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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: September, 2019
Sep 26, 2019

You must be Ruthless to win in Commercial Real Estate, or so Jonathan Keyser thought.   

Jonathan Keyser, founder of Keyser, and author of You Don’t Have to be Ruthless to Win is changing the way commercial real estate business is done in Arizona and beyond.  

Raised by missionaries, Jonathan was shocked into reality when he entered the commercial real estate brokerage business.  He learned how others played the game, and because he wanted to be successful, he abandoned the lessons learned as a child, to look out for number one, regardless of the cost.   

Ruthless to Win

Jonathan knew early in life that he did not want to be poor.  As a child of missionaries, his life was about service. He was surrounded by people without means, and therefore, having little did not bother Jonathan.  Upon returning to the states, he realized he was poor, and he equated serving others as the source of his being poor. Therefore, if he did not want to be poor, he thought, he had to look out for himself only.  If he looked out for number one and could be ruthless, he would win and he would make a lot of money.  

It worked.  He worked for a large CRE brokerage, and was quickly recognized as an elite performer who was destined to climb the corporate ladder.  He admits that his success came at a cost. Determined to be successful, he was willing to be ruthless to win. He did whatever it took to make the sale that benefited him the most.  While he enjoyed the success, he was conflicted with who he had become. 

Then he heard about a different way of doing business.  He learned that if he returned to serving others, that eventually people would want to do business with him, because they knew he could be trusted. If he committed to service, the mentor assured him, the money would take care of itself.  

This new philosophy fit with the morals from his youth, and that made him feel good.  Jonathan liked what he heard, but asked the mentor, why others do not follow this method?  The answer was simple, people were not willing to invest the time it takes.

The Long View Towards Success

Sales has always been a numbers game.  To make more sales, talk to more prospects.  When the results driven culture manifest itself, the numbers emphasize sales, not service.  This lack of service rarely leaves the customer with a good experience.  

In order to change the experience for the customer, you have to give without expectation.  Why don’t companies do this? The answer is simple, cost.  

To create a better experience that allows a relationship to develop between the salesperson and the client takes time.  Time that produces no immediate results.  

The Keyser Way

Jonathan made the decision to become a person of service.  No longer was he worried about making the sale. He wanted to truly help all those who he came into contact with.  For five years, he focused on service, convinced that things would work out. He admits that before things started to role, he was tempted to go back to what he knew worked, but he resisted.  

At the end of five years, he realized the abundance his mentor promised.  So much so that he and his group of like minded entrepreneurs who experienced the fruits from their service, made the leap and formed Keyser.

Today, Keyser is more than a commercial real estate firm.  It is an organization committed to doing what is right for the customer, its motto: “Relentless client champion.   

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK:  For me the biggest risk is cultural dilution. 

It's something that I'm very actively aware of daily. There are so many times that I'm tempted to choose revenue over culture. Whether it's because I have to let somebody go which are some of the biggest lessons I've learned in the past. Somebody talks a good game. You think there's somebody that's wired for service. Then they get in and you realize that that was just it was just a really good sales job they used to get in the door. And making sure that people are living it right it's easy for people to get busy and forget that we are committed to these 15 cooperating principles and that's what makes us special so cultural dilution as we scale I think is the biggest risk. Because if we if we dilute our culture then we're just another real estate firm and ruthlessness springs up and everything that I set out to change goes away. And that's part of why this book is so important to me right. It's like in it we describe the three levels of reinvention which is an inside out reinvention. It's start with yourself and you reinvent your company culture around service and then you reinvent your relationship with your stakeholders. And it has to be that inside out thing.

For more go to:

Website: keyserco.com

Book: https://ruthlessbook.com/

Sep 24, 2019

Darrin: [00:00:08] Jonathan Kaiser what is the BIGGEST RISK? [00:00:11][2.9]

Jonathan: [00:00:11] I think for me it's a it's not an insurance answer even though what you do is extremely valuable and without it, companies put themselves at risk which never seems like a big deal until you need it and then you need it badly. [00:00:28][17.1]

[00:00:29] For me the biggest risk is cultural dilution. [00:00:33][3.1]

