We’ve all had those moments when our real estate business feels stuck in neutral. Sometimes, it’s the grind—day-to-day work piling up, overwhelming us, leaving no room to move forward.
Other times, it’s the market—deals dry up, financing gets tough, or old strategies stop working.
And often, it’s the isolation that comes with being a solopreneur.
When our wealth and cash flow goals feel perpetually out of reach, it’s easy to feel frustrated and stuck.
That’s why it’s crucial to step back, recharge, and reorient ourselves.
For many of us, the National Real Estate Investing Summit is that opportunity.
Year after year, no matter how busy or overwhelmed we feel, we show up. Why?
Because we know that those 4 days can re-energize and inspire us, connect us with the right people, and provide the tools and strategies to excel.
To make the most of the Summit, here are some tried-and-true tips from seasoned attendees:
1. Come Prepared New Financial Friends and Allies. Bring plenty of business cards— hundreds, even—because attendees at the Summit are looking to make real connections. They want to find people who can help them or be helped by them, forming relationships that extend well beyond the weekend. Be open to building these financial friendships, as they can be game-changers for your business.
2. Plan Your Personal Agenda. With so many workshops and presentations, it’s easy to feel overwhelmed. The key is to focus on the sessions that address the biggest challenges and next steps in your business. Plan your agenda carefully, and put yourself in front of the experts who can help you take your business to the next level.
3. Get Out of Your Box. Leave behind limiting beliefs like “I can’t afford to invest in big properties,” or “I’m just a rehabber.” Be open to new ideas and strategies, and know that with the right tools and advice, you can surpass even your biggest real estate goals. The Summit is the place to break free from old thinking and embrace new opportunities.
I attended my first Summit in 1992 as a brand-new investor, where I learned about foreclosures. That knowledge made me five figures in the following year alone. Since then, I’ve attended every single year, and each time, I’ve learned something new that’s propelled my business forward—whether it’s short-term rentals, private lending, or direct mail marketing. These strategies, picked up at the Summit, have made me millions.
I’m confident that this year’s Summit will once again change my life—and it can change yours too. Let’s meet up at the Summit!
— Vena Jones-Cox
SPECIAL EVENTS
THURS.
8:30-5
THURS.
7-9 P.M.
DEALMAKER FORUM*
An advanced mastermind for very experienced investors moderated by John Hyre
EXCHANGE MEETING
We’ll be swapping stuff, skills, properties, notes, and more. It’s Halloween, so come in costume.
THURS.
9 P.M.
THURS.
9 P.M.-??
FRIDAY
8:30-5
FRIDAY
7-9 P.M.
THURSDAY NIGHT DOOR PRIZE: a $5,000 cruise for 4! Must be present to win!
CASH FLOW TOURNEY 1
Learn to play Robert Kiyosaki’s Cash Flow 101 game while you network
BUSINESS MASTERMIND*
FRIDAY
7:15 P.M.
FRIDAY
9 P.M.-??
Solve your most pressing BUSINESS challenge in a small group mastermind setting Just 2 Seats Left!
DEAL-FINDING CHALLENGE
Learn to dial for dollars, then DO IT with lists you’ll be given. Set your appointments and win a free year of DealMachine. Wait List Only
FRIDAY NIGHT DOOR PRIZE:
A new laptop with over $10k in courses already installed! Must be present to win
CASH FLOW TOURNEY 2
Play Cash Flow 101 and build relationships! Winners move on to finals, and a possible $500 cash prize...
SPECIAL EVENTS
SAT. 9-5
SAT. 7-9 P.M.
YOUTH ACADEMY
DAY 1*
for 15-22-year-olds looking to build a business NOW. They’ll learn about wealth vs. income, entrepreneurialism, and more
PETE FORTUNATO
The most brilliant mind in real estate today shares the secrets to making and keeping financial friends and allies
SAT. 9 P.M. SATURDAY NIGHT DOOR PRIZE:
An 8 lb bag of silver! must be present to win!
SAT. 9 P.M.-??
CASH FLOW TOURNEY FINALS
Day 2 winners compete for the $500 cash prize!
SUN. 9-5
SUN. 5:15 P.M.
YOUTH ACADEMY DAY 2*
for 15-22-year-olds looking to build a business NOW. They’ll learn about wealth vs. income, entrepreneurialism, and more
GRAND DOOR PRIZE
Win a 3-year pre-paid lease on a Ford F150 or Mustang (winner must qualify and pay tax, title, and license) or $15,000 in cash! must be present to win!
*Dealmaker Forum, Business Mastermind, and Youth Academy require separate pre-registration and pre-payment. OREIAConvention.com for Details
2-5
LUNCH AND LEARNS
THE PERFECT FOLLOW-UP SYSTEM: 3 PROVEN FOLLOW-UP CAMPAIGNS TO CONVERT MORE SELLER LEADS INTO DEALS
By Damon Remy, REI Blackbook
Hey there! It’s Damon, CEO of REI Blackbook.
I’m guessing you’re reading this article because you want to improve your follow-up to close more deals! But ultimately so, you can make more money to have more freedom. Right?
At REI BlackBook, we help stressed-out, busy real estate investors close more deals and build better businesses without sacrificing their souls. So, if it’s the freedom you want, you’re in the right place… keep reading!
The Perfect Follow-Up System is a resource we put together after years of working with our top users to help them perfect their follow-up so they can squeeze more ROI from their marketing dollars. This document is the result of years of testing and finding out what works best to get sellers to respond.
Use These Follow-Up Campaigns, And You Will Completely Change The Trajectory Of Your Business From This Day Forward.
Look... I understand that’s a big promise, but I’m dead serious. If you follow the simple steps laid out in the pages to come, you will start to book more seller appointments and close more deals.
But don’t take my word for it. Just ask Vena JonesCox, Ron Legrand, Phillip Vincent, Matt Theriault, Zack Beach, and thousands of others who leverage REI BlackBook as their secret weapon.
Not to mention our friend Marcy Martinez, who went from struggling investor to consistently closing 3-5 deals a month within a few months of
implementing The Perfect Follow-Up System. What would 3-5 deals a month do for you? Does it get you closer to your freedom goals? I know it did for Marcy.
I could keep going, but my point is we want to help you simplify your path to financial freedom.
With REI BlackBook’s tools, training, and worldclass support, we give you everything you need to be successful – to consistently and predictably attract and convert more leads so you can start to build a business of tree freedom and impact.
I’d love to help get you there!
To Your Success,
Damon Remy CEO
REIBlackBook.com
PS: Increase Your Speed to Lead and Convert More Deals; Book a demo today! www.reiblackbook.com/QuickDemo
Are you tired of missing out on potential deals because your initial lead follow-up falls short?
If you want to maximize your appointments and close more deals, you’re in the right place. This comprehensive playbook will show you how to nail your initial lead follow-up, ensuring you stay ahead of the competition and secure more appointments than ever before.
Imagine doubling the size of your business simply by optimizing your lead follow-up strategy. It might sound crazy, but it’s entirely possible!
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In the world of real estate, engaging with potential sellers at the right time is crucial. Our meticulously designed campaigns are tailored to ensure consistent communication with potential sellers.
Research from the Harvard Business Review indicates that FAST and consistent follow-up can increase conversion rates by up to 71%. By keeping in touch with prospects, you position yourself to be the first person they think of when they are ready to make a move.
You don’t need to break the bank on advertising or resort to aggressive sales tactics. The key lies in mastering your initial lead follow-up. These carefully curated campaigns are your ticket to building trust and rapport with your seller leads without coming across as pushy or salesy.
Natural, Effortless Engagement
Our messages are crafted to feel so natural that your leads will think you personally typed them with your own two thumbs. By putting your follow-up on autopilot, you can effortlessly build rapport and trust, converting cold seller leads into lucrative sales appointments and consistent deals.
The Art of Sales Cadence with Our Proven 15X3 Framework
In the world of sales, timing is everything. But it’s not just about when you reach out; it’s also about how often, through which channels, and with what message. The Perfect Follow-Up System leverages our 15X3 Framework: a nuanced approach to mastering the art of follow-up, spanning 15 minutes, 15 days, and 15 months.
