Podcast Summary
Networking in Real Estate: Building Strong Relationships for Success: Reach out to top agents and contractors for referrals to expand your real estate business and meet key industry players. Effective networking can lead to lucrative deals and valuable insights.
Building relationships and networking can lead to valuable opportunities in real estate investing. The guests on this episode, Todd Daxheimer, shared his experience of how reaching out to the best agents and contractors in a market and asking for referrals helped him expand his business. This simple yet effective strategy can lead to meeting key players in the industry and potentially uncovering lucrative deals. Additionally, the episode provided valuable insights into raising capital, finding deals, and dealing with brokers in new areas. Overall, the discussion offered a fresh perspective on the importance of networking and building strong relationships in real estate investing.
A real estate investor's journey of self-education and first deal: Through self-education, timing, and unique financing options, a real estate investor was able to succeed in the industry despite market challenges.
Todd, a real estate investor from Minnesota, started his journey in the industry by reading self-help books and educating himself during his free time while his wife worked in the Twin Cities. He financed his first deal with an FHA 203k loan, which allowed him to put only a small amount down and cover the cost of repairs. Todd found the property through a real estate agent and ended up living in it for two years before selling it for a significant profit, even during a market crash. This experience taught him the value of education, timing, and taking advantage of unique financing options to succeed in real estate investing.
Using FHA loans for house hacking: FHA loans enable investors to live in and renovate a property, effectively getting paid to work on it and making a profit
Todd's unique advantage in real estate investing was his ability to use an FHA 2 or 3 k loan to purchase a property and live there while renovating it, effectively getting paid to work on the property. This strategy, also known as house hacking, allowed him to make a significant profit on his first investment. Although he encountered challenges, such as juggling multiple projects while working full-time and dealing with unexpected costs, the education he gained was worth it. Today, Todd's investing portfolio includes both rental properties and flips, and he continues to grow his real estate business.
Transitioning from hands-on to delegating for business growth: Scaling a real estate portfolio requires delegating tasks and letting go of control, allowing for better cash flow and operations in the 'in-between market' of small to midsize apartment buildings.
Building a successful real estate portfolio involves a strategic transition from hands-on management to building a system that can handle larger volumes. The speaker, who amassed 80 rental units and did over 150 flips, shared how he was forced to delegate tasks as he bought more properties and couldn't handle the renovations and management himself. He formed his team gradually and even did some tasks himself until he became too busy. This transition allowed him to scale his business, but it required letting go of some control. Additionally, the speaker emphasized the potential for better cash flow and operations in the "in-between market" of small to midsize apartment buildings, which are often overlooked by larger investors. This approach can lead to finding better deals and building a profitable real estate portfolio.
Gradually transitioning from a job to real estate investing: Consider timing and financial implications before quitting job, ensure income from real estate exceeds salary, and have a solid financial plan and supportive partner.
Transitioning out of a job into real estate investing can be done gradually, and it's important to ensure a smooth financial transition. Most employers will be willing to keep a good employee on a part-time basis if given the opportunity. However, it's essential to carefully consider the timing and financial implications before making the move. The speaker shared his personal experience of quitting his job only after ensuring that his income from real estate was greater than his teaching salary. He also emphasized that the process was less stressful after quitting, as he no longer had to manage a full-time job alongside his real estate investments. However, it's important to note that the stress levels can be high during both stages - while working full-time and managing a growing portfolio, as well as after quitting and taking on the full responsibility of managing the investments. Ultimately, it's crucial to have a solid financial plan and a supportive partner before making the leap.
Considering more than just low cap rates and high cash flow for real estate investments: Successful investors prioritize value add properties, strong job growth, population trends, affordable rents, and good returns for investors when choosing markets and investments.
Successful real estate investors consider various factors beyond just low cap rates and high cash flow when choosing markets and investments. The investor in this discussion prioritizes value add properties with a significant spread over market cap rates to provide a cushion for potential market shifts. He also looks for strong job growth, population trends, and affordable rents for tenants in markets like Cincinnati and Lexington, Kentucky. The overall market conditions and the ability to provide a good return for investors are also crucial considerations. It's essential to look at the entire picture when deciding where to invest, as some markets may offer strong cash flow but lack opportunities for value add or have unsustainable rent increases.
