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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: January, 2020
Jan 30, 2020

Financial Independence through Real Estate is available to you.  

Kaylee Mcmahon is proof that if you are willing to hustle, you can create financial freedom through real estate.  She is based in Texas and has tried a lot of different things, learned a lot and grown an impressive portfolio in a short amount of time.  

Single Family Real Estate

In the beginning, Kaylee got her real estate license and worked as an agent and broker listing and selling single family properties.  This availed her to do flips and learn how to manage projects. Flipping houses taught her that she has little patience for babysitting grown men, contractors, who cannot perform as they have promised.  But the experience taught her what is involved in renovating a property. 

Marketing 

Regardless of what you do, in order for others to know what you do, you have to market yourself.  Kaylee was featured on Ryan Harper’s Propelio TV, YouTube channel, which created a video resource for real estate investors.  Here, she met and networked with real estate professionals with many different skill sets while growing her sphere of influence in real estate.  

The Apartment Queen

At one of Propelio’s large networking events, she heard Will Crozier talk about the $780 Million  portfolio of multifamily properties he acquired in just eight years. He explained how the economies of scale multiply with multifamily.  At that moment, she knew the path to her future and true financial freedom through real estate. The Apartment Queen was born.  

She connected with Will, and other investors and learned all she could.  

Multifamily Syndication

To date Kaylee has syndicated six apartment properties in just under three years.  The first two deals happened almost simultaneously. Kaylee raised all the money herself, and leveraged the experience of her partners.  The experience of her partners provided Kaylee with a sounding board for her to solve the problems and issues that go with syndicating multifamily properties.   

Her partners also provided the networth required with the banks to qualify for the loans.  Lenders require your net worth be greater than the value of the property you are acquiring.  When you are just starting out, this is a great opportunity to find and work with a high net worth investor. 

Raising Money

Raising money in the beginning is tough.  You have no track record, everything is new.  The key she has learned is to continuously be raising capital.  When she meets with her investors, she qualifies what her investor is looking for and how much they have to invest.  Then she stays in touch with her investors.  

Her efforts have paid off.  Now her deals are getting oversubscribed, and she is able to raise millions in hours.  

Independence

Real estate has provided independence for Kaylee.  As an agent, she made enough money so that she could afford to live on her own.  Her success has allowed her additional opportunities for networking and travel so that she can get away from work and recharge.  Being alone provides her the time to evaluate what she is doing and how it is working for her.  

BIGGEST RISK 

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

BIGGEST RISK:

I think the BIGGEST RISK in what I do, multi-family investing, is making sure that the deal the way that you buy it. If you don't buy it, right. Sorry, sucker! 

The point is, is you want to buy it at the right price to where there's a margin of error. There's a margin. So, for example, if you screw something up, it's like, OK, well, we have enough cash sitting over here, we can fix that problem. Or you want to be as far away from foreclosure point as possible. 

You know, everyone's everyone's freaking out honestly about, you know, these the cycle changing and coming.  I think people are freaking out and that's going to cause an issue. I don't think that there really is going to be an issue probably for another three years. But I think because people are preemptively freaking out. You know, so you have to mitigate the risk.

So one thing I build in to the underwriting on a deal is you want to look at the market vacancy. So for me, I go ahead and say, OK, let's look at the deal. If we have to drop the rents or if we have to increase vacancy 10 percent. So I do that and then I take the rent number or the rent amounts we think we can get. And when I reduce rent and take the actuals. What it's doing today, not what we think we can, which is twelve. But on an actual worth doing today, I take that down 10 percent. 

Let's decrease rents 10 percent because we have nonrecourse debt on these loans. Right. I check out the expenses and I use the expenses at the same rate of growth. So like if to expense growth every year. Expenses are going to increase. And so I say, OK, we're gonna grow 2 percent every year. 

I could talk on this forever, but there's there's several stress tests that we put our deals through to make sure that we can ride out a recession, which I think is the biggest risk.