[00:00:34] And it's something that I'm very actively aware of daily. There are so many times that I'm tempted to choose revenue over culture. Whether it's because I have to let somebody go which are some of the biggest lessons I've learned in the past. Somebody talks a good game. You think there's somebody that's wired for service. Then they get in and you realize that that was just it was just a really good sales job they used to get in the door. And making sure that people are living it right it's easy for people to get busy and forget that we are committed to these 15 cooperating principles and that's what makes us special so cultural dilution as we scale I think is the biggest risk. Because if we if we dilute our culture then we're just another real estate firm and ruthlessness springs up and everything that I set out to change goes away. And that's part of why this book is so important to me right. It's like in it we describe the three levels of reinvention which is an inside out reinvention. It's start with yourself and you reinvent your company culture around service and then you reinvent your relationship with your stakeholders. And it has to be that inside out thing. And one of the things that we've done here recently is as we've built this firm people come through our space and say oh my gosh this is amazing. How have you guys done this? How can I do this in my own organizations? So we've launched the Kaiser Institute. And the Kaiser Institute is designed to train, empower and certify the next generation of selfless leader. In the future, there will be a Kaiser certification or just like somebody gets an MBA or a black belt in Six Sigma or the Kaiser certification which means they know how to go in and affect change around culture within organizations. We'll also have one for the organizations themselves. So companies come to me and say I want to be Keyser certified. I want to show that our that we live these values. And so again at the end of the day it's my biggest risk is that we get away from what got us here. That we get away from the vision of changing the business world through selfless service and proving that you don't have to be ruthless to win. I mean my whole mantra is success to service. Not serve and go broke. But succeed through service. Not in the short game necessarily but in the long game. And if imagine a world, I can just envision a world so clearly, where to best and the brightest spend their days selflessly helping other people. Not because they think it's the right thing to do but because they get at a deep level that is in their own personal best interest to do so. That world excites me. That's a world I want to be a part of. And that's a world I wake up every morning and try to help create. [00:00:34][0.0]

Sep 19, 2019

Virtual Assistants can make your real estate real estate business truly passive.  

There are only so many hours in the day.  If you want to grow your real estate business beyond a casual side hustle, you need to work it.  You can either work every working hour, or hire help. Where do you go to find the help you need?

Nicole Grinnell and Liz Goddard are the daughters of entrepreneurs.  Growing up, they were regularly called on to work in their family business.  

The two met in Atlanta, GA where they became friends.  With their common past, they recognized the growing entrepreneur culture that struggled to grow to the next level.  These entrepreneurs needed help from someone they could trust like a family member. While they recognized the entrepreneurs needed help, Nicole & Liz also saw that there was a whole network of people like the two of them, who had skills but did not want to do the corporate 9-5 while raising a family.  

This recognition of two groups, entrepreneurs with a need, and part time professionals help who wanted flexible work looked like a match, and this was the start of ccmyadmin.    

Real Estate Entrepreneur 

Real Estate investors and professionals are entrepreneurs.  Most start out small with one property in addition to their full time W2 work.  Most of these real estate entrepreneurs share the dream of somehow growing their portfolio to a point where it will provide true financial freedom.  What holds them back from growing to this dream of financial freedom?  

It’s usually a combination of money and time.  The money can be raised from others, but the only way to get more time is to add help.    

Hiring Direct vs Virtual Assistant

You recognize you need help.  Do you hire direct or work with a virtual assistant?  

You need help in all areas; marketing, sales, bookkeeping, management, the list is never ending.   If you decide to hire someone to work directly for you, where do you turn? The following are questions you must answer:

  • What is the task you need help with?
  • How much time do you need help for?
  • What skill set do you need to help you get the job done?
  • Do you fully understand the task you need help with?    
  • What are the laws around hiring an employee?
  • Do you have enough space to bring an employee in house?
  • Where will you find this employee?
  • Who is going to train the employee?
  • Who will manage the employee to make certain the work is getting done?
  • What if you get the person all trained only to realize the person is not going to work out?
  • What happens when the employee needs time off?

If these questions are overwhelming, you have a second option: Virtual Assistant.  .

