Financial Freedom with Real Estate Investing

The multi-family market is hot right now making it harder to find good deals. Finding a way to charge above market rents is one strategy that allows us to buy properties at market and still get the returns we are looking for.


There are various strategies for achieving this, but a relatively new one that has come to my attention is renting out properties on a short-term basis via AirBnB. This week Nav Athwal joins me to discuss this strategy and some things you need to think about before implementing it.


Key Takeaways


[4:43] AirBnB and how most hosts utilize the platform

  • Hosts rent out rooms and/or entire personal homes

[7:31] Alternative ways to use the platform

  • Buying properties for the exclusive purpose of renting through AirBnB
  • Renting out empty properties through AirBnB while you are unable or unwilling to use them for another purpose

[10:15] Where the short term rental strategy can work

  • Look for cities where AirBnB is already very active
  • Look for cities with favorable regulations toward short term rentals

[11:42] Scalability of this strategy

  • Not completely proven
  • Services like Pillow offer on demand concierge and property management

[13:46] Regulatory Uncertainty

  • Some cities are limiting short term rentals while others are outlawing them completely.

[15:36] Pro AirBnB cities

  • Seattle
  • Austin
  • MANY international cities

[19:22] Nav’s advice to real estate investors evaluating this strategy:

  • Make sure your ROI is higher than it would be for a long term rental
    • Factor in cost to manage
    • Factor in expected occupancy rate
  • Research the cities regulatory environment
  • Location- Is this a location that will attract travelers?

Resources mentioned

Blog Post: THE RISE OF THE PROFESSIONAL AIRBNB INVESTOR- https://www.realtyshares.com/blog/the-rise-of-the-professional-airbnb-investor/

Connect with Nav

Website: www.realtyshares.com
Email: nav@realtyshares.com
Twitter: @navathwal

 

Direct download: MB_044-_The_Rise_of_the_AirBnB_Multifamily_Investor-2.mp3
Category:general -- posted at: 12:39pm EDT

Ever wonder what SEC regulations apply to apartment building syndications? There is a lot to this subject and while it’s not crucial that you know everything, nor should you try, it is important that you have a basic understand of what’s involved and what to look out for.

This week I’m joined by SEC Attorney Steven Rinaldi who has been handling private offerings of securities for over 26 years. Steven is extremely knowledgeable and competent, and this episode is packed full of useful info!

Key Takeaways:

[2:25] Definition and example of a syndication
[5:00] The types of entities Apartment Building Investors should use for Syndication
[8:08] How to structure a deal
[10:31] Legal documents required for syndication:

  • Operating Agreement
  • Prospectus/Private Placement Memorandum (PPM)
  • Subscription Agreement
  • Form D. File this in the states where the investors are located (not the property)

[13:12] Advantages of Delaware LLC’s

  • Hard to break up
    • Discourages disgruntled investors from filing lawsuits
  • Delaware judges see these cases all of the time and are very familiar with business law
  • Get out of trouble for as little as 10K vs. 250K

[17:38] What makes an investor an “Accredited Investor”

  • Net worth of one million or more excluding their house, car and life insurance
  • Husband and wife with a salary of 300K or more, with every expectation that will continue
    • Or one spouse makes over 200k per year, (with every expectation that will continue)
  • Less common
    • Trust fund of more than 5 million, Corporation, Partnership or LLC worth more than 5 million
    • Banks, Broker/Dealers, Mutual Funds, Insurance, Small Business Development Companies

[19:18] What qualifies as a “Prior Relationship”

  • The SEC won’t define it

[21:10] How to go about advertising to accredited investors

  • Go to a broker/dealer that specializes in alternative investments

[21:52] The difference between advertising and networking

[22:37] The importance of doing a PPM

  • You are required to provide a PPM to all non-accredited investors
  • You want to provide a PPM to accredited investors because they can sue you for fraud for not disclosing all "material information"
  • If you don’t, and the deal goes sideways you could easily lose everything you have. In most states that includes your house and your kid's college fund.
  • In most states, you cannot discharge a securities law judgment or fraud judgment in bankruptcy
  • ALWAYS DO A PPM!

[26:43]- Time and cost of drafting an Operation Agreement and PPM

  • Three weeks for initial draft
  • Could be completed in as little as five weeks

[29:10] The basics of crowdfunding

  • You can advertise to non-accredited investors BUT pay attention to the rules
  • You must refund all money if you don’t hit your goal.
  • More work for an attorney, therefore, more expensive

Connect with Steven Rinaldi


Email: stevendrinaldi@msn.com

Website www.rinaldilaw.com

Phone number: 240-481-2706

 

Direct download: MB_043-_Interview_with_SEC_Attorney_Steven_Rinaldi-2.mp3
Category:Commercial Real Estate -- posted at: 7:32pm EDT

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