REIA meetings take place in different cities throughout the country and every city has its own association. The purpose of these meetings is to develop a network or chain of real estate investors. They guide the ones that enter the market and learn from those who are already in the market and have a good grip of it.
Not only do people learn and enjoy these REIA meetings but these meetings give people a chance to interact and get to know more investors. These meetings have now become a platform for the networking of investors. These meetings serve the purpose of expanding the real estate circle. Just a few years back, real estate was a small market and people were scared to enter it or try their luck here. But now it is one of the biggest markets with many people investing their money on land with the intention of earning some extra income.
Investors can join in as guests or take membership of REIA, as these associations provide a wide forum to all the investors to introduce their products and get to know about others. These meetings are usually held at the beginning of every month and they update investors about the market and its conditions in previous months. They also forecast about the coming month and how the market will be. No matter if an investor is new in the market or is a millionaire, everyone learns more and more through these meetings.
Other topics that these meetings shed a light on include; learning how to become financially independent as an investor. These meetings provide investors how to retain their wealth once they start making it and keep the cash cycle rolling. When an investor makes a gain he needs to reinvest and all these techniques are taught in these meetings, for those who don’t have much information about real estate.
Real estate has a wide scope and these meetings teach how one can explore other avenues and how they can make more profits by entering these avenues one at a time. The best part about being a member at an association is that one gets to be in the midst of ambitious and proactive people who form a society of real estate investors. Not only investors get to learn through these meetings but they also get a chance to share their experiences with others and get their perspective on it.

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REIA meetings take place in different cities throughout the country and every city has its own association. The purpose of these meetings is to develop a network or chain of real estate investors. They guide the ones that enter the market and learn from those who are already in the market and have a good grip of it.
Not only do people learn and enjoy these REIA meetings but these meetings give people a chance to interact and get to know more investors. These meetings have now become a platform for the networking of investors. These meetings serve the purpose of expanding the real estate circle. Just a few years back, real estate was a small market and people were scared to enter it or try their luck here. But now it is one of the biggest markets with many people investing their money on land with the intention of earning some extra income.
Investors can join in as guests or take membership of REIA, as these associations provide a wide forum to all the investors to introduce their products and get to know about others. These meetings are usually held at the beginning of every month and they update investors about the market and its conditions in previous months. They also forecast about the coming month and how the market will be. No matter if an investor is new in the market or is a millionaire, everyone learns more and more through these meetings.
Other topics that these meetings shed a light on include; learning how to become financially independent as an investor. These meetings provide investors how to retain their wealth once they start making it and keep the cash cycle rolling. When an investor makes a gain he needs to reinvest and all these techniques are taught in these meetings, for those who don’t have much information about real estate.
Real estate has a wide scope and these meetings teach how one can explore other avenues and how they can make more profits by entering these avenues one at a time. The best part about being a member at an association is that one gets to be in the midst of ambitious and proactive people who form a society of real estate investors. Not only investors get to learn through these meetings but they also get a chance to share their experiences with others and get their perspective on it.

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Delaying things can sometimes be a smart move. For example, orchestrated delays are an artful part of negotiating. But when it comes to managing your property’s day-to-day operations, although there are some things you can put off, there are others that you need to take care of ASAP. Keeping a constant watch on these will keep your investment at peak performance.

Lets look at 3 core essentials you must stay on top of and should never let slide, even for a day.

1. Occupancy.
Units that are filled put money in your pocket. Empty units take money out. Priority #1 for your management company is to fill up your property. Lost income from an empty unit is never recovered. If your occupancy level is below the market average, find out why. There can be any number of reasons tenants are moving out and others are not moving in, such as too much deferred maintenance. Whatever the culprit, fix it.

2. Attitude.
Once your property is filled up, priority becomes keeping it full. And more often than not, you’ll find the key to this is all about having the right attitude. Every member of your management team has to have a “can do” attitude; otherwise you end fruitlessly spending your time managing the manager and trying to turnaround poor attitudes. Find people who are inherently go-getters and ruthlessly dump those who are not.

3. Collections
Collections are always a high priority. Rental income puts the “cash” in cash flow. You can expect a few outstanding rents at the start of the month, but your management company should have all rent collected long before the next rental payment is due. Rents at go uncollected for more than 30 days are likely to never get collected.

The best way to handle this is to have a reporting plan in place that ensures nothing slips through the cracks. A “Monday Morning” report from your management company reminds them that your eyes are on their performance. The report includes current occupancy, projected occupancy, rent collected and delinquent rents.

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Going deep into debt is generally considered a bad thing. People don’t like the idea of being at the mercy of a creditor, whether it’s Ebenezer Scrooge, MasterCard, or their neighborhood banker.

