Podcast Summary
Follow Bigger Pockets on Facebook for valuable real estate content: Stay informed and grow your real estate business by following Bigger Pockets on Facebook for articles, forum discussions, and weekly polls. Listen to their podcast for expert interviews and valuable insights.
Following the Bigger Pockets community on Facebook can provide valuable content and resources for real estate investors. The hosts, Josh Dorkin and Brandon Turner, encourage listeners to like their Facebook page for access to articles, forum discussions, and weekly polls. The content shared on Facebook can help investors grow their business and stay informed about new strategies. Additionally, the episode features an interview with Ankit Dougal, the owner of RER LLC, a real estate investment company based in New Jersey. Ankit shares his experience in various aspects of real estate investing and provides high-end content for both novice and experienced investors. The hosts express their excitement about the show's content and encourage listeners to ask questions for Ankit in the show notes. Overall, following the Bigger Pockets community on Facebook and listening to their podcast can provide valuable insights and resources for real estate investors.
Investing in Real Estate with Little to No Money Down: Through companies like Rent to Retirement and BAM Capital, investors can access real estate opportunities with minimal down payments and potentially high returns.
There are opportunities to invest in real estate with little to no money down through companies like Rent to Retirement and BAM Capital. Rent to Retirement offers discounted new construction properties and investor loans with low rates and minimal down payments, while BAM Capital is a trusted multifamily syndicator with a strong track record and offerings targeting cash flow stability, capital preservation, long term appreciation, and accelerated tax benefits. Ankita, who started in real estate as a young agent, emphasizes the importance of knowledge and learning your market and product class to gain credibility and succeed in the industry.
Starting to flip houses during market downturns: Profit from distressed properties, plan carefully, work hard, and finance smartly for success in real estate even during market downturns
Even during market downturns, there are opportunities to make significant profits in real estate through buying distressed properties at deep discounts. Ankit shares his experience of starting to flip houses during the market collapse in 2008, making a 30% profit on his first project, and then transitioning into becoming a landlord in 2011. He financed his substantial real estate business by syndicating projects with a few people and eventually attracting high net worth investors and a private equity group. This strategy allowed him to build a successful business model, despite the challenges of the market. The key lesson is that even when the market is not ideal, there are opportunities for success through careful planning, hard work, and smart financing.
Offering high profits to investors in the initial stages to build trust: To build trust with investors in a real estate syndication business, offer them a significant share of profits in the beginning.
Starting a real estate syndication business requires building trust with investors by offering them a significant share of profits in the initial stages. This was the approach taken by the speaker when he and his business partner started their firm in 2008. They needed to raise money to invest in distressed properties in high-cost areas like Jersey, where the cost of buying a property and investing in it could reach up to $300,000 for two young entrepreneurs. They began by offering their investors 70-80% of the profits, which was higher than the industry standard at the time. This approach allowed them to build a strong investor base and establish trust, as they were able to demonstrate their ability to generate returns. The investors in the first round were primarily friends and family, and later on, they expanded to their friends' connections and eventually family offices. This strategy of expanding through circles of influence was outlined in an article the speaker wrote and can be found at biggerpockets.com/show 56.
Expanding your network and securing investments from a wider pool of individuals: Focus on delivering impressive returns to initial investors to expand network, pursue a master's degree in real estate finance, and build a team of essential professionals like a real estate attorney, accountant, and SEC attorney.
Expanding your network and securing investments from a wider pool of individuals requires building a strong track record and leveraging your current connections. This process involves transitioning from friends and family (first circle) to acquaintances and professional networks (second circle). To make this jump, focus on delivering impressive returns to your initial investors, who will then be more likely to recommend you to their contacts. Additionally, pursuing a master's degree in real estate finance can provide valuable knowledge and skills for managing larger, more complex deals. However, the practical aspects of syndication, such as setting up legal structures and creating offering documents, are best learned through experience or by hiring professionals. A good real estate attorney, accountant, and SEC attorney are essential team members when engaging in syndications.
Understanding Private Placement Memorandums and Investing with Family: Private Placements require a legal document, the PPM, and investing with family comes with unique risks, requiring careful consideration.
A Private Placement Memorandum (PPM) is an essential legally protected document for raising capital, typically costing between $7,000 and $15,000. It outlines the business plan, risks, and potential returns of an investment opportunity. For beginners without significant funds, it might be tempting to seek investments from personal networks, but this approach comes with risks, especially when dealing with family and friends. The need for legal protection increases as the investment circle expands beyond the first circle. While some may argue against asking family for money due to potential complications and awkward conversations, the decision ultimately depends on individual circumstances and risk tolerance. The investment world is not a guaranteed success, and losses are inevitable. Therefore, carefully consider the potential consequences before involving family in your investment endeavors.
From asset flipping to landlord business: Overcoming operational challenges: Adaptability and persistence are key in real estate. Focus on 'no toilets, no tenants, no headaches' to minimize operational issues and scale your business.