Understanding sales cadence is pivotal to converting leads. There are six main communication methods for sales: text message, voicemail, phone, social media, direct mail, and email. Consider these best practices to get started:
Attempts: Before you make any move, gauge the playing field. Analyze the data,
understanding the outreach frequency that works best for your leads.
Channels: A shout in a deserted alley goes unheard. Similarly, reaching out via the wrong channel will yield no results. Understand your lead’s habitat - are they email enthusiasts or text mavens? Customize your approach.
Duration: Not every lead warms up at the same pace. Some might be ready in a few touches, while others take time. Understand your sales cycle and calibrate the duration of your persistence.
Spacing: Ever heard of the saying, “Give them room to breathe?” It applies here too. While persistence is key, inundating leads will repel them. A spacing of one to four days strikes a balance between persistence and patience early on, yet cold leads may need even more space.
Messaging: A generic “Hey there!” won’t cut it. Dive deep into the lead’s behavior and demographics. Craft a message that resonates, one that’s tailored to their interests and needs.
But why reinvent the wheel? Harness the power of The Perfect Follow-Up System with the 15X3 Framework and recognize the cadence that resonates with your leads. With the right rhythm and messaging, watch your appointments (and deals) soar!
PS: Increase Your Speed to Lead and Convert More Deals. Book a demo today!
www.reiblackbook.com/QuickDemo
The Conversation Starter (The First 15-Minutes)
In our hyper-connected, information-saturated age, sellers are empowered with knowledge every step of their journey. For us marketers, that means the battleground has shifted. Now, it’s not just about catching attention, but holding it and acting with lightning speed. The name of the game? Rapid
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(continued from page 9) engagement. If your sales teams aren’t striking while the iron’s hot, you’re not just missing opportunities— you’re gifting them to your competitors. Don’t be left in the digital dust; speed is today’s currency.
The data doesn’t lie: businesses responding to leads within a five-minute window are supercharging their chances, being 100x more likely to lock in and convert those golden opportunities.
So, in this rapid-play game, can you afford to hit pause? The clock’s ticking. Let’s make every second count.
Sending emails and texts at the right moment boosts conversions by 53%. Yet, the industry average lead response time for website leads is a disappointing 17 hours, leaving sellers searching for answers aka your competitors!
Alright, here’s the digital golden ticket you’ve been waiting for: “The Conversation Starter.” Dive into this treasure trove of ready-to-use emails, texts, and voicemail scripts specifically crafted for those crucial first 15 minutes. Ready to lead the charge and not just follow? Click below and let’s ignite those conversations.
Download The Conversation Starter by going to www.reiblackbook.com/FreeTemplates
The Appointment Setter (The Next 15 Days)
So, you’ve nailed those initial 15 minutes with “The Conversation Starter”—great first move! But here’s the deal: not every seller is locked in from that first touch. Some need a nudge, a follow-up, or a deeper connection. If you didn’t make that live connection or set the stage in the first 15 minutes, it’s imperative that those leads don’t slip through the cracks. That’s where the critical next 15 days come into play.
Life’s packed with distractions, and your prospects are right in the thick of it. Yet that initial spark, that original motivation, the reason they reached out?
That hasn’t dimmed. Our job? To keep rekindling that interest, gently nudging, “Hey, we’re here, and we’ve
got what you’re searching for.”
Enter “The Appointment Setter,” the perfect follow-up to “The Conversation Starter.” It’s our toolkit for diversifying touchpoints: crafted emails, engaging texts, personal calls, and those strategic voicemails (always transparent, always genuine). Every medium offers a unique touch, making sure we’re consistently present but never pushy.
But here’s where the magic happens: We’re not just touching base; we’re delivering value at each interaction. It’s about offering them something worthwhile every time they see our name, hitting that sweet spot of engagement.
Ready to solidify those connections over the next 15 days and elevate your conversion game? Let “The Appointment Setter” be your guide. Dive in, and let’s make every interaction count!
Download The Appointment Setter by going to www.reiblackbook.com/FreeTemplates
The Cold Lead Converter - (The Next 15-Months)
Alright, stop right there. You’ve put “The Conversation Starter” into play for those vital first 15 minutes. You’ve masterfully employed “The Appointment Setter” to dominate the subsequent 15 days. But let’s not kid ourselves: The world’s a fastpaced mess, and no matter how sharp our strategies are, some leads will cool off. But listen closely: cold does NOT mean dead.
These cold leads? They’re not failures; they’re opportunities in waiting. With them, it’s about a more measured, strategic approach. Adjust your frequency, dialing it back to weekly or bi-weekly contacts. Make your touchpoints varied but deliberate. The objective? Keep your presence felt without becoming a pest, and consistently underscore the unmatched value you bring to the table.
This is where finesse meets function: the balance of open-ended and closed-ended questioning. The (continued on page 11)
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latter revives and re-establishes the initial reason for contact, while the former deepens the conversation, gleaning insights that allow for more precise positioning.
Need concrete evidence? Let’s dissect Marcy’s experience with Luis. After a lengthy stretch of silence, one simple text message broke through, turning a cold lead into a $30,000 profit. It’s not just about tactics; it’s about the art and science of re-engagement.
After 22 Months of silence from Luis, Marcy broke through with this simple text message and the seller responded within 3 minutes! It’s not magic…it’s just magical when you let the system do the work!
“Hey Luis, I was just driving through the neighborhood and thought of you. How have you been?”
Dive into the depths of “The Cold Lead Converter.” It culminates years of hard-won experience, offering meticulously crafted templates and scripts. This is the wisdom harvested from the best practices of a vast network of real estate pros. If you’re serious about extracting gold from those cold leads, arm yourself with this proven arsenal. Ready to turn those chilly prospects into profitable conversions? Time’s ticking. Act now.
Download The Cold Lead Converter by going to www.reiblackbook.com/FreeTemplates
How Many Deals Can You Afford to Lose This Year to Underperforming Follow-Up?
Alright, my friend, here’s what you gotta do. Dive deep into the content we’ve got in here. Give those trainings another listen. Keep showing up, keep soaking in the knowledge. Growth never takes a day off, right?
Now, before we hit the final note, let me hit you with something to chew on. Ready for it? Ask yourself this: Just how many deals can you let slip through your fingers this year ‘cause your leads get lost in the shuffle? Let’s crunch some numbers...
Imagine each deal pockets you, what, $5k, $10k, maybe $20k? Heck, for the sake of argument, let’s ballpark it at $10k.
Now picture this: You’ve been busting your hump, right? Every day, you’re out there hustling hard. The phone’s ringing off the hook, your website’s buzzing with potential leads. You’ve poured sweat and soul into making those connections. But here’s the kicker…
You’re human. You get swamped, life happens, and before you know it, that lead is buried under a pile of sticky notes, lost in the chaos. Maybe you meant to call them back, maybe you jotted it down somewhere, but intentions don’t close deals.
Without a system in place, it’s like pouring water into a leaky bucket. You put in all that work upfront, only to let the deal slip through your fingers because the back-end wasn’t tight.
Bottom line? That lackluster follow-up of yours might just be bleeding a cool $10k this month. And my friend, that’s a whopping $120k+ annually!
Makes you think, doesn’t it? Ask yourself again, how many deals can you afford to lose this year?
That being said, I want to invite you to a 30-Day Test Drive of REI BlackBook! Visit www.reiblackbook. com/30DaysFree to claim this offer.
It’s a No Brainer. Insane Value.
It’s hands down the fastest way to fix your followup and put it on autopilot. And if for any reason, you feel like you didn’t get your money’s worth, send us an email during that first 30 days and we’ll give you your money back 100% guaranteed.
Why? Because, we’re so confident that if you follow and implement everything we teach you, you’ll see results.
See you on the inside
Damon
WHY YOU NEED TO UNDERSTAND OPTIONS: A CASE STUDY
By Bill Cook
Bill Cook has been investing in real estate fulltime for over 3 decades, and is best known for the fact that he buys properties to hold almost entirely via seller and private financing. He’s the author of a home study course on Options, and is presenting on the topic for 3 hours at the National Real Estate Investing Summit. If you don’t have an in-person or virtual seat yet, get it at OREIAConvention.com.
When real estate investors hear the word “Options,” most automatically think Lease Options. But lease options are actually TWO contracts— one that gives you the right to buy the property in the future (the option), and one that lets you have possession and control of it now (the lease).
