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Jan 02

Case Study: Multifamily Real Estate Success Story – Art F. ($128,450)

By Carole Ellis | News , REI Today Podcast

Investor: Art F.
State: Massachusetts
Investment Type: Multifamily
Total Funding: $50,000 in hand + $78,450 processing = $128,450

When Maryland Investor Art F. first started buying multifamily properties, he did so in a manner very similar to that employed by other investors getting started in the business: he found a good deal on a multifamily property that needed some work, purchased the property, then set about rehabbing it so that he could install tenants and start generating monthly cash flow.

However, Art did one thing very differently: he did not take out a loan in order to do the rehab and repairs. Instead, he made the state government pay for them!

“I went to the Worcester, Massachusetts website and found HOME (the Massachusetts HOME Investment Partnerships Program) and other grants for low income rental property,” Art said. The HOME program is a funding program for which investors are eligible (this is unusual because most state and federal funding is tailored to homeowners). Art talked to city officials within the program, wrote and submitted a proposal and shortly thereafter received a grant of $50,000.

“We expect to receive additional grants of $40,750 and $38,000,” he added gleefully, noting that his proposal scored third out of 22 submissions, thereby positioning him for the additional funding.

Art credited his success in gaining access to this money, which will enable him to rehab the property without taking out loans, to Chris Johnson’s grant funding guide and personal assistance with the proposal.

“I sent Chris a copy to review,” he recounted, adding that the materials in the course helped him achieve his proposal’s high score. “Thank you!” he concluded.

Want to hear more? Sign up for the free training THIS THURSDAY here.

 

 

 

Dec 19

Top 4 Things You MUST DO to Flip HUGE COMMERCIAL BUILDINGS and SURVIVE THE NEXT CRASH in style

By Carole Ellis | News , REI Today Exclusive Content , REI Today Podcast

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How would you feel if I could distill the entire process involved in flipping commercial real estate on a MASSIVE SCALE into just four simple steps AND throw in there the key to surviving the NEXT REAL ESTATE CRASH IN STYLE? You’d be HUGELY excited! Good news. I’m Carole Ellis, and my guest, Sue Nelson, who has purchased thousands of apartments in her decade of commercial real estate investing, will break the entire process down for you today in Episode 21.

So let’s get right down to the four green flags you’re looking for when you’re thinking about investing in an apartment building. Now, for the sake of clarity, let’s take just a minute to define “apartment building.” If you listened to episode 20 (and if you haven’t, I HIGHLY recommend you do so immediately after you finish this one because my expert has a VERY UNIQUE way of looking at real estate deals that will truly revolutionize the process for you should you choose also to adopt it), then you know that Sue is not a big fan of the “small potatoes” apartment complex, say duplexes, triplexes, and quadplexes. So during this podcast, when we say “apartments” or “multifamily buildings” or “units,” just bear in mind, we’re talking BIG. And don’t let that intimidate you, because Sue is a true expert on the process of buying these things without using your own money and on flipping these things for fast, massive profits.

Now that we’ve got that out of the way, let’s get into the four things that Sue says you must do in order to know that an apartment deal is worth investing your time. If you’re just tuning in, our expert, Sue, is a long-time commercial real estate investing expert who has done it all and done it big for many years. She started out, however, as an art teacher, and only started flipping mega-properties when her daughter was born with some health issues. Sue tackled a 104-unit building as a “starter project” and literally made five times her teaching salary with one deal and never looked back. And speaking of not being intimidated, I can’t tell you how many times Sue said during the course of our exclusive interview with her, “If I can do it, anyone can!” And with these four “green flags” as a guideline, you’ll find it easy to believe her!

So, I asked Sue directly, “What are the things that you must check off on the list that would let you – or anyone doing this type of real estate – that they had a great deal.” Well, she’s a very methodical lady, and it turns out she has just such a checklist! And she agreed to share it here.

So, first of all, Sue checks cash flow. If the building doesn’t cash flow, then there is too much risk, she explained. That’s the first and biggest checkmark in the box.

Next, Sue evaluates the occupancy of the building. Occupancy is, as you might have guessed, the number of occupants in the building or, more specifically, the number of units that are occupied. “I usually only buy if the property is 85 percent or more occupied,” Sue told me, adding that in her opinion, numbers lower than 85 percent add too much risk to a deal and make it less attractive to investors and buyers.