Building and managing a successful real estate business involves making tough decisions and adapting to new challenges. The speaker shared his experience of shifting from flipping assets to building a landlord business, but soon realized that managing the day-to-day operations was becoming a significant obstacle. Despite implementing systems and hiring staff, he still faced operational headaches. This led him to reevaluate his business strategy and seek ways to minimize headaches, ultimately leading him to focus on "no toilets, no tenants, no headaches." This approach allowed him to scale his business and focus on growing his real estate portfolio, rather than being bogged down by operational issues. This story highlights the importance of being adaptable and persistent in the face of challenges, and the value of continuously refining business strategies to achieve long-term success.
Tax Liens: A Passive Investment for Multifamily Business Owners: Tax liens offer a high yield investment opportunity for multifamily business owners seeking a more passive income stream. By purchasing tax liens, investors help municipalities with cash for public services and have the chance to work with homeowners on payment plans.
Managing a multifamily business can be overwhelming and lead to burnout due to constant tenant issues and the need for immediate attention. For some investors, this can mean looking for alternative, more passive investments. Tax liens are one such option. A tax lien is a debt against a property due to unpaid property taxes. The municipality sells the tax lien at auction to investors, who can earn a high yield. In New Jersey, for example, the yield starts at 18%. By purchasing a tax lien, investors are essentially helping the municipality by providing them with much-needed cash for public services. Additionally, investors have the opportunity to work with the homeowner to establish a payment plan before the municipality takes the lien back and forecloses on the property. This makes tax liens an attractive alternative investment for those looking to build a more passive income stream while still contributing to the community.
Tax Lien Investing: Buying Property Debts for Profit: Tax lien investing lets you buy property debts at auctions, earn interest till debt is paid, and potentially gain property ownership if debt isn't repaid.
Tax lien investing involves buying a tax lien against a property with unpaid taxes, and the investor earns interest on the amount owed until the homeowner pays off the debt. The investor purchases the lien at an auction, where they bid down the interest rate, and once they own the lien, they have the right to collect the taxes due, plus their purchase price and the accrued interest. If the homeowner fails to pay, the investor can initiate a foreclosure process to take ownership of the property. The percentage of liens that get paid off versus those that don't varies by state, and the collection process can take several months to years. Investors can earn attractive returns by buying liens at low prices at auction and collecting the higher interest rate on the debt over time.
Tax Lien Investing: Risks and Rewards: Tax lien investing offers potential for high returns, but involves risks but most liens get redeemed, and investors earn annualized returns. Foreclosure process may be necessary if homeowner doesn't pay, with potential legal expenses and penalties.
Tax lien investing offers attractive returns, with approximately 95-97% of liens getting redeemed, and investors earning an annualized return on their investment. The redemption period varies by state, with some offering shorter periods for homeowners to pay back the investor before the foreclosure process begins. Banks may also pay the taxes themselves to preserve their interest in the property, or foreclose on the property and pay off the tax lien holder before transferring ownership. It's important to note that tax lien investing involves some risk, as there's a chance the homeowner may not redeem the lien, and the investor may need to initiate the foreclosure process to recover their investment. Additionally, legal expenses and potential penalties may be incurred during the foreclosure process. Overall, tax lien investing can provide attractive returns, but investors should be aware of the risks and potential complexities involved.
Investing in Tax Liens: Long-Term Commitment with Uncertain Rewards: Tax lien investing requires patience, as returns are uncertain and irregular. Strategize and set clear goals to maximize potential rewards.
Tax lien investing involves tying up your money for an extended period with uncertain redemption timelines and irregular income payments. You may not get paid back for up to 3 years, and during this time, you'll need to continue investing to preserve your right as the lienholder. This means you could potentially pay off previous lienholders to gain the right to foreclose on the property. The process can take anywhere from a few months to over a year, depending on the state. Despite these challenges, the potential rewards can be significant, especially if the property value appreciates during your investment period. It's crucial to approach tax lien investing as a business, with a clear strategy and investment goals, to maximize your returns.
Importance of Due Diligence in Tax Lien Investing: Neglecting due diligence in tax lien investing can lead to costly surprises. Research property value, check condition, and verify info. Passive investing options like Pine Financial's mortgage fund offer 8% preferred return and 70% net profits. Easy loan process with lenders like Host Financial. Simplify property insurance with NREIG.
Due diligence is a crucial step in investing in tax liens, even though you can't physically inspect the property. This means conducting research on the property's value, checking its condition from the outside, and verifying the information provided. Neglecting due diligence can lead to costly surprises, as a house that looked great on Google Maps might not be in the same condition in person. Another important takeaway is that there are ways to invest in real estate passively, such as through Pine Financial Group's mortgage fund, which offers a targeted 8% preferred return and 70% of net profits to investors. Additionally, working with lenders like Host Financial that make the loan process easy and efficient can help streamline the investment process. Lastly, using an insurance provider like NREIG, which specializes in real estate investor insurance, can simplify managing multiple properties and their insurance needs.
