Ep. 131 Rod Khleif: Landlord Tales – How Multifamily Investing Can Consolidate Your Bottom Line

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earn real estate cashflow with investment goals, multifamily investingInvestor, author and real estate investing mentor, Rod Khleif has done it all.

Rod was introduced to real estate investing early on. He managed to find success fairly quickly and, by 2006, had acquired thousands of properties across the U.S., including 800 in Florida.

Rod’s taste for real estate investing lies mostly in multifamily investing.

With single family properties, you can run the risk of spreading yourself too thin. It can become difficult to manage a large portfolio of single family properties. You have the potential to earn greater returns while managing fewer physical properties.

Rod also found that, following the market crash of 2008, his multifamily properties fared much better than his single family homes.

In this edition of Landlord Tales, Rod talks how multifamily investing allows you to consolidate your bottom line. He also shares his outlook on the real estate market cycle.

Consolidating Your Bottom Line Through Multifamily Investing

  • Easier Property Management
    • Stockpile spare/replacement parts for property maintenance
  • Stronger Buy-and-Hold Strategy
    • Duplexes/Four-plexes considered residential real estate, eligible for residential financing
    • Income producing
  • Commercial Multifamily Has Value-add Potential
    • You can exponentially increase your ROI through value-add features in your commercial multifamily investments.

Market Outlook

“What goes up must come down”

In his market outlook, Rod shares some uncertainty over the future of the real estate market. He cautions investors to be wary of those claiming that a crash isn’t going to happen.

  • Flippers: be careful entering into high-dollar flips
  • Multifamily investing: Avoid 5-year balloons

Whatever your market; single family or multifamily investing; focus on cash flow investments. Investing for value can leave you with little options in a downturn.

Investor Resources

To learn more about how multifamily investing can consolidate your bottom line and increase your cash flow check out Rod’s podcast Lifetime Cash flow Through Real Estate Investing, a real estate investing talk show with a focus on multifamily.

Rod is offering Invest Florida Show listeners exclusive access to his new book How to Create Lifetime Cash flow Through Multifamily Properties. To get your free copy:

Check out Rod’s past episode, in which he discusses the importance of implementing practical real estate goals into your investment strategy.

 

Ep. 127 Scott Maurer & Dave Shaw: There Are Many Ways to Invest in Real Estate With an IRA!

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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.

self-directed IRA real estate investingScott 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.

 

 

invest in real estate with an IRADave 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

  • Advanta Costs:
    • $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
  • Returns:
    • 12-15% on 6 month fix-and-flip
    • 10% on 3 year lends

Contacts

  • 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 daveshaw98@gmail.com

Ep. 126 Mark Holmes: What Multifamily Investors Need to Know About the Rental Boom

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multifamily investorsThe 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

  • Landlord friendly
  • 3% job growth
  • Statewide rent growth: 4%
  • I-4 Corridor rent growth: 6%

Florida Multifamily Markets

  • Tampa
    • 4000 MF units online, last 12 mo.
    • 65% absorption rate
    • 3.7% rent growth
    • Class A: 4.5% cap rates; Class B: 6%
  • Orlando
    • 5,500 MF units online, last 12 mo.
    • 57% absorption
    • 4.8% rent growth
  • Melbourne
    • 8% rent growth in last 12 mo.
  • Miami/SFL
    • 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

Contact Mark

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 mark1holmes1@gmail.com.

Ep. 122 Livingston Hessam: What You Need to Know About the State of Mortgage Banking and Real Estate Lending

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mortgage banking and real estate lendingIt’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.

This episode, we have Livingston Hessam, who just returned from this year’s Mortgage Bankers Association Commercial Real Estate Finance and Multifamily Housing Convention & Expo.

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)

Commercial Mortgage-Backed Securities (CMBS Loans)

  • 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

10-year Spreads

  • 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

Hot Topics

  • Trump Administration
    • Tax reforms
    • Dodd-Frank roll-backs
  • Retail lending
    • 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

Investor Resources

  • 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.
  • To contact Livingston directly, click here.

 

 

Ep. 116 Larry Goins: Cashflow without Tenants or Rehabs

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making money in a rising market. earning cashlfow without tenants or rehabsAll investors have heard horror stories from single and multi-family investing: bad tenants, rehabs gone wrong. Often these stories result in investors paying much more in out-of-pocket capital than was accounted for. This remains a major contributing factor preventing would-be investors from making the leap. Though there are successful strategies one can adopt to deal with bad tenants or to facilitate successful rehabs, many investors are still wary of residential asset classes.

However, there are ways to earn cashflow without having traditional tenants or making unneeded rehabs to the property.

Larry Goins is one investor that does not rely on having traditional tenants or doing property rehabs.

Listeners may remember Larry from Episode 106 where he discussed finding creative ways to make money in rising markets. Larry is a 30 year investor and investment mentor. He is an author, speaker and educator sharing his wealth of investment experience with beginner investors. This episode, Larry discusses his strategy of offering lease options instead of traditional tenant leasing.