Sadly, here’s what 99% of real estate investors DON’T know. Options all by themselves are a powerful creative deal structuring tool.
Let me give you an example of a situation where a lease option (or subject to or private loan or any other type of creative deal structure) would NOT have worked, so you see how win-win and profitable pure options can be.
Last October my wife and I signed a purchase agreement with a seller in Tampa. The seller was in a tough situation. Her otherwise free-and-clear property was scheduled for tax sale 2 months later. She was living on $1,400 a month income, and couldn’t afford to move. Her health isn’t the greatest. And she was about to lose all of her equity—and her home— because of a $13,000 overdue tax bill.
The property is in an area we like, so we came up with a creative solution to all of the seller’s problems (or so we thought!).
We agreed to buy the seller’s property for $193,000, with $13,000 down payable directly to the tax collector, and the balance of $180,000 at 0%, with 450 monthly payments of $400.
The kicker that sold the seller on this deal was this. We agreed that she could continue to live in the house, paying only the taxes and insurance as ‘rent’ (which she can now do, because we’re giving her $400 a month in extra income), for as long as she wanted or needed to.
After signing the contract, Kim and I left the country for 5 weeks. During our trip, our closing agent discovered the seller did not have clear title to her property. Turned out, she and her mom each owned a 50% interest in the property.
It gets worse: the seller’s mom passed in 2022. Her mom’s estate had not been probated. For the seller to sell us the property, her mother’s estate would first need to be probated. Unfortunately, the seller did not have the money to pay for this.
But wait, there’s more. The seller had three credit card judgements against her totaling over $6,600. Because of Florida law, these three judgments would need to be paid before we would agree to buy the seller’s property.
So you see the problem It’s now late November. The seller HAS to sell by late December, or she’ll lose her house to tax sale. There’s no way that the house can be probated in that time frame, or that the credit card liens could be paid off, since the seller had no money to do either one.
To solve all these problems, the seller needed both more time and more money.
For most investors, this great deal would just die right there. The investor would lose the chance to buy (continued on page 13)
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a $300,000 house for a $13,000 tax payment plus $400 a month, at zero interest, for 450 months.
But that’s because they’ve never met my best friend…Mr. Option!
How do we stop the tax sale, so that the seller isn’t at risk of losing her house and her equity, AND pay to get the probate done, and get those credit card liens negotiated and paid off—BEFORE owning the house?
Wouldn’t that be a huge risk? What if we gave the county $13,000, and then she refused to sell us the house after all? Or she died before the probate on the house was finished?
No, because we switched our strategy from an immediate purchase to a DELAYED, but SECURED, purchase with an Option to Buy.
The first step, since we now had the additional cost of the probate on her mom’s estate, was that the seller agreed to lower her sale price from $193,000 down to $167,200. The new seller-financed terms were $17,200 down, 0% interest, 300 monthly payments of $500.
The second step was that we signed an option agreement under the following terms:
Option strike price: $167,200
Option consideration:$17.200—$13,000 (paid directly to the county to cure the tax default) + $2,200 (payable directly to the probate attorney to get the deed fully in her name) + $2,000 (payable directly to the credit card companies—we negotiated the balance down from $6,600)
Option term: 40 years
How is this different than a purchase contract with a whole lot of earnest money at risk?
It’s notarized, and recorded at the county courthouse along with a mortgage to secure the option. Our up-front cash investment is safe because
it’s backed by two legal documents that allow us, if necessary, to force the sale of the property under the terms we agreed to.
And the result was what we and the seller wanted.
In February of this year, Kim and I finished the work necessary to probate the property and get it fully into the seller’s name. We closed, got the deed, and are now paying the former owner $500/month.
More importantly, the seller DIDN’T lose her house and the equity to the tax sale. She got all her problems, which she couldn’t solve herself because of lack of money and time, solved. Now she gets to keep living in her house, AND gets much-needed payments of $500 a month, every month.
We think that within 2-3 years, she’ll move out, and at that point we’ll continue to pay her (or possibly her heirs) $500 a month and make the house into a long-term rental. Other houses on this street rent for $2,200 per month. Cha ching is right!
“That sounds like a great deal, but it doesn’t apply to me because I wouldn’t have the cash to pay those back taxes and pay off those credit card liens and pay the attorney for the probate and then pay the seller $500 a month for an unknown period of time”, you say.
But you’re wrong—if we hadn’t had the cash, it would have been easy to get a partner to put it up in return for part of this great deal.
Because of the looming tax sale and the title problems that needed to be solved, starting with a pure option was the ONLY way to solve this problem, and many others that you’ll run across. If you want to be in the top .1% of problem solvers and get deals other people can’t, you need to learn more about them.
At the National Real Estate Summit in Cincinnati, I’ll spend 3 hours on Sunday afternoon showing you more about how they work, and how they make you money. I’ll see you there!
ONE SIMPLE TRICK TO GETTING CONTROL OF YOUR BUSINESS FINANCES
By David Richter
David Richter is a real estate investor—as in, built a business doing 25 deals a month—who implemented the now-famous “Profit First” model of financial control after finding that money was going out the door as fast as it was coming in. He then wrote a book about it, Profit First for Real Estate Investing, and now coaches real estate entrepreneurs about how to get control of their cash flow and get paid. And that could include YOU, when you come to see his presentation at the National Real Estate Summit. Get your tickets at OREIAConvention.com.
Do you ever feel like the money you make in real estate just comes in one door and goes out the other? Like you don’t have a real moment-to-moment grip on what you really have to spend, whether you have enough to pay the next tax bill or buy that deal you found? Like your business eats every dollar it makes, with not enough left over for you?
That’s stressful—and very common.
As a fellow real estate investor and business owner who helps entrepreneurs become more profitable, I want to put the power back into your hands so that you can have more profit, more time, and more freedom to do what you love.
After talking with hundreds of business owners, I’ve discovered that the ones who feel financially out of control have the same underlying problem. They’re making this one mistake that is costing them their sleep, sanity, time, and money...
Running their business (or life) with only one bank account.
“What?! No I’m not! I have a bank account for each of my 3 LLCs, plus my personal checking and savings. He’s crazy!”
Stay with me, because it’s not about just having multiple bank accounts. It’s about having the RIGHT bank accounts, that keep you in control and in the know about where you are.
Stop Tossing a Cash Salad
Let’s imagine that you have one company, and one bank account for it, just like your asset protection attorney told you to. How can having one account cause so much trouble?
Because with one account, you tend to make business decisions this way:
“I want to spend $5,000 on a marketing campaign. Let me open my banking app and see if I have $5,000. Oh, I do. Let’s spend it!”
And then…you realize that you forgot that real estate taxes are due next week. Or that your quarterly income tax payment has to be made on the 1st. Or that the tenant on Main Street is moving out at the end of the month, and you needed that $5,000 to do the turnover. Or that you started your business to earn YOU money, not so that you could pay IT at the end of the month to keep it going.
What you’re really doing with one bank account is tossing your cash – like a cash salad. Money in, money out, throw the money all about. Close your eyes, swipe your card, and hope you’ll have enough in the account for tomorrow. Wonder why your business is making all this money, and you’re not getting any of it.
And you’re not alone. But there’s a better way that’s shockingly simple.
The Better Way
All you need to do to get back in control of your business’s money is to get into the habit of giving that money a home as soon as it comes in. It’s like the old “envelope system”, where you stuff cash into labeled
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expense envelopes for your personal life to track your budget in various categories—but way easier.
All you need to do is open 4 new bank accounts:
1. The Income account—which takes in all the money that your business makes.
2. The Profit account—where you’ll immediately transfer a percentage of what comes into the income account. Once a quarter, you’ll withdraw money from this account to do whatever you want with. Because you deserve it for all your hard work.
3. The Owner’s Pay account—where you’ll immediately transfer whatever your company ‘pays’ you for your regular living expenses.
Here’s an example flow table for all you visual learners:
4. The Owner’s Tax account—where you’ll move whatever percentage of the income your CPA tells you to right away, and then absolutely not touch it, for any reason, until you use it to pay your business and personal income taxes.