Thirdly, Sue said, she evaluates the rehab costs on a building. Now, Sue gets a LOT of her properties from banks which is, much like the rest of commercial real estate, kind of an intimidating concept for a lot of people. However, Sue has certain MAGIC WORDS that she says to bankers that basically cause them to sit up, pay attention, and open up those REO (that’s real estate owned) books and start selling at a discount. If you want those words, by the way, as well as the ENTIRE, firsthand explanation from Sue about how to leverage these four green flags, head over to www.rei.today/IMPORTANT right now and register for Sue’s limited-time training. Returning to rehab, though, Sue looks for relatively low rehab costs so that she can add value to the property quickly not by fixing it up, but by, as she puts it, increasing income or decreasing expenses. And she’s not unclear: “I am not looking for large rehab deals,” she said on no uncertain terms.

Finally, Sue buys in what she calls “decent neighborhoods.” It is very, very difficult to fix a neighborhood, she warned me, adding that some areas – and you know what she’s talking about! – have a culture of non-repair that can really bog your projects down. “As much as you are dying to fix the world and help dilapidated areas, it’s very difficult to do that,” she said, pointing out it’s also very difficult to get other investors to invest in or buy those projects outright.

So there you have them, ladies and gentlemen. Four simple, straightforward green flags for buying BIG and doing BIG DEALS that should SELL FAST in commercial real estate, where six- and seven-digit deals are not at all uncommon. “When I have broken those rules, that’s when I’ve gotten in trouble,” Sue told me, and added that in her opinion, “If you follow those rules, you make it very, very possible that you are going to stay out of trouble regardless if we experience another 2008 market crash.” Given that she invested profitably and productively THROUGHOUT the crash, I’d listen to her on that one!

Now if you like what you’re hearing – and I know you do – in terms of clear, concise instructions for making big, BIG deals that probably seemed unimaginable for you before you started listening to this exclusive interview series with Sue happen in YOUR REAL ESTATE INVESTING BUSINESS, then you need to head over RIGHT NOW to www.rei.today/IMPORTANT to sign up for Sue’s extended, limited-time, FREE TRAINING. That’s www.rei.today/IMPORTANT. When you do that, you’ll be able to not only get Sue’s personal, extended teachings on just how to make this stuff work, but you’ll also be able to view real-life case studies about how she did it. So RUN, don’t walk over to www.rei.today/IMPORTANT and get on that class roster before we run out of room.

And once you’ve registered for the class, take a minute to review our other materials from Sue on the website at www.rei.today. You’ll see other podcasts, news and reporting on the topic, and far, far more insightful stuff that will make your real estate investing business safer, faster, and more profitable.

When you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country in addition to having the chance to interact directly with Sue herself.

REI Nation, thanks for listening in. Now, more than ever, please remember this:

Your best investment is ALWAYS your own education.

Jun 30

where housing is LESS AFFORDABLE THAN EVER

By Carole Ellis | News

If you fear that you may never be able to afford a home, then you’re not alone. According to National Association of Realtors (NAR) chief economist Lawrence Yun, “People who are currently renting and want to convert into ownership [are facing] major difficulty” due to quickly-rising home prices and slowly-rising (or stagnant) wages. Yun added, “What happens when the rates begin to rise?” and noted that affordability is the main contributing factor to the relatively slow national housing recovery.

“While housing should be pushing overall economic growth, it is not, due to the meager activity in home construction,” said Diana Olick in response to the same numbers. She noted that rental demand is fueling construction activity, but that the single-family home inventory is still quite tight. Olick also noted that multifamily housing starts are also likely to slow in coming months because the supply for “higher-priced, urban rentals…is now high.”

While the experts certainly don’t have the brightest outlook on the housing market these days, the good news for real estate investors is that there is a ready, willing, and eager market hoping to buy but presently priced out of conventional home purchases. Buying options that allow for creative financing could open up an entirely new buyers’ market for investors willing to work with buyers looking for lease-options, subject-to options, and seller financing.

Lesson Learned:

When the market becomes unaffordable, get creative to get in.

Point to Ponder:

Are you concerned about the lack of affordability in our national housing market?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

 

Jun 30

REALITY TV gives real estate a BAD NAME?

By Carole Ellis | News

According to the St. Louis Better Business Bureau (BBB), reality television personalities sponsoring real estate seminars are a red flag for consumers. The BBB recently published an official warning about these free seminars, where attendees learn basic information about real estate investing in exchange, usually, for their time and contact information. At the events, however, the BBB stated, attendees are asked to “buy advanced education courses that cost up to thousands of dollars.”

Of course, real estate investors understand better than just about anyone how valuable the right knowledge can be when it comes to improving their bottom lines, and that is why you will often find experienced investors and brand new investors side by side at the same events and trainings, working hard to maximize their knowledge, and most investors have no problem paying for education and training that they believe will help them make bigger profits. However, some reality real estate stars are earning themselves a bad name, said the St. Louis BBB, citing Scott Yancy of “Flipping Vegas” in particular. They gave Yancy an “F” rating because buyers reported requesting refunds after their purchases did not, they said, pay off as promised.