Virtual Assistants

Virtual Assistants can be the solution to your growing business and the needs for help.  The benefits of using virtual assistants through ccmyadmin are many including:

  • Recruiting: one call is all it takes to get the help you need.  No more placing an add and waiting for people to call, interview and eventually hire.  Ccmyadmin has a list of qualified candidates ready to take on your work.
  • Screening; the VA you work with has been screened for their skills, and ability.  You don’t have to hire an employee only to realize they are a better interviewer than actual employee.
  • Training; Liz & Nicole work with you to determine the exact steps needed to accomplish the work you need completed.  You pay one fee and the training is taken care of.   
  • No additional space needed.  The VA will work remotely and thus require no additional space in your facility. 
  • Employment laws are not your problem.  The VA is under contract with ccmyadmin, and you contract with ccmyadmin direct.  
  • Pay only for what you need.  Unlike a direct hire where you pay for full time, but only have part time need, using a VA, you only pay for what you need to get your job done.  

Virtual Assistant Skill Sets

What are the type of tasks a virtual assistant can perform?  Here is a short list of the types of tasks provided by ccmyadmin  VA’s:

  • Bookkeeping
  • Answering inbound calls
  • Making outbound cold call /prospect calls
  • Marketing
  • Podcast transcripts
  • Training
  • Operational
  • Administrative
  • Schedule appointments
  • Manage your calendar
  • Write and send correspondence
  • Process orders 
  • Communicate with tenants, property managers and service providers

It is clear there are significant associated with hiring direct that can be avoided or minimized by utilizing the talent provided through a virtual assistant.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK:  There's a lot of risk that comes with employment. If you are not prepared to hire somebody or don't understand everything you need to be doing as an employer in the state that you are working in, there's risk. The risk is great, especially with all the employment laws. There's a lot of little things that you just have to know if you're going to employ people. If you do not know the laws, you need to find somebody that does, or you to hire a company like ours, who can help you stay legal. So there is a lot of risk that comes with employment. And all that risk comes with working with contractors as well. And you really need to know those very clear cut and defined lines because it is an expensive mistake to make.

For more go to: www.ccmyadmin.com

Sep 17, 2019

Nicole Grenell and Liz Goddard, What is the BIGGEST RISK? [00:00:12][3.8]

LIZ: [00:00:14] So i is this question because all I see is risk. I'm the person in the partnership for all that. I mean I was in HR, so all I did was evaluate and mitigate risk all day long. So I would say let's point the question towards employment because there's a lot of risk that comes with employment. If you are not prepared to hire somebody or don't understand everything you need to be doing as an employer in the state that you are working in, there's risk. There is serious risk especially with all the employment laws. So we had a client who had employees and didn't know that she had to have workers comp insurance and then someone filed Worker's Comp. Right. And so. [00:00:55][41.0]

Nicole: [00:00:55] In the worst state that you could possibly do that in. [00:00:57][2.1]

LIZ: [00:00:59] And so there's a lot of little things that you just have to know if you're gonna employ people. If you do not know them, you need to find somebody that does, or you to hire a company like some like one of ours, who can help you dance around that or show you show you what you need to do. So there is a lot of risk that comes with employment. And all those risk that comes with working with contractors as well. And you really need to know those very clear cut and defined lines because it is an expensive mistake to make. [00:00:59][0.0]

[46.9]

Sep 12, 2019

Delaware Statutory Trust is an option for real estate investors looking to utilize a 1031 Exchange rather than pay capital gains and depreciation recapture taxes. .  

Robert Zink is a commercial real estate broker with a securities license.  The securities license allows him to offer Delaware Statutory Trust as an option.  It can provide a solution to real estate investors wanting to sell out of their current property, but are not willing to surrender a significant portion of their gain through paying taxes.  They would like to do a 1031 exchange, but not continue with the issues of owning real estate, tenants, toilets and termites.

Delaware Statutory Trust

A Delaware Statutory Trust provides the opportunity for investors to own a fractional interest in an institutional grade property; multifamily, office, medical, warehouse, etc.  The tenants in these properties are high caliber, typically national companies with strong balance sheets and long term leases.  

The investment in a Delaware Statutory Trust is passive.  You have no involvement with the day to day operation, property management, or lender.  The typical life expectancy of an investment is 6 to 8 years. At the end of the investment, the investor can either cash out, or 1031 Exchange into the next opportunity, while preserving their original 1031 Exchange. 