Earning Cashflow through Lease Options

  • Homeowners in Training
    • Prospective tenants are given lease with option to own
    • Tenants have stated intent to purchase property
    • Tenants put up non-refundable down-payment stating consideration to purcahse
  • Lease Agreements
    • For Dodd-Frank compliance, tenant’s down-payment only goes to closing costs; no rent credits can be given during lease agreement
    • Make sure tenant is responsible for minor repairs and maintenance for “x” amount per occurance
  • Resources

For more information about lease options and earning cashflow without tenants or rehabs, contact Larry directly through his website.

For webinars, trainings, reports and other information, visit www.larrygoins.com

Visit the Invest Florida Show website for even more episodes and to check out our archives!

 

Ep. 114 Kurt Westfield: Apartment Investor Tough Lessons Lead to New Strategy

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multifamily investing and finding a strategy as an apartment investorAs real estate investors, sometimes what we think is a good investment strategy does not turn out quite as expected. While a single family investor may be able to stick to a strategy and adopt minimal changes, this is not usually the case for the apartment investor.

Your investment strategy should suit the deal you are making. It may become necessary to change your strategy in order to make a deal work.

While this may mean an extra headache in the short-term, a change in strategy could mean the difference between a successful investment and a failure.

Just ask Apartment Investor Kurt Westfiled

Kurt Westfield is the founder of WC Companies, an umbrella brand for his multi-service real estate investment firms.Listeners will remember Kurt’s last episode with us when he discussed his transition from single family investor to apartment investor.

This episode, we catch up with Kurt following his transition to apartment investor. He discusses how he found out early on in his career the importance of finding a winning strategy.

Apartment Investor: Finding a New Strategy

The Deal

  • 14 unit apartment building
  • In foreclosure
  • Expedited due diligence (7 days)
  • Intended to be 12 month, light fix-and-flip with capital expenses at $80-100k

The Issues

  • Tenants trashed complex
  • Property had suffered from neglect

Changing Strategy

  • Evicted all current tenants
  • Rehabbed entire property, inside and out
  • Structured leasing as condo-apartment type w/ one model unit completed while construction was ongoing
  • Created brand identity
  • Started community engagement activities

The Results

  • 3 1/2 year project, cap expenses at $400k
  • Property raised market rent 60% in area
  • Identified potential of revitalizing fringe market properties
  • Focused on developing branded communities rather than street addresses

Kurt is still an active apartment investor, looking for multifamily deals in Tampa and Jacksonville up to 50 units. To contact Kurt with a potential deal, email him at kurt@wccompanies.com.

For any other questions or to find out more about services offered by WC Companies, visit their website.

Ep. 113 Elysia Stobbe: Diversifying Risk with Geography and Asset Class

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investor mortgages, diversifying riskNo Risk, No Reward

No matter the size or experience of the investor, this is a widely-held belief. However, it is not simply about risk, but rather smart risks.

Diversifying risk is a key strategy for real estate investors looking to expand their bottom line.

Increasing the Bottom Line

We are pleased to welcome back to the show, Elysia Stobbe, NMLS# 146751. Listeners will remember Elysia from Episode 108, in which she discussed updates to SFR investor mortgages.

In addition to being a branch manager with NFM Lending, Elysia is a successful investor with over 30 property deals under her belt, doing deals in and around Jacksonville, FL. She is also a published author. Her best selling book, How to Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye helps single family investors in obtaining secure, prime mortgages.

This episode of Landlord Tales, Elysia discusses her transition to multifamily investing and diversifying risk with geography and asset class. Through expanding focus into the multifamily asset class and remaining open-mined about market areas, Elysia learned that diversifying risk is a great way to increase returns.

Diversifying Risk

  • Multifamily offers greater cashflow potential than single family while minimizing tenant turnover risk
  • Multifamily cap rates typically 2-4% higher than single family
  • Remain open-minded about potential market areas
  • Distressed properties can be made rentable

Finding Deals

  • Networking with wholesalers is great way to find distressed multifamily properties
    • Craigslist; Bandit signs – WeBuyUglyHouses, iBuyHomes
  • Realtors
  • Property Managers
  • Real Estate Investment Associations (REIAs)

Resources & Links

To catch up on past shows, visit our archives page!

 

 

Ep. 105 Kurt Westfield: A Journey from Single Family to Multifamily Investing

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multifamily investingMost real estate investors starting out will try their hand at single family investing first. Single family properties are familiar, small-scale and generally easy to tackle for first-time investors.

However, many investors will find they have a limited ceiling for growth with single family properties. Juggling dozens of single family properties while actively marketing for new investments no longer becomes practical. Apart from wholesaling, flipping and other similar single family markets, the next logical step for many investors is to make the move to multifamily investing.

