Podcast Summary
Investing in Real Estate Later in Life: Older investors can find success in real estate investing through experience, knowledge, networking, and resources like good realtors and technology.
Successful real estate investing later in life is possible with the right mindset, experience, and resources. The guests on today's Bigger Pockets Podcast Show are proof of that. They were older investors who had lived their lives, saved money, and were getting started investing despite not having a large portfolio. They used their experience, knowledge, and networking to find good deals. One important resource they emphasized was having a good realtor who is well-versed in finding off-market deals and the For Sale by Owner (FSM) method. The investors also highlighted the importance of using technology, such as DealMachine, to make lead generation and deal making easier. Passive income through real estate investing was another topic discussed, and investing in a private real estate fund was suggested as an option for accredited or high net worth investors who want to collect cash flow without the headaches of owning rentals. Overall, the message is that it's never too late to start investing in real estate and that the right resources and mindset can lead to successful deals.
Investing in Real Estate with PPR Capital Management and Rent to Retirement: Experienced teams offer passive income opportunities through real estate notes and commercial properties. Rent to Retirement enables buying new construction rentals with no money down, providing potential for infinite returns.
Experienced teams like PPR Capital Management offer individuals the opportunity to invest in both real estate notes and commercial properties for truly passive income with a strong track record since 2007. Meanwhile, Rent to Retirement provides an opportunity to buy new construction rental properties with no money down, offering potential for infinite returns through cash flow and appreciation. Keith, a new real estate investor, shares his journey into investing, starting from attending meetups and eventually purchasing his first deal in Indianapolis. His goals were to secure a long-term investment for his family's future, focusing on appreciation and potential cash flow. Both cash flow and appreciation are essential for different reasons, depending on personal circumstances.
Seeing a property's potential through the BRRRR method: Approach real estate investing with a vision for a property's highest and best use, consider local markets, and cost-effectively add value through additions or subtractions.
Successful real estate investing involves seeing the potential in a property rather than just its current state. This was emphasized in a discussion about the BRRRR method (buy, rehab, rent, refinance), where investors can cash flow while focusing on long-term appreciation. The conversation highlighted the importance of adjusting expectations based on local markets, such as Indianapolis where 1-bath homes with multiple bedrooms are common. Additionally, the potential for adding bedrooms or bathrooms to increase a property's value was emphasized. This reverse strategy can be particularly effective for smaller homes with inefficient layouts. Overall, the key takeaway is to approach real estate investing with a vision for the property's highest and best use, and to consider how cost-effectively and productively you can add value through additions or subtractions.
An agent's expertise is essential for successful real estate investments: Working with a knowledgeable agent can help first-time buyers make profitable investments by shifting perspectives, advising on desirable property types, and negotiating better deals.
Having an investor-friendly agent with you is crucial in making a successful real estate investment, especially for first-time buyers. In this case, Peter, the agent, helped the buyer shift his perspective on the property market and guided him towards more profitable investments. He advised against focusing on larger houses with fewer bedrooms due to tenants' preferences and functional obsolescence issues. Instead, the buyer should consider smaller, two-bedroom houses that tend to be more desirable and have better rental potential. Additionally, Peter also helped the buyer find a long-term deal by identifying overlooked listings on the MLS that had been on the market for an extended period. He negotiated a significant price reduction during the inspection process, enabling the buyer to secure the property at a lower cost. Overall, Peter's expertise and guidance proved instrumental in helping the buyer make a profitable real estate investment.
Address known property issues before contract: Sellers can secure better terms by negotiating known issues before a contract, saving money and avoiding escalating costs during escrow.
During real estate negotiations, it's crucial for sellers to address and negotiate known issues with their property before entering into a contract. This gives them the leverage to secure better terms, as opposed to waiting until the escrow period when the situation can only worsen for them. Additionally, targeting properties with inexperienced agents can lead to significant savings, but sellers must be aware that they may end up losing money if they don't effectively negotiate the deal themselves. In this specific case, Peter successfully leveraged a known foundation issue to secure a substantial price reduction, but the seller's failure to pre-negotiate the issue cost them dearly.
Keith's 5/5 ARM Investment Strategy: Keith's investment strategy involved using a 5/5 ARM mortgage for a real estate investment property, which resulted in a higher cash flow return despite less money left in the deal.
A borrower, Keith, chose a 5/5 ARM mortgage for a real estate investment property due to its lower interest rate and the potential for cash flow increase through rent appreciation over the first five years. This mortgage type allows for a fixed rate for the initial term, but adjustments every five years thereafter. Keith's decision resulted in a monthly cash flow of about $700 as a midterm rental, which was more than breaking even on a long-term rental estimate of $1500-$1600. Although he left less money in the deal, the higher cash flow return made the investment worthwhile. The BRRR (Buy, Rehab, Refinance, Rent) strategy employed by Keith involved purchasing the property for $155,000, spending $15,000 on renovations and furnishings, and refinancing for $203,000. The total PITI was $2,200 per month, resulting in a cash flow difference of approximately $700 between long-term and midterm rentals. By choosing a 5/5 ARM, Keith effectively put more sweat equity into the deal but achieved a higher return on investment.
Profitable Real Estate Deals Despite Challenges: Despite foundation issues and unfamiliar markets, profitable real estate deals can be found. Use all info to your advantage, pivot on strategy, and tackle challenges for success.
