update for the vast majority of our projects.” — @SpenceHilligoss

[0:02:34]

“I try to really go above and beyond and communicate with both authenticity as well as just keeping it clean and simple on the monthly updates.” — @SpenceHilligoss [0:03:30]

Links Mentioned in Today’s Episode:

Spencer Hilligoss on LinkedIn

Madison Investing

Passive Income through Multifamily Real Estate Group on Facebook

Brett Swarts on Twitter
Capital Gains Tax Solutions

Episode #115: Deferred Sales Trusts with Brett Swarts Jul 20, 2020

Show notes

After the 2008 crash, a lot of people either lost most or all of their money and one of the biggest reasons was they were held hostage to a 1031 exchange. Even today, the conventional 1031 strategy presents many downsides, a major one being that once you sell, you have a limited timeframe before which you have to rebuy. Enter Brett Swarts, today’s guest and founder of Capital Gains Tax Solutions, a firm that offers a solution to the 1031 called the deferred sales trust. The DST offers an exit strategy that helps business owners escape feeling hostage to capital gains tax as well as venture capital to fund their next business deal. In today’s show, Brett gives listeners the lowdown on how the DST works and the many benefits it offers in comparison to the 1031 exchange. He talks about how it enables a client to sell, and then park their money for as long as they like and also reinvest it in many more asset types than the 1031 exchange allows. We hear from Brett how the DST allows boomers to preserve wealth and pass it down to the next generation, and how it can also help the US get a more liquid net worth. Brett also weighs in on the flexibility and seamless partner separation it provides in the context of syndications. In addition, our conversation covers what the DST can do to stop the dreaded 40% debt tax on taxable estates over 20 million. After hearing what Brett has to say, you’ll wonder why you even considered the 1031 exchange at all, so don’t miss this one!

Key Points From This Episode:

Introducing Brett who offers the deferred sales trust as a solution to the 1031 exchange.
How a DST allows you to delay a rebuy in contrast to the 1031 exchange which doesn’t.
Brett’s service: to help facilitate the legal process that clients undergo to do a DST.
How people often buy higher-priced properties on a 1031 exchange, getting more debt.
Parking your money and reinvesting in any asset through DSTs.
Traveling 1031 depreciation schedules and new depreciation schedules provided by a DST.
How baby boomers want to preserve wealth and 50% of the USA’s net worth is illiquid.
The flexibility of options DSTs give investors in syndications: they can take their money out.
Reinvesting into a new syndication deal via a brand new LLC through the DST.
Reasons for the DST asking 20% for a reserve account after forming a new LLC.
The risk tolerance question and what options a client has with dictating where the 20% goes.

Links Mentioned in Today’s Episode:

Brett Swarts LinkedIn

Capital Gains Tax Solutions on YouTube

Marcus and Millichap

American Banker’s Association

Russell Brunson

Passive Income through Multifamily Real Estate group on Facebook

Wild West Real Estate Show

Episode #114: Post-Close with Mark Hentemann Jul 17, 2020

Show notes

The period that follows the closing of the deal is vital in the outcomes of your investment. Here on this edition of Asset Management Fridays to talk of their practices in the 30 to 90 days following a purchase is Mark Hentemann! Mark is a television writer, having worked on high-profile shows such as Family Guy and with David Letterman! Mark explains his particular type of investing and how he got into the business after moving to Hollywood to be a writer. He is a specialist in restoring older buildings with vintage value and appeal. Much of this tendency comes from Mark's creative side, as he loves to visualize what something dilapidated and out of favor could be! Mark speaks about his strategy for the first few months, which entails a lot of observing, waiting, and evaluating. From there, he gives attention to the exterior and what he calls curb appeal, moving to the entranceways and then into the actual apartments. He believes in providing convenience and value for tenants with particular attention given to kitchens, floors, bathrooms, and electrical fixtures. Mark also talks about opening spaces up, aiming for more natural light and how much he enjoys this restoration process, so make sure to join us today to hear it all!

Key Points From This Episode:

Mark's career as a TV writer and why he decided to invest in real estate.
The first 30 to 90 days after the close for Mark; tenant value creation.
Adding value after the initial period and Mark's early focus on the exterior.
Tools for property management; companies and personal management to coordinate with.
The distinct and different roles for property management and how Mark differentiates these.
The value that tenants place on kitchens, floors and bathrooms!
Looking at the trends away from confined spaces to more open-plan living.
Mark's asset management superpower! Seeing the beauty in something old and dumpy!

