Podcast Summary
Passive Real Estate Investing Strategies for Monthly Income: Learn about refinancing, selling, private funds, renting to retirement, and 1031 exchanges for passive real estate investing, providing monthly income and avoiding tenant, maintenance, and property management hassles.
There are various ways to invest in real estate passively and earn monthly income without dealing with tenants, maintenance, or property management. During the BiggerPockets Podcast Show 535, David Green coached Carla Holmes on refinancing or selling her current portfolio to put the money towards her goal of retiring in 12 months. Additionally, investing in a private real estate fund like PPR Capital Management can offer passive income with a strong track record and no missed payments since 2007. Another option is renting to retirement, which allows buying a new construction turnkey rental property for no money down through discounted prices and low investor loans. Lastly, 1031 Pros can help save significant taxes through 1031 tax-deferred exchanges when selling properties. Overall, these strategies provide passive income opportunities for individuals looking to invest in real estate without the typical headaches.
Supporting veterans and real estate investors, PROS offers expertise and tax savings benefits: PROS, with a 30-year track record and 20,000 audit-free exchanges, supports veterans and real estate investors with expertise and tax savings benefits.
10/31 PROS offers expertise and tax savings benefits for various real estate investors and agents, with a proven track record of over 30 years and 20,000 audit-free exchanges in all 50 states. Carla, a listener and supporter of veterans, bid on a coaching call with David due to her alignment with his teachings and her personal intentions to support veterans. She chose to bid higher on David's coaching call because she found resonance with his concepts and believed it would provide additional value to her. The BiggerPockets community is encouraged to engage with the podcast and share their preferences for content styles.
Carla's project for truck drivers: Carla's goal is to purchase land for a quiet and safe parking lot for semi-truck drivers, acknowledging their essential role during the pandemic.
During the coaching call, Carla shared her goal of purchasing land and developing a parking lot specifically for semi-truck drivers. This project stems from her appreciation for these "silent heroes" who kept the country functioning despite the challenges brought by the COVID-19 situation. The land, which is zoned light residential and situated between a residential and industrial area, will provide a quiet and safe space for truck drivers to rest. This initiative not only benefits the drivers but also acts as a buffer between the two areas. This anecdote highlights Carla's competitive spirit and her desire to give back to the community, especially to those who often go unrecognized for their essential role in our society.
Turning a personal need into a business opportunity: Analyze income, expenses, work involved, and potential external hurdles before starting a business. Seek expert advice and be willing to adapt to ensure success.
Starting a business, even from a personal need, can grow into something much larger. The speaker in this conversation started with a need for storage space for their personal business, but saw an opportunity to help others and turn it into a larger self-storage business. When considering such a venture, it's important to analyze the income, expenses, work involved, and potential external hurdles. For example, the speaker mentioned an easement issue that could impact access to their land. It's crucial to understand the implications of such issues and have a plan to address them. Additionally, seeking advice from experts, like real estate professionals, can provide valuable insights and help ensure success. Overall, starting a business requires careful planning, research, and a willingness to adapt and overcome challenges.
Understanding easements in land development: Easements impact land use, transfer with title, and can be agreements between parties. Utilities are optional but beneficial, and land development involves active management and regulation compliance.
When purchasing land for development, easements can significantly impact its use. Developers may not own the land but have the right to use it, and some easements transfer with the title, meaning new owners must honor them. Other easements are agreements between parties and may not transfer, allowing new owners to revoke them. Understanding the presence and implications of easements is crucial in the land development process. Additionally, while utilities are not required, they can be beneficial for RV parks and other commercial uses. Lastly, it's essential to remember that purchasing land for development is not a purely passive investment, as it involves managing the project and ensuring compliance with local regulations.
Creating a Passive Real Estate Investment with Technology: Use technology for security and property management, minimize on-site presence, develop expenses upfront, outsource ongoing property oversight and maintenance, and ensure income covers all expenses.
The goal is to create a passive real estate investment by minimizing work and leveraging expenses. The investor plans to use technology for security and property management, requiring minimal on-site presence. Initial work will include development expenses like fencing and gate installation, but ongoing property oversight and maintenance can be outsourced to an expense. The ideal investment pays for its own problems to be solved. Hurdles, such as easement issues and property maintenance, can be translated into work and then expenses. The key is to ensure the income generated from the property is high enough to cover all expenses.
