My First Property: Right rehab, wrong tenant
10 Jun 2014

My First Property: Right rehab, wrong tenant

Alex De Marco didn’t let negative opinions from his peers stop him from investing in real estate and for him, finding the perfect property came easily. It wasn’t until he became a landlord that this investor went from doing rehab repairs to replacing tenants.

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Full name: Alex De Marco
Current location: Jersey City, NJ
First real investment: A half duplex townhome just outside of Pittsburgh, PA purchased in March 2011 for $8,500, now worth $25-30K

How did you decide where and what to buy?
My wife and I attended a local real estate education seminar advertised on the radio in May of 2009. The speakers at the event convinced us that real estate investing was a good idea.

We decided to learn the business by doing our own analysis and experimentation in addition to the advice we received from my wife’s cousin, a landlord, and other local investors that we met at ACRE, a real estate investing club in Pittsburgh where we were living at the time.

Not having a lot of money for this first investment and uninterested in borrowing from a bank during the financial crisis, we targeted neighborhoods where we could buy inexpensive properties, make minor repairs and then rent out. The goal was to have the monthly cashflow repay our out-of-pocket cash investment within 3-4 years.

I had just changed jobs, so I had some cash in my old 401K plan. I rolled it over into a self-directed IRA (SDIRA) and used it to buy our first property from a wholesaler, who we met at ACRE. The vacant property needed some renovations, but it was nothing we felt we could not handle.

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Marco Before After House 5Jun2014 EC

How did you purchase and finance your first real estate investment?
We bought the property inside our SDIRA and used CamaPlan as our plan administrators. The wholesaler and settlement attorney made the transaction quite easy. They had recently done deals with buyers using their IRAs, so they were familiar with the process.

The seller was motivated and wanted out. For the acquisition, we bought the contract from the wholesaler, made a small downpayment and the seller financed the rest. They held a note secured by a mortgage on the fixed-up and no-longer-vacant property for a couple of years.

The repairs were done by contractors and service providers who were paid in cash from the SDIRA. All I needed to do was fill out some forms and attach invoices and receipts authorizing the IRA administrators to pay the contractors.

Did you encounter any issues before or after closing?
The transactions and repairs were a breeze. The problems began when I signed a lease with my first tenant. I guess all landlords have tenant horror stories, but this problematic situation really was my fault.

I was not strict enough in my tenant screening process and was too eager to get someone in the property. Unfortunately, I ended up having to evict her within a few months and pay for additional repairs after she trashed the place.

I have since decided to use a property management firm to screen future tenants and have been much happier and productive this way. I get to do more of what I enjoy, which is buying “neighborhood eyesore” properties, fixing them up and turning them into safe, clean and affordable housing.

Marco Before After Kitchen 5Jun2014 EC

What was the biggest challenge in buying your first piece of real estate?
The biggest challenge was overcoming my own fear. Early on, I dealt with negativity from naysayers telling me why investing in real estate was a bad idea and that fueled my fear and anxiety about pulling the trigger.

The reality is that most people don’t know what they are talking about. They, or someone they know, may have been burned in the past because they were emotionally attached and didn’t think of it as a business, didn’t plan for the unexpected (i.e. inadequate cash reserves) or they didn’t educate themselves about the local market and financial analysis required to determine if an investment opportunity is a good deal or not.

Furthermore, I learned a great deal by attending monthly real estate investor meetups and going to inexpensive seminars. There are also a lot of online communities like BiggerPockets that are great resources for investors.

Be OPEN to opportunities
16 May 2014

Be OPEN to opportunities

Declared legally blind at age 10 and going totally blind by the time she was 20, Angela Winfield bought her first property at age 25. In just over 3 years, grew her investment portfolio to 12 residential units. As a contributing author to “Chicken Soup for the Soul”, Angela enjoys helping others create success in their personal and professional lives.

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Name: Angela Winfield
Location: Auburn, NY
Started investing in: 2009
Years spent investing in real estate: 5
Estimated portfolio size: $500K, 12 residential rental units

When did you start investing and how did you get started?
I started investing in 2009 by purchasing a triplex. I was hooked and started closing deals every 6 months.