Analyzing a market's growth potential: Investors should consider both cash flow and market growth potential when making real estate investments. Use resources like major brokerages, government statistics, and city websites to research growth opportunities. Build local connections and relationships for successful market entry.
While cash flow is crucial in real estate investments, it's essential to also consider the growth potential of a market. Investors who overlook long-term opportunities may miss out on significant gains. To analyze a market's growth, resources like major brokerages, government statistics, and city websites can provide valuable information. Building a team in a new market involves establishing local connections, such as using a local phone number and meeting potential partners in person. Be cautious of relying solely on past market rankings and instead focus on forward-thinking research. When entering a new market, contact top local brokers for referrals and build relationships with key industry players.
Networking and visiting the market are crucial for real estate investment success: Network with industry professionals, visit the target market, and conduct thorough research for a successful real estate investment strategy
Building a successful real estate investment business involves extensive networking and referrals. Reach out to property managers, contractors, real estate brokers, and other industry professionals for valuable insights and connections. Visiting the target market before investing is crucial to ensure compatibility and understanding of the local market conditions. While online platforms like LoopNet can yield potential deals, personal connections and on-site visits are essential for making informed decisions. Ultimately, investing in a market where you have a personal connection and liking for the place can be a subconscious factor in your decision-making process. To assess the quality of an area, consider intuition, crime statistics, online resources, and engaging with local professionals. Networking, visiting the market, and thorough research are key components of a successful real estate investment strategy.
Finding off-market deals through broker relationships: Building relationships with top brokers in target markets can lead to exclusive investment opportunities and expand your real estate portfolio. Expressing interest in a specific property can lead to discovering more deals in the area.
Building relationships with brokers in target markets can lead to off-market deals and expand investment opportunities. The speaker shares his experience of finding an 84-unit apartment complex in Lexington, Kentucky, through a top broker in the city. He explains that by expressing interest in a specific property, he asked the broker to help him find more deals in the area. This approach led him to the 84-unit property that wasn't even listed yet. The speaker emphasizes the importance of brokers in real estate investing and the value of building strong relationships with them. While there is a commission involved, it is worth it in the long run. Additionally, the speaker discusses his financing strategy, mentioning that he raises capital from investors both before and after spotting deals. This approach allows him to have a pool of investors to approach with potential deals while ensuring that he has the necessary funds to close on the property.
Building relationships with potential investors: Maintain systems for nurturing relationships and educating potential investors to increase chances of securing investment
Raising large amounts of money for real estate deals can be a challenging and uncertain process, especially for those without extensive networks of wealthy investors. Building relationships and educating potential investors about your business is crucial, and maintaining a system for keeping in touch with interested parties is essential. Utilizing tools like Excel documents and regular mailers or newsletters can help nurture these relationships and increase the likelihood of securing investment when the opportunity arises. While it may take time and effort to establish these systems, the potential rewards of successfully raising capital for real estate deals can be significant.
Partnering for Real Estate Success: Expand capabilities, invest in more properties, and fund deals with partners or private investors. Determination and a 'how' mindset lead to unexpected opportunities.
Successful real estate investing often involves partnering with others and raising money to fund deals. This approach allows individuals to expand their capabilities and invest in more properties than they might be able to on their own. The speaker shares his personal experience of starting out by buying properties with partners and later bringing in private investors to fund deals. He emphasizes the importance of putting oneself out there and offering potential investors the opportunity to become real estate investors themselves. The mindset of constantly asking "how" to fund deals is crucial, and even those who have already achieved success in real estate investing can still benefit from bringing in partners or private money. The speaker's story of buying a ski resort with no clear plan for financing serves as a powerful reminder of the possibilities that can arise when one is determined to make a deal happen.
Roof decks add value to high-end multifamily properties: Roof decks can increase property value for high-end assets, but may not be worth investment for lower-end properties. Offering flexible leases and attracting good tenants are effective strategies for maximizing returns.
Having a roof deck on a multifamily building can add value, but it depends on the specific market and asset class. For high-end properties in desirable areas, a roof deck can make a property more attractive and set it apart from competitors. However, for lower-end properties, it may not be worth the investment. Another key takeaway is that offering shorter leases to tenants can be a good strategy for flexibility, but the best strategy is to focus on attracting and retaining good tenants through effective screening and management. Additionally, there are resources available to help investors grow their portfolios, such as Rent to Retirement's no money down investment opportunities and Host Financial's easy lending process. Overall, the discussion highlights the importance of understanding the market and making informed decisions to maximize the value of real estate investments.
