Category Archives: Single Family

Ep. 73 Colin Murphy – This Investor Manages a Large Florida SFR Portfolio from Madrid, Spain!

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Colin Headshot Jan2013 croppedFlorida has long been known as a great real estate market for foreign investors. Commercial and residential markets both represent favorable investment markets for foreign capital. While investing in real estate outside of a county or state may seem a daunting task, this week we talk with an investor who grew and a successful SFR portfolio out of another country!

Colin Murphy is Director and Co-founder of Torcana, Ltd. an investment firm specializing in single-family properties in Florida. With over ten years’ experience behind him, Colin has grown Torcana into a leading name in Florida SFR markets and he was able to do it all based out of Madrid, Spain. This episode, Colin shares with us some tips for building a successful foreign real estate investment portfolio.

5 Must-Haves for Foreign Investors:

  1. Standard Contracts
    1. Avoid unnecessary and overly complex contracts
    2. Standard Realtor’s Assn. contracts offer foreign investors easy-to-understand terms
  2. Title Companies
    1. Foreign investors new to U.S. and FL markets may be unfamiliar with title companies
    2. Title companies ensure a clean title transfer in a real estate transaction. They run a property’s title against any outstanding liens and unpaid fees.
  3. Closing Costs
    1. Closing costs on U.S. and FL real estate is comparatively less than that of markets outside of the U.S.
    2. Despite the relatively low closing costs, foreign investors still need to be aware of what they are paying for
  4. Post-Closing
    1. Follow-up is needed after purchasing a property
    2. Find the right insurance coverage for your investment as well as establishing a property management plan
  5. Taxes
    1. All U.S. real estate is subject to taxes and returns must be filed on them
    2. County tax collector searches can be an easy way for foreign investors to keep track of their portfolios’ taxes

For a more comprehensive approach for foreign investors, check out Colin’s list of 20 things to know for real estate investing:

20 Things to know

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Colin also suggests Rich Dad Poor Dad, by Robert Kiyosaki and Millionaire Real Estate Investor, by Gary Keller, Dave Jenks and Jay Papasan for beginning investors

For more information from on Torcana‘s services or for investing opportunities, contact Colin: Torcana’s website, LinkedIn, or Bigger Pockets

 

Ep. 62 – 1031 Exchange – This Provision in the Tax Code Might Help You Acquire More Investment Property…..Faster

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home bundles of dollarsMany potential home buyers enter the housing market looking for something they can call “home”. Many look for a property based on personal aesthetics. However, these may not be the best indicators of a good investment property. Buying the ‘dream home’ may require a stringent, long-term financial requirement of the homeowner; one that may limit those who aspire to build an investment property portfolio. By purchasing a property for a primary residence not as long-term commitment but as a strategic investment decision, homeowners can take advantage of a provision in the IRS Tax Code that may enable them to acquire more investment property.

  • 26 U.S. Code § 121 – Exclusion of gain from sale of principal residence
    • Sale of property exempt from gains tax if property was held as principal residence for a minimum of 2 out of 5 years of ownership
    • Single taxpayers entitled up to $250k exemption
    • Joint filing taxpayers entitled up to $500k exemption
    • Mandatory, 2-year residency need not be contiguous
    • Applicable to one sale every two years, no limit on how often this may be done by homeowner
  • Things to Know
    • Look for properties that are good investment decisions
      • Sect. 121 only applies to exemption from Capital Gains Tax, meaning only a property that is being sold for higher than original purchasing price
    • Sect. 121 may not be good for those looking to have children.
    • Money saved in exclusion from gains tax may be used to acquire new properties
  • Exceptions
    • Check with tax adviser or C.P.A. for eligibility; you may still be eligible for partial exemption
    • Sect. 1031 Exchange – enables investors to sell a property with capital gains and receive a deferral on gains tax if purchasing a new one
      • If property was acquired as a replacement property and converted to a primary residence, investor must live in property for 5 yrs before qualifying under Sect. 121
    • Sect. 121 cannot exclude Depreciation Recapture Tax (25%)

 

 

 

Ep. 60 – Mark Fleming: What Does the Fed Rate Hike Mean to Real Estate Investors

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about-markWinter is coming… And so are national interest rate increases.

