Financial Freedom with Real Estate Investing

More money, more problems.

One of the major pain points for high net worth individuals involves taxes. Today’s guest was hit hard with a $497K bill in 2010, and that’s when he decided stop giving his money away to the IRS and start investing in multi-family properties!

David Zook is a wildly successful entrepreneur and experienced investor in the multi-family space who has syndicated over $50M worth of real estate in his career. His portfolio includes 3,000 apartment units in several states as well as Ambergris Caye, the largest resort in Belize. David has entered the ATM market as well, capitalizing on another investment that offers tax-advantage cashflow.

David is also a sought-after speaker and published author who has presented at venues such as the International Business Conference, The Jason Hartman Real Estate Mastermind, and The Cash Flow Wealth Summit. He credits his success to working with world-class teams, and today he discusses why it’s patriotic to take advantage of available tax breaks, the AHA moment that initiated his transition from passive investor to real estate syndicator, and how multi-family investing has evolved over time. Whether you’re a high net worth individual looking to reduce your tab with the IRS or a syndicator looking to raise money, this episode is for you. Listen in as David shares how he leverages paper loss and cost segregation to reduce his tax bill from $475K to nearly zero.

Key Takeaways

[5:43] Why it’s patriotic to take advantage of tax breaks

  • Incentives encourage certain activities (e.g.: oil exploration)
  • Government rewards for engagement

[7:27] The tax benefits associated with multi-family investing

  • Without creativity, can write off in 27½ years
  • Take ‘paper loss’ (allows to claim 3.6% annual loss)
  • Cost segregation study accelerates depreciation
  • Reinvest capital would have given to government

[10:49] How to exercise cost segregation

  • Licensed professional evaluates property
  • Report breaks down depreciation of component parts (i.e.: washer/dryer, pavement, plumbing)
  • Write off 70% of physical asset in five to seven years

[13:07] David’s advice around choosing syndicator (as a passive investor)

  • Find competent people with track record of success
  • Watch syndicator closely in early stages
  • Start small

 [15:08] How David transitioned from passive investor to syndicator

  • Came into market with cash, partner brought opportunities
  • Ran out of cash, invited family to invest
  • Finally had to slow down as ran out of cash
  • AHA moment on board of local startup bank, discussing .5% interest on CD
  • Realized could offer others double-digit returns via multi-family

[18:02] David’s approach to passive investing

  • Not involved in daily headaches
  • Must trust, believe in partners
  • ‘Team is more important than asset’

[20:24] How David raised money for his first deals as a syndicator

  • Psychological challenge (reputation in business)
  • Lived in Amish country, visited successful farmers
  • Listened to stories, identified pain points
  • Shared own successes
  • Raised $850K
  • Now can send email, get funding in two hours

[24:51] How David structures a deal

  • 5-10% range of cash-on-cash return
  • Investors concerned with consistent quarterly cashflow
  • Keep it simple

[26:28] How multi-family investing has evolved

  • Fewer deals today, must hustle
  • David’s team no longer aggressively chasing deals
  • Good broker, reputation for closing can procure 5-10% discount

[29:52] David’s ATM investing opportunity

  • Started as passive investor in 2012
  • Became partner last year, raised $9M in seven months
  • Introduces investors to exclusive asset class
  • Fits philosophy of investing for tax-advantage cashflow

Connect with David

The Real Asset Investor

Email info@therealassetinvestor.com

Email atm@therealassetinvestor.com

Resources

Email infor@therealassetinvestor.com

  • 8 Real Life Lessons for Syndicators and Their Investors
  • K-1 Sample (How Depreciation Works)

Robert Kiyosaki Books

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Real estate is no longer a local game, and smart apartment building investors have properties all over the country. The tricky part is finding a way to consolidate the data so that you can manage and analyze your portfolio all in one place. Is it possible to streamline the important property management processes when your investments are operated by different property managers using different software in different states? Today’s guest says, ‘Yes, you can,’ as she reveals how to remotely self-manage your real estate portfolio.

Dana Dunford is a real estate management specialist, licensed agent, and technology guru out of San Francisco. After earning her MBA from Harvard Business School in 2015, Dana co-founded Hemlane, a technology-enabled property management solution designed to support real estate investors in the remote management of their rentals. As CEO of the company, Dana understands that the best investments may not be in your backyard, and she is on a mission to provide investors with a single platform that consolidates and manages properties using intelligent software, virtual maintenance coordinators and local support.

Dana’s impressive resume includes positions at Apple, where she was a part of the worldwide financial planning and analysis team, and tech startup Nest, which was acquired by Google for $3.2 billion in 2014. Today she shares her expertise with the Apartment Building Investing audience, discussing the role of a property manager and the pros and cons of self-management. She covers the metrics you should be tracking as an owner, the benefits of property management software, and the processes that should be centralized across your portfolio. If you have between two and fifty properties, this is a must-listen interview that uncovers the tools available to help you remotely manage your investments.

