If you’ve got a real estate investment that’s managed through a third-party property management company, did you know it’s considered a security? When your investment is classified as a security, there’s different rules to how it is managed.
Our guest this week, Steven Rinaldi, is a real estate attorney based out of Bethesda Maryland. He is a leading figure in real estate and security law, having previously served as general counsel for the American Association of Bankers. He specializes in venture capital, private placement, angel investment and crowdfunding. He’s drafted memoranda for real estate investor with deal-types including private loans for rehabbers and loans for apartment investors.
This episode, he’ll be sharing what you need to know about real estate securities and the rules for managing properties as securities.
Find out what you need to know about real estate securities!
Federal looks at 4 factors of an investment to determine it as a security:
Investment of money
Expectation of profit
Element of control
Your expectation of a profit is based on the work of someone else
Your real estate investment is a security if you do not have control over day-to-day operations of it
Different sets of laws apply to real estate securities
Want to find out more about what it means to invest in real estate securities or curious about real estate syndication? You can contact Steven Rinaldi through email at firstname.lastname@example.org or by phone at (204) 481-2708. You can also check out what kind of syndication deals he’s been involved in! Click here to view.
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Then you know a good real estate investment depends on more than just the property. It could have all the right physical features, but if it’s in an under-performing market, then the property will never produce a strong ROI. There are socioeconomic factors that affect an investment’s value. These factors can include: population growth, market supply, and municipal planning.
You can track these factors before making an investment decision using forecast models. You can track pertinent market data as it relates to an investment value. Real estate investors and developers use forecast models to determine what markets to focus on. They can also be used to track up-and-coming markets, so you can get a lead on the next hot real estate market!
There’s few more qualified to talk about forecast modeling than David Farmer. A recognized civil engineer, and city planner, Dave has been in the real estate industry for more than 20 years. He has extensive development experience and is the former Chairman of SW Florida District Council for the Urban Land Institute.
You probably know that an IRA is a great way to save for the future. You may even be making contributions to one set up through your work. But did you also know that an IRA can serve as a great investment vehicle? Investors use IRAs to hold a variety of assets, but many don’t know that you can invest in real estate with an IRA too. A self-directed IRA provides a lot of flexibility for real estate investing.
This episode is a special one for Invest Florida. We’ll be covering the many ways to invest in real estate with an IRA in front of our first-ever LIVE audience! Scott Maurer, of Advanta IRA, and investor, Dave Shaw join us for a special panel discussion on investing in real estate using a self-directed IRA.
Scott Maurer joined Advanta out of college. He has since become the Director of Business Development and regularly educates investors on the many advantages to investing through self-directed IRAs.
Dave Shaw is a real estate appraiser-turned investor who uses his self-direct IRA as a lending vehicle.
What You Need to Know to Invest in Real Estate With an IRA
You can transfer funds IRA-to-IRA tax-free
Funds can be transferred as-needed
In Florida, IRAs are only protected against personal creditors, not real estate liabilities
Setting Up A Self-Directed IRA
$50 account-opening fee
One-time $95 investment fee (per investment)
$295 annual account management fee (includes payments and expenses)
Lending Through a Self-Directed IRA
You cannot lend to yourself or immediate family through your IRA
Flexible lending terms – you can write your own agreements
12-15% on 6 month fix-and-flip
10% on 3 year lends
To learn more about how you can invest in real estate with an IRA, call Advanta at (800) 425-0653 or visit their website. You can also check out educational videos and webinars from Scott on Advanta’s YouTube page.
Dave is always looking for single and multifamily deals (4 units and less). You can reach him by email at email@example.com
The national housing market is undergoing a major shift and multifamily investors are taking notice. Through economic and generational factors, the housing market is seeing a lessening demand for single family home purchases. Instead of buying a home, young professionals are opting to rent.
Mark Holmes may know this growing trend better than anyone. As a certified property appraiser with Value Tech Realty, Mark travels the United States appraising multifamily properties. As an appraiser, he understands this rental boom from a valuation perspective. As an active single family investor and passive multifamily investor, he understands what it means from an investor’s standpoint.
This episode, Mark gives us a recap of the the national multifamily market as well as the Florida multifamily market. We discuss the recent rental boom and what it means for multifamily investors.
National Multifamily Overview
63% home ownership, down from 69% (2004)
37% renters: 15 million shift
Financial recession brought on behavioral shift
Job growth jump-started multifamily development
Florida Multifamily Overview
3% job growth
Statewide rent growth: 4%
I-4 Corridor rent growth: 6%
Florida Multifamily Markets
4000 MF units online, last 12 mo.
65% absorption rate
3.7% rent growth
Class A: 4.5% cap rates; Class B: 6%
5,500 MF units online, last 12 mo.