The Federal Reserve has recently announced a new national interest rate hike, the first since 2006. Real estate investors are very anxious about the announced rate hike. Many investors are wary that the rate hike may be instituted prematurely in an economy that is not capable of facilitating the effects on real estate markets.

Mark Fleming, Ph. D. serves as the Chief Economist for First American Financial Corporation. With over 20 years’ experience in mortgage and property information, Mark analyzes and forecasts national mortgage and real estate markets. This episode, Mark lends his expertise to our discussion on the new rate hike‘s effect on current real estate markets at a national level, and tells us why investors shouldn’t be so worried.

  • Federal Reserve Rate Hikes
    • First rate hike in 9 yrs
      • 2006 – +5% increase
      • 2007 -’08 to Present – 0%
      • End of Year (2015) – .25% increase
      • 2016 – +1% increase
    • Instituted to correlate with expected income/wage growth
    • Long-term, fixed-rate loans not affected
    • Good for housing markets
      • House-price appreciation seeing “asset inflation”, especially in Florida
      • 5-6% nationally, higher in FL markets (South Florida)
      • Out-pacing current wage growth, causing increase in housing rates
      • Rate hike should slow appreciation growth rate
  • 2016 and Beyond
    • Rate hike est. 5% increase
    • House-appreciation (Nationally) projected to slow to 3-4%
    • Income growth est. 3-4% increase
    • Commercial real estate to benefit from economic growth
    • Multi-family to benefit from strong millennial rental market

Interested in contacting First American Financial or want to learn more from Mark on the new rate hike and other economic info? Check out the company website and visit the Economic Center

Ep. 51 Joe Fairless: Transitioning From Single-Family to Multi-Family with Creative Equity

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jf-homepage2Joe Fairless bought his first single-family investment properties in his home state of Texas after leaving a successful, but unrewarding career in advertising. After finding that multi-family investing offered greater returns and less inventory, he began making the transition to multi-family investing.

His first deal was managed through unconventional measures. Lacking the standing as a seasoned multi-family investor, Joe incorporated non-traditional, creative equity solutions for obtaining capital for his first 168-unit apartment complex in Cincinnati, Ohio. Now founder of Fairless Investments, Joe controls millions of dollars in multi-family investment properties. Joe shares his experience in multi-family investing and provides tips for securing capital through creative equity methods.

  • Challenges for Single-Family Investors
    • Lack of credibility in multi-family markets
    • Traditional lending and private financing may be difficult to attain
  • Network Personal Contacts
    • This is a good practice for single-family investors to find financing by networking personal relationships for interest in multi-family investing
  • Strategic Networking
    • Network and affiliate with organizations that may not be lenders but have cash flow or may have eye towards investing
      • i.e. philanthropic organizations, community foundations, business groups
  • Establish Investment Base First
    • This does not mean a blind-fund or requirement of prior monetary investment
    • Form verbal contract with investors based on shared financial goals
    • Pursue investment opportunities that suit shared criteria
  • Structuring Deal With Investors
    • Preferred returns – investors get cash from deal before yourself
    • Acquisition fees
    • Performance hurdles
    • Post-sale incentives
  • Tips
    • Make yourself attractive to lenders and investors
    • Know the market, know the deal
    • Investing is starting a small business; structure so that you may sell that business. Don’t get tied down to an investment

Joe has his own daily podcast in which he interviews guests on a variety of real estate investment strategies

For more information on Joe, visit his website

You can also contact him by email at info@joefairless.com with questions or investment opportunities!

Joe also shares some helpful literature for single-family investors looking to make the transition:

Investing for Dummies – Eric Tyson

Commercial Real Estate Investing for Dummies – Peter Conti & Peter Harris

The Complete Guide to Buying and Selling Apartment Buildings - Steve Berges

 

Ep. 50 – Three Types of Creative Mortgages for Real Estate Investors

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Successful investing needs capital. For real estate investors, that often means mortgaging existing properties as a source of attaining capital. Traditional lending through banks and other financial institutions is often the method of acquiring hard-money loans. Sometimes though, the loan approval process may be too time-consuming or their lending practices may be too restrictive for investors.