For more go to:

admin@theapartmentqueen.com

Website: theapartmentqueen.com

Podcast: #1 Leading Ladies

Jan 28, 2020

I think the BIGGEST RISK in what I do, multi-family investing, is making sure that the deal the way that you buy it. Because like honestly, the way you buy it means everything. I mean, if you don't buy it, right. Sorry, sucker. You know, whether whatever whether it's you know, you're not operating it right? 

The point is, is you want to buy it at the right price to where there's a margin of error. There's a margin. So, for example, if you screw something up, it's like, OK, well, we have enough cash sitting over here, we can fix that problem. Or you want to be as far away from foreclosure point as possible. So and it's the same thing with what's going to happen here with the election coming and the economy changing. You know, everyone's everyone's freaking out honestly about, you know, these the cycle changing and coming, And it should have already happened, honestly. And so I think what's going to happen and I'm listening and I'm listening and, you know, you have to be aware. I think people are freaking out and that's going to cause an issue. I don't think that there really is going to be an issue probably for another three years. But I think because people are preemptively freaking out. I think something's going to happen in the next twelve months. The 12 to 24 months, honestly. But I'm just gonna go ahead and assume twelve months, worst case or best case or whatever, and prepare for that. You know, so to mitigate the risk.

What's cool about apartments? I'm going to read this line from this book. I just spoke at a trust company today and I was like, hey, guys, like multifamily real estate is so cool because of this statistic right here. So I'll read it for everybody, so this book is awesome. I don't know if you can see it, but it's. The Perfect Investment by Paul Moore. And it's great for my passive investors. I give it to all of them so they can see why this is so different in single family. So "the multi-family delinquency rate at its peak was 90 percent lower than the residential rate in most of the downturn since the Great Depression". 

So meaning that Fannie Mae, Freddie Mac, nonrecourse loans, they do so much due diligence on the operators,the deal itself, everything. I mean, I just signed on a Freddie loan last week, you know, for this deal that we're done now. And they just have to vet all of us. We have to get an organization chart. We have to give them our track records. I mean, on and on and on. So it's not I can't say the word safe, but I mean, you have to mitigate risk. And so just knowing that that is happening because of the way the underwritten, a lot of my passives love nonrecourse loan debt on the deals that they might invest in because they know that's the case. So that's that's one thing I'll point out. As far as the difference between single and multi, that helps just inherently avoid some risk.

Then for us, we have to underwrite the deal conservatively. So everybody in their mother is going to say, oh, I'm conservative. What does that mean? You know, it's not I'm conservative like I'm a Republican. What it means is, like I've said, OK, so if you look at the market vacancy, the market rent, the market's expenses and some other things, and we'll just stick with those for now. What is the market bearing right now? What is it done in the last three years? What is it done at its worst? And what what could it do? Because I don't have a crystal ball. But there's some economists, friends of mine and some friends. 

I've been in the biz for a long time. And I kind of use these stress tests, if you will, to test the deals. And if they pass these tests, then I feel comfortable moving forward with that deal, because like I was saying, you know, if you set it up right, you're going to make it through a recession versus, you know, the housing single family goes like this, you know, and you just have to ride the wave. And I don't want to ride the wave. And I don't want my people to ride the wave. 

I don't buy these outright with my own cash. I use investors money to invest. So we have to buy. right. Because I would die if somebody was like, "oh, I gave you my educational savings account for my child" or "I gave you my retirement my whole life. I would literally die". If I ever screwed someone over by not doing my due diligence.

So one thing I build in to the underwriting on a deal is you want to look at the market vacancy. So for me, I go ahead and say, OK, let's look at the deal. If we have to drop the rents or if we have to increase vacancy 10 percent. So I do that and then I take the rent number or the rent amounts we think we can get. And when I reduce that 10, actually, no, I take the actuals. What it's doing today, not what we think we can, which is twelve. But on an actual worth doing today, I take that down 10 percent. Let's decrease rents 10 percent because we have nonrecourse debt on these loans. Right. So they required that we keep the student population under a certain percentage. That we keep the occupancy over a certain percentage, that we meet these certain things to keep the loan, to keep qualified for the loan. 