There are still profitable real estate deals to be found in today's market, even with challenges like foundation issues or unfamiliar markets. Keith's experience of buying a fixer-upper in Indianapolis and turning it into a successful midterm rental, despite initial concerns about foundation issues and the market, demonstrates this. Another key takeaway is the importance of using all available information to your advantage and not being afraid to pivot on your strategy. Keith initially aimed for a long-term rental but ended up with a profitable midterm rental. Lastly, don't shy away from potential issues like foundation problems or mold, as they can often be fixed for a reasonable cost and may even give you an edge over other buyers. Overall, this deal serves as a reminder that real estate investing requires a flexible mindset and a willingness to tackle challenges head-on.
Approaching real estate challenges with a numbers-focused mindset: Assessing potential issues like foundation problems, lead paint, asbestos, and termites in terms of dollar amounts can help reduce stress and make transactions more manageable. Utilize experienced professionals and helpful resources to simplify the process.
Turning potential fears or unknowns in real estate transactions into dollar amounts can help reduce stress and make the situation more approachable. This was discussed in relation to foundation issues and other potential issues like lead paint, asbestos, and termites. Having a realtor or experienced professional who has dealt with such issues before can also be beneficial in assessing and addressing these concerns. Additionally, modern solutions like Steadily.com for insurance and Relay for business banking can help streamline and simplify certain aspects of the real estate investment process. In essence, approaching real estate challenges with a numbers-focused mindset and utilizing helpful resources can lead to more successful and less stressful transactions.
Exploring Different Ways to Engage in Real Estate Investing: Connect Invest offers passive investment opportunities with fixed income and attractive returns, while educational resources like the Walker webcast provide valuable industry insights. Utilizing both can help new and experienced investors make informed decisions and build a successful portfolio.
There are multiple ways to engage with real estate investing – both passively through platforms like Connect Invest, and actively through education and networking. Connect Invest offers a hassle-free investment opportunity with fixed monthly income and attractive annualized return rates. Meanwhile, the Walker webcast provides valuable insights into commercial real estate, entrepreneurship, leadership, and the economy, offering a deeper understanding of the industry. For Dave, the push to get back into real estate investing came from discovering the BiggerPockets community and reading Long Distance Real Estate Investing by Dave Greene. The technology available now made researching properties and building a team much more accessible. After finding success with Connect Invest, Dave's goals have changed – he's older and now has two sons, making his motivation twofold. In essence, whether you're just starting out or returning to real estate investing, there are resources available to help you learn, connect, and grow. By utilizing platforms like Connect Invest and educational opportunities like the Walker webcast, you can make informed decisions and build a successful investment portfolio.
Leveraging an agent's expertise for successful real estate investments: Clearly defined goals and local market knowledge, when combined with an agent's expertise, can lead to successful real estate investments.
Having a clear goal, such as securing passive income for retirement or leaving a legacy for children, can drive real estate investment decisions. However, relying solely on online resources may not yield the best opportunities. Instead, leveraging an agent's expertise and local market knowledge can lead to better deals and experiences. When agents receive property information from clients, they consider various factors, including disclosures, pricing, and market conditions, to provide valuable insights and guidance. In the end, successful investments often involve a combination of clear goals, local knowledge, and strategic decision-making.
Working with an experienced agent increases chances of getting desired house: Effective communication and market insights from an agent can lead to securing desirable properties, even if it means paying slightly above asking price.
Having an experienced agent who can navigate the negotiation process and communicate effectively with the listing agent can significantly increase your chances of getting the house you want. In real estate, being willing to pay slightly above asking price, when justified by market conditions and the property's value, can lead to securing the deal. However, it's essential to have a mature perspective and not get caught up in the details or ego of feeling like you've "won" by paying less than asking price. Additionally, recognizing the scarcity of desirable properties in certain locations and price points can help inform your decision-making process. Overall, the key is to work with an agent who can provide valuable market insights and help you make informed offers that increase your chances of success.
Having cash on hand speeds up real estate deal-making: Cash accelerates real estate transactions and gives a competitive edge, from long-term savings or property sales
Having cash on hand can significantly speed up the real estate deal-making process and give you a competitive edge. In the discussed example, Dave was able to secure a new property quickly and with a renter in less than a week due to having cash available. The cash came from the sale of land that he and his wife had held onto for several years, demonstrating the importance of delayed gratification and long-term planning. For those looking to work with a new real estate agent, Dahlia recommends ensuring financial readiness, whether through pre-qualification for financing or proof of funds for cash transactions.
Building a successful out-of-state investment team: Finding the right people and building a strong network are essential for successful out-of-state investing. Persistence pays off in the long run.
Investing out of state can be a complex process, but having the right team in place can make all the difference. Researching the market, finding a great agent with local resources, and building a network are crucial steps to ensure success. Dave's experience of buying multiple properties with Dahlia's help illustrates this. Finding the right people may be challenging, but once you do, you can scale your investments faster. Whether it's through social media, agent finder platforms, or personal connections, building a strong network is essential. As Keith, Peter, Rob, and Dahlia shared, their success stories highlight the importance of persistence and the power of a solid team.
Connect with investor-friendly real estate agents: Use BiggerPockets Agent Finder to connect with local market experts for investment guidance and neighborhood expertise, helping investors navigate the real estate market consistently and confidently.
Finding an investor-friendly real estate agent is crucial for those looking to get into or advance in real estate investing. The market may change, but the goal of financial freedom remains constant. With BiggerPockets Agent Finder, investors can easily connect with local market experts who can help navigate neighborhoods, analyze numbers, and build confidence in making real estate investments. This free resource, available only at biggerpockets.com/deals, is an essential tool for those looking to enter or expand their real estate investment journey. Remember, it's not about timing the market perfectly but rather being in the market consistently. As always, investment comes with risk, so consult with qualified advisors before making any investment decisions.