As a woman in the real estate industry, what inspired you to get started?
I was inspired to start investing in real estate because of my deep desire for personal independence and financial freedom. The spark fully ignited right after I started working for my law firm when a life insurance representative saw I was a new associate and asked to meet with me.

Since I was very eager and interested to start investing, I accepted and began discussing and researching how the policies worked. Many “traditional” investment vehicles such as 401Ks, generate money that is tied up and cannot be touched without penalty until age 55 1/2. Those vehicles are fine and have their places, but I kept thinking there has to be a better way.

Real estate was the better way.

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Was there anyone who encouraged you to get started?
No one really encouraged me to get into it, quite the opposite actually. Most people advised me against investing in real estate and warned me about the potential pitfalls of it. Even though my parents had made small endeavors in real estate with some success, I didn’t even share my investment plans with them until I was established and had my footing, which didn’t take long.

“Real estate is risky” was the general message I got from non-real estate investors as well as unsuccessful ones. I had to look for the information to get a well-rounded perspective and evaluate the pros and cons for myself. That way, I could determine whether real estate was a good fit for my personality, risk tolerance and financial goals. So far, it has been an excellent fit.

Do you recommend women get into property investing?
Definitely, if they understand the vehicle and think it aligns with their goals and values. I would also tell other women that you don’t have to be in the real estate profession or industry to be a real estate investor. Don’t let your profession dictate your investment options.

That being said, you do need to understand real estate and how you’re using it as an investment tool.

Real estate is tangible, accessible and relatable.

Most of us have lived in multiple homes, have rented at some point in our lives and have some basic experience of how real estate works. All you’re doing is shifting your perspective by learning to look at real estate with a bit of business savvy.

Have you encountered any challenges that you think are unique to being a woman in real estate?
Yes, one example was at a very contentious closing. In fact, the only contentious closing I’ve had. The seller’s attorney actually remarked, “Don’t you have enough properties?” I suspect this was due in part because I’m a woman and was the only woman involved in the deal.

Other than that and an occasional snide remark or underestimation of my knowledge, I haven’t endured many gender specific challenges.

What do you love most about investing in real estate?
I love the multiple avenues for financial gain—cashflow, tax benefits, appreciation and building equity. I particularly love the cashflow and flexibility that comes with generating recurring monthly income that I can use as I choose. I typically reinvest it, but I like having the option of using it to fund a vacation or other pleasure purchases.

What is your biggest accomplishment so far?
My biggest accomplishment has been putting together a dynamic team. I maintain good relationships with real estate agents, bankers, real estate attorneys and other advisors. I also have an incredible property manager, who has been absolutely critical to my success.

I know where my strengths lie—in setting goals, developing strategic plans, finding the properties, putting deals together and overseeing the properties from a budgetary/performance perspective. However, tenant relations, repairs and maintenance and other daily management activities aren’t my most valuable use.

To think you can do it all yourself may be feasible to a point, but it makes things much more difficult and ultimately sets you up for failure so it’s important to have a good team.

Have you made any poor investment decisions?
No, I’ve haven’t made any poor investment decisions. To the contrary, I’ve been extremely pleased with my method and how it’s all working out. It’s hard not to get excited about consistent double digit cash-on-cash returns and in my best year, over 50% return.

I credit this to the preparation and foundation put in place by using my 4 keys to success.

What are your 4 keys to success?
Here is what I think every real estate investor should know and follow. Invest with your eyes wide O.P.E.N. This means have the appropriate:

  1. Outlook; develop a strategic and workable

  2. Plan; invest in the necessary

  3. Education; and establish a strong and highly functional

  4. Network.

In particular, your outlook needs to be that of an investor, not a home owner. I’ve seen beautiful properties that give me romantic ideas of fixing it up and making it my dream home, but that is not my goal and doesn’t fit in with my investment plan.

Properties, especially residential properties, have a way at tugging at our heartstrings; which is good in the sense of knowing what potential tenants would like about the property, but it’s essential that the emotional response is filtered through an investor lens.

