multifamily investing

7 Things You Must Know About Multi-Family Investing

September 11, 2019 by Team RE Mentor 4 Comments

1. Multi Family Properties Can Protect Your Wealth

You’ve worked hard, you’ve established yourself. Over time, real estate values have consistently proven that they will go up. We feel one of the safest investments you can make is putting your money in real estate. One of the largest benefits of Multi Family real estate is it gives you cash flow while it appreciates.

2. Your Properties Should Run on Autopilot

When you secure a property, always hire a good quality management company to run it and you can continue to invest in other properties… or enjoy your life in any way you choose. Whether you are traveling the globe or just sitting at home, your management company oversees the day-to-day operations of your investment… delegation is the key to happiness.

3. Emerging Markets Create Faster Appreciation

Institutional investors understand the power of emerging markets. In fact, MIT offers a course specifically surrounding markets that explode with appreciation. Be sure you study this critical element to success.

4. Use “Undervalued” Properties For Quick Gains

Value add properties definitely look less attractive, but that is exactly why they yield a higher return and increase cash flow.

5. Going Big Can Equal Bigger Returns

Small properties are good for beginning investors. You’ve earned the status you enjoy today. Larger properties will bring you larger returns with less risk, that’s the irony, but you already know this.

6. Start Where You Are Comfortable

If you are just beginning, get educated, take action, take calculated risks, get the confidence of having your first deal under your belt, and then watch your portfolio grow.

7. Use a Proven System

You use systems in your day-to-day life and business; it only makes sense that you should use them in your real estate investing, too. Proven systems bring you proven results and get you to your goals faster.

Recession Without A Plan Is A Fast Way To Go Broke

August 21, 2019 by Team RE Mentor Leave a Comment

The fastest way to get from point “A” to point “B” is to have a plan. The fastest way to earn one million dollars or more in real estate investing is to have a plan. The fastest way to go broke…the fastest way to lose a lot of money…the fastest way to be forced out of the investing business is not to plan. Especially during a looming RECESSION … yes, we said it.

If you don’t make a plan now, this new recession will rip you out of your investing interests during 2020.

DON’T SAY RECESSION

Just don’t say “recession” around any economists, politicians, or your creditors. We also hear you shouldn’t say the word “recession” in front of your bathroom mirror 3 times in the dark.

Many successful investors found themselves working very hard in their investing business but not really getting anywhere. Only after they started sitting down once a day to plan their activities did they start making real progress in their investing business.

Nothing substantial in life is completed without some sort of plan. When ships cross the ocean they “chart a course.” What they are doing is planning. Across all of our oceans are buoys, those red, floating devices. If you’ve ever been in a harbor or seen a harbor scene in a movie, you’ve seen a buoy. Some of them have bells attached so you don’t hit them at night.

“A highly leveraged business sector could amplify any economic downturn as companies are forced to lay off workers…” the Federal Reserve chair, Jerome Powell, said in a May speech.

“RED, RIGHT, RETURNING”

Buoys are the ocean’s traffic signals. They are all numbered. And there is a universal ocean law, followed by all captains whenever they return to a harbor. It’s the three R’s: “Red, Right, Returning”. Any captain will tell you when you are returning to a harbor, the Red buoys should be on your Right. This the way you plan your entry.

When you are going from point “A” to point “B” across the ocean, you chart out a series of buoys that you will set your “road map” for your journey. Since they are numbered, you know when you are at the right buoy. A simple journey from Falmouth, MA, to Martha’s Vineyard, though only seven miles, may require that you chart the passing of 15 buoys. It’s like playing connect-the-dots across the ocean. As you go from buoy to buoy, you successfully navigate your journey to your destination.

WITHOUT A RUDDER

Plan your real estate investing with the same philosophy. To get from where you are now to one million dollars, you have to plan to perform certain activities and meet certain milestones (buoys) to connect the dots, to get to your goal.

Without your goal constantly in mind, you will drift aimlessly and unprofitably, like a sailboat without a rudder, until you begin to plan properly.

After you start planning consistently, you will realize that any time your business starts getting chaotic, you’ll pause and realize that you’ve gotten away from your planning.

RIDING OUT THE STORM

One way to weather the storm during this type of chaos is to have multi-family rental properties that are going to provide a steady stream of income during the turbulence of the markets.

The fastest way to get order back into your business is to begin planning again. You did make rental properties part of your plan, right?

BUILDING HABITS INTO A BUSINESS PLAN

If your business or life is chaotic now, start planning. When you begin the planning process, you won’t suddenly wake up tomorrow and start planning every day for the rest of your life. Certainly, if you start shoring up for a recession today, your plan can become actions, and when this ugly beast rears its head — it is already slain.

But alas, we are all human and we begin by planning a little, reaping the rewards, getting away from it, becoming chaotic again, then going back and planning a little more. It’s just human nature.

However, each time you get away from planning and then go back again, you are taking a giant subconscious leap forward to successfully embedding planning into your business and your life.

Great plans take habitual thinking, strategy, and execution. Start your planning habit today. So, you won’t wake up to a financial nightmare. Instead, you can rest easy knowing you have prepared for eventualities.