Fear of debt causes some investors to pay 100% cash for properties, which is a lousy way to leverage their money. Owning a building with zero debt (no mortgage) does not give you the best return on equity. Yes, your cash flow is great, but look at how much you had to invest to generate that cash flow.

Let’s say your Aunt Nellie left you $1 million. You could buy a $1 million apartment building with 6 units and pay all cash. If the units each generate $1,000 a month in rent, you’re $1 million gets you $6,000 a month.

However, if you split the $1 million into the down payments on five 6-flat apartment buildings (30 units total), your $1 million gets you $30,000 a month in rental income. You have mortgages now, of course, but you control five times the equity. Which is why I say, don’t just tell me what your cash flow alone is. Rather, tell me by how much cash flow you generate compared to how much you invested.

Effectively leveraging your cash and managing your debt gets you a higher ROE (Return On Equity). Going into debt can be a very good thing. In fact, it’s how you get ultra rich.

Choose your lenders as carefully as you choose your properties. Here are 5 major money sources:

Local Banks: Neighborhood lenders generally have shorter terms and higher interest rates. They like to keep their loans close to home and work with people they know, thus you can build long-term relationships. When you need money to rehab, use a local bank.

National Lenders: The big-name banks tend not to hold the loan. Rather, they sell it on the secondary market. Use a national lender when you have a straightforward deal that does not require creative financing.

Conduit Lenders: When you get into the big leagues and want to borrow millions of dollars, you can approach Wall Street. Firms like Citigroup pool their loans into mortgage-backed securities that they sell on the open market. Other mega lenders include insurance companies and pension funds.

Private Investors: If you’re just starting out, your most viable path will be to partner with private investors. You can quickly get the down payment or even enough funds to pay 100% cash. A student of mine went to his first local investment club and within a week had $250,000 in funds committed from private investors.

Friends and Family: Finally, although you can’t choose your relatives you can choose whether or not to borrow money from them. Just remember that any dysfunctional relationships your family may possess will likely be put on steroids when money is involved. And perhaps nothing ruins a friendship faster than borrowing money.

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Your job as a real estate “rainmaker” is to find the deal and make it happen. Leave the building management and operations to others. The big money is made in the deal and that’s where your time is best spent.

Obviously you want to focus only on stellar deals. Forget the marginal ones. It takes just as much time to work on a deal that brings in peanuts as it does to lock down a deal that makes you wildly rich. There are 6 red flags that tell you quickly if a deal will be a time-waster. If you spot just one of these 6 warning signs, move on to the next potential property.

1. The numbers don’t add up.
The bottom line is you want to make a lot of money. If the numbers don’t add up and the seller won’t drop the price, or you can’t get better terms, move on.

2. Missing numbers.
If the seller can’t provide you with the year-to-date profit and loss statements, plus the actual numbers from the previous two years, move on to another deal.

3. Made-up numbers.
Pro forma numbers are pure guesswork. They may be educated guesswork, but they are still a projection. Lenders won’t give these made-up numbers any weight and neither should you.

4. Troubled property.
A property may look good on paper: The numbers are real and they add up. But a site visit paints a different picture… Major repairs are needed because the seller has been deferring the maintenance hoping to pass the headache on to the buyer. Don’t let it be you.

5. Wrong area.
Don’t spend your money trying to reverse a trend. If the neighborhood is in decline, the property carries that stigma. Tenants will be moving on, and so should you.

6. Months on the market.
Good properties go fast. Bad properties linger in the listings for month after month. With detective work you can figure out why it’s a dud. And that’s a viable learning experience. But your time will be better spent going after good deals.

You create a beautiful garden by getting rid of the weeds. It’s the same with building a real estate portfolio: you must quickly weed out the lousy candidates and focus only on the prime properties.

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No matter what formula you use for analyzing a commercial property and deciding if it makes a solid investment, there is no “E” in the equation. “E” stands for emotion.

When I present my bootcamps on investing in apartment houses, there are always a couple of perplexed investors who come with stories about getting into deals that aren’t working out as they expected. For all practical purposes they’re taking a bath on the property and they want me to tell them how I’d fix it.

I’m glad they came to me for help. But the truth is, I never would have done the deal in the first place.

Yet invariably, they argue their rationale was solid. They remain convinced the square peg will fit into the round hole as long as they keep hammering away at it. What drives this wishful and irrational thinking? Emotion.

So I ask what “attracted” them to the property in the first place and I hear things like it was a trophy property and/or that other investors were also interested in it. Well, there isn’t a mathematical formula for “trophy,” so there’s your first clue that emotion has crept into their rationale. You don’t want a property because other investors want it. You want the property because the numbers work.