In terms of a plan, you should know your strategy, end goal and basic money rules. What are the characteristics of a good deal for you? Are you fixing and flippingInvesting for cashflow? What’s your time frame?

Looking beyond the quick buck
21 Mar 2014

Looking beyond the quick buck

Theresa Bradley-Banta is the founder and CEO of Theresa Bradley-Banta Real Estate Consultancy, a published author and sought after speaker on reality-based strategies for buying, owning and operating multi-family investment properties. Being an award-winning consultant and having overcome some of the unique challenges of being a woman in real estate, she hopes to mentor others by sharing some of the successes and failures she’s endured in the industry.

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Full Name: Theresa Bradley-Banta
Location: Denver, CO
Started investing in: 2004
Years spent investing in real estate: 10
Estimated portfolio size: I’ve owned or had primary ownership roles in properties from $50K to greater than $9M—including single-family rentals, multi-family apartment buildings and single-family development projects

As a woman in the real estate industry, what inspired you to get started?
I met several women real estate investors who were incredibly successful through some friends of mine. They were investing on a large-scale—not just your typical mom-and-pop rental properties. Instead, they had large portfolios of buy and hold investment properties as well as their own property management companies.

Over time, these women became wonderful friends and mentors of mine. They also provided me with an opportunity to invest in some of my very first properties.

When did you start investing and how did you get started?
I started investing in real estate in 2004 largely by accident when my husband and I moved out of our house. Instead of selling it, we rented it out to girls on the local university soccer team. I loved the experience.

With the encouragement of my husband and female friends who were already investing in real estate, I started buying and flipping single-family residences and small multi-family properties throughout the country.

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With each successful flip, our investment pool grew and I made it a rule to always put the profits from real estate investing back into real estate. No excuses.

We don’t use real estate profits to take vacations or to pay off consumer debt. The profits go straight back into new real estate acquisitions.

What do you love most about investing in real estate?
Real estate investing is tremendously exciting. Every project is totally different and keeps you on your toes.

One of my favorite investment deals was a mid-size Class C apartment building that was on its last breath. There were a lot of tenant issues; they were running the building and it was literally a free for all—late rent payments, noise, parties, crime, etc. On top of that, the building was in a terrible state of disrepair.

Finding properties like this is exactly why I love investing in real estate. We renovated the property, returned it to its former beauty and gave our new residents a well-managed, safe place to call home.

Have you encountered any challenges that you think are unique to being a woman in real estate?
Initially, I found that men wouldn’t take me seriously, especially when I decided to invest in apartment buildings. One of the first commercial brokers I interviewed spent the entire hour talking to my husband, acting as though I wasn’t in the room—even though I was the one who had arranged the interview.

At the time, I had already had quite a bit of success investing in single-family and small multi-family properties. It wasn’t until my husband, with no prompting from me, told the broker that I was the real estate investor in the family that I was even acknowledged.

The best way to deal with people who don’t take you seriously is to realize it has nothing to do with you.

Treat it as a non-issue and don’t make a big deal out of it. In the case of the broker who refused to deal directly with me, I chose not to hire him.

Most contractors and service providers I’ve worked with recognize who’s holding the checkbook. I think most women are naturally skilled at working as a team and building relationships and trust.

What is your biggest accomplishment so far?
You might think it would be a multi-million dollar deal, but my biggest triumph was the first house I bought, renovated and flipped. It was an amazing experience to find, finance and renovate a property for the very first time. It completely changed my psychology. Doing that deal gave me a lot of confidence and I eventually moved on to multi-million dollar projects. Learning to believe in my abilities was priceless.

Have you made any poor investment decisions?
One of my worst investment decisions was to buy properties in an area of the country that I really didn’t want to visit. I tried to manage the real estate from afar, which I’ve found is not a good idea.

It’s difficult to stay on top of market trends and your asset performance if you’re not willing to visit the area, tour your properties occasionally, meet with the residents and hold in-person meetings with your team. We ended up firing several managers and ultimately sold the property.

What would you advise a young woman who is thinking about getting into real estate investing?
Don’t immediately join your local real estate investor club. Does this surprise you? If you join a club you’ll most likely find yourself hanging out with other real estate investing hopefuls. The real estate business is about who you know. You need to connect with successful real estate investors so that you can learn and tap into their networks – the sooner the better.