You’ll still have the account you’ve been using to handle all of this, but you’ll rename it—at least in your own head--The Operating Expense Account. The rest of the money from the income account (except for any minimum balance your bank makes you keep) will be moved here.
Essentially, we’re transforming your all-purpose account into a single-purpose account where you’ll pay your business bills and employees.
This is what you collected this month
Always start with at least 1% and build from there Owner’s Pay
This covers over what you (the owner) need each month
Owner’s Tax $5,000 5%
This flow is constant You bring in money, you get on your computer, you make the transfers. The beautiful thing about it is that it forces you to focus on the health of your business first (profitability) and to get creative with what you have left over (in Operating Expenses).
I know this seems simple – elementary even. Well, good! Now you have no reason to NOT go out and take action.
Consult your CPA on the estimated amount of tax money you’ll need to save for the whole year
The leftovers go to your Operating Expenses—and this is what you have to pay bills, cover expenses, and take on new deals or projects.
The single action of opening multiple accounts, and transferring every dollar into those accounts, is earning you a spot at the table of the wealthy. Wealthy people control their money and know where every dollar resides. They don’t just let it happen by accident. Just like you won’t accidentally gain financial freedom.
WHERE ARE ALL THE DEALS? IN THE “HIDDEN MARKET”!
By Tony Youngs
Tony Youngs has been investing in real estate for over 35 years. He’s wholesaled, retailed, and bought rentals And the bread and butter of his business has been finding ‘unknown’ sellers in what he calls the “Hidden Market”. He’s one of over 30 experts giving presentations at the National Real Estate Summit in Cincinnati on October 31st - November 3rd. You can pick his brain when you attend. You do have tickets, right? Get them at OREIAConvention.com.
In 2024, many real estate investors are struggling with finding deals that make sense.
High prices, high interest rates, high rehab costs, and competition from everyone from other investors to hedge funds to homeowners to out-of-country buyers looking to put their money in U.S. properties mean that a lot of people think that there “are just no deals”. There’s always SOMEONE who’s willing to pay more than you are for a property.
Other investors—the smart ones—know that there are ALWAYS deals, because there are always sellers who NEED to sell for personal reasons.
They look for ‘off market’ deals, often through direct mail, or internet ads, or cold calling.
But what I like better than OFF market is HIDDEN market.
The Hidden market is all those distressed properties you have seen in neighborhoods where there’s clearly a problem.
You know--- the ones with high grass, peeling paint, overgrown bushes, falling gutters in an otherwise nice neighborhood.
They might be vacant or occupied. But the key is, they don’t have for sale signs. They’re not in MLS, there’s no ad for them on Craigslist or Zillow or Facebook Marketplace.
And in many cases, there’s no “problem” that you can buy a list of. Maybe the loan is in default, but the foreclosure hasn’t been filed yet. Maybe the owner died, but no probate has been opened. Maybe the owner started to rehab it, and ran out of money.
In other words, these are properties with distressed owners that very few people know about. Your competition is minimal or non-existent.
The “Hidden Market”—and the systems and discipline I’ve built around constantly finding these properties, tracking down the owners, and reaching out to them in effective ways—has been the secret to my success in hot markets and cold for many years. I’ve found numerous profitable wholesale, retail, and buy-and-hold deals this way.
I encourage you to tap the Hidden Market, too. I’ll teach you more about it at the National Real Estate Investing Summit, and I look forward to seeing you there!
WHY INFINITE BANKING AND REAL ESTATE INVESTING ARE A PERFECT COUPLE
By Brent Kesler
Brent Kesler is the founder of The Money Multiplier, a company that helps people implement Infinite Banking into their financial lives. He’s a long-time sponsor of the National Real Estate Investing Summit (and that’s why we can keep the ticket prices so low, so thank him when you see him!) Oh, and GET one of those low-priced tickets at OREIAConvention.com!
In today’s dynamic financial landscape, investors and homeowners alike are seeking innovative ways to maximize their capital and achieve greater financial freedom.
One such strategy gaining traction is the Infinite Banking Concept (IBC).
This approach, which utilizes whole life insurance policies, offers a unique method for managing personal finances and funding real estate investments. Let’s explore how IBC works and how it can be a game-changer in the real estate arena.
What is Infinite Banking?
At its core, the Infinite Banking Concept is a financial strategy that involves using a specially designed whole life insurance policy to create a personal banking system. By making regular premium payments, you build cash value within the policy. This cash value grows over time and can be accessed through policy loans. Essentially, you become your own banker, leveraging your policy’s cash value to finance various needs, including real estate investments.
How Does IBC Work?
The mechanics of IBC are straightforward yet powerful. As you pay premiums into your whole life insurance policy, a portion of those payments accumulates as “cash value”. This cash value grows on a tax-deferred basis, allowing you to borrow against it as needed. Policy loans come with competitive interest rates and flexible repayment terms, giving you access to capital without the need for traditional loan applications or credit checks.
Applying IBC to Real Estate
One of the best applications of IBC is in real estate investing.
By tapping into the cash value of your policy, you can finance property purchases in a variety of ways. Whether it’s funding a down payment or covering the full purchase price, IBC provides a flexible and accessible source of capital.
Additionally, you can use policy loans to offer private loans to other real estate investors, generating interest income while continuing to grow your policy’s cash value.
Benefits and Risks
“Cash is King”, and the ability to access capital without relying on traditional mortgage processes can significantly streamline property transactions. Moreover, the tax-deferred growth of your cash value and the potential for tax-free loans add another layer of financial benefit.
However, it’s essential to be aware of the risks. The interest rates that you pay on your own policy loans should be monitored to ensure they remain favorable. And yes, you should actually MAKE those payments back to your own policy to avoid diminishing your cash value. Regular policy reviews and effective management are key to optimizing the benefits of IBC.
Your First Step
To effectively leverage IBC in real estate, start by selecting a whole life insurance policy with strong cash value growth potential. Work with a financial advisor to ensure the policy aligns with your investment goals. Once you have the policy, develop a strategy for borrowing and repaying loans to maintain a healthy cash value. Integrate IBC with your existing real estate strategies to maximize its potential and achieve your financial objectives.
If you’re ready to start, we encourage you to get on a call with our team at mentors, beyourownbanker.com, or just come visit us at the National Real Estate Investing Summit!
UNDERSTANDING THE THREE TYPES OF MOBILE HOME INVESTMENTS
By Adrian Smude
Mobile homes represent a unique yet often overlooked asset class that continues to yield attractive returns. The lack of mainstream discussion leads to confusion about how to effectively invest in mobile homes. This article demystifies the process, outlining the three primary investment types: mobile home parks, mobile homes on rented land, and mobile homes with land.
Mobile Home Parks
A mobile home park may consist of two or more units on a single parcel. Owners might possess just the land or both the land and the homes. Operating a mobile home park often requires inspections and special licenses. Ownership models vary: owning both the homes and the land is akin to running a flat apartment complex with comprehensive responsibilities, whereas owning just the land reduces maintenance duties, as tenants manage their own units. Given the right management approach, both scenarios can be highly profitable.
Investors should consider seller financing to mitigate sellers’ potential tax impacts from cash sales. For bank financing, community banks are usually more amenable to negotiating terms. However, the increasing acquisition of larger parks by hedge funds has intensified competition, potentially squeezing returns.
Mobile Home on Rented Land
In this scenario, you own the mobile home but not the land it sits on, treating the home as personal property (often governed by DMV regulations). The landowner charges a lot of rent and may impose rules such as age restrictions or subletting conditions. Before investing, ensure the landowner supports your operational plan and check that the current owner is up-to-date on payments.
Financially, aim for the rental income or monthly payments from the mobile home to be double the lot rent to buffer against potential vacancies. Traditional banks may shy away from financing these investments, so exploring private funding or using personal resources could be necessary. The main drawback is the lack of control over the land, which can lead to unpredictable changes in park management policies.
Mobile Homes with Land
Purchasing both the mobile home and its underlying land constitutes a real estate transaction, offering both an asset and a stream of income. This method tends to attract less competition, enhancing profit potential. The key advantages include more stable tenant occupancy and the security of owning the land, which remains valuable even if the mobile home depreciates.
