Podcast Summary
Treat real estate investing as a business: Expand networks, engage in business side, consider no money down turnkey rental properties for growth
Real estate investing should be treated as a business from the very beginning, even if you only own one property. Josh Dorkin and Brandon Turner of the Bigger Pockets podcast emphasized this point, sharing their own experiences and encouraging listeners to expand their networks by reaching out to new people in the industry. Additionally, they discussed an opportunity for investing in no money down turnkey rental properties through Rent to Retirement. This episode served as a reminder to actively engage in the business side of real estate and seek out opportunities for growth.
Investing in Real Estate with Minimal Upfront Capital: Explore Rent to Retirement and Connect Invest for no-money-down real estate investment opportunities. Consider student housing as a profitable niche. Easy loan qualification with Host Financial.
There are alternative ways to invest in real estate with little to no money down and enjoy passive income. Rent to Retirement and Connect Invest are platforms that allow you to participate in real estate investment with minimal upfront capital. Rent to Retirement offers opportunities to invest in new construction properties or invest with no money down, while Connect Invest allows you to invest in a diversified portfolio of commercial and residential real estate projects. Additionally, Host Financial offers easy qualification for loans, making it an attractive option for investors looking to grow their portfolio faster. Another key takeaway is the discussion about student housing as a niche, which was shared by Bill Sirius, a seasoned investor in this area since 1980. Overall, these platforms and strategies offer accessible and hassle-free ways to invest in real estate and generate passive income.
Starting real estate as a business from the start is crucial: Treating real estate as a business from the start, with a formal business structure and professional approach, can help maximize potential and minimize losses.
Treating real estate as a business from the very beginning is crucial for success. The speaker shared his personal experience of starting his real estate career in the 1980s during a recession in Oregon when interest rates were high, leading to significant losses. He emphasized the importance of recognizing the advantages of real estate investments, such as income, depreciation, equity build-up, and appreciation potential. However, he realized that his first attempt at real estate failed because he treated it as a hobby rather than a business. He made informal arrangements with tenants, lacked proper construction skills, and didn't have a formal business structure. After reading a book on landlording and property management, he learned the importance of treating real estate as a business from day one, even if one only owns one property. This meant getting a business name, meeting tenants in a professional setting, and having formal rental agreements. By treating real estate as a business, one can maximize its potential and minimize losses.
Professional Mindset for Landlording Success: Adopt a business approach, focus on a niche, and learn from failures to increase chances of success in landlording.
Treating landlording as a business, not a hobby, is crucial for success. This means having a professional mindset, understanding that tenants are clients or residents, and not friends. Failure is a part of the process, but holding on and learning from mistakes can lead to profit. Additionally, finding a niche market and becoming an expert in it is essential for success in real estate. Many people are overwhelmed by the many possibilities in real estate, but focusing on a specific niche and strategy can lead to better results. For instance, Bill failed in his early attempts at landlording due to lack of clarity on his strategy and expertise. He learned the hard way that being a jack-of-all-trades is not effective. By focusing on a niche and becoming an expert, one can increase their chances of success.
Finding a profitable niche in real estate: Focusing on a specific niche in real estate, like student housing, can lead to high rents, consistent occupancy, and minimal vacancies.
Finding a specific niche in real estate investing can lead to great success. This was exemplified by the speaker's experience with collecting 1979-1981 Toyota pickup trucks. By becoming an expert in this niche market, he was able to accurately determine the value of each truck and make profitable trades. Similarly, in real estate, focusing on a specific niche, such as student housing, can provide high rents, consistent occupancy, and minimal vacancies. Despite common misconceptions, student housing can be a lucrative investment opportunity. The key is to have a clear understanding of the niche and its unique challenges and benefits.
Investing in student rental properties: A roller coaster ride: Despite challenges like high turnover and managing large groups, student rentals offer low vacancy, high rents, and multiple cosigners for security. Parental cosigners and group leases help manage turnover and risk.
Investing in student rental properties comes with challenges, such as high turnover rates and managing large groups of tenants, but it also offers advantages like low vacancy rates, high rents, and the security of having multiple cosigners and deposits. The turnover can be managed by adapting to a roller coaster schedule, and group leases mean that all tenants are jointly responsible for the lease. Parental cosigners provide an added layer of security for landlords, making it a worthwhile investment despite the unique challenges it presents. Business in student housing is like going to war, requiring constant effort to keep expenses down and increase income. Overall, the highs and lows of student rental management make it an exciting and rewarding venture for real estate investors.