Tweetables:

“I pumped my first payments once I got any kind of traction into real estate and immediately got hooked and I’ve been doing it ever since and plan to do it until I’m a hundred.” — Mark Hentemann [0:01:36]

“I, out of sheer necessity, gravitated towards the cheapest properties I could find.” — Mark Hentemann [0:02:18]

“I don’t want to start spending or jumping to a major project until I get to know the property a little bit and see where the flaws are or where the issues are.” — Mark Hentemann [0:03:23]

Links Mentioned in Today’s Episode:

Mark Hentemann Email

Quantum Capital

Passive Income through Multifamily Real Estate Group on Facebook

Episode #113: Automation & Outsourcing with Bob Lachance Jul 13, 2020

Show notes

There comes a time in real estate investors’ careers when they can no longer manage all the tasks and wear all the hats required to succeed in the industry. This is when virtual assistants (VAs) might be just what they need. Bob Lachance is a nationally recognized speaker, mentor, and trainer who specializes in helping customers build their businesses through automation and outsourcing. He acquired his first flip in 2004 and has done over 700 transactions since, and has also started two successful real state coaching programs and three virtual assistant staffing companies. He is the owner of REVA Global LLC, which focuses on offering trained real estate virtual assistants to real estate professionals. In this episode, Bob tells listeners when they might start thinking about outsourcing some of the tasks, what they can expect to pay for virtual assistants, and advises on acquiring a full-time employee versus hiring a VA for each of their specialized tasks. He also discusses VA’s retention rates, how investors can hang on to good ones, and the importance of having clearly defined responsibilities to maximize the chances of success.

Key Points From This Episode:

Find out who Bob Lachance is and about his real estate career thus far.
Recognizing a need for mentoring and developing two coaching programs in response.
Starting his first company after spotting the opportunity to provide virtual assistant services.
When it is time for investors to think about automating and outsourcing certain tasks.
Guidelines around the cost of VA services and why it need not cost a fortune.
Factors to consider when deciding to hire a full-time employee versus a virtual assistant.
Thoughts on hiring several VAs for each specific area or hiring one or two to manage it all.
Suggestions for getting started on training your VA in their tasks and responsibilities.
How Bob and his team go about finding, screening, and interviewing candidates.
Hear what automation outsourcing means to Bob and examples of how it works.
The average retention rates of VAs and tips for retaining that person on your staff.
Why you should know the area you invest in and avoid shiny object syndrome.

Tweetables:

“If I have to hammer the phones all day long, that would zap my energy. I need to outsource that to somebody else. Guess what? I can work on building my business. I don't have to work at that specific task that will zap all of my energy.” — Bob Lachance [0:07:00]

“I would 100% recommend just sticking within the tasks that that particular individual is good at.” — Bob Lachance [0:09:45]

“Our clients that have the most success with their virtual assistants are the ones that treat them like they’re in-house.” — Bob Lachance [0:17:48]

Links Mentioned in Today’s Episode:

Bob Lachance on LinkedIn

Bob Lachance Email

Passive Income Through Multifamily Real Estate Facebook Group

Multi-family Investors Facebook Group

Episode #112: Refinancing with James Kandasamy Jul 10, 2020

Show notes

If you are in the real estate game currently or are thinking about diving in, chances are you have heard the term 'refinancing'. If you have not, do not fear, we have James Kandasamy from Achieve Investment Group here to explain the idea and share his wisdom on the subject! James joins us for this edition of Asset Management Fridays and we go through all the important points about refinancing and how James has used it to build his business. He has experienced amazing growth and success in a relatively short period of time and we hear all about his impressive business before jumping into what refinancing entails. We unpack the intricacies of the topic, talking about return on capital versus return of capital and which types of loans might suit your needs best. James gives us some insight into fees that are associated with refinancing and he warns us about pre-payment penalties and other hazards. We learn a bunch of lessons from James today about your DSCR, avoiding bridge lenders, and more, so make sure to join us on the show to get it all!

Key Points From This Episode:

James' business and how large his company has grown in the last five years.
The tricky business of refinancing; smart times to do it and the power that it offers.
Return on capital versus return of capital and the dilution of the term 'cashflow'.
Possible difficulties that arise in the refinancing cycle and during the deal.
James' ideas on long-term debt and the use of bridge loans.
Avoiding pre-payment penalties and making use of conventional bank loans.
The array of rates and fees that go into a refinance and the two ways to approach it.
James' asset management superpowers: controlling expenses, using data, and more!