While many investors focus on generating rental income from these “aluminum castles,” fix-and-flip strategies are also viable, provided that you verify bank financing criteria for potential buyers. Work with a title company experienced in these transactions to ensure all legalities, including lien searches and proper documentation of the home and land, are addressed.
Take Action
Each investment type offers distinct advantages and challenges, tailored to different business goals. For instance, combining mobile homes with land has significantly increased my cash flow compared to traditional site-built homes. If you’re ready to explore these opportunities further, consider which model aligns best with your objectives and start taking steps toward your investment future.
HOW TO CREATE A HOLISTIC FINANCIAL PLAN TO BOOST YOUR REAL ESTATE JOURNEY
By Amanda Neely
Ready to take your real estate journey to the next level but feeling as lost as a GPS in a tunnel? Fear not, fellow property enthusiast! Let’s dive into the world of holistic financial planning – it’s like yoga for your wallet, but with fewer downward dogs and more upward trends.
Infinite Banking: Your Personal Piggy Bank on Steroids
Imagine having a financial superhero in your corner, a cape and all. That’s Infinite Banking for you! It’s like turning your life insurance into a secret vault that would make Batman jealous. You become your own banker, lending yourself money for real estate deals. It’s like playing Monopoly, but you own the bank and the properties!
Myth buster alert: You don’t need to wait years to use this strategy. There are single premium policies that let you start playing banker faster than you can say “foreclosure.”
Profit First: Because “Profit Last” Sounds Like a Terrible Board Game
This strategy flips the traditional formula on its head. Instead of “Income - Expenses = Profit,” it’s “Income - Profit = Expenses.” It’s like giving your future self a high-five before paying the bills. Your real estate business stays healthier than a kalemunching yoga instructor.
Myth alert: Putting profit first doesn’t slow growth. It’s like planting money trees in your backyard – they grow faster when watered regularly!
Estate Planning: Building Your Legacy (Without the Drama of “Succession”)
Estate planning isn’t just for the rich and famous. It’s about ensuring your real estate empire doesn’t crumble faster than a sandcastle at high tide when you’re gone. Without a plan, the government becomes your posthumous business partner – and trust me, they’re terrible at picking curtains for your properties.
More Strategies to Spice Up Your Financial Life:
1. Tax Strategy: Because the only certain things in life are death, taxes, and tenants who swear the check is in the mail.
2. Debt Strategy: Learn to use good debt like a financial ninja. Bad debt is the villain; good debt is your sidekick.
3. Cash Flow Management: Treat your cash flow like a well-behaved river, not a tsunami or a desert. (See Profit First!)
4. Diversification: Don’t put all your eggs in one basket unless that basket is made of gold and guarded by dragons (and still maybe not then).
In all seriousness, creating a holistic financial plan is like assembling the Avengers of wealth-building strategies. It’s not just about buying properties; it’s about creating a financial fortress that would make Tony Stark envious.
Your journey to real estate success is a marathon, not a sprint. So, lace up those financial running shoes, hydrate with knowledge, and don’t forget to stretch your imagination. With these strategies in your toolkit, you’ll build wealth faster than you can say “location, location, location!”
Now go forth and conquer the real estate world –just remember to invite us along for the ride and to cheer you on!
HOW TO DETERMINE THE NET OPERATING INCOME (NOI) OF AN APARTMENT COMPLEX.
By Anthony Chara
There are 3 figures that go hand-in-hand when trying to determine a commercial/ apartment property’s value. They are; Net Operating Income (NOI), Cap Rate (CR) and Asking Price or Purchase Price (PP). If you know 2 of the figures you can always figure out the third.
I will be talking about the NOI of a property. More specifically, how NOI is calculated as it relates to an apartment building.
We are going to start with a simplified version of how to arrive at the NOI of a property and then expand each category. Basically, the formula is: Income - Expenses (other than debt service) = Net Operating Income.
INCOME:
First thing, I determine the income generated by the property. I start with the Gross Potential Rental Income (GPI) or Scheduled Gross Rental Income (SGI). Both terms are used interchangeably within the industry. The GPI assumes that all apartments (100%) are rented at full market value even if some are actually vacant or discounted.
For our example, I will use a 30 unit apartment building that has all 2 bedroom, 1 bathroom units with market rents of $600 per month each. Therefore, the GPI of this complex as an annual figure will be: 30 units x $600/month = $18,000/month x 12 months = $216,000 per year of Gross Potential Income.
The second step in the equation is to determine the vacancy of the property, both physical and economic. If you have a 30 unit complex and 3 units are vacant, the vacancy is 10% (3/30 = .1 or 10%). I will not be calculating economic vacancy in this calculation due to some of its complexities. However, economic vacancy can include a few factors such as a tenant leaving in the middle of the month (or night), a nonpaying tenant or ‘incentives/concessions’ given to a
tenant to induce them to move in such as ‘Free Rent’ or reduced rent for a certain period of time.
For this example, I’ll use the 10% vacancy factor. Therefore, if we assume that 3 units will be vacant every month for the entire year, we would reduce our Income by $21,600. ($216,000 GPI x 10%) Keep in mind that even if you do have 3 units vacant the entire year to achieve this 10% annual rate, it may not actually be the same exact 3 units that are vacant. The vacant units will typically rotate throughout the year as tenants come and go.
The next factor we want to look at is ‘Other Income”. The most common form of Other Income is from on-site laundry facilities. Other types of Other Income can include vending machines or even cell phone towers. We add this income into our calculations to arrive at a value called ‘Effective Gross Income’ (EGI).
Let’s assume that our annual Other Income in this example is $3,120. This is how our Annual Property Operating Data (APOD) or Financials will appear if we only looked at the Income section.
INCOME
GPI
$216,000
Vacancy 10% ($21,600)
Other Income $3,120
Effective Gross Income $197,520 (GPI – Vacancy + OI = EGI)
EXPENSES:
Now, it’s time to focus on the Expenses associated with a complex. I will talk about the Debt Service (Mortgage Payments) in another article in greater detail. Debt Service is not taken into account when determining the Value of a complex. Some buyers may pay all cash, some may ‘exchange’ into this complex from another one and only need to finance 50% or so of the purchase price and others may need to finance more. Debt Service is not considered an Expense as it relates to NOI. It is, however, used by a finance company to determine another very important
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factor called Debt Service Coverage Ratio (DSCR) which I will cover under the Debt Service article.
Expenses can be summarized within 6 major categories which are; Taxes, Insurance, Management, Maintenance, Utilities and Repairs. (TIMMUR). Within each of these major categories there are subcategories, but I will only be referring to the major categories in this article.
Depending on the age, quality of the complex and when the last rehab was completed, the expenses will generally range from about 40%-50% of the EGI. For a complex which is considered ‘All Bills Paid’ (see utilities paragraph below) the expenses will generally range from 50%-60% of the EGI.
Taxes are the property taxes associated with the complex. The amount as a percentage of Effective Gross Income (EGI) can vary widely depending on the state in which the property is located and the value of the property. The seller can provide you with the amount of property tax they’ve paid during a calendar year. You may also be able to determine the amount through on-line resources such as accessing your county Tax Assessors web site. You can even have your Title Company supply this information to you once your contract is accepted and you start due-diligence prior to closing.
One thing you need to be careful about is if and when a reassessment from the sale will occur and how it will affect the property tax for this property. I would highly recommend that when you get to your duediligence phase prior to closing, you get an estimate of what the taxes will be based on the new purchase price of the complex and use that figure in your calculations.
It’s not uncommon to have a complex that was purchased quite a few years earlier being taxed at a greatly reduced rate. When you purchase the complex, many states will reassess the property and start charging you based on the new value and you could find yourself in sticker shock. Always get an up to date estimate prior to closing from the tax assessor’s office if possible.
Insurance is pretty obvious too. This amount will vary too depending on the insurer, the state the property is located in, your experience with this type of property, how many other units your insurer is already covering for you and the type of coverage you need. Make sure
you get a good policy from a reputable company. Many times your best source is to stick with the company that is currently insuring the complex. They know the building and its history. They know whether or not any claims have been filed against the property. Always get 3 estimates anyway, including one from the current provider. Providers other than the current insurer still have access to a database that will inform them of any current or prior claims against the property or policy.