Staying Connected and Competitive in Student Property Management: Be responsive to tenants, address issues promptly, have an attractive online presence, begin marketing efforts early, consider campus culture and student population size for successful student property management.
Effective property management in the student market involves staying connected and competitive. This means being responsive to tenants and addressing any issues promptly to maintain a positive community. Additionally, having an attractive online presence through high-quality photos on a website is crucial, as students often research properties online before visiting in person. Marketing efforts should also begin early, as competition for rentals near universities can be fierce. Some properties may only be suitable for student tenants, and considering the campus culture and student population size can impact summer occupancy. Overall, successful student property management requires a proactive approach and a strong understanding of the unique needs and behaviors of this demographic.
Considering Campus Conditions for a Rental Business: To succeed in a campus rental business, provide essential amenities like lawn care, establish clear policies for student disputes, and efficiently use space in fraternity and sorority houses.
Starting a campus rental business requires careful consideration of specific campus conditions, providing necessary amenities like lawn care services, and implementing clear policies for handling issues such as student drama and pet ownership. Oregon State's growth makes it an attractive market, but potential landlords must assess the campus's unique needs. Lawn care is a crucial amenity that students often won't provide, so hiring a service is essential. Policies should aim to minimize landlord involvement in student disputes, with house managers serving as intermediaries. Fraternity and sorority houses can be rented out, but efficient use of space is essential to maximize return on investment.
Creating more bedrooms in student housing properties: Increasing bedrooms in student housing properties can boost rental income, but check local regulations and financing options to ensure profitability
Creating more bedrooms in student housing properties can significantly increase rental income. This can be achieved by converting garages, carports, and even entire buildings into multi-bedroom units. However, it's essential to check local city ordinances regarding the number of unrelated adults allowed to live together, as this can impact the size and potential profitability of the property. For instance, some communities may only allow a certain number of unrelated adults to live together, limiting the potential number of tenants. In one example, the investor shared how they turned an old cider factory into a campus rental with nine bedrooms and three baths, generating a substantial rental income. While the costs of purchasing and renovating the property were high, the increased rental income made it a financially advantageous investment. The investor also mentioned that they had obtained a city loan to help fund the project. Overall, the key takeaway is that creating more bedrooms in student housing properties can lead to increased rental income, but it's crucial to consider local regulations and financing options to make the project profitable.
Creating a Rental Business with Airbnb: Transforming small spaces, generating extra income, and using digital banking solutions can lead to a successful rental business.
Turning a property into a rental or short-term rental business, such as with Airbnb, can provide valuable extra income and even lead to quitting a 9 to 5 job. This was shared by the speaker, who had personally experienced this. Another takeaway is the creativity and resourcefulness in transforming small spaces, like those found in a former dental office, into functional living quarters. Lastly, using a digital banking solution like Relay can streamline the process of managing finances for multiple properties, making it easier and more efficient.
Fundrise offers bridge financing to top real estate investors on high-quality assets: Fundrise provides attractive interest rates by financing real estate deals with creditworthy borrowers, boasting over $800M in completed deals and an average net interest of 10.8%
Fundrise offers investors the opportunity to earn attractive interest rates by providing bridge financing to top real estate investors on high-quality assets with creditworthy borrowers. With over $800 million in private credit deals completed and an average net interest of 10.8%, this is a unique investment opportunity that has already shown significant success. The company's origins lie in student rental properties, but it has since expanded to other niches, including short sales and foreclosures, and multifamily properties in various markets. Founded in 2004, Fundrise has grown from a small operation to a large-scale business with multiple partnerships and a presence in several markets. The company's founder, Bill, started with a group of college students who learned the ropes of real estate investing through internships and went on to flip nearly 200 houses together. After growing tired of the complexities of the flipping business, Bill returned to the buy-and-hold model and expanded into new markets. Today, Fundrise continues to ride the wave of new opportunities and partnerships, making it an exciting investment option for those looking to diversify their portfolio.
Expanding Perspective for Enduring Business Growth: To build an enduringly great business, recognize the need for diverse talents and partnerships, and focus on building a strong team.