Lease Lengths and Creative Solutions: In colder climates or areas with high turnover rates, shorter leases may be more attractive. Longer leases can benefit both parties in stable markets or with good tenants. Creative solutions like options to purchase, leasebacks, or land contracts can help manage holding costs and risk for property sellers.
The length of a lease can depend on the specific market conditions and the type of property being rented out. In colder climates or areas with high turnover rates, shorter leases like 3 to 6 months may be more attractive. However, in more stable markets or with good tenants, longer leases can benefit both parties. Additionally, when an owner wants to sell a property but isn't ready to move out yet, creative solutions like options to purchase, leasebacks, or land contracts can help tie up the property and manage holding costs and risk. Lastly, individuals who want to help out landlords but aren't licensed property managers can still offer assistance in various ways, such as mentoring, coaching, or showing properties, without being required to manage the property itself.
Exploring Real Estate Investing Beyond Being a Landlord: Consider property management, contract services, small ownership, or studying market analysis and strategies to expand real estate investing roles. Persistence, patience, and commitment are key to success.
There are various ways to get involved in real estate investing beyond just being a landlord. You can have property managers handle tenant calls and even take on contract services or become an employee. Another option is to seek a small ownership interest in a property or company. However, it's crucial to not cross the boundary and ensure trust and legal considerations are met. Additionally, successful real estate investors are persistent, patient, and committed to their goals. They understand the importance of studying the market and waiting for deals with sound numbers. Books like "Emerging Real Estate Markets" and "ABCs of Real Estate Investing" can provide valuable insights into market analysis and investing strategies. Lastly, for fun, this investor enjoys bow hunting, camping, hiking, and playing hockey.
Patience and authenticity are crucial in real estate investing: Successful investors prioritize finding the right market, building relationships, and securing deals before focusing on finances.
Patience and authenticity are key when it comes to real estate investing. Todd Decksheimer, a successful investor, emphasized the importance of not faking numbers or rushing into deals. Instead, investors should focus on finding the right market and building their network. Decksheimer also shared that he approaches his business by securing deals first and then figuring out the finances. This contrasts with the common approach of focusing on money and finances before securing deals. Decksheimer's research and market studies are also impressive, leaving the interviewers feeling like they need to revamp their own processes. Overall, the interview provided valuable insights and a mindset shift for those looking to invest in real estate. To learn more about Todd Decksheimer, check out his website ventureproperties.com, his new podcast "Pillars of Wealth Creation," or find him on BiggerPockets or LinkedIn under Todd Decksheimer.
Real Estate Investing: A Long-Term Journey: Stay focused on financial freedom, meet successful investors, and start small to achieve long-term success in real estate investing.
Real estate investing is a journey that requires preparation, involvement, and a long-term perspective. Todd shared his experiences and insights from his own journey, emphasizing the importance of family, being involved in leadership roles, and starting early. He also mentioned the significance of meeting successful investors as sources of inspiration and learning opportunities. Despite not having met his heroes yet, he expressed a desire to meet real estate investing legends like Ken McElroy and Sam Zell. Todd's last job as a dock boy at Bobbers Boat and Bait was a reminder of his humble beginnings and the importance of starting small and working hard. Overall, Todd's story highlights the importance of staying focused on financial freedom and learning from others in the industry.
Find an investor-friendly agent for successful real estate investing: Connect with local market experts via BiggerPockets Agent Finder for guidance, deal analysis, and confidence in real estate investments
If you're serious about real estate investing or looking to level up your game, finding an investor-friendly agent is a crucial step. With BiggerPockets Agent Finder, you can quickly connect with local market experts who can help guide you through the buying process, analyze potential deals, and build confidence in your investments. This free resource, available only at biggerpockets.com/deals, can help you navigate neighborhoods, numbers, and actions, bringing you closer to financial freedom. Remember, past performance is not indicative of future results, and it's essential to consult with qualified advisors before investing. Use BiggerPockets Agent Finder today at biggerpockets.com/deals to find your investor-friendly agent and start making informed real estate investments.