There might be a time period where people aren't getting jobs and they're losing jobs. They don't have enough money to pay rent. And so to keep them in there and to keep our occupancy high enough to stay in that loan and not make it a recourse loan, we may have to drop the rents it up or an amount. So worst case they can see goes up 10 percent. Rents decrease 10 percent. That's a really good spread that I use. See how far it is both over the debt service. What we have to pay and then plus the bill to keep the lights on. One thing that I guess I automatically do this, but somebody else brought it up.

Hey, I check out the expenses and I use the expenses at the same rate of growth. So like if to expense growth every year. Expenses are going to increase. And so I say, OK, we're gonna go 2 percent every year. We're going to go at the rate of growth, 2 percent every year. So I think that's reasonable. It's not super low. Some people do like 1 percent or whatever. It's at the rate of growth which the wash. It makes sense. Anyway, I could talk on this forever, but there's there's several stress tests that we put our deals through to make sure that we can ride out a recession, which I think is the biggest risk.

Jan 23, 2020

Do you know how to leverage Social Media for Commercial Real Estate?

Matthew Laborde, principal of Elifin Realty, a commercial real estate brokerage in Baton Rouge, LA, is successfully leveraging social media to create a recognizable brand and attract clients.  He worked hard and in just three years he was the 2nd largest producer in the firm! On his 27th birthday, he started his own firm, Elifin Realty. 

How to Start with Social Media

How do you start to use social media?  You start. When Matthew started in commercial real estate at nineteen years old, Matthew had sworn off social media.  Prior to 2018, he used social media to connect with others, and rally for a cause. He did not use social media for business.  

Why use Social Media for Business?

If people don’t know you are in business, how are they going to find you?  The first time you post for business is awkward. It will continue to be until you find your way.  Your goal in the beginning is to connect with people and find the people who are your fans or potential clients.  

Start by connecting with others and commenting on their posts.  Get comfortable being uncomfortable. Your connections, will become your audience.  They will choose to engage with you if your post provides value for them.  

Be Vulnerable Make Deeper Connections 

Your audience will be compelled to pay attention if they find you are willing to be vulnerable and show more than just a highlight reel.  Matthew jumped off the vulnerable pier and into the deep end of uncomfortable when he made the decision to document his journey towards starring in a musical.  That may not sound like much unless you don’t sing, dance or act.

Matthew posted pictures of him in tights, and singing in public.  To deepen his connection with his contacts and further his progression of performing in front of others, he posted a challenge for anyone, anytime to request him to sing a song in public.   

What to Post

Learning what to post can take time.  Just remember you are trying to connect with your contacts and provide value.  This does not have to be just information about your business. You can comment on activities in your community or comment on other people’s page if you have something that is relevant.  

Matthew and Elifin utilize the different platforms to post a sample of the original post found on their website.  This is an excellent way to gain SEO ranking on your website by linking to your website utilizing your keywords.

Answer questions that your customers have asked you.  Elifin has created a list of questions that clients ask, where members of the firm provide video answers.  

Where to Post on Social Media

How many social media platforms do you need to be on?  Matthew has limited his posting to two: Facebook and Linkedin.  If it is anything related to business, Matthew post, the post the exact same information on each Facebook & Linkedin.  Find where your clients and prospects engage on social media and post there. 

Traction on Social Media

How long does it take to create traction on Social Media?  When you commit to utilizing social media and you are posting regularly.  

  • Authentic
  • Provide value to client
  • Keep posting
  • Post more often

You are probably thinking, “one more thing to do”, “every day”, right?  Matthew has figured out how to continue to post regularly without a lot of extra effort.  