FYI—We have a FREE videoturial that teaches the critical skill of recognizing when the market phase is changing so you change your investment strategy so you continue to do well investing (this is the number one mistake investors make)

Rolling Into A Mini-Perm And We Don’t Mean a Haircut – This is A Must Know For Real Estate Investors!!!

August 7, 2019 by Team RE Mentor Leave a Comment

Mini-perm financing is short-term financing typically used to pay off income-producing construction. Or commercial or multi-family properties, usually payable in three to five years. In this case, "perm" is short for "permanent", alluding to permanent financing.

Commercial properties often cannot qualify for long-term, permanent financing until they've established operating histories.

Mini-perm loans, therefore, are used to pay off the construction loans. And bridge the gap until the property can qualify for permanent financing.

During the last year it seemed as though mini-perm financing has tended to be more prevalent in some parts of the United States.

Generally, mini-perm loan financing is used to pay off construction or commercial property loans. Either at the beginning of a particular project or investment. Once a project is producing income, the borrower can begin to look for a more long-term financing solution.

The loan carries a balloon payment at the end of the term. With the anticipation that the loan can then be easily refinanced due to the fact that the property now has an operating history on which to successfully obtain permanent financing.

Listen to Eric Stewart from Atlantic Capital Group describe bridge loans to mini-perms as featured on Real Insights Podcast

There are two types of mini-perm financing available, namely:

hard mini-perm; and
soft mini perm.

A hard mini perm is a project finance structure where legal maturity is set typically around 7 years. Forcing the borrower to refinance before maturity or face default.

A soft mini-perm is a structure without this default risk. Where the loan maturity remains long-term but whereby increasing incentives are in place to encourage the borrower to refinance.

Advantages of the hard mini-perm include the obligation on the borrower to refinance. Refinancing would be at prevailing market rates, and the fact that funders will be able to price on a short-term basis which also allows the repayment of their upfront fees over a shorter period.

Risks

The main disadvantage is of course the introduction of default risk potential for all parties (funders, borrower and Government).

Upon default, the funders may lose control to an administrator and have to allocate more capital to the project. In contrast, a soft mini perm sets out the contractual remedies available to funders and no additional capital is required. Unsurprisingly, the soft mini-perm is the structure more favored by the market generally.

Long-term funding is still available in the banking market.

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Business Systems Provide Value

July 3, 2019 by Team RE Mentor Leave a Comment

Business systems are the way you do things. They are the procedures that can be replicated.

For example, we recently created a telephone answering system for an office receptionist. We created a script that delineated how she is to answer the phone and what information she needs to collect. She has responses for the types of questions callers may have and to whom she should direct calls.

We were very specific about the circumstances for transferring telephone calls and circumstances for taking messages. In addition, we established the procedure for inputting the information in the business’s customer relationship management (CRM) database program.

Effective business systems can be created for all kinds of work performance that occur in your organization. As you formalize your systems, the time you spend focusing on the details of a job become invaluable; as you critically examine each step of a process, you are also determining whether certain areas need improvement. This is a key component of the process because business systems need to be reviewed and improved as the ways of doing business change.

Here are five other reasons that effective business systems provide value:

1. Systems provide consistency

With business systems, you can produce the same products and services with the same level of consistency. Once you have created your systems and written down the sequential steps, your employees can follow the proper procedures consistently. You can monitor these processes and improve when necessary.

Systems can be implemented for sales, marketing operations, employee training, etc. The people who benefit the most from having systems in place are your customers who know what to expect from your business.

2. Change is easier to accomplish

Systems make a business predictable. So when change impacts your business–which may often occur–then knowing what business systems need to be modified becomes easier. You will know the current work process and can predict how change should be handled while still maintaining your systems.

Once your systems become part of a flow chart, or are written as a set of sequential tasks and procedures to follow, they become easier to monitor. You’ll notice that tasks will be completed properly and efficiently; changes can be more quickly addressed.

3. Training new employees becomes easier

New hires can be quickly integrated into your business when there is a written set of procedures for them to follow and they know exactly what is expected from them. It becomes easier to gauge the effectiveness of an employee when you have a measurable set of guidelines to review.

4. Business systems allow staff to focus on what they do best

Any time you are trying to complete a project with a specific deadline, you will want to avoid any problems that may develop. We like to create business systems that also best match the employee talent that is available. Allowing people with specific skills, knowledge, and abilities to be responsible for those parts of the business allows for better quality of work; everyone then can focus on what they do best.

Once business systems are established and implemented, activities can be performed on “autopilot.” Repetitive activities in your business become routine, and you can focus on activities with higher payoffs.

5. Business systems create value

Effective business systems become a part of your company’s organizational infrastructure. If you are selling your business, formal procedures add value. Buyer can see that operations run smoothly and consistently; new hires can be quickly integrated.

Systems are what make businesses grow, flow, endure, and sell. This makes a business purchase more enticing and more valuable because the systems become tangible assets. Businesses that effectively follow systems find themselves winning against their competition.

Are you looking to implement systems into your real estate business? Learn more about how our dedicated RE Team mastered this process and can pass on the mechanics of success.

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