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…
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.
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.
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.”