To do this, he recommends that you find a part of your day that you can create a small nugget of content you can post.  Think of the questions your clients or colleagues asked during the day and take a minute to provide an answer on video speaking to your audience.  If you read a trade journal, or something of local importance, take a minute and comment online. Over time, you will develop an identity, and people will recognize you as an expert.   

Do I need to Spend Money

You do NOT need to spend money to establish yourself on social media.  If you connect with others, post valuable content regularly that speaks to your audience, you do not need to spend money on ads.  Organic, original content will 

BIGGEST RISK 

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

BIGGEST RISK: Matthew Laborde, what is the BIGGEST RISK? 

Matthew: The BIGGEST RISK, so I'm going to stay on topic for this one and I'll speak to the biggest risk for business owners and agents, right. In general, especially for the, I would say the veteran agent, the more mature agent and older agent.  

The older business owners not engaging in social media is a huge risk.  It's this wide open field that you might, as the veteran, you might have the capital to invest, to have to hire people to do this for you.  But if you don't believe that it can help your business, and if you don't take the time to understand it, then you're going to miss a huge opportunity and open it up for a younger generation, like myself, to come in and take market share. So I'd say that's a huge risk that you need to consider.

For more go to:

Facebook: Matthew Laborde

Linkedin: Matthew Laborde

Website: https://elifinrealty.com/

Jan 21, 2020

BIGGEST RISK: Matthew Laborde, what is the BIGGEST RISK? 

Matthew: The BIGGEST RISK, so I'm going to stay on topic for this one and I'll speak to the biggest risk for business owners and agents, right. In general, especially for the, I would say the veteran agent, the more mature agent and older agent.  

The older business owners not engaging in social media is a huge risk.  It's this wide open field that you might, as the veteran, you might have the capital to invest, to have to hire people to do this for you.  But if you don't believe that it can help your business, and if you don't take the time to understand it, then you're going to miss a huge opportunity and open it up for a younger generation, like myself, to come in and take market share. So I'd say that's a huge risk that you need to consider.

Jan 16, 2020

Women investing in Commercial Real Estate are rare.  Why is that?

Beth Azor, “The Canvassing Queen”,principal at Azor Advisory Services, is a rare bird in commercial real estate.  She is a full time Commercial Real Estate Broker, Developer & Investor.  

Residential Real Estate

Beth grew up with two residential real estate agents for parents.  As soon as she turned 18, she got her real estate license and dabbled in real estate.  After college, she worked for a non profit that paid very little. To make additional income, she worked as a real estate agent on weekends.  

In two years her non profit salary doubled, but she still made more money working weekends in residential real estate, but real estate was so boring. 

The residential developer she worked for had Beth hold an open house in a luxury home development.  She spent most of her time reading People Magazine while waiting for prospects to show up for a tour of the model home.  

When a friend suggested she consider commercial real estate, she thought why?  How much more boring could raw land be than residential housing?

Then she learned about the possibilities in commercial real estate.  She could help developers and investors solve problems, create wealth and achieve the American Dream.

Commercial Real Estate 

Beth thrived in commercial real estate.  The commercial real estate firm she started with provided a rich environment where she could grow and become a commercial real estate professional.  In eighteen years, the firm grew from 11 to 125 people and she became the president of the firm.  

During her time with this firm, she found a passion, teaching agents how to lease vacant spaces.  She also invested in multiple commercial real estate properties as a passive investor with her partner.

At the end of run, she was a single mom of a 4 year old and recognized that the demands of running a large firm did not match her desire to be active in her kid’s lives.  

In  2004, Beth started Azor Advisory Services where she took the lead on investing in commercial real estate.  Also, because she was recognized as an expert in leasing, other commercial real estate firms reached out to her to teach their agents how to become experts in leasing.  

