Podcast Summary
From small to big in real estate: Building a successful real estate business involves starting small and scaling up, as demonstrated by David Green's journey to a 64-unit apartment complex.
Starting small in real estate and scaling up through commercial projects is a viable path to success, as shared by Brandon and David Green on the Bigger Pockets Podcast (episode 342). They discussed David's experience building a 64-unit apartment complex and how it marked the beginning of his realization of the potential for scaling a real estate business. Bigger Pockets is not just a community but also a publishing company, offering a variety of real estate books for those looking to learn. Additionally, Rent to Retirement provides an opportunity to invest in turnkey rental properties with no or low money down. Remember, good tenant screening is crucial for successful property management, and RentReady's new feature simplifies this process with TransUnion tenant screening and proof of income verification.
Automatic tenant income verification with Plaid reports: Through RentReady's system, tenants can securely provide landlords with financial data for thorough assessment, allowing informed decisions and eliminating gut checks.
RentReady's automatic tenant income verification system provides a thorough assessment of a potential tenant's financial stability through Plaid certified reports. This service, which is paid for and completed by the tenant through the desktop and mobile app, allows landlords to make informed decisions and eliminates the need for gut check tenant screening. Additionally, Chris Benson, a successful real estate investor, shared his journey into real estate, starting with a duplex and eventually expanding into apartment complexes and self-storage units. He emphasized the importance of time and how real estate's numbers-based approach fit his skill set. The interview also touched on the benefits of cold calling and the opportunities it can bring. Overall, the discussion highlighted the value of utilizing technology for tenant screening and the potential success that can be achieved through real estate investing.
From small deals to big opportunities: Starting small can lead to bigger opportunities in real estate. Persist, learn from mistakes, and consider partnering for success.
Starting small and learning from experiences can lead to bigger opportunities in real estate investing. The speaker, who was once a new member on BiggerPockets, listened to the podcast and aspired to be a guest. He began by buying duplexes with a goal of replacing his income, but soon realized he disliked dealing with tenant issues. He learned that small deals require the same amount of work as larger ones, but yield less profit. This insight led him to explore commercial multifamily real estate, which offered high-class tenants and mitigated risks. He achieved this by reaching out to an old acquaintance who owned a construction company and partnered with him. Reflecting on his journey, the speaker emphasized the importance of persistence and learning from mistakes. It's a reminder that starting small and growing can lead to significant accomplishments in real estate investing.
Forming a successful partnership for a commercial real estate project: Making a cold call to an old acquaintance led to a successful partnership for a commercial real estate project. Cheap land and strategic planning minimized risk and ensured luxury housing in a competitive market.
Building a successful commercial real estate project, such as an apartment complex, requires partnerships and careful planning. The speaker, who built a 64-unit complex in Rome, New York, made a cold call to an old acquaintance, Steve Buck from Buck Construction, after being inspired by his desire to scale his real estate business. The land in Rome, once part of a decimated town due to the closure of Griffiss Air Force Base, was cheap, and the municipality wanted to develop it. The speaker and Steve formed a partnership, with the speaker providing the equity and his wife's risk tolerance, and Steve's company handling the development details. The project cost was kept low due to the cheap land and the goal was to build luxury housing in a market with no competition. They built the complex in 16 unit phases to minimize risk and ensure the hypothesis was correct, requiring the development of infrastructure for the entire project before building each phase. This partnership and strategic planning led to the success of their first commercial multifamily project and served as a valuable learning experience.
Being the first to provide luxury housing in underserved areas: Risks of being first to market in real estate can lead to high demand and successful projects. Trust experienced partners and carefully select markets.
Being the first to provide luxury housing in underserved areas can lead to high demand and successful projects. The speaker shared his experience of developing a real estate project in phases, with infrastructure prepared for each subsequent phase. Initially, they were confident in filling 16 units but decided to take a risk and build for 32. This strategy paid off, as they were able to attract tenants from the local workforce who preferred living closer to their jobs. The risk of being first to market was emphasized, as having unique offerings sets a project apart from competitors. Construction costs increased with each phase, totaling between 2.2 and 2.4 million dollars per phase. The success of the project can be attributed to the right market selection and trusting the judgment of an experienced partner. However, the speaker acknowledged that if he had known more at the start, he might have approached the deal differently.
Learning from real estate development mistakes: Starting a real estate development project without experience can lead to financial challenges, but having the right partners and learning from mistakes can lead to future success.
Starting a large real estate development project without prior experience can lead to financial challenges, but having the right partners and learning from mistakes can lead to future success. The speaker shares his experience of building 64 units in the middle of a cornfield, where he had limited knowledge about development and relied heavily on his partners' expertise. Despite going over budget in the initial phase, he learned valuable lessons and eventually transitioned to syndication, raising money from others to accelerate his growth and focus on what he does best - sales. The speaker emphasizes the importance of having the right people in the right roles in a business. His journey began with a small project, but it taught him invaluable lessons and set him on a path towards building his own apartment complexes.