When I say this, I may hear that the “pro forma” numbers were solid. I’m quick to point out that pro forma numbers are fictitious. That’s like buying a car and finding out later that the 35 miles-per-gallon quoted by the seller was based on your putting in a different engine once you bought the car.

A deal must be analyzed with actual current numbers only. Never take numbers based on a historically ideal scenario where the property is 100% occupied, as compared to the real 70% occupancy that it actually has today.

If the current numbers don’t indicate a workable deal, guess what that means: They don’t add up. You need to scrap the deal.

Making up for lost time is how you lose money

New investors often feel that they’re behind the eight ball; that they should have invested long ago and need to make up for lost time. They take the plunge now even though the tide has gone out. This is emotion-driven thinking and needs to be kept in check. Wait for the tide to return. Rest assured that real estate is a tremendous wealth-building vehicle and you can build wealth quickly — as long as you go by the real numbers and not your emotions.

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April is officially “Earth Month” and Friday of this week marks the 41st anniversary of Earth Day. I did some “Q&D” (Quick and Dirty) research and came up with the 5 easiest ideas your tenants can get on the Green bandwagon. The light bulb has long been the graphic symbol for a bright idea, so lets start right there with one of the biggest wastes of energy on the plant… the antiquated incandescent light bulb.

1. Kick out Thomas Edison
Thomas Edison may have invented the familiar bubble-shaped incandescent light, but it’s time he got the LED out. Incandescent bulbs are notorious wasters of energy. If you pay the electric utilities at your building, you have an even greater incentive to make the switch.

2. Grow a green thumb
Indoor plants clean the air. More plants mean cleaner air. Your model apartment should make good use of them because it drops the hint that green is beautiful and welcome.

3. Use the dishwasher
Dishwashers use less water and less soap. Plus, they are more sanitary. And when you’re finished in the kitchen, turn off the light. It is a massive waste of energy to light space that nobody is using.

4. Be a bag-free person
Instead of accepting plastic bags from retailers, bring your own tote. Many supermarkets sell tote bags and you may even be able to strike up a deal with a green-friendly retailer near your apartment complex and get free tote bags for your tenants. (There’s an added value: when you carry a tote you tend to buy only what you need because you carry less. So now you’re not only saving the planet, you’re saving money.)

5. Change by degree
Adjust the thermostat to be one degree cooler in winter and one degree warmer in summer. “Spring ahead; fall back” refers to changing the clocks, but now it can also refer to the thermostat. If you like it set at 72 in the summer, set it ahead to 73. If you like 76 in the winter, set it back to 75.The temperature difference is negligible, but multiply that slight energy reduction by tens of millions of thermostats around the globe one degree makes a big difference.

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A myth can hang around so long that people think it’s the absolute gospel truth. Lets look at some common sayings and bits of conventional wisdom that could do you more harm than good if you adhere to them religiously.

Myth: Location Location Location
Reality: Location is more important to your tenants than it is to you

Sorry, but this famous triptych truism is wrong. Certainly, location plays a role in determining value. But it is not the ONLY factor. Nor is it even the most important factor for you, the property owner. Imagine if doctors lived by the mantra “exercise, exercise, exercise.” It’s sound advice. But it’s not the remedy for a broken leg or sore throat.

To assess location, you must first profile the property’s target market. You can then determine if a property’s location gives you maximum exposure to the target market. For example, bedroom communities outside the city center have A.M. and P.M. sides of the street, indicating the commuter traffic flow into and out of the city. Traffic flow is the lifeblood of many retail businesses. Donut shops want to be located on the way to work. Pizza on the way home from work. Traffic flow is less important for offices, industrial and apartment buildings. Here, access to public services like rail and schools will likely be more critical than which side of the street the building sits on.

Location is more important to your tenants than it is to you. It’s a great marketing tool for getting tenants, but it is not the pedestal upon which you should be basing the value of your building.

Myth: Future value is worth paying for today
Reality: Future value should not factor in your purchase formula

You may have heard me say that the term “pro forma” is not Latin for “pretend,” but it might as well be. That is because nobody can predict the future. Pro forma numbers are a calculated guess – and the calculation is often meant to deceive you… sellers give you a work of fiction when they deliver their pro forma numbers.

You don’t buy a new car based on its future “collector value.” Likewise, when buying real estate, don’t let pro forma numbers drive you down the wrong path.

You want to buy a property based on actual numbers. Focus on the profit-and-loss statements: Get the year-to-date and go back two years as well. Also get the current rent roll. These 3 numbers will reveal the true story — no crystal ball required.

We’ll be looking at more myths in upcoming blogs… stay tuned.

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