Retail Leasing

Beth is known by her fellow CRE professionals as the “Canvassing Queen”, referring to her constant canvassing for prospective tenants in her retail centers.  She regularly teaches courses on how to lease space, and has written two books on the subject. 

Don’t Say No for the Prospect - how-to manual on overcoming fear and negative self talk. 

The Retail Leasing Playbook - step-by-step guide book offers clear instructions that every aspiring retail leasing agent can adapt to jumpstart their own career.

Retail real estate has changed dramatically since the invention of the internet and Amazon.  

The Amazon effect has disrupted retail businesses and their need for a brick and mortar location.  The days of going to the mall to find your pair of shoes have mostly been replaced by shoppers scrolling their computer screen, 

Retail is Not Dead

Beth assures us that Retail is not dead.  Instead, shoppers are going to the mall for an experience, looking for something they cannot buy online.  Retail product sales has gone on line. Amazon’s biggest seller is shoes since they purchased Zappos. People are short on time and looking for a friction free solutions.  Retail is now made up of the five “F” words.

  • Food; restaurants.  For the first time in history, restaurant sales exceed grocery sales!  Beyond the eat in, carry out, Uber Eats, GrubHub, food delivery is dominate.  Many restaurants now have multiple parking spaces in front of their restaurant for delivery vehicles to pick up their order for delivery.
  • Fun: Competitive socializing.  Barcade; this is the combination of arcade with the bar, ie: ax throwing.  Kids gaming, ie: bounce houses, trampolines, escape games, i-Fly.

 

  • Fitness: Fitness boutique; gyms, martial arts studios, pilates studios, etc.

 

  • Physicians: Urgent care, Physical Therapy, Podiatrist, Chiropractor, Drug stores
  • Furniture: Specialty furniture sales.  

Women Investing in Commercial Real Estate

Where are women investing in commercial real estate?  Commercial real estate has provided Beth with substantial growth opportunities.  She invested passively in multiple properties while at the firm she started with.  When she started Azor Advisory Services she was the lead investor/ sponsor responsible for finding the deal and the investor capital. 

Over time, Beth has acquired a portfolio worth over $80 million of cash flow producing real estate.  When she talks with other women, she asks them, why are you not investing in real estate?

Sadly, she finds that women have numerous excuses for not investing in commercial real estate, from “I’m not smart enough” to “I’m not good with numbers”.  When she travels to conferences, she finds that less than 10 % of attendees are women, and that most female attendees are the spouse of an investor. Even in the deals that Beth raises money for, most investors tend to be male. 

To combat this, Beth has created The Commercial Real Estate Investment Symposium for Women.  There will be multiple successful women real estate investors speaking on topics including: 

  • How we have invested
  • How we found the deal
  • How we raised the money
  • Overcoming limiting beliefs

Tips for Women 

Women have to grab hold of the opportunity in real estate.  If they lack education, get educated. Are you are scared? Then find someone who has invested and get their help.  

Don’t follow the herd.  When Beth ask women how does the stock market work, they don’t know, yet they defer to investing in their 401k.  They do not understand that they will have to sell their stock in order to get their money.

Cash flowing real estate produces cash and appreciates in value.  So get educated and get in real estate.

BIGGEST RISK 

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

BIGGEST RISK: I think the BIGGEST RISK is lack of knowledge. And we luckily live in a world where we can mitigate that, but that does take time and effort and work to do so. So and you don't know what you don't know.

So when I was building my when I developed my first shopping center, which was about five years ago, I bought I bought a strip club and knocked it down and built a strip center. The municipality loved me. But I had never built anything before. And I was very nervous. And I and I had one partner in that deal. And I kept telling him, you know, I don't know what I'm doing. He said, don't worry, you'll figure it out. 

But I hired people that didn't know what they were doing to consult with me and teach me. And I read a lot of books. I listen to podcasts. So the biggest risk is the lack of education. But particularly you don't know what you don't know. And being wise and astute and I'm just a big believer in continually learning. I probably listened to three or four podcasts a day and I'm constantly reading. 