Rather than join a club which might only meet monthly, pick up the phone or go online and start asking your friends, family, parents and business acquaintances, “Who do you know who has had success investing in real estate?” Start networking like crazy and really put yourself out there. Let people know you are just starting out and eager to learn about the various ways to invest in real estate.

Women make fantastic residential real estate investors. We tend to look beyond the “quick buck” and focus on other things that are important to us like the well being of our residents and health of our planet. I think women understand that having a positive impact on people’s lives and on the world we live in goes beyond a concept that we simply use in our marketing efforts. It’s something we really truly embrace.

What do you think is the 3 most important things every investor should know when investing in real estate?
1. It takes money to invest in real estate but it doesn’t have to be your money.

Good deals always attract money. Always.

As an investor, it’s your job to find the great deals. No guesswork, you must know how to analyze the market and numbers.

2. Real estate investing is not a way to get rich quick. To succeed, you must have time, patience, the support of friends and family and a great deal of education. Surround yourself with talented mentors and build a solid team.

3. Know your real estate investing market and submarkets intimately. Intuition and feelings have no place in selecting investment markets.

I can’t resist adding a fourth. Be smart about “hot new trends.” Sometimes the best time to buy is when everyone else is jumping ship. If you’ve heard about the latest hot new thing in real estate investing, chances are you’re too late to the party.

What are your investing goals for the future?
I’m always looking for real estate that presents a good value to add opportunity, especially large multi-family properties and apartment buildings. As a contributing author, speaker and writer, I’ll continue to share information and content on how to invest in real estate and on the ever-changing industry and markets.

I also have the great privilege to mentor clients on a national basis and hopefully will continue to serve as a role model to investors I meet. I love to share the successes and failures made by me and by my colleagues in my field.

Rocker turned real estate pro
14 Mar 2014

Rocker turned real estate pro

Jenelle Isaacson is the hip owner of Living Room Realty. After starting her company 5 years ago while pregnant, Jenelle credits her creative background, fresh approach and attitude towards real estate to her success.

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Full Name: Jenelle Isaacson
Location: Portland, OR
Started investing in: 2001
Years spent investing in real estate: 13
Estimated portfolio size: $3.5M, 5 properties, residential and commercial real estate

As a woman in the real estate industry, what inspired you to get started?
I had previous success in sales in an art and jewelry gallery. During a conversation with my step mom, who had been selling real estate for a few years, she encouraged me to take those skills and see what I could do in real estate. I loved houses, interior design and had just bought my first house at age 26 which empowered me to make the leap into the industry.

When did you start investing and how did you get started?
A few months after getting my real estate license and helping a lot of my friends buy their first houses and fix them up, I found a house in my neighborhood that was a great value and snatched it up. My dad had just retired from teaching and we decided to fix it up as a family.

Besides each of us choosing to repaint the front door 3 times, we were on the same page. Each of us brought a different skill and that little house ended up making us a $7,000 profit each. Success! I got the bug from there.

What do you love most about investing in real estate?
Creating community. Every house, development and project is a chance to bring something new to a community. Putting together my team of contractors, lenders, inspectors and tradespeople feels like family.

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Also, my favorite deals are those that come to me from the most unexpected places.

It’s in those moments that I realize how a healthy, diverse community has supported my success.

I played in a girls punk band up into the time I started my career in real estate. Years later, a drummer in a band we played with saw I was now the owner of a real estate company. When he needed to sell his house, he came to me knowing I would be able to relate to him.

We worked together to help him get out of a tough financial situation and one of my partners ended up buying the house, rehabbing it and turning it into an amazing home for herself. It feels good to know that my connections made in the art and music world make me relevant to business in a way that I would not be without that experience. Everyone came out a winner.

Have you encountered any challenges that you think are unique to being a woman in real estate?
Being a woman in real estate can be challenging. I am petite and look younger than I am which can lead to people underestimating me, but I have learned to turn that into a strength. When I was first starting my real estate business, I endured a lot of sexism.