Keyur Patel (top, left) and Naim Hamdar (top, right) of Synergistic Funding share three types of creative mortgages that are available to real estate investors as an alternative to traditional institutional lending.

  1. Commercial Mortgage-Backed Securities – CMBS Loans
    • Currently strong alternative loan product
    • Cyclical nature – this type of loan dissipates with market downturn
    • Undisclosed, non-restrictive cash-out feature
    • Assumable
    • Non-recourse
    • Quick execution – loan sold as packaged, traded security or bond
    • Competitive Interest Rates compared w/ institutional lending (< 8%)
  2. Bridge Financing
    • Often used as alternative loan for investors making balloon payments on existing mortgage and institution not offering re-financing options
    • Up to 65% loan-to-value
    • Typical terms – 1-3 yrs. w/ balloon
    • Interest rates between 8-12%
    • Quick-closing
    • Non-Recourse
    • Creative underwriting – “carve-outs” prevent loan being taken out with malicious intent
    • No minimum for financing, but $100 million ceiling
  3. Line of Credit
    • Designed for seasoned investors w/ multiple projects per year
    • Private lines of credit offered to investors
    • Available for entire term (1yr)
    • No annual fees if not used
    • Once used, 1% monthly fee applied + 9-month repayment term
    • Quick-closing
    • Relatively quick approval turnover (1-3 weeks)
      • Investors must have at least 2 successful closings per year
      • 1 yr. tax returns
      • 3 months bank statements

For more questions on these types of creative mortgages for real estate investing or to find out about other services Keyur and Naim offer:

Call Synergistic Funding – 813-333-5128

or email them at info@synergisticfunding.com

 

Ep. 49 Kevin Jursinski, Esq: Update on Dodd Frank Seller Financing Laws and Real Estate Lending on Single Family Properties

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Kevin-F.-Jursinski-B.C.SSince the Dodd-Frank Act was signed into law in 2010, the immense and labyrinthine series of stringent financial regulations has been a foreboding presence in real estate lending, especially in Florida. Instituted in response to the Great Recession, Dodd-Frank has posed a formidable threat to investors. With over 2000 pages of new rules and financial regulations, investors are unsure exactly what is exempt from Dodd-Frank stipulations.

Kevin Jursinski, B.C.S is FL Bar Board certified in real estate and construction law as well as business litigation. With over over 30 years of practice in Florida real estate law as well as personal experience in the Florida investment market, Kevin has the knowledge and insight to summarize the bill and define its role in real estate lending. Kevin also discusses how Dodd-Frank related litigation might be approached in court.

  • Dodd-Frank Act (2010)
    • Dense and punitive set of rules outlining financial regulation
  • Seller-Financing & 3rd Party-Financing Affected
  • Gray Areas Explained
    • Dodd-Frank does not apply to non-consumers (Investors) of residential property
    • Commercial properties do not apply
    • Dodd-Frank only affects primary residences (vacation homes exempt)
    • Purchase-money financing only affected by Dodd-Frank in owner-occupied sales
    • Residential home-builders are precluded under Dodd-Frank from becoming contractors of seller finanacing
    • Dodd-Frank does not apply retroactively – previous owner-occupied financing not affected
    • Dodd-Frank applies to origination of loan intent
  • Recent Dodd-Frank Changes
    • Owner-occupied residence lending/financing
      • 1-Sale exceptions – Sell one property per year w/ Dodd-Frank guidelines
      • 3-Sale exceptions – Sell up to three properties per year w/ Dodd-Frank guidelines
  • Government Oversight

To keep updated on changes to Dodd-Frank and its impact on real estate lending visit Kevin’s website, www.kfjlaw.com

Kevin’s article on  Update-as-to-the-Dodd-Frank-Act-Seller-Financing-Restrictions

Dodd Frank Seller Financing Rule Update

 

 

 

Ten Suggestions for Landlords and Managers of Residential Properties – Josh Diggs

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Headshot_JoshOkay. So you have made the leap and acquired a real estate investment asset to begin your portfolio. The next step, managing the property, is a recurring problem that arises for many investors. Real estate needs to be managed. A poorly managed property is a strain on any investor’s time and finances.