Self-awareness in Real Estate Investing: Recognize your strengths and weaknesses, adapt to new opportunities, and collaborate with complementary skills for personal enjoyment and financial success in real estate investing
Self-awareness and understanding one's strengths and weaknesses are crucial for success in real estate investing. The interviewee shared how he identified that operating multifamily properties wasn't for him, but he could leverage his sales skills to raise capital for professional operators and earn back end ownership. He emphasized the importance of recognizing what one is good at and finding a way to put that skill into practice, leading to both personal enjoyment and financial success. Additionally, he highlighted the importance of being open to new opportunities and recognizing that others may have skills that complement one's own, leading to mutually beneficial partnerships. Overall, the interviewee's story underscores the importance of self-awareness, adaptability, and collaboration in real estate investing.
Embrace uncertainty and take action: Success often comes from taking action despite uncertainty, adapting to new opportunities, and being open to change
Growth and success often come from taking action and embracing uncertainty. As one speaker put it, "you don't know where you're gonna end up, but knowing it'll be something good" is the mindset that sets apart those who find success from those who are always frustrated. This means jumping into new opportunities, even if you don't have all the answers, and being open to the fact that the path may change as you go. As another successful businessman, T. Boone Pickens, famously said, "deals create deals." Opportunities often present themselves unexpectedly, and the ability to adapt and move forward is key. Whether it's starting a business, pursuing a career, or making personal growth, the important thing is to keep moving and be open to the unexpected. So, don't wait until you have all the answers to take action. Instead, focus on the next step and trust that the path will reveal itself as you go.
Leveraging Partnerships for Growth: Finding a like-minded individual with complementary skills can help expand business goals and accelerate growth. Keep moving forward through challenges to expand your zone of clarity and reveal new opportunities.
Finding a like-minded individual with different skills can help accelerate personal and professional growth. Brandon's experience of expanding his business goals from 50 units to potentially over 1,000 units in a short time is a testament to this. Instead of pushing through challenges on your own, it can be more effective to let opportunities pull you forward. This can be achieved by taking on new challenges or hiring new talent, like an asset manager or a personal trainer. Using the analogy of driving through fog, it's important to keep moving forward instead of stopping and complaining about the uncertainty. By doing so, your zone of clarity will continue to expand and reveal new opportunities. Good tenant screening is also crucial in property management, and RentReady's new feature, proof of income verification, simplifies the process.
Revolutionizing Real Estate: Technology and Innovative Strategies: Technology streamlines real estate investing with tenant income verification and property search tools, while innovative strategies like self-storage and rent-to-own offer attractive returns
Technology is revolutionizing the real estate industry, making it easier and more efficient for investors to find opportunities and verify tenants. RentReady's automatic tenant income verification ensures financial stability through detailed reports, while PropStream helps find motivated sellers with access to over 155 million properties and 120 search filters. Investors like Chris are turning to alternative asset classes, such as self-storage, in response to market changes. Storage offers attractive returns, with data from the National Association of REITs supporting its potential. Integra Development Group simplifies real estate investing through their rent-to-own strategy, providing immediate cash flow, above-average rents, and built-in equity. Overall, technology and innovative strategies are transforming the real estate landscape, making it an exciting time for investors.
Significant growth opportunities in self-storage industry for regional operators and private investors: The self-storage industry, with under 25% market penetration by institutional investors, offers vast potential for growth for regional operators and private investors. Its resilience during the last recession and the value of building relationships make it an attractive investment opportunity.
The self-storage industry offers significant opportunities for growth due to its current underpenetration by institutional investors. With less than 25% of the market owned by six REITs and U-Haul, there is a vast potential for regional operators and private investors to build a substantial portfolio. The industry's resilience during the last recession, with stores losing less than 4% compared to the S&P 500's 22% decline, further highlights its appeal. The speaker's personal journey from cold-calling self-storage operators to becoming an investor and eventually joining Reliant as a partner demonstrates the value of building relationships and recognizing opportunities. Reliant, with just under 30,000 units, is one of the regional players in this growing market.
Investing in conservative asset classes during economic uncertainty: Considering conservative asset classes like mobile home parks during economic uncertainty can provide stability and potential for long-term gains as others may hesitate. Cap rates compressing and vacancy rates rising during recessions offer opportunities for aggressive moves.
During economic uncertainty, it's strategic to invest in conservative asset classes that others may be ignoring. David and Brandon's focus on mobile home parks is an excellent example of this approach. As cap rates continue to compress due to institutional money, it becomes increasingly challenging for investors to make substantial returns. By buying in these conservative asset classes when others are hesitant, investors can position themselves to make aggressive moves during a potential recession when vacancy rates rise, and investors may look to exit their investments. Additionally, the psychological aspect of tenants in mobile home parks not leaving, even during economic downturns, provides an added layer of stability to this investment strategy. Ultimately, it's crucial to resist following the herd and instead, carefully consider the market conditions and potential opportunities for long-term gains.
