Multi-family assets cover a wide spectrum of niches, such as apartments and mobile home parks, and investment strategies, such as new development, acquiring stabilized assets, seeking value-add opportunities, or repositioning of highly distressed assets. Each niche has its own unique characteristics and each strategy has its own risk factors. Balance of Risk and Reward One […]
In Tapping Into Appreciation in A Growing Market, I shared why anyone with equity in their home may want to consider converting that equity into cash in a great market so that equity could be used and reinvested, rather than sitting idle or even worse, lost altogether due to cyclical declines in the market. I […]
Interest rates influence decision making Investors select among asset classes such as stocks and real estate Demand rises within that asset class, raising prices Prices investors are willing to pay for NOI are reflected by cap rates Many people miss the fact that cap rates (see real estate terms resources page) are not necessarily the […]
Especially in this economic cycle, the assumptions we make in our underwriting can lead to very critical miscalculations if we are not prudent and conservative. Below are two very important considerations in conservatively underwriting multifamily investments. Rent Growth Both experienced and inexperienced investors alike may be inclined to project rent growth in year one. While […]
There is a trade off that exists when it comes to the types of property and locations in which to invest. If it were every investor’s choice, they would only invest in the absolute most desirable areas and neighborhoods. However, sometimes due to demand and valuation, finding a suitable asset that meets your criteria can […]
Below outlines how passive investors, or Limited Partners (LP’s), in apartment syndications commonly receive returns. Cash Flow from Operations Distributions from Cash FlowAfter the passive investor agrees to join the deal as an LP, she will receive her representative portion of cash flow distributed as however outlined in the private placement memorandum (PPM). These can […]
What is buy and hold?Buy and Hold real estate, characterized by the long-term holding period than other strategies such as fixing and flipping, reaps great long term rewards. These rewards give, and give and finally give more. While it is great to have a mix of quick-cash producing strategies and ongoing passive income, buy and […]
Hello Friends. I recently refinanced on my second rental property and wanted to share the details for anyone considering doing the same. In an earlier article, I shared how to take advantage of equity growth and how to tap into that equity into an appreciating market. In that post, I shared some detail regarding the […]
The primary focus for every investor should be capital preservation: protecting the principal investment funds. This is significantly more essential when using other people’s investment funds. After first protecting principal, then an investor’s second priority is capital appreciation. Many times these priorities get confused; appreciation becomes the top goal and protection of principal is put […]
Right now happens to be a good time for many people in the stock market. Led by technology stocks, people are experiencing growth and feeling good from their exposure to the stock market highs. The Game Stop short squeeze left one average part-time individual investor up by millions of dollars! With all the success of […]
Many investors someday aspire to grow from their single family rental portfolio to owning many multi-family assets. Mistakenly, they may assume that what is necessary to be successful in multi-family real estate is identical to that of single-family investing. There is one fundamental difference in investing in the multi-family versus single-family real estate assets. One […]
Russell Gray from the Real Estate Guys Radio podcast said it very well when he stated that “Good Underwriting Beats Market Timing.” There are not too many people that can predict with consistent accuracy when the local or greater real estate market will “take off” or “slow down.” No one can, with 100% certainty or […]
When underwriting a multi-family real estate investment, you will always deal with income as part of your analysis. In fact, income is the most important part of the analysis because without income, there is no service to debt or cash flow. Therefore, understanding the income side of the process is of great importance. For underwriting […]
You have heard it said many times:“Stay away from debt.””All debt is bad.” It sounded like great advice, especially having come from well-meaning people. If you are like me, you lived a great portion of your whole life with these generalized beliefs. For me, in many ways it was great. I saved as much as […]
When it comes to rental property investing, even for passive investors, it is critical to understand how the forces of demand influence desirability for a key market. Conceptually, there are two approaches to demand analysis, Inferred and Fundamental. I will describe each using the Appraisal Institute’s definition for each term. 1️⃣ Inferred Analysis: Demand projected […]
When I first began my studies of real estate in 2013, I adopted a very narrow mindset in the suitable path to wealth creation. I believed that all investors followed the same obvious strategies and that one’s success was dependent upon that individuals own resources. Along the way, I learned that, aside from the dozens […]
One of the core threats to the income your property produces is vacancy. Vacancy is a term most often used to to describe the level of occupancy of a particularly property. Each unit that is unoccupied is lost income potential. Vacancy is one of the largest expenses to your rental operations. It is easy to […]
Buying real estate is fun. When most people think of the excitement of real estate, they imagine doing deals, collecting monthly cash flow and cashing closing checks. But there is another side of real estate investing, a potentially more ominous view that involves the costly repairs and potentially painful impacts of unplanned expenses. Expenses are […]
I want to share a very simple concept that is easy to understand, but even easier to overlook when you are purchasing an investment property. The concept is Price versus Value. As Warren Buffet once famously stated, ”Price is what you pay; Value is what you get.” What he meant by the statement is that […]
If you are an active investor, you may be very familiar with the following three business models. If you seek to passively invest with a sponsor, your familiarity with the below models is of great importance. As you will see, each has its own set of unique pros and cons. Turnkey Turnkey investing is to […]
If you read my article about why everyone should have real estate in their wealth portfolio, you know that I am passionate about the power of real estate and its use as a wealth builder for anyone. Unlike other assets, real estate has an unusual wealth building potential, in that wealth is built in four […]
Buying multifamily real estate involves addressing many variables. Underwriting is the process of accounting for those variables in order to determine an appropriate price based on the identified value. Recognize that multifamily real estate (5 units or greater) is considered commercial real estate, and is valued differently from residential (single family homes and small multi […]