Key Takeaways

 [3:25] The costliest expense in the property management space

  • Bad tenants
  • Turnover costs
  • Eviction expenses
  • Vacancy during inopportune months

[4:39] How to avoid the expenses associated with turnover

  • Advertise early and often (good tenants look 30 days out)
  • Advertise on as many sites as possible
  • Respond quickly, schedule showings asap
  • Screen thoroughly via comprehensive background/credit checks on every applicant (not just primary)

[6:28] The pros and cons of self-management vs. hiring a property manager

  • Makes financial sense to hire property manager for class C and D properties
  • Consider self-management in case of class A properties
  • Good idea to have licensed professional you trust ‘on the ground’
  • Maintain a sense of control by having access to financials, business records

[8:23] The role of a property manager

  • First to blame, last to get credit
  • Must be jack of all trades (finance/accounting, maintenance/repair, salesperson)

[10:17] Dana’s guidance around making property managers ‘offensive players’

  • Open communication, transparency in decision-making
  • Establish owner’s criteria for approving tenants
  • Collaborative partner when problems arise

[11:41] Dana’s advice about interacting with your property manager

  • Frequently in beginning to establish expectations, any time issues arise
  • Weekly call if oversee more than 200 units
  • Email weekly summary (# of tenant applications, leads)

[13:18] The benefits of property management software

  • Provides owner with real-time insight
  • Long-term savings offset $30 monthly investment

[14:28] The metrics owners should be tracking

  • Income statement is crucial (profit/loss, expenses, ROI)
  • Should be able to answer general questions about portfolio
  • Reasons for vacancies
  • Tenant risk mitigation (Following policies? Inspection reports?)
  • Financial risk (Autopay? Late payments? Late fees?)
  • May shift based on need (maintenance, marketing)

[16:17] The processes an owner should prioritize

  • Tenant selection
  • Legal contracts
  • Maintenance management

[17:39] How to incentivize tenants to pay on time

  • Daily late fees
  • Require payment of late fees before rent
  • Report late payments to credit bureau
  • Check state/county laws

[19:34] The processes Dana recommends centralizing across your portfolio

  • Marketing
  • Application
  • Financials, bookkeeping
  • Maintenance tracking

[21:15] How to consolidate your records

  • Newer software allows for integration (email support team with questions)
  • Export all data to single platform (e.g.: QuickBooksSmartMove, Excel)
  • Enlist help of VA only after processes in place

[24:45] The free tools Dana recommends for managing your portfolio

  • Trello (project management)
  • Slack (team communication)
  • Google Sheets
  • Dedicated email, phone number and business bank account

[25:59] The fundamentals of Hemlane software

  • ‘Best investments not in backyard’
  • Add any property to platform
  • Consolidates data for entire portfolio
  • Streamlines property marketing, applicant screening, lease tracking, rent/payments and maintenance

Connect with Dana

Hemlane

Hemlane on Twitter

Hemlane on Facebook

Email: dana@hemlane.com

Phone 385-355-4361

Resources

QuickBooks

smart move

Upwork

Trello

Slack

Google Sheets

Review the Podcast on iTunes

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‘When others are fearful, be greedy. When others are greedy, be fearful.’ Today’s guest took Warren Buffet’s advice to heart, moving past her fear and reaching out to investors at the top of their game to ask for guidance as she shifted from single-family fix and flips to 300-plus unit multi-family properties. Her bigger-is-better philosophy has led to a love of investing in sizable unloved properties and performing a full-gut rehab to revitalize the property – and the community.

Kira Golden is the CEO of Direct Source Wealth, a real estate development company out of Denver that does direct deals and serves as a platform for new and experienced investors. By the time she was 18, Kira had holdings in both the real estate and stock market. After graduating Magna Cum Laude from George Washington University with a master’s in public administration, Kira worked as a financial advisor at Edward Jones until she was in a position to live off her investment income. She currently owns properties in Washington, Colorado, Arizona, Illinois, Ohio, Puerto Rico and France.

Kira is on a mission to bring high-quality deals to Main Street, providing clients with the financial freedom she has earned through investment in real estate. Today she shares how she financed her first deals, what prompted her shift from single- to multi-family properties, and why she reaches out to big name investors at the top of their game. Listen in to understand how to choose the right equity partners and why Kira recommends investing in apartments – the sooner the better!

 Key Takeaways

[2:25] How Kira got her start in real estate investing

  • Watched Robert Kiyosaki infomercials as ‘12-year-old insomniac’
  • Experienced windfall/freak-out cycle as daughter of inventor
  • Desire for consistent cashflow led to buying houses at 18
  • Bought five houses in three years

[5:13] How Kira financed her first deals

  • Invested $3K savings in stock market, grew to $10K
  • Used $10K to finance first house
  • Put $1K deposit on condo, then sold option to homebuyer (value had increased during construction)
  • Used profits to finance second house

[9:14] Kira’s minimalist philosophy

  • Continued to save money, work full-time during college
  • Conscious decision to ‘live like college kid’ until age 30
  • Passive cashflow exceeded expenses by 22 ($2K/month)

[10:56] Kira’s shift from single- to multi-family investments

  • Goals grew from $1M to $100M
  • Weary of fix and flips, borrowing hard money at 18%
  • Got into private lending
  • Time became more valuable than money
  • Feedback from lenders indicated that $1M loan for multi-family was easier to secure than $100K loan for single-family home