BRRRR strategy: Buy, Rehab, Rent, Refinance, and Repeat: Effective real estate investment strategy, but consider all expenses and start small, assess property performance before refinancing, and look for off-market deals
The BRRRR strategy, which involves buying, rehabbing, renting, refinancing, and repeating the process, can be an effective way to build wealth in real estate. However, it's important to consider all expenses involved, including property taxes, insurance, utilities, maintenance, and potential infrastructure costs. For instance, a commercial property for truckers may require additional amenities like bathrooms and showers. The total cost of the property, including land, development, and professional fees, can be substantial. The speaker in this conversation estimated the cost to be around $607,500, but emphasized the importance of starting small and gradually expanding. Recurring expenses, such as property taxes and insurance, were estimated to be around $25,100 per month before refinancing. The speaker also mentioned the importance of taking time to assess the property's performance before deciding to refinance and potentially take on a mortgage. In today's market, where inventory levels are low and competition is high, looking for off-market opportunities using tools like PropStream can be a smart strategy for finding potential deals.
Exploring Real Estate Investing Opportunities with PropStream, Walker Webcast, and Integra Development Group: PropStream offers extensive real estate data, lead automation, skip tracing, and marketing tools. Walker Webcast provides insights into commercial real estate, entrepreneurship, leadership, and the economy. Integra Development Group simplifies investing through rent to own strategy, offering cash flow, equity, and a solid exit plan.
PropStream is a leading real estate data provider, offering over 155 million properties nationwide with accurate comps and various search filters to help investors find motivated sellers efficiently. The platform also provides lead automation, skip tracing, and a marketing suite to close deals effectively. Meanwhile, the Walker webcast, hosted by the CEO of Walker and Dunlop, offers insights into commercial real estate, entrepreneurship, leadership, and the economy through interviews with industry experts. Lastly, Integra Development Group simplifies real estate investing through their rent to own strategy, providing immediate cash flow, built-in equity, and a foolproof exit plan. The discussed example of a parking lot investment aims for 77 spots, generating an average of $110 per month in rental income, considering hourly, daily, weekly, and monthly contracts, but not yet factoring in vacancy.
Opportunities for Additional Revenue at a Parking Lot: A parking lot near industrial areas, universities, and highways can generate significant revenue through lease agreements and additional services like food trucks, vending machines, and overflow parking for businesses.
The demand for parking spaces is high, and the location of the proposed parking lot, which is right off the highway and near industrial areas and universities, presents several opportunities for generating additional revenue. The owner is considering leasing out the parking lot to businesses in need of overflow parking or to individuals for tailgating events. Additionally, they plan to install vending machines or even food trucks to sell to visitors, and if the crowd is large enough, they could even own and operate the food trucks themselves. The potential profit from the parking lot stalls, which is around $6,000 per month after expenses, would be increased significantly with these additional revenue streams. Overall, the parking lot has the potential to be financially successful with a combination of lease agreements and additional services.
Determining a property's worth with cap rate calculation: Calculate cap rate to understand potential ROI, consider creative revenue streams, and target advertising to attract tenants effectively.
When considering an investment opportunity, it's essential to determine the property's worth by calculating the cap rate. This number can help you understand the potential return on investment and even provide insights into the possibility of refinancing or selling the property. Additionally, thinking creatively about the market and identifying the specific needs of your target demographic can lead to higher profit margins. For instance, in the case of a truck stop investment, considering the demand for food and potential RV rentals could lead to additional revenue streams. Utilizing targeted advertising on apps or websites popular among truck drivers is also a smart strategy to attract tenants effectively. Overall, exploring unique investment opportunities and solving problems for your target market can lead to greater profitability.
Speaker's fear of debt hindering growth in real estate: Despite having a successful real estate portfolio, the speaker's aversion to debt is preventing them from expanding it further and increasing passive income.
The speaker's aversion to debt, rooted in past experiences and upbringing, is hindering their potential growth in real estate. The speaker currently holds 9 properties with a total equity of 1.24 million, but is hesitant to consider leverage due to fear of debt. The speaker's past experiences with foreclosure and short sales have left them wary of debt, as they believe it could lead to financial instability. However, the speaker recognizes the potential benefits of using debt to expand their portfolio and increase passive income. The speaker is considering turning 5 of their properties into a larger investment, but is unsure of the next steps. The speaker's cash flow from the 9 properties is approximately $97.80 per month. The speaker's reluctance towards debt stems from a desire to have financial security and the belief that less debt equals more cash for unexpected expenses. However, the speaker acknowledges that their past experiences with debt have contributed to the loss of properties, some of which were cash flowing at the time. The speaker is now taking a different approach, separating personal income from rental income, to better prepare for potential financial setbacks.
Managing Cash Flow for Financial Success: Effective cash flow management is essential for personal finances and business success. Avoiding living above your means and considering risks, work, and rewards when making real estate investment decisions can lead to financial freedom.