I often got asked if my company was just for women, a comment that always surprised me seeing that most people in residential real estate are women. Our company actually had a higher ratio of men to women than our competitors, but when I looked around at the other firms in our market, we were the only one of our size that was owned, operated and managed by women. I think this is what makes us even more competitive when it comes to going after market share.

It’s also a misconception that has benefited us at times. The majority of home buyers are single women who are attracted to our brand and company because we have so many empowered women who are successful in real estate.

What is your biggest accomplishment so far?
I think buying my first commercial property has been my biggest triumph. I managed to put together financing for a commercial building in 2009 after the market crashed. A lot of banks laughed at me, I was a realtor with a new realty firm in the depth of the housing crash. I also had a 2 month old and an 18 month old.

Getting together the finances and business plans to the banks was one of the hardest things I had done and not being discouraged was a real test of grit.

When I finally found an advocate at a local bank and some help from the city, we were able to put together the deal. I felt proud of what I had done and owning a piece of real estate on a popular main street in the city felt like a major achievement.

Have you made any poor investment decisions?
I’m lucky in that I don’t have any nightmare stories, but I have made decisions I would do differently. I wish I would have held on to more property in the beginning of my career, rather than flipping it.

At the time, I needed the capitol to work with and didn’t have the connections I do now for financing so selling property freed up the money I needed to rehab or purchase. Bringing in partners and getting more creative are things I consider now that I didn’t before.

Do you recommend women get into property investing? What would you advise a young woman who is thinking about getting into real estate investing?
Definitely, yes. Women generally have very good instincts for houses and neighborhoods.

My biggest piece of advice is to be selfish!

Don’t put your boyfriend on the house as a way to show him you trust, care, love, etc. him. Time after time I see women put their boyfriends and partners on their real estate purchase. Women want to share “home” and mistake making a home as needing to share an asset.

What do you think are the most important things every investor should know when investing in real estate?
Know yourself first, your threshold for risk and your ability to see a project through. Believe in yourself, no one knows more than you, has more talent, luck or opportunities than you do. You will learn along the way. Know your market, values and demand. If you are weak in any one of these, hire someone who can help you.

What are your investing goals for the future?
I would really like to do more commercial projects where I can take more risks and be an active collaborator in shaping the businesses that I lease to and develop for. A whole market concept or micro retail in an urban setting also sounds exciting with a residence on top for me and my family.

Find a mentor and take action
08 Mar 2014

Find a mentor and take action

With over 25 years of experience under her belt, Lori Greymont started investing in real estate while she was still in college. As an accomplished investor, Lori learned how to overcome some of the struggles of being a woman in the real estate industry and hopes to help others do the same.

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Name: Lori Greymont
Morgan Hill
Started investing in: 1989
Years spent investing in real estate: 25+
Estimated portfolio size: 50+ single-family homes and has bought and sold over 1500 to clients since late 2009

When did you start investing and how did you get started?
I started in college. I bought a 3 bedroom house on a HUD program with $500 down and 18% interest rate. I rented out 2 bedrooms and finished out the basement as an apartment. It was my first experience receiving cash flow and I was hooked.

As a woman in the real estate industry, what inspired you to get started?
I grew up in the shadow of a powerful business woman, my mom. She would get an idea, make a decision and just do it—from opening restaurants to buying houses with no money down.

Every few years, we would move into a “broken” house and rehab it. Then when it was finished, we would sell it and move again. I watched how she would do some research and quickly make a decision after a short amount of time and I grew up thinking that was normal until I started working with other investors.

I have come to realize that too many people get stuck in the decision stage and never move forward.

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The only thing in life we never get back is time.

So what if you make a mistake? Try again. If you let time slip by and you never try, you are left with regret. I want to live my life to the fullest—that sometimes means failing, but you can never find out if success is there if you don’t try.

Do you recommend women get into property investing?
I think everyone should be in real estate investing. If you look at where most of the wealth is built, you will find it in real estate—for several reasons: it’s real, it’s insurable, it’s in demand, it appreciates in value faster than inflation as an average and it can be leveraged. You can’t do that with traditional investments like stocks so it’s safe if you invest with the fundamentals in mind.

