Podcast Summary
Learning from experiences and setting goals in real estate investing: Setting goals is crucial in real estate investing, but it's equally important to learn from past experiences to improve future deals.
Success in real estate investing doesn't come overnight, and it's important to learn from each deal to improve the next one. Josh Dorkin and Brandon Turner, hosts of the Bigger Pockets podcast, emphasized the importance of setting goals but also learning from experiences. They expressed their gratitude for the impact Bigger Pockets has had on their lives and the lives of millions of others in the real estate community. The show featured a local Denver investor who scaled up his business and shared unique funding sources and valuable insights. The podcast also mentioned a book sale with a 20% discount using the code "GiveThanks2016" on BiggerPockets.com/bookstore from Black Friday through Cyber Monday.
Expand real estate business with DealMachine and Rent to Retirement: Investors can grow their portfolios efficiently by utilizing DealMachine for off-market leads and data, Rent to Retirement for no-money down rental properties, and Host Financial for simplified mortgage applications.
DealMachine and Rent to Retirement offer valuable resources for real estate investors looking to expand their businesses. DealMachine provides access to comprehensive data for off-market deals and easier lead management, while Rent to Retirement enables investors to purchase new construction rental properties with little to no money down. Additionally, Host Financial simplifies the mortgage application process for investors. Overall, these tools and services can help investors grow their portfolios more efficiently and effectively. Mark Walker, a guest on the Bigger Pockets podcast, shared his success story of scaling his real estate business in Longmont, Colorado, to the point where he could quit his job and live off the passive income derived from his portfolio. His experience highlights the potential for growth and financial freedom in real estate investing.
Starting early and persisting in real estate pays off: Starting early in real estate and being persistent can lead to high returns. Set high goals, delegate management, and consider market conditions.
Starting early and being persistent in real estate investing can lead to significant returns. The speaker shared his journey starting in 2004 with a high cash-on-cash return on his first deal, taking a break, and then resuming in 2010 with development projects and later passive income from rental properties. He emphasized the importance of setting high returns and delegating property management to others if needed. The speaker also highlighted that timing and market conditions are crucial factors in real estate investing, as evidenced by his success in Denver around 2011 when properties were affordable.
Assessing Real Estate Investment Capabilities: Financial literacy, building relationships, and seizing opportunities are crucial for successful real estate investments. High returns can result from favorable financing options, but managing properties requires various skills.
Managing real estate investments can be challenging, and it's essential to assess your capabilities before diving in. The speaker shared his experience of buying his first property, a duplex in South Denver, which led to a 36% cash on cash return. He emphasized the importance of financial literacy, building relationships, and seizing opportunities. Cash on cash return refers to the annual profit from an investment before considering the mortgage payments or depreciation. It's calculated by subtracting the annual operating expenses from the annual rental income. In the speaker's case, the high return was due to a favorable financing option, an interest-only loan, which was common during that time. However, managing real estate requires various skills, such as lease enforcement and stress management. If these aspects are not appealing or manageable, it's wise to hire a property manager.
Partnering with experienced individuals in real estate leads to financial gains: Partnering with experienced individuals in real estate can save time, offer access to resources, and result in significant financial gains through shared profits.
Partnering with experienced individuals in real estate can lead to significant financial gains. In the discussed example, the speaker bought a duplex and then developed two more properties with the help of a general contractor. This partnership was beneficial because the general contractor had experience, connections to a portfolio lender, and the ability to bring in necessary resources to get the job done. The speaker was able to bring the down payment for the construction loan, and they split the profits with a flat 40% return for the speaker. Portfolio lenders, who keep the loans on their own books instead of selling them on the secondary market, can offer more loans for those looking to build a real estate portfolio. This partnership saved the speaker time and trouble, and it resulted in a successful real estate venture.
Expanding network leads to more deals: Networking and building relationships in real estate can lead to financial gains and access to new opportunities.
Building relationships is key to success in real estate investing. By investing in rental properties, the speaker not only gained financial returns but also expanded his network, leading him to meet a lender who introduced him to a power broker, bringing him even more deals. This concept was echoed in a recent episode featuring Justin Stamper, emphasizing the importance of networking and building relationships with experienced individuals in the industry. Through partnerships and commercial loans, the speaker was able to buy larger multifamily properties and experience different underwriting processes. This journey began with a 12-unit apartment complex in Denver, which although in a rougher area, offered an attractive return and served as an introduction to the multifamily space.