So that's how I mitigate that potential lack of knowledge. And that helps. But there's things, you know, our retail industry is going to be just lambasted by self-driving cars. So I'm fascinated and I'm reading all about that because if I I'm fifty nine. So if in the next ten years the self-driving car thing happens, our industry is going to shift again. So I'm trying to stay on top of it, but I don't know what I don't know. And so that's how I mitigate it. So that's the biggest risk, not knowing what you don't know.

Jan 14, 2020

I think the BIGGEST RISK is lack of knowledge. And we luckily live in a world where we can mitigate that, but that does take time and effort and work to do so. So and you don't know what you don't know. 

So when I was building my when I developed my first shopping center, which was about five years ago, I bought I bought a strip club and knocked it down and built a strip center. The muncipality loved me. But I had never built anything before. And I was very nervous. And I and I had one partner in that deal. And I kept telling him, you know, I don't know what I'm doing. He said, don't worry, you'll figure it out. 

But I hired people that didn't know what they were doing to consult with me and teach me. And I read a lot of books. I listen to podcasts. So the biggest risk is the lack of education. But particularly you don't know what you don't know. And being wise and astute and I'm just a big believer in continually learning. I probably listened to three or four podcasts a day and I'm constantly reading. 

So that's how I mitigate that potential lack of knowledge. And that helps. But there's things, you know, our retail industry is going to be just lambasted by self-driving cars. So I'm fascinated and I'm reading all about that because if I I'm fifty nine. So if in the next ten years the self-driving car thing happens, our industry is going to shift again. So I'm trying to stay on top of it, but I don't know what I don't know. And so that's how I mitigate it. So that's the biggest risk, not knowing what you don't know.

Jan 9, 2020

Market cycles in real estate create opportunities for investors to recognize value and make a profit when you buy.

Lee Kearney has flipped over 7,000 homes in the past decade.  In the crash of 2008, he lost everything, but at the bottom of the market he recognized the opportunity, and was able to make up for his loss.

Market Cycle

The market cycle is easier to identify in the past.  It has lows and highs which reflect when money is not trading hands to when money is effortless.  When you look back in time, you can see the point where buyers are spooked and are no longer willing to buy.  This marks the high point and the start of a down market. It is the point where buyers believe there is no more upside left in the market.  When this happens, it causes sellers to lower the price to attract buyers.

If sellers are unable to attract buyers quickly with a minor price adjustment, the risk of a crash increases.  When this period of uncertainty lingers on, the belief that things are bad spreads, and further reduces the number of potential buyers who are willing to part with their cash.  

Sellers who are not property capitalized to hold their property through the slow market cycle, can potentially lose their property.  Only when buyers recognize the opportunity and start buying again does the momentum of the market cycle change from downward to upward.  

At this point, the market begins to build support as buyers re-enter the market.  Buyers are able to pick up deals from sellers who are desperate, or exhausted and fearful that they will not be able to sell their property.  As the market continues, sellers continue to raise their price. This will continue for as long as buyers believe there is potential for additional value to be recognized. When the buyers no longer believe there is value in the market, the cycle starts all over again.

Interest Rate Affects Real Estate Market Cycle

There are multiple real estate market cycle drivers.  In the single family residential market, interest rates are a primary driver of price, affordability, buyers and sellers behavior.  

Most residential buyers are payment sensitive.  They can afford a certain amount each month for their housing budget, which is determined by the lenders debt to income ratio.  

When you borrow money to buy a house, if interest rates are lower, their payment will buy a more expensive home.  The reverse is true when interest rates increase. Instead of a more expensive home, the same payment can only buy a less expensive home.    

To help stimulate or extend the market cycle, the Federal Reserve can raise and lower the interest rate charged to commercial banks.  This directly affects the interest rates individuals can get for a mortgage, which affects home prices, all the while the buyer payment never changes.  

