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Syndication Is The Secret To Making Big Money In Real Estate

September 18, 2019 by Team RE Mentor Leave a Comment

Are you interested in syndication?

First let’s focus on something important: every investment entails some risk and successful investors are great at minimizing the risk not just for themselves but also for everyone else involved with them.

This means that as a real estate investor you must be quick at putting together deals using syndicates.

Syndication Is The Secret To Making Big Money In Real Estaterementor.com

Essentially, a syndicate is a group of investors representing an interest in breaking into the real estate investment market who put up a certain amount of cash and get fronted by a professional.

If you are clever about it…

And have begun to establish your credentials, built up a reputation and can talk the talk in a way that convinces people to trust you with their money you are then off to a flying start.

It means that you will bring credentials, the ability to close profitable deals and expert negotiating skills to the table.

For the investors who form the syndicate the benefits are twofold:

First they gain a foothold into the competitive real estate investment market without having to put up a whole lot of money to begin with and this means reduced exposure for them and fewer risks for their money.
Second they gain someone who will do all the legwork and close the deals and work for their profit. All they have to do is sit back and enjoy it.

Provided you are diligent in your work, capable of paying attention to every detail and good at working under pressure and, hopefully, working at more than one deal at a time then your earning potential should only be limited by your ability to put deals together.

Creating syndicates and using other people’s money to invest in real estate without risking your own allows you to create win-win scenarios which benefit everyone and that is the best way to build a career, a reputation and a personal fortune.

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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.

Emerging Real Estate Markets Are Recession Proof

September 4, 2019 by Team RE Mentor 29 Comments

The moment any one utters the dreaded ‘R’ word the real estate industry seems to shake, rattle and collapse. Mortgages, borrowing, house selling and buying and house building, all slow down. Especially during a Recession. But not emerging real estate markets.

Yet, housing never really stops being in demand. People always want somewhere to live. Real estate investors who have seen the market go through its ups and downs know what to do. When the economy temporarily stalls what is required is an emerging real estate market to allow them to make money on the same scale as when boom times are there.

This is how it works:

Emerging real estate markets are created out of a real need. Which is then coupled to generous local incentives necessary for the development of a region. As such it is totally recession proof. Perfect for the savvy real estate investor who has managed to spot it first.

The reason an emerging market is recession proof is because it is driven by its own micro-economic realities. Independent of the larger economic picture. A new industry moving to town creates an influx of new jobs. It attracts new people and brings with it its own people and all these generate a buzz.

In response, the local government provides incentives to help them with their relocation. They do this to ease the expected pressure on housing.

This attracts new supporting business to the area. Helps other start ups get going and attracts even more people and suddenly you have a boom-town in your hands.

The pressure-cooker conditions this creates are perfect for closing deals fast in emerging real estate markets…

… and making good money from them. The skill of course lies in being able to correctly identify an emerging real estate market as it emerges rather than chase the far more risky tail end of it.

Here’s the truth:

An emerging real estate market always Peters out* and begins to normalize and reflect the rest of the economy. This means that the window of opportunity is small indeed and the real estate investor worth his salt knows when to get in and when to get out.

One of the things we cover in the courses we give is how to recognize an emerging real estate market and what processes you need to have put in place in order to be alerted about it and identify it correctly.

The thing you need to be aware of is that emerging real estate markets are like gold mines. You need to find them, work them and then move on, all the richer for the experience and with your bank balance better off.

*The earliest known use of peter as a verb meaning dwindle relates to the mining industry in the USA in the mid 19th century, and it is reasonable to accept that that is where it originated. Thoughts of US mining at that date bring to mind images of the California Gold Rush, which is sometimes suggested as the source of this phrase.

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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Research “Comparables” Before Buying Real Estate In That Market

July 31, 2019 by Team RE Mentor Leave a Comment

With any type of investment or business, research is important. This will allow you to know what to expect and also have the ability to be able to distinguish a diamond in the rough by examining comparables.

Before you write an offer for any market, you're going to want to spend some time getting a feel for the market.

Doing this before you look at deals will allow you to move much more quickly when recognizing a potentially good deal as much of your due diligence has already been done. How can you know what a good deal is without research?

You will have little background on which to judge investment deals. Your market research can and should include most of the following information:

what rent is going for an area, who the large employers are, and what the smaller sub-markets are doing. What are home sales like in the area?

Where is job growth going to come from and what kind of jobs will these be? Where will new transportation be? What is the current rental market like? Asking all of these questions gives you an idea of the bigger picture and explains the economics of the area. Knowing the current situation along with where future trends lie will allow you to assess a deal for current viability along with future appreciation based upon the trends that you have researched.

Secondly, look at some comparables with in the area.

Taking time to study these will let you understand what the market is truly like. This will allow you to know prices within an area (as well as submarkets) and roughly what you can expect to pay if paying market price. This can help you quickly determine if a prospective deal is brought to you whether it is undervalued and whether you might be able to create forced appreciation very quickly.

Look at as many comparables as possible and most experts recommend around the last fifty.

This can allow you to see what has happened over a period of time and lessens the impact that outliers can have upon the data due to the larger data pool you are using.

Remember that you do not have to find all this information yourself. Use the services of an experienced broker. They are paid very well to help you succeed. You must make the broker feel comfortable knowing that you will work for him as much as he will work for you. The importance of using a broker is that here she is in this particular market every day. He or she should know what the hot areas are and should be able to bring you some potentially good deals. You are paying for the brokers’ expertise to do not be afraid to ask questions as you do your market research.

Hopefully this article on the importance of doing a research is giving an indication of what you have to look for in the reasons to do it. Completing the due diligence can make you a great deal more money as you're able to jump on an opportunity that much quicker and put your bid in with the confidence that you have done the market research to make this potential deal work out for you.