Navigating unexpected twists in real estate investing: Be patient, adaptable, and financially prepared for unexpected opportunities and challenges in real estate investing. Trust the process and remain mentally resilient.
Real estate investing requires patience and adaptability. The speaker shared his experience of buying a property with the intention to hold it for 10 years but selling it unexpectedly after a year due to a lucrative offer. He also mentioned the mental challenge of adjusting to not receiving a regular paycheck after quitting his job. Additionally, he discussed an unconventional property management arrangement with a fellow investor. Despite the unexpected twists and turns, the speaker emphasized the importance of being open to opportunities and trusting the process in real estate investing. It's essential to be financially prepared and mentally resilient to navigate the ups and downs of the market.
Redfin's comprehensive solution for buying or selling homes with personalized recommendations and local agents: Redfin helps sellers get the best prices with lower fees, while Airbnb can provide extra income and potentially financial independence for homeowners
Redfin offers a comprehensive solution for those looking to buy or sell homes, with frequent updates, personalized recommendations, and local agents to guide the process. For sellers, Redfin agents have a proven track record of getting the best prices. Redfin's fees are also significantly lower than competitors, allowing homeowners to save money. Additionally, Airbnb can provide extra income for homeowners, potentially even leading to financial independence. The speaker shares his personal experience of using Airbnb to gain the confidence to start his own real estate business. When considering quitting a job to pursue real estate, setting a financial goal can help determine the right time. The speaker shares his experience of waiting until he reached a certain income level before making the leap.
Learning from experienced mentors in real estate: Networking and gaining experience with industry veterans can lead to valuable opportunities and attractive financing options in real estate.
Networking and learning from experienced mentors can lead to valuable opportunities in real estate. The speaker shares his personal experience of feeling unfulfilled in his full-time job and turning to his cousin, a 30-year veteran in multifamily, for guidance. Through job shadowing, he gained insights into the industry and eventually acquired a 64-unit apartment complex in Texas with the help of his cousin's management company. The speaker emphasizes the importance of gaining experience and building relationships to increase chances of qualifying for attractive financing options, such as agency debt, which have nonrecourse loans and attractive terms but are difficult to obtain.
Focusing on property value and potential income for agency debt: Investors can secure agency debt by emphasizing a property's net worth and its ability to generate sufficient net operating income to cover debt payments, rather than their personal income or employment status.
When it comes to securing agency debt for real estate investments, lenders focus on the property's net worth and its ability to generate sufficient net operating income to cover debt payments. The investor's personal income or employment status is not a primary concern. Instead, they look at the relationship between the property's value and the loan amount, as well as the post-closing liquidity. For instance, the investor in the discussion shared his experience of acquiring a multifamily property through a loan broker, renovating it, and securing agency debt based on the property's value and potential income. The loan allowed him to borrow not just the acquisition price but also the renovation budget, effectively requiring minimal upfront capital. Soft costs, which include legal and loan origination fees, were rolled into the loan. The property's worth is projected to increase, with an exit plan involving a mid-three-digit price. The investor aims for an 11% cash-on-cash return in the first year and a high twenties Internal Rate of Return (IRR) over a five-year hold. This demonstrates the significance of focusing on the property's potential income and value when seeking agency debt.
Understanding Cash on Cash Return vs Internal Rate of Return in Real Estate Investments: Cash on cash return measures income from operations, while IRR includes capital gains and is crucial for larger investments. Legal costs for syndications can be high, so consider flat-fee options.
When evaluating real estate investments, it's essential to understand the difference between cash on cash return and Internal Rate of Return (IRR). Cash on cash return is the money coming back to you from the property's operations, while IRR is the total return, including capital gains, recognized upon exiting the investment. Cash on cash return is simpler to calculate for smaller deals, but IRR is crucial for larger investments, especially when raising funds from investors. Moreover, syndications, a legal structure for pooling resources to purchase larger real estate assets, involve significant legal costs. The speaker spent approximately $20,000 on legal fees for their first syndication. To keep costs down, it's recommended to explore flat-fee options with your attorney when engaging in a typical multifamily transaction.
Saving time and money with flat fee arrangements for real estate attorneys: First-time investors can save on legal fees by choosing a flat fee arrangement, but be prepared for unexpected city requirements and inspections when acquiring multifamily properties.