The nice part about a good policy is that if something does happen to the complex, it will pay you the lost rental income while the repairs are being performed, along with helping the displaced tenants find alternative accommodations. Ask the agent for detailed information about the policy’s coverage.
Management is the person or company that will manage your tenants. I know they are called Property Managers, but the reality is that 80% of what they do is managing the tenants. I highly recommend you use a third party company to manage your tenants and not do it yourself. Why would you want to anyway? If you purchase the property the right way, you would have already calculated in the cost of management and the complex should support itself. If it doesn’t, I suggest you find another property. If the only way the property will cash flow the way you need it too is for you to manage the property yourself, go find another property. There are plenty of them out there.
Don’t always go with the company that charges the least amount. Check around. Ask for references from other owners, RE brokers or even your finance company. Good or bad, the word does spread in a community as to who to use, and more importantly, who not to use.
Management fees are determined by the size of the complex and competition in a given area. On a 30 unit complex you could pay in the range of 5%-8% of the monthly rents. Make sure the fee is based on the ‘Collected Rent’ and not the ‘Scheduled Rent”. This gives the Property Manager an incentive to collect the rent. If they don’t collect it, they don’t get paid.
Maintenance/Repair: Rather than getting into a long discussion over what the difference is between Maintenance and Repairs, I’ll spend this time talking about the difference between R&M and Capital Expenditures, sometimes referred to as ‘Cap Ex’. Considering the IRS looks at R&M as pretty much the (continued on page 22)
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same, don’t worry about it. If you have a nagging desire to learn more, call the IRS or just ask your CPA. My CPA just spreads out the expenses over both the R&M categories unless the price of one item/ repair is above $1000. If it is, it may be considered a Cap Ex expense and the item/repair may need to be depreciated over a number of years.
Here are some things you’ll find under the R&M category; cleaning the carpet, replacing the carpet, mowing the lawn, replacing a broken window, light bulbs, unclogging toilets, fixing a hot water heater or replacing an AC unit, painting a unit, clean up of a unit, replacing a faucet or toilet; pretty much anything that you would typically repair or maintain during the life of the property on a routine day in and day out basis.
Capital Expenditures are where things can get a little tricky. What if you repair a hole in a roof and the cost is over $1000? Talk to your CPA. Mine will typically consider that a repair even if it’s slightly over $1000. However, if you replace an entire roof or all the roofs in the complex, that becomes a Cap Ex expense and the cost will need to be depreciated over time. Other items that would be considered Cap Ex would include replacing a boiler system, painting or residing the entire complex, redoing the landscaping, completing a major rehab project in which the individual pieces might all be less than $1000, but when added up costs tens or hundreds of thousands of dollars. The nice part is that Cap Ex doesn’t affect the NOI of the property. Thusly, the value of your property doesn’t drop due to some large expense like replacing the entire roof or rehabbing multiple units or the entire complex.
Maintenance and Repairs combined will average between 5%-15% of EGI depending on the age of the complex and how long it’s been since the last substantial rehab performed. Another factor that will affect where a complex will fall within this range is weather. Typically, properties that are in colder winter climates will drift towards the higher range. The warmer the climate, the lower it will gravitate. For our example I am estimating 5% for Maintenance and 5% for Repairs for a combined total of 10%.
Utilities will include, at minimum, the gas, electric and water used on the common areas of the property like the hallways, leasing office, laundry room and landscaping. Some complexes are considered ‘All Bills Paid’ which means the owner pays for most or all of
the utilities, even those used directly by the tenants. The downside to this situation, which you’ve probably already figured out, is that you have little or no control over the energy consumption of your tenants. It’s not uncommon to see a tenant’s window open in the dead of winter with the heater running full blast. Most owners will try and do what they can to pass this expense onto the tenants. Sometimes that’s not easy.
You may or may not be able to charge a portion of the utilities back to the tenants. It really depends on what the market will bear. Fortunately, most new owners are doing what they can to charge the tenants. For our example, we are going to assume we are only paying for the common area utilities to include electricity for the hallways, laundry room and outside lighting, plus water for the landscaping and laundry room.
Repairs: See Maintenance above
After determining your expenses your revised APOD will look something like this:
Subtracting your total Operating Expenses (OE) from your Effective Gross Income (EGI) leaves you a Net Operating Income (NOI) of $108,555. This is a very important figure to know because it will allow you and your finance company to determine the value of the complex you’re thinking about purchasing or refinancing. The finance company will take your NOI, and, along with the average Cap Rate for similar properties in the area to determine a value range for your property.
INCOME
GPI $216,000
Vacancy 10% ($21,600)
Other Income
$3,120
EGI $197,520
EXPENSES
Taxes $22,105
Insurance $8,592
Management $13,826
Maintenance
$9,876
Utilities $24,690
Repairs
$9,876
Total Operating Expenses $88,965 (45.04% of EGI)
NOI=EGI-Op. Exp. $108,555 (54.96% of EGI)
IS YOUR TITLE COMPANY OVERCHARGING YOU FOR YOUR CLOSING?
By Darrin Carey
As a hard money lender, I see a lot of closing statements (aka HUDs) from a lot of title companies. I’ve noticed an annoying trend that is also disturbing.
When I’m lending money to a real estate investor, I send the title company my very detailed and specific lender requirements – one of those being a basic Lender’s Title Insurance policy from a well-rated underwriting company. In most cases, I do not require additional Insurance endorsements, and I never require a closing protection letter.
In fact, part of my title order says: “Do not add endorsements unless specifically requested. Do not issue a closing protection letter.” Yet, several title companies still try to include them. Sometimes many of them. Like this one, from an actual preliminary HUD:
• Closing/Settlement Fee to [xxxxxxx] Title & Escrow Co. $295.00
• Courier/Shipping & Handling to [xxxxxxx] Title & Escrow Co., $25.00
• Search & Exam to [xxxxxxx] Title & Escrow Co. $100.00
• Binder Fee to [xxxxxxx] Title & Escrow Co. $50.00
• Wire Fee to [xxxxxxx] Title & Escrow Co. $50.00
• Lender’s Title Insurance (REISSUE RATE) to [xxxxxxx] Title & Escrow Co. $125.00
OH ALTA Endorsement (Survey) to [xxxxxxx] Title & Escrow Co. $100.00
OH ALTA Endorsement (Environmental Protection Lien) [xxxxxxx] Title & Escrow Co. $50.00
OH ALTA Endorsement (Restrictions, Mineral) to [xxxxxxx] Title & Escrow Co. $150.00
OH-112: Delete Exception for Mechanics’ Lien to [xxxxxxx] Title & Escrow Co. $150.00
Closing Protection Letter to [xxxxxx] National Title Insurance $40.00
Total preliminary charges to the Borrower: $1,135. Of the eleven items, the last FIVE total $490, and were requested by no one! (Endorsements do have their place at times, and
some lenders DO require them – ask your lender to be sure.)
Of course, I sent it back to them for corrections - took them three times to get it right, geesh.
Final total charges to Borrower: $645. Far less than $1,135.
I’ve asked several title companies, why do these “extras” show up on the HUD? The universal response has been “Our template puts them in there automatically”. Well, guess what, YOUR company built the template, and YOU chose to use that template, despite my instructions being different.
Imagine at a restaurant you order a $20 dinner. Nothing else. But then they bring you unrequested drinks and dessert … followed by a bill for $50. Who would put up with that?
I have all these questions running through my head:
• Does the borrower assume the lender requires it?
• Does the lender notice? If so, do they care enough to have it changed since their borrower is paying for it?
• Does the title company assume the borrower and lender won’t ask one another?
• Is the title company “stuffing” the bill for additional profits? If so, how much does this practice net for them?
• How many people actually catch this?
• Am I just overly sensitive to unnecessary fees?
Ok, the last one is a definite “yes”. Since I’m also an investor, I always watch all sides of the transaction – for me as the lender, AND for the borrower.
When I see these “extras”, I always have them removed. In one day, I saved three different borrowers a total of $1500 worth of unnecessary and unrequested services. It’s worth noting that, of the fees charged for insurance and endorsements, 70% or more is a commission (profit) for the title company, while the much smaller difference goes to the actual underwriting insurance company.
The borrowers will probably never know that I saved them a lot of money, but I’m starting to think maybe I should tell them. Not to pat myself on the back, but so they know their chosen title company has a business practice of padding the bill. (Personally, I refuse to use any title company who does this.)