Building an enduringly great business requires thinking beyond the scope of your current operation and seeking out partnerships and a strong team to help you grow. This was a pivotal realization for the speaker, who was inspired by the idea of enduringly great companies as outlined in Jim Collins' book "Good to Great." At the time, the speaker's business was focused on campus rentals, but they recognized that to build something truly great, they needed to expand their perspective and bring in people with diverse gifts and energy. Today, the speaker's business has grown significantly, with over 400 housing units and apartment units across multiple cities, and a team of around 30 people. The importance of building a strong team cannot be overstated, and becoming a good team leader is a crucial aspect of growing a successful business.
Transitioning from solo to partnership mindset in real estate investing: Give up decision-making power for team's expertise, add value to properties for long-term financing
Transitioning from a sole proprietor mindset to a partnership team mindset in real estate investing can be both freeing and frustrating. It involves giving up some decision-making power and trusting your team to make decisions in their areas of responsibility. Financing is another important aspect of real estate investing, especially in student housing. Short-term financing options include mom and pop financing, ma and pa money, and hard money loans. To transition to long-term financing, it's essential to add value to the property through rehab, changing the building's nature, or adding bedrooms. The ultimate goal is to refinance all the money into lower-interest loans, although this may not always be achievable. The speaker shared his personal experience of starting with mom and pop financing and eventually transitioning to longer-term financing after adding value to the properties.
Targeting marketing for real estate deals: Focus on acquiring undervalued properties through targeted marketing in specific geographical areas to build a profitable real estate portfolio with minimal initial investment
Finding great real estate deals is the foundation for success in real estate investing. By focusing on acquiring properties at a significant discount, investors can leverage other people's money to build wealth. An effective strategy for finding these deals is through targeted marketing, such as the three-line ad Bill mentioned, which helped him purchase his first property. This strategy can be applied to specific geographical areas, like those near colleges and universities, where demand for rental properties is high. By targeting niche markets and looking for undervalued properties, investors can create a profitable portfolio while minimizing their initial investment.
Investing in off-campus student rentals with potential: Maximizing bedrooms and bathrooms, following fair housing laws, attracting students through pricing and needs, and having a renovation expert can lead to high rents and good occupancy in off-campus student rentals.
Investing in student rentals in areas that are a bit farther from campus, but have potential with the right renovations, can lead to higher rents and good occupancy without breaking the bank on purchase prices. However, it's crucial to follow fair housing laws and avoid any language or actions that could be perceived as discriminatory. Students prioritize bedrooms over other amenities, so maximizing the number of bedrooms and bathrooms in a property is key. Attracting students is self-selective through pricing and catering to their specific needs. Additionally, having a partner with expertise in renovations can be beneficial.
Investors with unique strategies stand out in the market: Find a niche, master it, and consider hiding property locations for a surprise effect during visits for a competitive edge.
Successful real estate investors find unique strategies to stand out in the market. The speaker shares an example of an investor who hides the location of his properties from potential buyers but wows them with the houses' interiors once they visit. Another investor, inspired by the first one, also adopted this strategy and built a business around it. The speaker emphasizes the importance of having a niche and mastering it. He also recommends reading books that stand the test of time, are researched, and are best read in a group setting for valuable feedback.
Approach investing like going to war: Educate, train, and take action to succeed in real estate investing, focusing on a niche and learning from opportunities.
Having the right mindset and taking action are key to successful real estate investing. According to Bill, it's important to approach investing as if you're going to war, as it requires education, training, and a lot of action. Following opportunities and getting really good at a niche are also important strategies. Bill shared the example of J.W. Marriott starting his hotel chain by providing catering on airlines and then realizing the need for good hotels at destinations. Bill emphasized that taking action, such as making offers on properties, is essential for buying a property. People can learn more about Bill and his businesses at stewardshipproperties.com and Stewardship Capital's website, which focuses on buying notes.
View real estate investing as stewardship, not ownership: Consider yourself a manager of assets, not an owner, and prioritize responsible and thoughtful management in real estate investing. Leave ratings and reviews to help grow the BiggerPockets community.
According to Bill Sirius from Stewardship Properties, it's important to view real estate investing as a form of stewardship rather than ownership. He emphasized that we are all just passing through this life and should consider ourselves as managers of the assets we've been entrusted. This perspective reminds him of his company's name and serves as a reminder for responsible and thoughtful management. Additionally, the team at BiggerPockets Podcast encouraged listeners to leave ratings and reviews on various platforms to help grow their community and reach more investors.