Have you encountered any challenges that you think are unique to being a woman in real estate?
In my current business, I often work with contractors that are rehabbing my homes. I have been rehabbing since I was a teen, meaning physically doing the work. So now that I am the owner hiring the work to get done, it’s not uncommon for a contractor to offer a solution that costs more than necessary.

I will listen, then tell them how I would like them to do it and pretty much don’t leave any ambiguity that I am correct. I usually get the response of “Oh, I didn’t think of that,” or “Yes, that will work.”

I always offer my input and see if they think it would work.

Unfortunately, there are some people who have an issue with a woman directing the job. I’ve learned to part ways amicably and move on.

The hardest thing I think, as a woman, is to fire someone. We are built for relationships and people view us as “kind” so when we have to do something that ruffles that perception, it’s hard for both us and the person we are letting go. I often give people a second and third chance, but it comes down to what I want to create in my life.

If the relationship is not working for me, it most likely isn’t working for them either. So, I ask myself the following questions: What will happen if I continue this way and what will happen if I don’t continue this way? The answer gives me the strength to have the necessary conversation.

What do you love most about investing in real estate?
People. I enjoy helping people get over their fear of whatever is holding them back from making an investment. I also enjoy the hunt of the deal. I love cash flow each month off the properties. I’m also partial to single-family homes and building. It comes down to the improving or adding value for me and making a positive impact.

What is your biggest accomplishment so far?
My biggest accomplishment has been building a multi-million dollar company during the great recession and helping many other investors get into solid investments when most people were fearful. My early adopter investors are now very happy with the growth and appreciation they have seen in the past few years.

Have you made any poor investment decisions? If so, how would you have done things differently?
Of course! I always say a sign of an expert is someone who has made a mistake and stayed in the game. The saying is, ‘if you fall off the horse get back on.’ There is good value in that because you learned something in that process. Why not apply what you learned?

The biggest mistake I made was buying a 40-acre parcel of land with the expectation of appreciation. The reason it was a mistake is because land doesn’t generate income. We had a seller carry mortgage, so we had expenses, no income and decreasing value. Needless to say, we forfeited it back to the owners, causing myself and others to lose our down payment money.

The lesson to learn in this is real estate doesn’t always go up and you should buy on the fundamentals of cash flow. Anything else is a gamble.

What do you think are the most important things every investor should know?
It used to be location, location, location, but I have found that there really are 5 keys to successful investing. They are:

  1. Market timing—you need to understand where in the real estate cycle your market is.

  2. Your plan—invest for what meets your goals, don’t follow what everyone else is doing.

  3. Location—this is important in regards to picking a marketplace that has a strong economy and a neighborhood that meets your investor goals.

  4. Team—this is probably the most important component with long term holds. 90% of your success is based on how well you select and manage your tenant.

  5. Numbers—it’s critical to know what the real numbers are and to make sure they meet your goals.

What would you advise a young woman who is thinking about getting into real estate investing?

Just do it. Find a mentor and take action.

What are your investing goals for the future?
My passion this year is to help others achieve the success they desire. We continue to support investors who want to get solid passive cash flow from turnkey real estate investments through my company, Summit Assets Group.

I have created an all-women’s mastermind group, called the Impact Circle, for investors and business owners that are ready to positively impact their futures. This group brings investors together to catapult each other to success with power, passion and purpose. I’m excited about what we can do together.

The Dirty 30: Where are they now?
28 Feb 2014

The Dirty 30: Where are they now?

Last year, we profiled 30 young investors on their inspiring start in the real estate game. We caught up with them recently to see how their investment portfolios were progressing and the lessons they’ve learnt in the past year. Here’s what they had to say…

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Beau: Real estate reality star

Beau Eckstein had a great 2013. Over the past year, he completed a luxury home renovation – his largest project to date. He is currently renovating a 2 unit building and was even cast in a reality show titled ‘Flip It To Win It.’ Beau says:

“2013 was an amazing year. If you bought anything you could have made money with the market upswing. However, it’s important to realize the market is going to be much tighter in 2014.