We don’t know the specifics of those complaints, but we do think it’s worth noting that Yancy got that failing grade not because he didn’t refund the money (he appears to have done so) but because buyers requested refunds. While investors may “need to understand that these seminars are sales presentations,” as the St. Louis BBB president said so patronizingly, investors also should be aware that paying for a service that is actually delivered (we have no idea what happened and whether it was or not in the Yancy case) is a valuable move that can revolutionize a business.

Lesson Learned:

Listen to your BBB’s warnings, but take them with a grain of salt and use your own common sense!

Point to Ponder:

Do you like attending free real estate seminars?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 27

SMARTEST CITY in the country SNAGS $50M

By Carole Ellis | News

It pays to be smart and brag about it sometimes. The U.S. Department of Transportation (DOT) might give you $50 million if they think you’re doing enough of it. The DOT recently announced that Columbus, Ohio, is the “smartest city” out there, and as a reward the city will receive $50 million in grants to “create a first-of-its-kind city that uses data, technology, and creativity to model the future.”

Columbus won the inaugural “Smart City Challenge,” a program that encouraged cities to inventory the challenges that they currently face and come up with practical, actionable ideas about how they would use innovation and technology to solve those challenges. The $50 million will go toward implementing the solutions that Columbus already laid out in its entry. Six other finalist cities will also receive support from industry sponsors involved in the competition, including Amazon, Vulcan, AT&T, DC Solar, and Mobile Eye. The six cities are: Austin, Texas; Denver, Colorado; Kansas City, Missouri; Pittsburg, Pennsylvania; Portland, Oregon, and San Francisco, California.

Columbus officials said that they plan to use the money to “connect citizens and visitors, provide sustainable transportation options, and improve job opportunities.” DOT secretary Anthony Foxx said that the city’s “focus on improving the health and lives of the community” played a key role in its win.

Lesson Learned:

A good community master plan can yield major rewards. When you’re evaluating an area for investing potential, take a minute to check out the master plan and see how much, if anything, is actually happening on it. If it is, that can be a good sign that a community is set to grow.

Point to Ponder:

Do you agree with this type of contest?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 27

BREXIT MAGIC BULLET for U.S. housing

By Carole Ellis | News

According to the National Association of Realtors (NAR), Great Britain’s decision to leave the European Union (EU), also known as “Brexit,” could have a short-term positive impact on U.S. housing. “Demand for U.S. real estate could rise,” said NAR chief economist Lawrence Yun, adding that global corporations may also show additional interest in commercial real estate if the U.K. becomes “a less attractive place to conduct global business” as a result of the move. Longer term, things could be a little less sunny because Brexit is likely to create additional global market volatility and make the EU less stable as well.

As if interest rates were not presently low enough, Brexit could also help out homebuyers hoping that interest rates will stay low for a while longer. “Mortgage rates will tumble,” said Greg McBride, Bankrate.com’s chief financial analysts. He added that interest rates could “possibly hit new record lows,” and other analysts chimed in, suggesting that this could give the home-refinance sector “new life” in the short term as well. Although McBride recommended homeowners move fast to lock in low rates, Fannie Mae chief economist Doug Duncan wasn’t worried about the low interest rates going anywhere. “The Fed will very likely be on hold for some time as it observes the impact on U.S. and global financial markets and economic activity,” he said.

Lesson Learned:

Market shifts are not necessarily bad for markets as long as investors make sure to understand them before reacting.

Point to Ponder:

Do you think Brexit was a good move for Great Britain?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 27

analysts warn: “a STORM is brewing”

By Carole Ellis | News

According to a new report from Pacific Investment Management Company (PIMCO), U.S. commercial real estate prices could be poised to plunge as much as five percent over the next 12 months. After nearly six years of national growth, some analysts fear that the sudden downturn could be hugely problematic for investors who bought near the top of the market expecting foreign interest to continue to grow before the advent of Brexit. However, PIMCO researchers say that the cooling-off period could actually create a “welcome storm” for investors looking for properties at bargain prices. “For flexible capital, this storm might be a welcome one indeed,” they wrote.

One potential issue for commercial investors could be the declining level of activity from Chinese investors, who have been backing off, relatively speaking, in recent months thanks to economic volatility in their own country and a strengthening dollar. Lower oil prices and “dislocated debt markets” are also playing a role in commercial uncertainty. PIMCO analysts called the combination of factors a “blast of volatility for commercial real estate.”