Multifamily investing may be intimidating to some, but while it is a different ball-game than single family, the two do share a few commonalities and the overall benefit of multifamily investing outweighs the risk.

Just ask Kurt Westfield.

Kurt moved to Florida from New York and, in 2008, co-founded an investment partnership, WC Equity Group. They then entered into Tampa’s single family investment market.

After doing 102 single family deals in his first two years, Kurt new it was time to make a change if he wanted to scale his investment growth.

Kurt turned to multifamily investing and has since expanded to also offer lending, management and syndication services under his umbrella firm, WC Companies. In addition to Tampa, WC Equity Group also has properties in Jacksonville, FL and Cleveland, OH.

Check out Kurt’s story going from single family to multifamily investing and what he learned along the way!

Tools for Multifamily Investing

  • Market Timing
    • Understand where market could go, not where it is.
  • Fringe Markets
    • Areas on edge of of hot market’s outward growth, i.e. markets around South Tampa
    • Similar tenant quality to class-a markets, better price points
    • Gentrification/community redevelopment occurring
    • Value-add opportunity
  • Network
    • Working relationships with brokers
    • Like-minded investor base
    • Reliable team of contractors/sub-contractors
  • Responsiveness
    • Be prompt and responsive for potential investment deals. Assure potential investors of trust-worthiness.
  • Mentors/Inspiration

Kurt is always interested in working with bright, like-minded investors and brokers to expand his network in multifamily investing.

To contact Kurt with potential deals or to find out about the services his companies offer, visit www.wccompanies.com, click on any company tab and find the contact section.

Check out their Facebook Page!

 

 

Ep. 101 Dan Pepper: Increasing the Value of Your Property by Paying Attention to Financial Details

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increase proprty values with financial detailsTime is money. Property managers spend a lot of money on their time and this is true whether they are managing residential, multifamily or commercial properties. Often times, property managers may get caught up in the timing of things, letting their financial records and organization fall by the wayside. Not only does this cause added stress on the property manager, but it can also hurt the value of a property. When it comes time to sell a property or to refinance, proper financial details mean everything in determining how much the property is valued at.

Dan Pepper knows the importance of organizing and recording all the financial details of a property. Through his company, Palm Companies, a combined investment and property management firm, Dan oversees 190 multifamily units with nearly 50 units managed by Palm. With so many factors to keep track of, paying attention to financial details has become imperative in streamlining property management efficiency. This episode, Dan shares what he has learned about managing properties effectively and increasing property value by organizing and tracking financial details.

  • Automated Property Management Systems

    • streamline record keeping, bill pay and rent collection
    • Appfolio – good mid-market, fully-integrated automated system; 80+ units
    • Import photos or scans of bills for services and expenses into an easily accessible database
  • Capitalizing Expenses vs. Annual Expenses

    • Clearly define and categorize expenses that are capital improvements and what are annual expenses
    • Buyers can reconcile their investment concerns with detailed records
    • Lenders can asses precise values on properties
    • If unfamiliar, google search “capitalizing expenses”

Dan and Palm Companies are focused on multifamily properties ranging between 30-150 units in Southwest Florida. They focused primarily on property management ventures currently, but are open to viable multifamily deals. Palm Companies also has an interest in retail investments. Check out their website for more information.

Ep. 96 Jillian Bandes: Making a Complex First Invest in Small Multifamily

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multifamily investListeners of the show will remember Jillian Bandes who, in episode 74, discussed what real estate investors should consider about building structure when looking at commercial multifamily investing. The project manager for Bandes Construction covered 6 hot topics on building structure and maintenance that investors should be aware of with commercial multifamily properties.

In this episode, we discuss Jillian’s first investment property….a single family home with an ajacent rental apartment.  She discusses razing the property, dealing with the local code and building officials and her plans on whether to rent the units or live in one and rent the remainder.  The property was purchased through a foreclosure and we cover the online methods now employed by Pinellas County.  Not only is this project about a potential home and investment, but Jillian is  passionate about blazing the trail for urban renewal and redevelopment in St Petersburg’s core and her unit is in the heart of a rapidly changing area.

  • Residential property permitting and zoning regulations differ from commercial properties
  • Property location
    • Choose property in an area you are familiar with
    • Walk surrounding neighborhood
  • If investment property, define target rental market
  • Due-diligence
    • If foreclosure property, know state of title (liens)
    • What is the property zoned for? Is property up to code? Accessory buildings permitted?
  • Work with local and municipal officials
  • St. Petersburg, Florida
    • Undergoing immense urban growth period
    • Investors need accessibility to invest in properties with potential for redevelopment/renewal
    • South St. Pete offers development opportunity and reasonable prices w/ proximity to cultural amenities

Jillian extends a big thank you to Carlyn Neuman of Tampa’s 360 Realty for helping to navigate online foreclosure bidding as well as to Katrina Trump of Bank of Tampa, for assisting with securing financing.