Cash flow is crucial for both personal finances and business success. Living above your means can lead to financial struggles and even the loss of investments. Paying off a property does not eliminate all financial obligations, as there are still expenses like property taxes, insurance, and maintenance. When considering whether to sell, refinance, or hold onto real estate investments, it's essential to evaluate the risks, the work required, and the potential rewards. Selling may provide more equity, but refinancing allows for keeping the property and using the equity for other investments. Ultimately, careful planning and responsible financial management are key to achieving financial freedom.
Should I sell or refinance my property?: Consider the potential for appreciation, work required, and long-term gains before deciding to sell or refinance a property. Personal preferences and investment strategies also impact the decision.
Making decisions about whether to sell or refinance properties requires careful consideration of various factors. Selling a property means losing out on potential appreciation, while refinancing and keeping it allows for adding debt and longer-term gains. Properties causing more work and less promising for long-term appreciation should be considered for sale, while those requiring less work and showing greater potential for growth should be kept. It's essential to assess the specific circumstances of each property and make informed decisions based on these factors. Additionally, personal preferences and investment strategies play a role in the decision-making process.
Learn the fundamentals before going faster: Start small, learn the process, and gradually expand to minimize mistakes and losses in real estate investing
It's important to approach new experiences and investments gradually, learning the fundamentals before taking on more. Using the analogy of racing through a course, the speaker emphasizes the value of memorizing the course and anticipating turns before going faster. This strategy can help minimize mistakes and losses, allowing for a smoother transition to handling more complex situations. In real estate investing, this means starting with one parking lot and learning the process before expanding to more properties. This approach can lead to long-term success and the ability to refinance and invest in new opportunities when ready.
Waiting to refinance for financial gain: It's financially wiser to wait for the right opportunity to use funds from real estate projects instead of refinancing early and paying interest on the borrowed money. Inflation decreases the value of money, and delaying refinancing allows for more valuable investment opportunities in the future.
It's generally more financially beneficial to wait to refinance and use the funds from real estate projects when you're ready to use them, rather than pulling out money and paying interest on it beforehand. The value of the money decreases due to inflation, and the opportunity to invest in more valuable properties in the future may be missed. This strategy, known as "Birr," allows investors to recycle their capital and pursue multiple investment goals without feeling pressured to make hasty decisions. By leaving the money in the bank until the right opportunity arises, investors can avoid making impulsive investments and make the most of their resources.
Learning Real Estate Investing the Right Way: Approach real estate investing with a long-term perspective, focus on learning and preparation, and go slow to eventually drive like an expert.
When it comes to real estate investing, it's important to take your time and learn the ropes before rushing in and potentially making costly mistakes. The speaker emphasized the importance of understanding the asset class and what makes it work, as well as being prepared and having your finances in order before making a move. They also advised against trying to time the market perfectly and instead focusing on continuous improvement and learning. The speaker used the analogy of learning jujitsu to illustrate the importance of going slow at first and gradually building up speed and expertise. They also cautioned against making hasty decisions based on short-term gains, as these are often unsustainable and may lead to future financial difficulties. Overall, the key takeaway is to approach real estate investing with a long-term perspective, a focus on learning and preparation, and a willingness to go slow in order to eventually drive the car like an expert.
Staying Prepared for Real Estate Refinancing: Prepare documents, understand timeline, and keep looking for deals during refinance period to build wealth and reach financial goals.
Being prepared and taking a cautious approach is key when it comes to real estate refinancing. This means having all necessary documents ready and knowing where to access them, understanding the timeline for the process, and continuing to look for potential deals during the refinance period. The speaker emphasizes the importance of this approach for those looking to build wealth and reach financial goals in a specific timeframe. Additionally, the speaker commends the listener for their successful real estate investments and encourages them to continue their efforts, emphasizing the power of time in the market.
Carla's Approach to Commercial Property Investing: Remodeling and Renting: Carla, a real estate investor, shares her approach to commercial property investing by remodeling them and then charging market rent. She emphasizes the importance of ensuring finances are in order before creativity and encourages listeners to share ideas or thoughts on her investing journey.
Carla, a real estate investor, shared her approach to investing in commercial properties, which involves remodeling them before charging market rent. She mentioned that she wasn't charging the market rent for some properties and planned to do so only after remodeling. She also acknowledged that she enjoys the remodeling process and considers it a creative outlet. However, she emphasized the importance of ensuring that the finances are in order before being creative with property investments. Carla expressed her desire for a mentor in commercial real estate and encouraged listeners to leave comments with their thoughts on her investing journey or potential ideas for her. The podcast also featured a promotion for BiggerPockets Agent Finder, a resource for finding investor-friendly real estate agents.