For this year, my strategies are to buy, fix and hold.

I’m looking at purchasing properties where I can add value.

The idea is to purchase multi-family units with a future exit strategy of converting into tenants in common (TIC) units.

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I’m also purchasing rental properties in affluent neighborhoods. The strategy of these purchases is to rent out the properties while working on plans to add square footage to maximize the selling price.

Incorporating a buy and hold strategy will help attain long term wealth. I would also encourage helping others invest in real estate. There is over $4.6T in retirement funds with only 2% of these assets being self-directed. We all need to take charge of our futures.”

Dan: Doubled portfolio in 1 year

Over the past year, Dan Botwinik was able to finalize a 70 unit acquisition he was working on and close a handful of other deals that almost doubled his portfolio to 400 units. Dan says,

“2013 was a big year for me and my partners at Cougar Capital Real Estate, largely made possible by the infrastructure investments made in 2012. Our biggest accomplishment was achieving significant rent increases to the 70 unit complex and creating a template for future developments. The complex appraised for $3.45M more than we paid for it, with an investment of $2M in construction – we paid $1.85M and it was appraised for $5.3M.

Improvements in sourcing and construction management are also allowing us to bite off larger projects and get them completed more quickly and to a higher level of finish, while still coming in at a compelling number compared to appraised value. This has enabled us to attract better tenants and have fewer headaches further down the ownership cycle.

These projects have also been helpful in determining which projects are the best fit, add the most value, and the fastest. We just bought another large complex near the original complex and the repositioning of the new complex no longer seems intimidating.”

Doug: Ready for renovations

After spending a year building the foundation of his business, Doug Medvetz was finally able to start buying and renovating houses. He says,

“Our first year was spent building the foundation of our business and though it is an important piece, it was not as exciting as our first year actually running the business.

Over the past year, we have been involved in 3 renovations. Initially, we focused on single-family homes and have already completed 2 single-family home renovations, but are now also interested in 3-family condo conversion projects and recently purchased our first 3-family condo conversion for over $500K.

The most challenging aspect of the business has been managing the financial side of the renovation projects.

We are currently using hard money loans to fund our rehabs. This requires us to negotiate with our contractors to take payment after they perform their part of the project.

That being said, we learned that when looking to partner with another company/investing group it’s best to form a 50/50 joint venture partnership and identify in writing the responsibilities of each group/company involved. In the future this is how we will structure most partnerships when renovating a house.”

Jonathan: Facing the storm

Hit hard by Hurricane Sandy, Jonathan Dieguez learned first hand why it’s important to have a diverse portfolio of investments. He says:

“Over the past year, I have been focusing on commercial real estate vs. residential. My company has shifted our business model from predominantly dealing with loss mitigation departments and homeowners over to asset managers and builders who ran out of financing on their development deals.

I also started a new company, Creative Equity Group, with 3 other partners which capitalizes on the new crowdfunding in real estate concept.

Hurricane Sandy also took a toll on my fully renovated properties. Not only do I still have properties listed for sale on the market, but my builders insurance did not cover any of the damages caused by the storm. Two particular properties were located right near the flood zones and have cost me a combined total of more than $150K in re-repairs and list price reductions.

However, my commodities fund with Absolute Capital Homes received a 23% annual return for 2013. This is a perfect example on why it’s so important to have a diversified portfolio of investments as well as multiple revenue streams so that if one suffers or underperforms, it’s not the end of the world.”

Peter: Quit his job to start a successful company

After acquiring 6 investment properties with a partner in Columbus, Ohio, Peter Lohmann fell in love with real estate and decided to quit his job as an engineer to start a successful property management company. He says,

“Starting my own company was both the most challenging and most rewarding thing I have experienced over the past year.

The best investment you can ever make is starting a successful company because all you have to do is invest a few grand and can have an infinite return.

Since starting the company in April 2013, our portfolio has grown from 0 to 150 units with 4 employees.

Although not much has changed in how I make investments, the most important thing I learned was the difference between debt and equity. Understanding that in a very practical way has helped me think more clearly about future investment opportunities.”

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