Rate of Return

The rate of return will vary from property to property, however the sponsor carefully selects properties in growing markets with less possible downside.  Investing in growing markets with strong employment, and demand for the type of property invested in provide a lower risk and solid return. Cash flow expectation is between 5 - 6 average return on the investment .   The investor receives a K1 for their taxes with the income and their percentage of the depreciation.  

Planning Your 1031 Exchange

In order to execute your 1031 Exchange properly, you must designate a qualified intermediary.  The duty of the QA is to hold the funds from your sale and then deliver to closing on your new property.  You have 45 days from the sale of property #1 to identify its replacement, of which you can identify 3 potential options.  In total from the date of sale, you have 180 days from the date of sale to close the purchase of the replacement property identified in the first 45 days. 

A Delaware Statutory Trust property can be identified in part or whole for the proceeds from your sale.  Many use this as a way to “balance” a trade. If you find a replacement property of lesser value than property #1, you can invest the balance of the sale proceeds into a separate property to balance the trade.  

This is also an excellent tool for estate planning.  If you have multiple beneficiaries you want to benefit upon your death, you can select multiple separate fractional investment.  This assures each beneficiary will receive their designated property investment.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK:  As you get older and have less time to recover from exposure to a risk that actually comes to pass you need to minimize your risk. The value of real estate goes up and down, so I would say the BIGGEST RISK is investing in a "C" property in a bad market. Recently I saw a sponsor with a large apartment complex in one of the oil patch towns with a lot of fracking. I wouldn't invest nor encourage an investor to invest there because, what if fracking goes away?  What if we decide we don't want to frack anymore? If that happens, the apartment house doesn't have a high value if fracking goes away. So buying that apartment house in Florida, California or Dallas proper would be completely different. I think avoiding properties in markets that have exposure to down markets. Additionally, I think investing with new sponsors that don't have a track record is risky. 

So the BIGGEST RISK would be going into bad market or weaker markets or with a sponsor that doesn't have the ability or track record to solve the problem.

For more: 

Call: (503)880-6968

Email: robert.zink@coloradofsc.com

Sep 10, 2019

Darrin: [00:00:08] What is the BIGGEST RISK? [00:00:09][1.3]

Bob: [00:00:11] That's a good question Darrin and certainly one that we should consider you're in that business. That having been in real estate forever you want to minimize that risk especially as you get older and have less time to recover from exposure to a risk that actually comes to pass. It is after all real estate.  And the value of real estate goes up and down. So I would see the BIGGEST RISK is investing in a "C" property in a bad market. Recently I saw a sponsor with a large apartment complex in one of the oil patch towns, it was in the fracking business. I wouldn't invest, or encourage an investor to invest there because what if fracking goes away. What if we decide we don't want to frack anymore?  Then that apartment house doesn't have a high value if fracking were to go away. So buying that apartment house in Florida or California or someplace Dallas proper would be completely different. I think avoiding prop properties in markets that are you know have exposure to down markets. And I think investing with new sponsors that don't have a track record someone that they may be great they may be well intentioned but don't have the wherewithal to Inland or Pascoe Cantor that if there is a problem they they can solve it. Where a new sponsor perhaps couldn't solve it. So the biggest risk would be going into bad market or weaker markets or with a sponsor that doesn't have the ability or track record to solve the problem.

For more: 

Call: (503)880-6968

Email: robert.zink@coloradofsc.com

Sep 5, 2019

The Tax Benefits of Real Estate are numerous.  Ted Lanzaro, author of the Tax Smart Landlord, is a real estate investor and CPA whose practice is focused on helping real estate investors.

Ted began working as a CPA for a firm where his clients were real estate investors.  After he recognized the benefits of real estate investing, he started investing himself.

Like most investors, he started investing in single family properties, purchased, rehabbed and rented these properties.  As his experience grew, so too did his portfolio. Together with friends, they purchased and grew a portfolio of smaller multifamily properties in SE Florida.   

Since then, he has relocated to Connecticut where he currently invest passively in other syndicators projects..

Benefits of a Real Estate Focused CPA 

The benefits of a real estate focused CPA are not always recognized by investors.  It’s usually only after hearing Ted speak at an investor meeting that audience members will seek him out to discuss how they can improve their tax situation.  Ted’s experience as an investor helps him connect with investors as an investor rather than just a tax theory CPA.   