Josh Diggs, of Palm Capital Partners of Tampa, shares with us 10 tips for successful and effective property management. With years of experience in owning and managing investment real estate, Josh has crafted the essential shortlist to property management. His 10 tips cover all the points landlords and managers need to know about residential property management.

  1. Due diligence on tenants
    1. Background checks, credit checks
  2. Don’t make exceptions on tenant-screening policies
  3. Don’t buy used appliances
    1. Repair costs on used appliances total more than purchasing new
    2. It is better and more cost-effective to purchase new appliances w/ warranties
  4. Condition forms
    1. Have tenants complete and sign formal acknowledgments of unit conditions upon move-in
  5. Be cautious hiring sub-contractors
    1. Cheap ones may be appealing but service is unreliable/faulty
    2. Referrals and word-of-mouth are best vehicles for finding reliable sub-contractors
  6. Bed tenants mean bad communities
    1. If existing tenants are bad influence on community, remove them
  7. Complete regular property inspections
    1. A/C, smoke alarms, etc.
  8. Always deal with tenant directly
    1. Don’t allow friends or family of tenant to intervene in matters involving the property
  9. Maintain timely property maintenance
    1. Waiting on necessary replacements and repairs may have serious long-term consequences
  10. Always be professional
    1. Regardless of situation, never allow personal matters to affect business

Josh’s company Palm Capital Partners, LLC is always looking for new investment opportunities. They are mainly interested in B+C multi-family properties.

If you have any questions on investing in the Tampa area or have a property you wish to sell you can contact Palm Capital Partners at 888-805-9317

or you can contact Josh directly at 727-859-6510

Ep 38 Barney Killinger – Working the Central Florida Auction Market

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Potential investors looking to get into the Florida real estate market are often held back by the fear that they don’t have the capability, time or resources to make the right investment decisions. There are a million reasons to say, “I can’t do it because…”

Our guest this week is Barney Killinger of Pro Auctions Services. Barney is a foreclosure auction expert, purchasing properties at foreclosure auctions for investors. His company, servicing mainly Central Florida, provides investors with a consolidated portfolio of foreclosure auction markets available for bid in several counties.

Barney is a great guest not only for his enormous well-spring of knowledge and experience SSPX0099in the Central Florida auction market but for his inspirational story. In 2010, Barney was involved in a head-on collision and suffered a severely fractured neck. While bed-ridden and amidst surgeries Barney continued to pursue his dream of achieving success in foreclosure auction markets and managed to organize and execute successful bids on 40 properties in a 45 day period from his hospital bed. Barney is living proof that you absolutely can succeed as an investor with perseverance and dedication.

  • Florida foreclosure market still going strong
    • Courts still holding and processing foreclosure cases
    • Large amounts of “reserve stock” properties
    • Most likely to reach its peak mid-2018
  • High Risk/High Reward
    • Title issues
    • Structural damage
    • Risks can be minimized with right knowledge and resources
  • Returns on foreclosure auction investments
    • 65-75% average for investors
    • 12-15% average per month on remodel/rehab properties
    • 3-6% average per month on wholesale flips
  • FL Open Bid system
    • Investors have access to bank/lender’s selling prices prior to sale
  • FL 10-day Title Redemption Law
    • 10 days allotted post-sale for owner/borrower to pay liens or for bank/lender to vacate foreclosure sale
    • If sale vacated by bank, make direct offer to bank on vacated property
  • Pro Auctions Services
    • Servicing mainly Central Florida auction market: Polk, Orange, Osceola, Seminole and Volusia County
    • Proxy Drivers – view and photograph property for buyer at auction
    • Proxy Bidders – buyers who represent investor at auction
  • Tips for SuccessVideo Pic
    • Always SEE the property before placing bid
    • Run title search
    • Who you work with and how you educate yourself is very important in real estate investments