Offering additional services is great but let me choose. Don’t just tack them onto the bill and hope I don’t catch it.
HOW AN IRA INVESTOR ACHIEVED A 255-PERCENT ROI ON A REAL ESTATE JOINT VENTURE
By John Bowens
There is a misconception among aspiring real estate investors that you need substantial capital to get started. However, the journey of an Equity Trust IRA investor debunks this myth, instead showcasing the immense potential of leveraging a self-directed Roth IRA for real estate investments. This investor embarked on a real estate joint venture with a mere $13,000 in their Roth IRA and strategically navigated the investment landscape to yield a staggering 255-percent return on investment.
Strategic investment with small-balance IRAs
This strategy involves identifying potentially lucrative real estate opportunities, partnering with financial allies, and utilizing the advantages of self-directed IRAs. Here’s a real-life example that illustrates this strategy.
Investor A had about $13,000 in his Roth IRA. He needed about $105,000 for the purchase and rehab of an investment property he identified. Investor A brought that opportunity to a “financial friend” (Investor B). They then structured a real estate joint venture agreement that spelled out that 50 percent of the net profits upon the sale of the property would go back to Investor A’s Roth IRA, and 50 percent of the profit would go back to Investor B’s Roth and traditional IRAs.
Did investor B have to use an IRA? No. It could have been their non-IRA funds. The key here is Investor A found the opportunity and used his self-directed Roth IRA with only about $13,000, earning $68,000 in profit. And since Investor A negotiated with Investor B to receive 50 percent of that net profit, he made $34,000 tax-free through this real estate joint venture.
The investor’s journey involved finding a promising real estate deal, forming a joint venture agreement with a financial friend, and leveraging their Roth IRA for the investment. The result was a significant profit of $34,000 tax-free, catapulting the IRA’s value from approximately $13,000 to over $47,000.
By combining resources and expertise with a financial partner, investors with limited capital can access larger and more lucrative deals, maximizing their return on investment. The journey of this Equity Trust client serves as an example of the efficacy of strategic partnerships and the innovative use of self-directed IRAs in real estate investing.
Inspiration for real estate investors
For real estate investors looking to maximize their investment potential, this example demonstrates that with the right strategy, partnerships, and investment vehicle, achieving substantial returns is not only possible but within reach, even with a small initial investment. When combined, these strategies could open doors to new investment opportunities.
By embracing the principles of strategic investment, leveraging self-directed IRAs, and forming beneficial partnerships, real estate investors can unlock new avenues for growth and potentially achieve remarkable returns on their investments.
John Bowens, CISP, is Director, Head of Education and Investor Success at Equity Trust Company, a leading custodian of self-directed IRAs. Visit www.TrustETC.com for more information.
Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.
COST VS COVERAGE
By Kevin Jenkins
Insurance rates are on the rise, and with natural disasters becoming more frequent, finding affordable coverage has become a real challenge. With premiums increasing by about 45% on average nationally, many consumers are feeling the pinch. Some insurers have even stopped offering coverage in high-risk areas altogether.
It’s wise to shop around for better rates, but it’s crucial to do so with caution. If an agent promises to beat your current rate without reviewing your coverages, be wary. A lower premium could mean reduced coverage, which might leave you exposed in the event of a claim. Understanding the specifics of your coverage is essential to avoid unexpected costs later on.
One way to lower your premiums is by raising your deductibles, but this means you’ll need to cover more of the cost if a loss occurs. While some
companies advertise low rates with options like “name your own price,” these often come with reduced coverage. If your property is underinsured, a total loss could leave you without enough funds to rebuild or cover your loans. Similarly, reduced liability coverage might leave you financially vulnerable in the event of a significant claim.
The best approach to ensure you’re adequately covered is to ask questions. A knowledgeable agent should be able to explain your coverage in detail, including what is included and excluded. As an independent agency, the Noel Selewski Agency offers a range of carriers, providing more options for finding the right balance between cost and coverage.
If you’re looking to review your insurance and explore better rates without compromising your coverage, contact us at the Noel Selewski Agency 855-50-INSURE (855-504-67878.) nselewski@ noelselewskiagency.com. We’re here to help you navigate these challenging times and find a solution that works for you.
DON’T BE LEFT SHORT MONEY TO FINISH YOUR PROJECTS
By Rob Fishbein
I deal with a lot of investors. Everyone who knows me know they can just send a text, email or just call. I get so many investors asking me for a small loan just to finish a rehab they started.
I hear or read something like this. Hey Rob I got this rehab I need to finish. I just need $15k, $20k etc just to finish.
Two reasons I really hate these calls/texts/emails.
1. I often can’t help them because they owe too much on their property.
2. I can help them but they don’t want to pay the
cost, especially if they have a loan already on the property. We need to be in first position and they don’t want to refinance their whole project.
Whether you are new at this or very experienced the best way to approach your deal is to have some cushion. When you open up a house you don’t know what you might have missed when you assessed your project. You need to have cushion. You need to have a little room in there just in case you need it. I tell everyone I speak to or text or email to make sure you have a little room in there; embellish on your budget a little or just add a line for contingency in there. We want you to succeed. If a deal is tight you are in danger of losing money on the deal. Prices are coming down, be vigilant. We would love to be your partner today and 1000s of projects later.
SHOULD I INVEST IN THE CURRENT SELF-STORAGE REAL ESTATE MARKET?
By Scott Meyers
There are so many questions about investing in the current self-storage market. Should I surge forward with all the deals that are being presented to me right now while the interest rates are low? Should I sit on my cash and wait for the looming recession to get worse? Will there be better deals as we get to the deepest parts of the recession? Or, should I invest in a new development project because of the great opportunities there are to get cheap money?
Growth stocks and stock and bond funds are at the top of the list of possible long-term investments. However, your savings account, checking account or a money market account are at the top of the list for short term investments.
There are many places to put your money that are great opportunities for solid investments. In terms of the stock market, we had a little dip at the beginning of Covid-19, but the stock market immediately rebounded and so a lot of people headed back to the stock market. And since then, wars, Inflation, an election, along with many other factors have caused people to pull their money out of the stock market and they are just sitting on the sidelines looking for a safe place to put that money.
We also find ourselves in a time where there are a lot of people who have lost their jobs or who have been downsized. Many of these people are sitting on 401k money that they can now convert into a self-directed IRA because they are no longer working for an employer. There is more money that is sitting on the sidelines waiting to be invested than there used to be.
We are going to talk about how to invest a lot of that money in self-storage and what you should consider when you look at self- storage investments.
You should know that there are many people actively looking for self-storage properties. There are a lot of passive investors who are interested in getting into self-storage facilities. There are also a lot of people who are waiting on the sidelines for the looming recession to produce distressed facilities.
As we head into a time where bank loans are harder to come by and some self-storage owner operators haven’t done well or haven’t created value in their properties, they are not going to be able to refinance when the time comes. Banks are offering less than generous terms in today’s environment. The loan to value, LTV, ratio is lower, debt service coverage ratios are higher, and banks are sharpening their pencils when it comes to underwriting these types of facilities. An owner that is expecting to refinance their current 80% LTV loan and replace it with another 80% LTV loan may have a rude awakening. As a result, some of these facilities will be coming on the market and many investors are banking on that.
Another thing to consider is that we have historic lows as far as current interest rates. There are people who are refinancing their portfolios into these lower interest rates and so opportunities that didn’t work in the past will work today because the cost of capital has gone down. So, the question remains, should you be bullish on self-storage right now given the environment that we are in? Many people think that we are currently in the perfect storm for investing in real estate because many existing owners are now listing their facilities because they cannot refinance them. There are many owners that are afraid of the looming recession, or afraid of the next wave of the pandemic so they are looking to sell their self-storage facilities.
Or, do you find yourself in the camp where you want to go deeper into the recession where there will be a higher unemployment rate and foreclosures are more prevalent? Foreclosure activity may increase
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because there are many self-storage owners who have diversified their assets into other asset classes. As those assets become distressed because of the pandemic and the deepening recession, many of those properties may end up wrapped up in foreclosure or even bankruptcy. Some investors may find that they are forced to sell their self-storage properties because they have fallen on hard times in those other investment areas.