Tweetables:

“When I buy a deal, I already know that that I can refinance this deal in one or two years.” — James Kandasamy [0:01:53]

“The power of commercial real estate, especially on a deep value add deal, is on refinances.” — James Kandasamy [0:02:46]

Links Mentioned in Today’s Episode:

James Kanasamy Email

James Kandasamy on LinkedIn

Achieve Investment Group

Achieve Wealth Through Value Add Real Estate Investing Podcast

Fannie Mae

Zillow

Apartments.com

10-Step List to Vet Sponsors

Episode #111: The Passive Investing Queen with Tamar Hermes Jul 06, 2020

Show notes

Like many forms of investing, real estate investing is a long-term wealth accumulation strategy with long-term outcomes. When you understand this basic principle, you go through market fluctuations with more ease and remain confident about the returns you will reap in the future. At the same time, however, it is about realizing that investing always carries some risk. Joining us to speak on this topic is Tamar Hermes, a full-time real estate investor, and educator. She is the CEO of Wealth Warrior Woman where she guides women on how to become financially free by teaching them to understand the numbers, options, and strategies in real estate. Tamar discusses what she as a passive investor is doing to mitigate the risks of the current recession, what deal sponsors can do to be proactive, and advises investors about how they should think about the possible postponement of their distributions. For her, this is a unique opportunity for people in the industry to reset their mindsets about investing and part with the fears they often revert to in times of crisis. She also shares her views on how multifamily will do in the next five years and tells listeners more about her coaching program and private consultancy.

Key Points From This Episode:

Helping other women to understand the opportunities in real estate investing.
What motivated Tamar to get into real estate investing and multifamily more recently.
The importance of understanding that investing is a long-term endeavor.
Tamar’s strategy for mitigating the risks of the current economic crisis.
Ideas for what sponsors can do to be proactive in these circumstances.
Tamar’s thoughts when she was told that distributions would be postponed for the time being.
Why this is an opportunity for investors to adjust their mindsets and approach.
The two phases of a sponsor: wealth generation and capital preservation.
How Tamar’s anticipates the recession to impact her returns as an investor.
Thoughts on how multifamily will perform over the next three to five years.
Advice to help people overcome the scarcity mindset and fear of investing in real estate.
Learn about Tamar’s coaching program and private consultancy for women.
Why it is necessary to fully understand the paperwork when buying a property.

Tweetables:

“I am a long-term investor and I think that is something that we all need to take to heart right now. Because like any investment, it is really a long-term game if you want to grow wealth.” — @tamarhermesintl [0:14:43]

“We like to be comfortable and whenever we step into those uncharted waters, it feels really scary for a lot of people and so I think part of it is taking small steps.” — @tamarhermesintl [0:14:43]

Links Mentioned in Today’s Episode:

Tamar Hermes on LinkedIn

Tamar Hermes on Twitter

Wealth Warrior Woman

Passive Income through Multifamily Real Estate group on Facebook

Mauricio Rauld on LinkedIn

Episode #110: The Legal Side of Things with Mauricio Rauld Jul 03, 2020

Show notes

Our guest today is Mauricio Rauld, the CEO and founder of Premier Law Group where he also acts as one of the syndication attorneys who help real estate syndicators to raise the capital to pursue their dreams of financial independence. Mauricio gives listeners some helpful advice around signing purchase and sales agreements, setting up LLCs, and keeping the asset management entity separate from the one owning the relevant share of the building. We also get into the issue of asset managers being legally responsible for the property managers they hire and the importance of including them in your insurance. Mauricio tells listeners what information lawyers require from their clients to set up a private placement memorandum and why the value of the PPM lies in its details, and then he gets into the “gray area” of conditioning the market versus merely adding value and educating. Be sure to join the conversation to also learn more about closing out an entity after a property is sold.

Key Points From This Episode:

An overview of the Premier Law Group and Mauricio’s capital raising role.
The dos and don’ts of signing a purchase and sale agreements (PSAs) and creating an LLC.
Separating the entity that does the asset management from the one owning your share of the building.
Recognizing that as the asset manager, you are legally responsible for the property manager.
Getting the insurance in place to cover you should the property manager perpetrate.
The information your attorney needs to set up a private placement memorandum (PPM).
Why you should not simply use a random PPM or one from the internet.
The most cringe-worthy posts people make about their deals from a legal point of view.
Navigating the fine line between conditioning the market and adding value.
Examples of pre-conditioning the market without having an active deal at the time.
What you need to do from a legal perspective to close out the entity after the property is sold.
A breakdown of the three entities operators need to establish for legal purposes.