Don't blindly follow the crowd: Understand fundamentals, build expertise, and earn trust before seeking outside investment.
It's essential to understand the fundamentals and not blindly follow the crowd when making decisions, whether in real estate or other aspects of life. Money is a valuable resource that comes with responsibility, and raising capital from investors requires a solid track record, expertise, and trust. Don't rush into taking other people's time and resources without being fully prepared. Instead, learn from those who have experience and build a strong foundation before seeking outside investment. As the wise man once said, "Just because all the dogs are barking at the same tree, doesn't mean it's the right tree."
Establishing trust and thought leadership in capital raising: Providing valuable information and building a community can help attract passive investors and establish trust in capital raising. Be transparent, provide value, and establish yourself as a thought leader to build a successful investment business.
Building trust and thought leadership is crucial for successful capital raising. Trust is essential when dealing with other people's money, and having a track record and a strong platform can help establish that trust. Brandon Turner, as an example, has built a large following through his podcast and blog, providing valuable information and becoming a thought leader in real estate investing. This approach not only helps attract passive investors but also creates a community where people can learn and grow together. It's important to remember that giving information freely and helping others can lead to significant opportunities, as seen in the story of an investor who gained a large investment through his involvement in the BiggerPockets forums. In the world of capital raising, it's essential to be transparent, provide value, and establish trust to build a successful investment business.
University Endowments Investing in Real Estate, Especially Self-Storage: University endowments, like Yale, allocate a significant portion of their portfolios to real estate, particularly self-storage. These institutions manage trillions of dollars in assets and present a significant opportunity for real estate investors looking to raise capital.
University endowments, managing trillions of dollars in assets, are increasingly investing in real estate, particularly self-storage properties. Yale University, a leader in this space, has nearly 12% of its portfolio allocated to direct real estate. For real estate investors looking to raise capital, these institutions present a significant opportunity, with Yale alone managing over $500 billion in assets and investing a minimum of $75 million per deal. The self-storage sector, in particular, is attractive due to the lack of competition in desirable locations. In a recent deal, Reliant Real Estate Investments found a ground-up development opportunity in Naples, Florida, through a connection made over dinner. The landowner, who controlled an option on the land, was impressed by Reliant's expertise and agreed to a JV partnership, allowing them to minimize the amount of equity they needed to raise. The deal, a self-storage property in a prime Naples location, was a success, and Reliant continues to hold it.
Staying Opportunistic and Steadfast in Real Estate Deals: Being persistent and disciplined in real estate negotiations can lead to significant returns, but managing investor expectations and maintaining a realistic underwriting approach is crucial.
Being opportunistic and steadfast in pursuing a deal, even during challenging negotiations, can lead to significant returns. The speaker shared a personal experience where they held onto a storage development project despite difficulties in the land acquisition process. Ultimately, the project was a success, with the investors seeing a triple return of their investment within just over 2 years. However, managing investor expectations and maintaining a realistic underwriting approach is crucial to avoid taking on unnecessary risks. The real estate market has seen strong returns in the last decade, leading to high investor expectations, but it's essential to remember that not every deal will result in mid-to-high double-digit returns. Instead, focusing on long-term success and maintaining a disciplined approach is key.
Focus on creating value and staying open-minded: Successful real estate investors like David Green approach opportunities with an open mind, create value, and take action without getting overwhelmed by information. They believe in maintaining a balanced lifestyle through hobbies and outdoor activities.
Successful real estate investors like David Green approach opportunities with an open mind and a focus on creating value. They're not tied to a specific timeline and are always looking for new deals. Green also emphasized the importance of taking action and not getting overwhelmed by information. He shared his love for outdoor activities and mentioned Eric Schmidt's book "The $1,000,000,000,000 Coach" as his favorite business book. Green believes that successful real estate investors jump into action, and while it's important not to do it stupidly, the key is to get started. He also highlighted the importance of hobbies and outdoor activities for maintaining a balanced lifestyle. Overall, Green's approach to real estate investing is focused on creating value, staying open-minded, and taking action.
Take action and learn from mistakes: Success in real estate investing comes from taking action, making mistakes, and continuously learning.
While education is important in real estate investing, the only way to truly learn and grow is by taking action and experiencing the ups and downs firsthand. Chris Benson, a successful real estate investor, emphasized this during his interview on BiggerPockets Radio. He encouraged listeners to seek out knowledge but also to jump in and learn from their mistakes. Chris shared his journey from being new to real estate to becoming a successful investor through hard work and determination. He advised listeners to check out his educational website at chrisbenson.com and to follow him on LinkedIn for more resources. He also invited listeners to reach out to him and his team at Reliant Investments for further information. Overall, Chris's message was clear: take action, learn from your mistakes, and never stop learning.