However, as prices continue to increase, regardless of interest rate, eventually, the cost of housing becomes unaffordable.  This causes the flow of money to stop, and a potential for a crash increases. 

Warning Signs

The warning signs were everywhere, in 2005, but few took notice.  Money was easy to get. Rates were low, and if you could fog a mirror, you could qualify for a loan.  

The Federal Reserve kept interest rates low, which artificially increased drove home prices up.  As the prices continued to go up, and lending standards lessened, buyers were counting on the market to continue pushing the values upward.  

Because buyers were stretching to get into homes, they had nothing left to save for a rainy day.  They were paying all they could to stay in their homes. If anything broke or they had an emergency, 

Buyers had no savings.  They were living hand to mouth.  When the banks failed, money stopped moving.  Most of the loans were interest only, or had balloons that came due when no banks were lending.  The buyers had loans they could not afford, homes they could not sell and mortgages for more than their homes were worth.  

Wages vs Home Price

Wages versus Home Price.  In order for prices to continue to increase, wages have to catch up.  If wages fail to increase, the demand for home owners will eventually go down.  These potential home owners will become renters. More demand for rental units will continue to push rents up.

When demand outpaces supply, prices go up.  More renters will push rents up. If wages do not go up with rents, renters will no longer be able to afford their apartment.  When renters cannot rent, landlords end up with vacancies.  

A vacant property can ruin an investor.  When a landlord does not have the capital needed to pay their mortgage, the bank will foreclose.  The bank is not in business to be a landlord, so it will elect to sell the property quickly for as much as they can get.  

These distressed properties provide a good opportunity for a buyer because now they can buy low and have a  cushion between their potential income and their expenses. 

In order to extend the market, wages eventually will need to increase.  

Investing vs Speculation

Investing versus speculating, the difference is one is following the herd while the other is not.  Investing is when you buy at the bottom of the market. This is when others are afraid to invest. The market can only go one way, and that is up.  

Speculating is when you follow the herd.  You are buying when everyone else is buying, at the top, and you hope that the property will go up in value.  

Long Term Wealth

Long term wealth is not determined by the number of doors you own.  Many investors think the number of doors measures wealth.

Real wealth is measured by equity.  When you buy low, and the market rises like it has for the past ten years, you end up with a lot of equity.  If you buy at the high, and prices go down, you have negative equity and a mortgage you can not refinance out of.

In addition to equity, you want positive cash flow.  This allows you to maintain the property, service your mortgage, accumulate reserves and potentially distribute profits to investors.    

When you buy low and have positive cash flow, you are on your way to creating wealth.

BIGGEST RISK 

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

BIGGEST RISK: 

Darrin:I've been asking my guests on CREPN Radio if they could take a look at their, you know, investing strategies and how they basically see the market and if they can identify what they consider to be the BIGGEST RISK. 

Lee: Sure. 

Darrin: And with that, I'd like to ask you, Lee Kearney, what is the BIGGEST RISK? 

Lee: If you're buying an asset today at market value, your BIGGEST RISK is the market risk. Is the risk of that asset going down in value? Now, if you're buying it wholesale, you don't bear the same risk. But if you're buying at a market price today in any primary market, I would say your biggest risk is that that assets gonna go down in value. 

For more go to:

www.realadvisors.com

Jan 7, 2020

Darrin:I've been asking my guests on CREPN Radio if they could take a look at their, you know, investing strategies and how they basically see the market and if they can identify what they consider to be the BIGGEST RISK. 

Lee: Sure. 

Darrin: And with that, I'd like to ask you, Lee Kearney, what is the BIGGEST RISK? 

Lee: If you're buying an asset today at market value, your BIGGEST RISK is the market risk. Is the risk of that asset going down in value? Now, if you're buying it wholesale, you don't bear the same risk. But if you're buying at a market price today in any primary market, I would say your biggest risk is that that assets gonna go down in value.