We saw a pause in self-storage development projects at the beginning of Covid-19, and then again when interest rates spiked in 2022. Now, banks are lending again because self-storage does well in a recession and banks are interested in strengthening their balance sheets. Because of this, banks are adding self-storage facilities or properties in this asset class to their balance sheets to bolster their holdings as we continue further into the recession.
Insurance companies are underwriting more loans in the self-storage space for the same reasons. They know that self-storage performs extremely well. They want in on this game because they know that it is a solid bet. Numerous new hedge funds and family office resources are pouring money into the
self-storage asset class. Because of this, there is more competition for those properties.
Some developers are playing the wait and see game because they are wondering what the banks are going to do with reserve requirements and other loan stipulations. Stipulations that were easy to overlook prior to the pandemic are making it more difficult to get projects underwritten in today’s market.
So, for this investor, we have revitalized some of our development projects that we had previously hit the pause button on because capital is so cheap. We are very bullish about purchasing new or existing facilities that are distressed or that may have the potential for a value add. We are also syndicating most of our projects and taking advantage of the perfect storm we find ourselves in. The interest rates are low and there are many passive investors who want to get in on the projects we are working on. We are combining the two types of financing together on projects that financially make sense.
Any type of market produces good opportunities, you just have to know where to look and how to take advantage of the financial opportunities that are available in that market. Happy Investing.
SECURING LENDING OPTIONS IN TODAY’S ENVIRONMENT
By Tom Berry
Securing the debt financing to purchase investment real estate has been fairly easy over the last decade as we have been in a long period of plentiful capital and historically low interest rates. It seems you could find lenders in every direction, ready to lend on a good investment property but as recently as a year ago, we started to see a shift. Interest rates had been climbing for a year or so, and newer, inexperienced investors started defaulting. The credit markets and private capital providers alike, started pumping the breaks. So how do we as RE Investors, secure the debt financing to invest in today’s environment?
First, you have to start with a “good deal”. You would be shocked at the number of times, potential borrowers fill out an application for a loan on a property that has no chance at profitability. If you are a newer investor, educate yourself on what makes a deal a “Good Deal”. Attend your local REIA meetups, shadow a successful investor, JV with someone more experienced, hire a coach to teach you. Don’t just grab a contract and assume it will be profitable for you. When you present a “bad deal” to a potential lender, you immediately lose credibility. Let’s face it. No one wants their money to be used on your practice.
Next, you need to have your ducks in a row. What I mean by that is, you need to have the project planned out and your personal and business finances in order. Look, I was broke when I started investing in real estate and had no money or credit so I’m not saying you can’t start with nothing, but I will tell you it’s the hardest way to go. The better your finances, the more likely you will succeed in your project which means the bigger pool of potential lenders you will have to pick from. Take some time to get your Personal Financial Statement in order and updated. Write a biography on yourself highlighting any successful RE deals you have done and any relevant business, construction, or management experience you have. Next, have your project planned out in detail. Acquire construction bids, write a detailed scope of work, and prepare an Executive Summary on your project.
While each of these steps may require a little time investment, none of them cost money. I can promise you, most borrowers don’t want to take these simple steps, which means, if you do, you will stand out from the crowd and as credit markets tighten and private lenders get nervous, you want to be the standout.
If you are working with Private Lenders, you can take it a step further and have a detailed background check and credit check done on yourself and add that to your package. Nothing provides comfort to a private lender like transparency. There are many other things you can add to your lending package. I always added a list of the properties I had purchased recently and their prices, rehab budget vs actual costs, and current rental rate and value. Hopefully you can start to see the types of things you can add in a lending request that will set you apart and add value to your proposal. Remember, people won’t lend to you if they don’t FEEL LIKE THEY KNOW YOU, like you, and trust you. The only way for them to feel they know you is for you to share information with them about yourself. Not just your deal. Too many investors focus all their time talking about the property and not enough on themselves and what they bring to the deal. In the end, people lend on you! They justify that decision with the property!
In 2014, after purchasing over $18,000,000 of real estate with only $1,000 of my own money, I partnered with a good friend who was also my largest private lender, to start a different kind of Private Money Lending Company. Investor Loan Source www.ILS.cash. I wanted to be a conduit from the private capital world to the real estate investor world. Since that time, we have funded over 2,000 loans and have closed over $1.2B in loan volume across 26 states, while NEVER USING A BANK OR WALL STREET CREDIT LINE. As real estate investors, we still buy property focusing on large shopping centers now, but our largest company is our lending company which funds Fix and Flips, DSCR loans for rental properties, and commercial development and re-development projects. If you have a project, you are needing debt financing on, visit our website and fill out a short application so we can discuss it with you. We never charge any fees until you are approved for the loan, so you have nothing to lose. Let us raise the capital so you can focus on finding “Good Deals”.
PROCEED WITH CAUTION
By Tony Youngs
As I go to various states pursuing distressed property acquisitions, I am finding an uptick in the amount of sellers that are willing to sell their off market properties. These include probate situations, tired landlords, elderly moving in to assisted living, vacants, bankruptcies, and pre-foreclosures. The problem is, sellers still have the impression their homes are worth more than they really are. They remember their neighbors getting multiple offers and selling above the norm but that has changed somewhat. I live in a high demand area and houses can sit on the market for 30 days before they go under contract. Around other parts of the nation that I visit, it can be even longer. Although most of the nation is still seeing lower than normal inventory, The higher interest rates has an affect and also the uncertainty of government affairs.
The reason I say proceed but with caution, is because if you are going to rehab a property, the rehab costs are outrageous. The cost of materials has come down a little from the pandemic but they are still high and I think they are here to stay. Businesses know that people are willing to pay and consumers are spending like crazy. On the other hand, contractors are charging much higher labor costs. Sheetrockers, framers, painters, plumbers, electricians, and HVAC is much higher today. I was rehabbing houses all through the pandemic years and I am rehabbing a house right now and the costs are much higher than a year ago. We have used the same plumber, electrician, and heating and air guys for years and their prices are much different. When we sit down with them and go over the figures, comparing them to our last few jobs and ask them why the difference, they show us the difference in material costs and show that their labor is higher because of the cost of living, Higher groceries, gas, food, clothing, and shelter. Just to make sure, we get estimates from other companies and the prices are very comparable.
My point is, as you find property owners willing to sell, make a sensible offer and stick to it. I make offers every week and when a seller tells me it is too low, I say, if you are willing to fix some of the items
I can go higher. After researching the costs and time involved, it doesn’t take long for them to see your way of thinking and then you can negotiate. Some sellers refuse to budge but it’s better to walk away than to lose money. Today, If you do buy a house and begin your rehab, if it seems to be costing more than you thought, nobody can force you to finish it. If a project looks like you may lose money or break even, stop work and sell it incomplete. There is always someone that will buy it in the condition it’s in and finish it themselves. Especially if they like the location. Homebuyers realize they are here for long term and don’t mind spending money for their long term home. Even in the multiple offers days, I would fix up a house beautifully and sell for top price, and the homeowner would sink more money into it. Because they were so happy they got a home in the area they wanted.
As we rehab a house, we make a list of what we want to accomplish this week and I stay on top of it to get it done. I shop around for good prices, I use low cost labor to do the many things that need doing like, demolition, carrying trash to the dumpster constantly, keeping the grass cut, painting, replacing broken glass, applying fire retardant caulking to the holes where the new wiring was installed, digging drainage ditches etc. There are plenty of little things like that. We also have a guy who has a full time job but wants to earn extra money after he gets off work. He is an excellent carpenter and installs new windows and doors, puts trim around the new windows, installs attic stairways etc. Thus saving us plenty of money. I personally still do some of the work that I can. It keeps the other workers busy when they see me working too. There are still many money saving things you must learn and use when doing a project. One thing I learned from my father when getting estimates, Don’t give the impression that you are rich and successful. Project costs can be higher.
The bottom line is this, proceed with caution and make your offers, but be aware of today’s renovation costs. Learn all you can on estimating repairs.
Tony Youngs is a trainer, national speaker, active real estate investor and the author of The “Hidden Market” system of acquiring off market properties. He can be reached at his website at www.tonyyoungs.com
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