The difference between a generalist and a specialist is proportionate to your tax consequence.  There are a lot of great CPA’s that know a little about a lot of different business types, but this is of limited use to someone whose business is primarily real estate.  A real estate specialist makes it his job to stay up to date on the laws and opportunities to take advantage of the laws to better their clients tax situation.   

The Benefits of Real Estate

The benefits of real estate are numerous.  With a real estate focused CPA, you are more likely to take advantage of the legal opportunities to lower your tax bill.  Benefits include: 

  • The ability to depreciate the asset, and expense the depreciation against income; lower income equals lower tax owed.
  • Leverage the asset and expense the interest payments.
  • Receive loan proceeds without tax consequence.
  • 1031 Exchange into a larger property rather than pay capital gains from a sale.

Biggest Mistake Investors Make with Taxes

The biggest mistake investors make with taxes is hands down, failing to take advantage of the tax filing rules as they apply to deprecation.  This failure combined not doing cost segregation studies nor writing off abandoned capital assets when they are replaced, add up to significant missed opportunities.  He attributes this to the fact that the client’s prior CPA was not a real estate investor, and therefore did not fully understand the benefit of depreciation.

There are additional deductions available to you as a real estate investor that are often missed.  One additional expense often missed is the miles driven to your properties while you manage them. Even if you cannot take advantage of the losses in the current year, it helps you to accumulate these losses for the future when you have a significant gain from a sale.  These accumulated losses can then be used against your gain to lower your tax expense.  

What Class of Investor are You?

Depending on class of investor you are, will dictate the opportunities available for you when filing your taxes.  The taxpayer classifications available to you are: 

  • Passive: For the investor who invests as a limited partner in a syndication.  You are not allowed to take any passive losses against your Ordinary Income. 
  • Active - For the investor who actively manages his property, they can expense up to 25,000 if their Adjusted Gross Income is less than $100,000.  The ability to write off losses lessens as your income approaches $125,000.  
  • Real Estate Professional: If you work in Real Estate and spend more than 750 hours in Real Estate per year, you can expense 100% of your real estate expenses against your Adjusted Gross Income.

Any depreciation that you are not able to use in the current tax year, is carried forward to be used later.  If not used prior to sale, you can use to offset the gain from the sale of the property. 

Cash Flow

The goal of investing in real estate is cash flow.  The benefit of real estate is is amplified with the benefit of depreciation, in that the paper loss of depreciation against income can reduce your taxable income to zero.  Keep in mind that if you keep the property long enough, you will eventually run out of depreciation, unless you exchange or recapitalize the building with new investment. The reason most investors are not concerned with this is because the present value of cash is worth more than cash received at a future date.  

Selling a Property

Selling your property can cause a significant taxable event.  Prior to selling, you want to engage your CPA to determine what your tax consequences will be, and if you can do anything to minimize the tax consequences.  

If you elect to do a 1031 Exchange, you have guidelines you have to abide by to avoid the tax consequences.  These include time lines and the use of an exchange intermediary.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK: The Biggest Risk Real Estate Investors currently face are the local laws being passed in favor of tenants.  These include environmental consequences, caps on rent increase, landlord fees charged by local jurisdictions, etc.   

 

For more go to: http://lanzarocpa.com/

Phone: (203)922-1742

Email: ted@lanzarocpa.com

Sep 3, 2019

Darrin: [00:00:08] Ted Lanzaro, "What is the BIGGEST RISK?" [00:00:12][4.2]

Ted: [00:00:14] The BIGGEST RISK that I see for real estate investors right now has to do with state legislators making laws that are anti-landlord, essentially. A lot of this is primarily in the residential market. But like for example here in Connecticut there's legislation right now that would make a landlord 100 percent liable for lead paint poisoning in their apartment buildings. So if someone and this is you know this is sad stuff and you obviously want to avoid this happening. But to make the landlord 100 percent liable for for something like that that happens. If it's done in such a way that it may not have been their fault. You know in other words like they may have already done a remediation but then something happens and, but they're still 100 percent liable. So those kind of you know there's other laws that restrict the amount of rent you can charge. There's the laws pending that would change Section 8 program. So it's all of these kind of legislative initiatives that are that I feel are a big big threat to landlords. [00:00:14][0.0]

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