Tweetables:

“We always create the LLC in the state where the property is located.” — @Mauricio_Rauld [0:02:26]

“You really want to reach out to your attorney right away. As soon as you enter into an LOI or have an LOI accepted, reach out to the attorney and the first thing you’re going to have to bring to your attorney is that business plan.” — @Mauricio_Rauld [0:04:19]

“The PPM in and of itself is kind of worthless if you just pull one from the internet or use a template. It’s what you put into the PPM that’s important.” — @Mauricio_Rauld [0:05:03]

Links Mentioned in Today’s Episode:

Mauricio Rauld on YouTube

Mauricio Rauld on Twitter

Premier Law Group

Passive Income through Multifamily Real Estate Group on Facebook

Gary Lipsky on Twitter

Episode #109: Juggling a W2 While Scaling your Real Estate Portfolio with Jens Nielsen Jun 29, 2020

Show notes

Many multifamily syndicators have either transitioned or are currently transitioning from a full-time W2 into the world of real estate. Taking the plunge can be daunting and going through the transition is demanding on time, finances, and one's emotions too. Luckily there is an art to it, and Jens Nielsen who is our guest for today is doing a great job of mastering it. Jens enjoyed working his W2 in the IT world for many years, but always wanted to find a way of clocking fewer hours while still making a good income. When he discovered real estate he dove in wholeheartedly and today specializes in underwriting, capital raising, and investor relations while still working his W2. In today’s episode, we speak to Jens about how he is managing the fear, time costs, social pressures, and risks involved in moving from his W2 into full-time syndication and coaching. He stresses the value of his time management skills, and also his dedication to remaining transparent with his W2 coworkers so as not to burn any bridges. Indeed, his boss has even invested in a few of his deals! If you’re looking for that push to finally quit your job and enter the world of passive income, this is the episode for you!

Key Points From This Episode:

Introducing Jens, a specialist in underwriting, capital raising, investor relations, and coaching.
Jens’s previous life: enjoying saving through his W2 in IT before going the real estate route.
How Jens had always wanted a passive income and then discovered real estate investing.
Jens’s journey into real estate buying fourplexes and educating himself through partnerships.
How Jens balances his W2 with real estate: early mornings, time management, and no kids!
When Jens might leave his W2 and the lost deal opportunities he faces while staying.
Transparency issues around keeping relations good at work while pivoting into real estate.
Financial risks that come with leaving a W2 and transitioning into a freelance career.
Advice for people getting into real estate: have support, build some savings, and get a coach.
Using the worst-case scenario mental exercise to get over the fear of entrepreneurship.
Jens’s five-year plan: sell smaller properties, keep coaching, and partner with his students.

Tweetables:

“For years I’ve been thinking about what I can do that doesn’t require me to punch the clock.” — Jens Nielsen [0:03:02]

“It really is that shift from relying on one source – that W2 that comes every other week – to going out there and just creating your own future.” — Jens Nielsen [0:10:00]

Links Mentioned in Today’s Episode:

Jens Nielsen on LinkedIn

Jens’ Email Address

Open Doors Capital

The 4-Hour Work Week

Passive Income through Multifamily Real Estate group on Facebook

Streak

Danny Randazzo on LinkedIn

Episode #108: Budgeting with Danny Randazzo Jun 26, 2020

Show notes

Creating air-tight budgets, which factor in all expenses, no matter how small, is no easy feat. It requires patience, commitment, and an eye to detail. Danny Randazzo, our guest today, certainly possesses these skills. As an asset management and budgeting whizz, he knows how to get the maximum NOI on properties. In this episode, Danny walks us through the current budget he is doing, and how his company creates multiple budgets to come up with a solid end number. He also talks about why they choose to do cost per door as well as the importance of being market-specific. Geographic location can shift several budget factors, so it is important to be cognizant of this. Along with this, Danny sheds light on the importance of having strict criteria that you stick to when looking for properties. We learned a great deal in today’s show, and we know you will too. Be sure to tune in today!

Key Points From This Episode:

Learn more about Danny’s background and what he is currently involved in.
Find out about Danny’s budgeting process on a new property he is underwriting.
The differentiating line items to look for when creating a budget.
Gary unpacks how location plays a role in budget differentiation.
Why Danny believes focusing on one market and knowing it well will lead to greater success.
How having strict criteria can help you stay conservative.
Danny’s asset management superpower and his top tip for success.

Tweetables:

“When we budget, we look at what the previous owner’s performance was. And we understand how they operated it because likely, them being a pretty decent owner-operator, their numbers shouldn’t be too far off.” — Danny Randazzo [0:02:48]

“You need to have a strict set of criteria and stick to it. If a deal doesn’t work because your criteria is conservative then it is not the deal for you.” — Danny Randazzo [0:10:18]

“Every single dollar counts when you are looking at asset management.” — Danny Randazzo [0:13:48]

Links Mentioned in Today’s Episode:

Danny Randazzo

Danny Randazzo on Instagram

Danny Randazzo on Facebook

PassiveInvesting.com

Sam Walton

CoStar

Passive Income through Multifamily Real Estate Group on Facebook

Gary Lipsky on Twitter