Jan 2, 2020

Credit is key to your financial freedom.

Debbie Bloyd is the principal at DLBmortgageservices.com where she provides mortgage and insurance service for her clients.  In order to qualify for the best lender rate or insurance product, good credit is key.

Your Credit

Your credit score is the measuring stick for all potential creditors to determine your ability to pay back your obligations.  Sadly, Debbie finds there are two types of borrowers. Those who are well educated about credit, with excellent credit, and those who are uneducated and have horrible credit.

Too many people do not understand the basics when it comes to personal finances.  While it is true, you have to use credit to establish credit, you have to use it wisely.  Maxing out all of your available credit cards negatively affects your credit rating. The algorithm used to determine your score will negatively reduce your score if you have no available credit.  So, to maintain a good credit score, don’t max out your credit.  

Additionally, many people suffer a trauma or event that they are unable to pay for.  If this happens to you, ignoring it and hoping it will go away is not a solution. When you don’t pay your debt, your creditor will report to the credit agencies that you have not paid your account as agreed, and your credit score will suffer badly.  If something happens to you, engage your creditors for a payment plan and make the payments as agreed. Or get help to rebuild your credit.

Building Your Credit

You have to use your credit in order to build it.  Where can you get credit? Student loans, car loans, credit cards, and professionally managed apartments will all report to the credit bureaus.  If you have too many open accounts, it will negatively affect your credit.  

Remember, buying stuff to impress people you do not know is not the way to build your credit.  

Decisions

Making good decisions is key to building your credit and creating financial freedom.   Debbie finds that many millennials make good income, but they are unwilling to make tough decisions that will provide long term financial freedom.  

Instead of renting a less expensive property and saving money for a down payment, they would rather rent the expensive new apartment and live the good life now.  Renting will not help them build equity.  

If you can’t afford a down payment, you have to make a decision.  You can either increase your income and lower your expenses. It is likely that it will be easier for you to lower your expenses right away.  Over time your savings will add up and provide you the nest egg needed to start building your financial freedom.  

Financial Freedom 

If you want financial freedom, you have to make the tough decisions that will provide you the path to ownership.  Leasing the newest most expensive car will not help you build your financial freedom. To build your financial freedom, you have to have ownership.  

Home loan interest rates are the lowest they have been.  There is not a better time to get in the ownership market.  Current rates are for owner occupied properties are in the low 3% and non owner occupied are in the low 4’s.

A great way to get started is to buy a fixer upper.  Buy low, improve the property and your sweat equity gives you the opportunity to grow wealth.  Now you have options. If you want to move into a larger property, you can use your equity for the down payment on a larger home and end up with an affordable mortgage.  Or if you want to add a rental property, you can borrow the equity from your primary home to buy a rental home.  

This is the path to your financial freedom.  

BIGGEST RISK 

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

BIGGEST RISK: 

I think the BIGGEST RISK is that we're going to be running out of money and we're growing too old. So what I see happening to families, either with money or without money, is they're outliving their money. People say, how much do you need to have to retire? And I said, more than you think. And they're like, well, how much is enough? I don't know. It depends on how you want to live. 

And so I have most of my seniors either out living their money. And that's a huge concern for them. And they don't start worrying about that until it's too late to do anything about it. You and I both know long term care policies. You can buy those at a young age. You can buy the middle aged. You can buy them when you're 60. But after about 65, they become unaffordable. 

People are thinking too late because we don't know how old you are. Fifty five. I feel like I'm 35. I probably look like more like I'm 45. But I still mentally, I don't feel old at all. And so I think a lot of people that are baby boomers much older than us are in their 70s and they don't feel old at all. 

But what happens is things are going to start going wrong with them and they're not protected. They never thought they'd, number one, get to be this old or no to have anything happen to them. And they're not prepared and wipes out entire families.

For more go to:

Website:http://www.moneystrategieswithdebbie.com

Facebook: Debbie Bloyd

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