When it comes to hiring an attorney for real estate deals, opting for a flat fee arrangement upfront can save time and money, especially for first-time investors who may have more questions and require more guidance throughout the process. The speaker also shared his experience with managing a 64-unit property, mentioning that dealing with city requirements and inspections was more challenging than anticipated. Overall, it's essential to expect partnerships with local authorities when acquiring multifamily properties and be prepared for potential unexpected costs. Additionally, the speaker mentioned that, after the renovation phase, managing the property requires minimal time and effort due to professional property management.
Easier maintenance and higher returns with townhomes and condos: Investing in townhomes or condos offers easier maintenance through HOAs and potentially higher returns due to less land costs.
Investing in a townhome can be easier than investing in a single family house due to the presence of a homeowners association (HOA) that takes care of exterior maintenance. Additionally, the post-tax return on townhomes and condos is typically higher due to less land associated with the acquisition price. The speaker also emphasized the importance of taking action and learning as keys to success in real estate investing. When starting out, a newbie investor should look for housing shortages in areas with potential for value-add deals or improvements.
Learning and Taking Action in Real Estate Investing: Successful real estate investors continuously learn, set realistic goals, focus on value-add deals, and apply knowledge through action. Resources like 'Best Real Estate Investing Advice Ever, Volume 1' and 'Rich Dad Poor Dad' aid in learning, while hobbies provide balance.
Successful real estate investors are always learning and taking action based on that knowledge. They set realistic goals, such as completing their first deal and learning from it, and focus on value-add deals in areas with a housing shortage. Favorite resources for learning include books like "Best Real Estate Investing Advice Ever, Volume 1" and "Rich Dad Poor Dad." Hobbies provide balance and rejuvenation, with activities like traveling, skiing, camping, and spending time with family being popular. Ultimately, the key to success in real estate investing is a commitment to continuous learning and taking action on that knowledge.
Continuous learning and taking action in multifamily investing: Learn strategies, feel comfortable, take action to win or learn, find resources on BiggerPockets and LuxeMano.com
Continuous learning and taking action are key to achieving success in multifamily investing. Mark Walker, a guest on the BiggerPockets podcast, emphasized the importance of feeling comfortable with strategies and concepts through learning, and the necessity of taking action to avoid losing and instead, either winning or learning. He encouraged listeners to adopt this mindset and find him on BiggerPockets and his website, LuxeMano.com, for resources on boosting multifamily property NOI. The episode highlighted Mark's journey from working a job to achieving financial freedom through real estate, and his ability to simplify the process. The BiggerPockets community, which creates opportunities for learning and networking, was also acknowledged for its role in helping people like Mark succeed. Overall, the episode emphasized the importance of continuous learning, taking action, and the support of a community in achieving success in multifamily investing.
Expressing gratitude to listeners and encouraging engagement: Listeners are encouraged to subscribe, leave reviews, join the community, and surprise Josh with messages of gratitude. The hosts emphasized the importance of finding an investor-friendly agent and shared their appreciation for the impact of BiggerPockets on their lives.
The hosts of Bigger Pockets Radio, Josh Dorkin and Brandon Turner, expressed their gratitude to their listeners for tuning in to their show, even with the presence of Brandon, who they acknowledged can be grating. They also asked listeners to subscribe to their podcast, leave ratings and reviews, and join the BiggerPockets community. Josh shared that his real estate success is largely due to BiggerPockets, and Brandon suggested surprising Josh with messages of gratitude on social media. The hosts emphasized the importance of time in the real estate market and encouraged listeners to find an investor-friendly agent through BiggerPockets Agent Finder. Overall, the hosts expressed their appreciation for their listeners and the impact BiggerPockets has had on their lives and the lives of many others.
Find investor-friendly agents with BiggerPockets.com/deals: Utilize BiggerPockets.com/deals to connect with local agents, gain expertise, and confidently invest in real estate
BiggerPockets.com/deals offers a free resource for those looking to invest in real estate by instantly connecting them with investor-friendly local agents. These agents can provide valuable expertise in navigating neighborhoods, analyzing numbers, and making confident investment decisions. To get started, simply enter some details about what and where you want to buy. Remember, this service is for informational purposes only, and all investment decisions involve risk. Always consult with qualified advisors before investing and only risk capital you can afford to lose. BiggerPockets LLC disclaims all liability for any damages arising from the use of this podcast's information. So, head to biggerpockets.com/deals to find your investor-friendly agent and get one step closer to financial freedom.