Lesson Learned:

Market volatility doesn’t have to mean you run for the nearest exit. Be very clear about what your strategy requires in a deal, then keep your eyes open!

Point to Ponder:

Do you think a six-percent drop in commercial real estate will affect all commercial sectors?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 27

why you need to SUCK IT UP and get on INSTAGRAM

By Carole Ellis | News

If you think Instagram is just for “the kids these days,” think again. First of all, most of them are actually on SnapChat. Second of all, the photo- and video-sharing app now has 500 million monthly users, and 300 million of those users view and post on the app every day. Thirdly, users spend an average of 21 minutes (more than enough time to view your listing) on the app every day. Although SnapChat is growing in popularity, most marketers agree that if you’re seeking home-buyers, Instagram, with its larger and slightly older user population, is the way to go.

So now that you’ve decided to get on Instagram, what should you be doing there? For starters, you’ll want to post things that people actually want to see and “like,” since a post with more “likes” is more likely to be visible. Instagram experts recommend not just posting pictures of houses in listings, but also posting “behind the scenes” images to show lifestyle of a local community, clean-up efforts on remodels, or happy clients behind the closing table. You also will want to sync up your account with Facebook, the owner of Instagram. Photo-sharing via Instagram tends to work better than photo-sharing via Facebook only, probably because Instagram is Facebook’s “baby” in a lot of ways since the company paid more than $1 billion for it in 2012. Finally, try out Instagram’s photo maps, which can showcase not only your images and photos, but also your presence on Google maps, which can improve your credibility, your local presence, and possibly your visibility as well.

Lesson Learned:

If you’ve been putting off Instagram, it’s time to set up that account and start snapping!

Point to Ponder:

Do you use social media in your real estate business? Why or why not?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

Jun 24

Investors’ “SNEAKY TRICKS” Land Them in Serious Legal Hot Water

By Carole Ellis | News

Three real estate investors who may have been following common, “sneaky” real estate advice now find themselves in seriously hot water, having been indicted last week for their involvement in a house-flipping scheme that involved mail fraud and conspiracy on multiple levels. The three men are accused of making more than 40 offers on HUD homes in cities and towns in Illinois and Indiana, placing “for sale” signs outside the homes before the purchases had occurred, and lying about their ability to fund the purchases by producing forged letters purportedly from private venture capital businesses stating that the individuals had lines of credit up to $500,000.

That wasn’t the end of it, either. Once the investors made their offers, they filed false liens on the homes to prevent them from being sold to other buyers, and they let the contracts expire on the homes. The moves not only were fraudulent, but they also cost the real estate investing community serious points when it comes to maintaining a good reputation. Nearly everything the men did is a twisted version of some good advice from an actual real estate investing expert, from obtaining lines of credit and providing proof-of-funds (you need real ones, folks!) to putting signs in the yard before they actually made the purchase (many experts say get a sign in there right away, though not before you actually own the home).

The men have only been indicted, so they are presumed innocent and we do not know what type of punishments they might face if convicted.

Lesson Learned:

Be quick on your feet, but don’t cheat!

Point to Ponder:

Have you ever done something you thought was sneaky but legal and learned otherwise?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

 

Jun 24

New FAA regulations on DRONES IN REAL ESTATE

By Carole Ellis | News

After months of deliberation, the FAA has released some definitive guidelines for real estate professionals who wish to use their drones for real estate purposes. Many real estate investors and other professionals use drones to take great pictures for listings, but the FAA had some pretty serious issues with how the images were being obtained. In fact, previously, the government required a special waiver be obtained before a real estate investor or agent (or anyone else for that matter) could use drones for photography in their business.

Fortunately, the FAA has decided that it will no longer require such a waiver and even went ahead and shut down the section on the FAA website where such applications were made. However, drone operators using their drones for real estate photography still must pass an initial aeronautical knowledge test at an FAA-approved testing center or, if they already possess a Part 61 pilot certificate, then they must have completed some continuing education in order to use the images for their business. “We’ve worked hard to strike a responsible balance that protects the safety and privacy of individuals while also ensuring realtors can put drones to good use,” said Tom Salomone, the current president of the National Association of Realtors (NAR) in a statement about the new regulations. “Getting here wasn’t easy,” he added.

Drones still must be lower than 400 feet above the ground or within 400 feet of a structure that is higher than 400 feet, and the drone may not exceed 100 miles per hour in airspeed. Pilots cannot be younger than 16 years of age.

Lesson Learned:

Might be time to start figuring out how to use your drone to take pictures, responsibly of course!

Point to Ponder:

Do you think that drones have a place in real estate? Should they even be allowed to fly?

Thank you for reading REI Today!

Your comments and questions are welcomed below.

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