4.8% rent growth
8% rent growth in last 12 mo.
3,500 units online last 12 mo., 3,300 coming
Nearly 100% absorption
3.3% rent growth
4.45% cap rates
49% of income goes to rent
What It Means for Multifamily Investors
Capital looking to invest in multifamily is out there
Class A property growth concessions trickling down to B + Cs
Most buyer interest is in multifamily
Interest rate increases mean cap rate increases
Major market cap rates seeing downward trend
Looking for property appraisals? Contact Value Tech Realty through their website. For single family and multifamily investors looking to work with Mark on a deal, contact him through email at firstname.lastname@example.org.
We started the Invest Florida Show podcast with the goal in mind to create a living archive of actionable, Florida-centric real estate investing information. Not only have we been able to realize our vision, but Invest Florida has grown to become an effective real estate marketing vehicle – not only for our own lead-generation, but for our guests’ businesses as well.
Podcasting has been growing in popularity over recent years and more and more professionals are realizing the potential of a podcast to extend their reach and network.
When Florida Realtor Magazine asked us to contribute to their cover story on the power of podcasts in building a professional brand, we were honored to take part.
Single family investors know that keeping up with rental properties and tenants can be a hassle. In addition to dealing with property management, investors must also manage tenants. While a single family rental is a great way for many to earn cashflow, it can be tough to stay organized.
Our guest this week, Gregory Radford knows a thing or two about organization. A decorated military veteran, Greg became a de facto single family rental investor while still serving in the Army. After renting out his home he had purchased using his V.A. loan, he had his Eureka moment. He saw the investment potential of the V.A. loan and leveraged that into becoming a successful single family investor.
Combining the organizational skills and discipline he learned in the Army with his loquacious attitude, Greg created a strategy for earning hassle-free cashflow through single family rental investments. Starting Radford Homes with his wife, Greg is an active single family rental investor in Polk County.
Federal loan program for military vets to put money down on a home
V.A. loans can be reused as many times as the loan limit allows
Homes must be inhabited for 12 months
Loan limits vary by state/county
Polk County: $424k
5 Tips for Hassle-Free Cashflow
Strategic, intentional marketing
Custom Rental Applications
Send pre-scripted correspondence to potential tenants with explicit application instructions.
Tenants who fail to follow instructions are disregarded
Asking ope-ended questions during tenant interviews
Find out about prior residences
Check social media
Open House for Rentals
Controlled open houses
Open houses 2x/mo. cuts down on scheduling showings and creates urgency among potential tenants
Requiring proof of bank account assures tenant’s financial credibility
All payments sent through electronic funds transfer or cashier’s check
Gary Keller – “Hold”
single family rental investing
Gary Raulston – “Real Estate Principals: A Value Approach”
Real estate investing is a big draw for many due to its strong ROI potential as well as its flexibility in investment strategy. There are a lot of ways to make money in real estate without keeping your finger on the main pulse of the deal. This is most evident when it comes to wholesaling and assigning contracts. Buying and reselling interest in a property allows for increased earning potential. It also allows for expedited turnarounds on deals.
Assigning contracts allows investors to sell interest in the property title without being responsible for following the deal all the way through. Essentially, investors can buy and sell properties without ever having to lay hands on the property itself. While this definitely has it’s perks, it is not without risks.
President-elect of the Central Florida Real Estate Investors Association, Todd Hutcheson, joins us today to discuss his experience starting out in wholesaling and assigning contracts. Listeners will remember Todd from episode 111, in which he discussed how investors can get into real estate with limited cash. Todd is an investing mentor. He is the founder of IBuyHomes and an active wholesaler in Central Florida. As he shares in this episode of Landlord Tales, assigning contacts can quickly become a snowball effect and your control over a closing can disappear before you know it.
What to Know About Assigning Contracts
Understand contract assignment process before selling interest
Write your control over closing into the contract
Contract assignments do not show up under public records
A final sale price listed in public records will not record contract assignments
Make sure to notify title companies of contract assignments when recording a title claim, otherwise it will not be insured
Finding a real estate market that fits your investment goals seems to be getting tougher and tougher. With markets tightening up across the state, investors are starting to feel it. Now, more than ever, investors need to be tracking investment market data – looking for trends and analyzing data to find viable markets.
Investors may be familiar with Yardi for property management services, but did you know they also offer comprehensive market research and data software? This system allows real estate investors to track investment market data on a national level, or zero-in on specific markets and sub-markets.
This episode, we welcome from Yardi Matrix: Senior analyst and editorial contributor, Chris Nebenzahl, and research and data analyst, Doug Ressler.They discuss what investors need to know about tracking investment market data. They also offer up an update on Florida’s commercial and multifamily markets.