 

For more information on Barney’s company and the services they offer, visit his site here

Contact the Pro Auctions team by email at auctions@proauctionsservices.com

or by calling the office at 863-687-4101

 

 

Ep. 37 June Fletcher Talks Naples Real Estate

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June_Fletcher_1433953767891_19585335_ver1.0_640_480 As a real estate investor, especially in Florida, it is important to remember one thing: there is no single real estate market. The Florida real estate markets are diverse and dynamic and are comprised of many different asset classes; from single and multi-family to commercial investment markets. Naples, on microcosmic scale, is a good representation of a diverse market. Although, with low supply of available property and a near-exclusive cash-buyer’s market leading to high real estate values, it can be difficult to find a footing in investing in Naples real estate.

June Fletcher can be considered an expert on real estate markets. She has been involved in business and real estate reporting for nearly 30 years and currently works as a Business and Real Estate reporter for the Naples Daily News. As local resident of Naples, she has the inside scoop on the current state of the Naples real estate markets.

  • Naples is one of highest Cash Markets in US
    • Represent 7/10 buyers
  • Collier County very diverse demographically
    • Marco Island + City of Naples, largely wealthy
    • Immokalee + other outlying areas, lower-income
  • Higher-price market averages compared with FL
    • Naples – $432k for single-family, $285k for townhomes/condos
    • FL – $200k for single-family, $159k for townhomes/condos
  • Higher net-worth value than state and national markets
    • City of Naples – $752k
    • State of FL – $395k
    • US – $496k
  • Decrease in Institutional Investor transactions (buys 10 or more units in calendar year)
  • Not affordable for local residents
    • Average income – $55k per year
    • Not many multi-family developments or affordable living projects
    • Ave Maria – planned community 20 mi. from City of Naples
    • Long commutes

If you are looking to visit Naples for investment opportunities or just to enjoy its natural splendor, June recommends stopping by The Bayhouse Restaurant for some great local flavor and grub or to catch a live Celtic band!

If you wish to contact June for more information on Naples real estate, email her at: fletcher.june@gmail.com

Look for June’s book, House Poor available now!

 

E36 – Jason Hartman – Building and Diversifying Your Real Estate Portfolio

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jason-hartman-speaking A common difficulty for real estate investors is making the jump into diversification: diversifying one’s investments can lead to larger returns and can provide supplemental support or income if one market fails, but it may prove intimidating to manage investments in several different market types. Investors are usually more comfortable investing in a single market rather than risk a loss in unknown markets.

For Jason Hartman, its all about diversification. Jason has been involved in the brokerage of several thousand real estate transactions and owned investment properties in 11 states and 17 cities. In his long career, Jason has championed diversification of investment markets and his company, Platinum Properties Investor Network assists investors with acquiring income properties in diverse markets. Jason joins us on the podcast to discuss his strategies for building and diversifying your real estate portfolio.

  • Diversify – Investors should be involved in about 3-5 different real estate markets
  • Be a Direct Investor – Starting investors should experience full control and ownership of property
  • Educate Yourself
    • Learn Your Markets
    • Podcasts, blogs, info products, and home study provide inexpensive and valuable Information
  • 3 Market Types
    1. Linear
    2. Cyclical
    3. Hybrid
  • FL is Good Hybrid Market
    • Good appreciation potential
    • Decent cashflow
    • Good diversification opportunity
  • All Real Estate is Local
    • No single “housing market”
    • About 400 local markets in U.S.
  • Top U.S. Markets
    • Memphis, TN – stable rental market
    • Little Rock, AR – landlord-friendly state
    • Indianapolis – strong industry, commercial growth
    • Atlanta, Birmingham, Kansas City also good markets
  • “Don’t Wait to Buy Real Estate…Buy Real Estate and Wait”

To find out more about Jason’s company or for more resources on building and diversifying your real estate portfolio, visit: jasonhartman.com

Contact Jason on Twitter at: @JasonHartmanROI

Also, tune in to Jason’s podcast for great advice and information on diversify your investments as well as increasing your financial literacy.