Thoroughly analyze potential investments with number crunching and on-site visits: Successful real estate investors use disciplined strategies, including detailed analysis and effective filters, to acquire high-yielding urban assets, even purchasing orphan liens without competition.
Successful real estate investing involves a disciplined approach and effective filtering strategies. The investor in this discussion emphasizes the importance of doing thorough number crunching on each potential investment opportunity, even if it means visiting every property in person. Their strategy focuses on high-yielding assets in urban markets, and they utilize various filters such as property type, property tax value, and Google maps to narrow down their list. They aim to buy about a dozen properties a month using both their own funds and syndicated tax lien money. An intriguing aspect of their approach is their focus on purchasing "orphan liens" – tax liens that were not sold at auction – which they are able to acquire without competition, often at a lower rate than the average auction starting bid.
Exploring the Orphan Tax Lien Market for Competitive Advantage: The orphan tax lien market, also known as the OTC market, offers competitive advantages for investors by providing fewer competitors and potentially higher returns. To succeed, stay informed about upcoming sales by contacting your tax collector and researching specific tax collectors for your area of interest.
In the world of tax lien investing, finding a niche is crucial for competing against larger players. The speaker discusses their success in the orphan lean or OTC market, where they buy liens at a higher rate with less competition. When buying at auctions, they've seen prices drop significantly over time, sometimes even with a premium paid above the lien's face value. The process of buying at auctions is similar to traditional auctions, with a tax collector announcing properties and bids based on interest rates. To get started, investors can contact their tax collector to find out when and how to attend local tax lien sales. The speaker emphasizes that calling the tax collector is a free and effective way to obtain a list of upcoming sales. The market covers counties and cities, so it's essential to stay informed about the specific tax collector responsible for the area of interest. Overall, the key takeaway is that with dedication, research, and strategic planning, investors can navigate the tax lien market and find profitable opportunities despite competition from larger players.
Tax Liens vs. Tax Deeds: Two Different Real Estate Investments: Tax liens let you invest without property ownership, while tax deeds give you ownership at a discount, but come with added responsibilities.
Tax liens and tax deeds are two different types of real estate investments. In the case of tax liens, you don't own the property yet, but you have a lien on it. The homeowner still lives there, and the tax collector handles the collection process. When the homeowner redeems the lien, you'll receive your payment. Tax liens are not risky, as statutorily, you're guaranteed to be paid back. With tax deeds, the government has sold the property to an investor for the amount of the lien. The investor then becomes responsible for the property, including any necessary repairs or improvements. Homeowners may still be living on the property, and it's the investor's responsibility to ensure they vacate. Tax deeds can be purchased at a discount to the tax value, but they come with additional responsibilities. Both types of investments require research and due diligence, but the process is relatively simple and hands-off once the initial steps are completed.
Educate yourself about tax liens and real estate investing: To succeed in tax liens and real estate investing, research returns, penalties, and timelines. Obtain bids from contractors with a clear scope of work. Find a good city by considering demographics, growth, and market data.
For new investors looking to get started in tax liens, the first step is to educate yourself about the market and the legal statutes involved. This includes researching the returns, penalties, and timeline. Once you have a solid understanding of these factors, you can make informed decisions about your investment. Additionally, when it comes to rehabbing a property, the first step is to obtain bids from contractors based on a well-defined scope of work. Preparing for an appraisal involves making the appraiser's job as easy as possible by providing them with accurate and complete information. To find a good city to invest in, consider factors such as demographics, household and job growth, and rental and housing market data. Remember, real estate investing requires time and effort, so be prepared to put in the work to make informed decisions.
Communicating Rent Increases to Tenants: Initiate discussions about rent adjustments several months before lease renewals, explain market conditions, and set clear expectations to avoid negative reactions.
Effective communication with tenants about rent increases is crucial to avoid surprise and negative reactions. Real estate investors should initiate discussions about rent adjustments several months before lease renewals, explaining market conditions and setting clear expectations. Additionally, successful real estate investing requires dedication, hard work, and focus, as emphasized by Ankit. He recommends books like "The Real Estate Game" and "Built to Sell" to gain valuable insights into the industry and business development. Ankit enjoys hobbies such as surfing, snowboarding, and pursuing a private pilot's license outside of his real estate endeavors. To connect with Ankit, listeners can visit his about me page on BiggerPockets at biggerpockets.com/ankit_rer.
Learning from the Bigger Pockets Community: Engage with others, ask questions, build relationships, and find an investor-friendly agent for maximum learning and growth opportunities in real estate.
Learning from this episode of the Bigger Pockets podcast is the importance of getting involved and making connections in the real estate community. Ankit Dougal, a guest on the show, shared his experience of learning and growing through his involvement in the BiggerPockets community. The hosts emphasized the value of engaging with others, asking questions, and building relationships. They encouraged listeners to leave comments, join the site, and interact with others to maximize their learning and growth opportunities. Additionally, they mentioned the benefits of finding an investor-friendly agent to help navigate the real estate market. Overall, the message was clear: the more actively you participate in the real estate community, the more you'll learn and the more successful you'll be.