Florida Multifamily Overview
Rent growth and development strong overall
Focus on A + Super A properties
Increasing demand for B + C properties, but limited supply
B + C properties seeing value-add opportunity
Florida Multifamily Market Highlights
Miami and Orlando: 9000 expected multifamily developments for completion, 2017
Tampa: 7200 expected multifamily developments for completion, 2017
Development expected to crest after 2017
Rapid rent growth may pose affordability issues in Miami/SFL
It’s a new year and change is in the air. With financial regulation changes sure to come and the recently announced Federal interest rate increases, it’s no wonder mortgage banking and real estate lending is hot on investors’ minds.
Listeners will remember Livingston from episode 70, in which he gave us a recap on multifamily mortgage banking and real estate lending from the 2016 conference. Livingston is Vice President of Walker & Dunlop‘s Tampa office. Livingston brings over 12 years of experience in real estate lending and finance solutions to Walker & Dunlop, which just celebrated it’s 80th anniversary.
Livingston offers up a recap of the 2017 CREF/Multifamily MBA Conference and discusses key themes from the past year and the current state of mortgage banking and real estate lending.
What’s In Store for Mortgage Banking and Lending
Agency Annual Caps
Fannie Mae & Freddie Mac each allocated $36.5 billion for 2017 (same as 2016)
Certain loans and portions of loans are excluded from the cap (i.e. affordable and green/energy efficient)
Fannie Mae & Freddie Mac multifamily production totaled over $110 billion in 2016.
Fannie up 30%, Freddie up 20% from 2015
Expected to capture 40% of total multifamily volume for 2017 ($50-55 billion each)
Risk-retention regulations put in place in 2016, narrowing amount of CMBS lenders
Post-election stability, but more selective lending market
CMBS lenders ramping up bridge-lending
Life-insurance (50% leverage and under): 125-135 range
CMBS (75% leverage): 250-280 range
Agency (80% leverage): Low 200s range
Federal interest rate sees .25% increase
Expected to increase to 2.75-3% by end of year
Publix most active retail buyer in FL
Grocery chains are buying out plazas after lease terms or taking right of first refusal on new lease terms
Reduced supply of grocery-anchored retail
Strong retail appetite for real estate lenders
In addition to his V.P. role at Walker & Dunlop, Livingston is President of the Society of Real Estate Professionals (SOREP). Formerly the Tampa chapter of University of Florida’s Bergstrom Council, SOREP hosts networking events and seminars to professionals and gives back to Florida universities. SOREP focuses on all aspects of the real estate industry and is open to all. Click here for more info.
Walker & Dunlop offers comprehensive real estate financial solutions for all income-producing properties. For more info, visit Walker & Dunlop website.
Florida has a high density of rivers, lakes, swamps and marshes that are generally protected from development. This has led many investors to wonder how much land is actually available for development. What many investors may not be familiar with is the concept of mitigation banks. Mitigation banks allow for the development of wetland areas that ordinarily would not be usable for real estate development.
So what exactly is a mitigation bank? How does it function and how can they serve investors and developers? Our guests this week are two experts in the field of environmental law and the designation and use of mitigation banks.
Listeners should remember Frank Hearne. Frank is a shareholder for Mechanik, Nuccio, Hearne & Wester, P.A. He was also one of Invest Florida’s first guests! His firm is one of the state leaders in environmental and land law. Beverly Birkitt, of Birkitt Environmental Services, Inc., has over 35 yrs. experience in the environmental field, with a focus on wetland litigation and litigation banking.
This episode, Frank and Beverly cover the ins-and-outs of using mitigation banks for wetland development and investment.
Spec wetland approved for future mitigation
Allows for more usable property for development
Exchange wetland set for development with wetlands that will be improved upon to compensate
Must be in the same hydrological zone as wetland to be developed (water basin)
State sets basin boundaries
Developing Mitigation Banks
Wetland landowners can develop mitigation banks
100-10,000 acres usually
Market demand in wetland area is critical
Polk County strong mitigation bank market
Mitigation banks must improve, not just preserve wetlands
Mitigation bank credits based on evaluation of improvement, not land size
Hot Mitigation Bank Markets
Tampa Bay Basin
In need of freshwater wetlands
Former agricultural lands
Risks for Mitigation Banks
land, permitting, construction, management
ROI tough to predict
If you have land that you believe is eligible for a mitigation bank, let Beverly know! Beverly can be contacted through her website: www.birkitt.com or by calling (813) 259-1085
For mitigation bank questions and for more info on other types of mitigation banks, contact Frank by email at email@example.com or call (813) 909-7400.