[15:07] Kira’s intent behind reaching out to potential partners

[16:56] Kira’s first 30-unit multi-family deal

  • Continues to take 20% of time three years later
  • Bank deal, bought distressed asset
  • Bought $5.4M bank note for $1M
  • Invested $2.5M to complete construction
  • Used investor capital, joint venture with equity partner

[19:19] How Kira attracts investors

  • Shares her excitement for deals
  • Distinguish between fear and intuition
  • Go where you’re afraid, reach out to big names
  • Founder, CEO of fifth largest mortgage bank in US
  • Large real estate investors at top of game

[23:12] What Kira learned from reaching out to sought-after investors

  • People you’re hero-worshipping are just people
  • Deep respect for what they have accomplished
  • Emulate skills that made them successful

[27:34] The importance of alignment in selecting an equity partner

  • Had to buy out partner on 30-unit after legal battle
  • Long-term buy and hold vs. high-velocity fix and flip will end in conflict

[30:47] How Kira would approach raising money for 30-unit deal without equity partner

  • Not beyond door-knocking (pushing own boundaries to raise more capital)
  • Approach bank to carry back the debt
  • Raise construction capital after closing ($250K/month)

[31:56] Kira’s 315-unit full gut rehab

  • Mentor offered pocket deal, he functioned as silent partner
  • Vacant, drug-/crime-infested area of Dayton, OH
  • Turned around, named top-ten complex in city
  • No equity partner, built engine to find investors (first generation made good)

[34:16] Why Kira wishes she had done multi-family sooner

  • Fix and flip experience was valuable (can’t be snowed by property management companies, contractors)
  • Two years would have been long enough
  • Multi-family is a better vehicle
  • Had to build confidence while maintaining roots

[37:21] Kira’s advice for aspiring real estate investors

  • Determine whether you are a deal junkie or just want to retire early
  • 10% who are deal junkies should align with experienced partner to short-cycle learning process

[39:15] What’s next for Kira and Direct Source Wealth

  • Three days meditating in Sedona
  • $100M fund to bring high-quality deals to Main Street

Connect with Kira

Direct Source Wealth

Connect on LinkedIn

Facebook

Resources

Partner with Michael

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building


The vast majority of women perform a number of unpaid jobs every day, from childcare to housekeeping to food preparation. There is simply no time to pick up another job! But today’s guest argues that there is a way for women to generate substantial income that doesn’t require a lot of time and energy – apartment building investing.

Whitney Nicely believes that every woman should control her own destiny by investing in real estate as soon and as much as possible. Born into a family of entrepreneurs, Whitney was inspired to invest in real estate as a creative outlet that would allow her the freedom to be her own boss. She flipped her first house in 2009, and has since grown her portfolio to include 17 residential houses, 19 apartment units and seven chunks of vacant land across east Tennessee.  

Whitney’s philosophy is to take action first and figure it out as she goes. Her bold, ‘throw spaghetti at the wall’ strategy has proven successful, and now she teaches women how to invest in real estate with no money, no credit and no bank necessary. Listen in as she shares why she prefers apartments to single family homes, how she landed and financed her multi-family properties, and her advice around building a reputation as a local real estate authority. Learn why women need to start building a portfolio – today!

Key Takeaways

[2:27] How Whitney got her start in real estate

  • Mom is real estate investor (mailbox money)
  • Went in with no plan
  • Bought land for $1,500
  • Rents driveway and land for $750/month

[5:38] Whitney’s experience with single family homes

  • Bought two houses to rent
  • Realized would take 115 years to get money back
  • Discovered lease option (no money, no credit)

[6:38] Why Whitney quit the family business to do real estate

  • ‘Too much family, not enough fun’
  • Family of entrepreneurs
  • Sought creative outlet of her own

[7:29] The advantages of apartments (vs. single family homes)

  • More money with less time
  • Property manager to deal with problems
  • One roof, one tax bill
  • If one set of renters can’t pay, mortgage still covered

[12:30] How Whitney landed her three multi-family units

  • Property in country near industrial park
  • Previous owner lost through foreclosure
  • Local bank owned, managed by local realtor
  • Listed in small, local MLS (big players unaware)
  • Whitney in contact with agent, lead when price dropped
  • Used HELOC from house paid off to make offer ($25K for 5-unit, $35K for 11-unit)

[15:58] The cashflow on Whitney’s current multi-family properties

  • 19 units total
  • Triplex units bring in $550/month for each, mortgage $60 ($900 profit)
  • Five-units rent for $500/month, mortgage $800
  • 11-unit brings in $4,000/month, mortgage $1,100

[16:52] The other expenses associated with owning apartments

  • Real estate taxes, insurance
  • ‘Bug guy’
  • Property manager
  • Yard maintenance

[17:51] What’s next for Whitney

  • Mobile home park
  • Old building to rent as think tank/co-op office space

[19:04] Whitney’s early real estate misstep

  • Purchased house she hadn’t seen for $15,000
  • Fleas, squishy floors, dubious neighbors
  • Could not rent
  • Sold at auction for $11,000

[21:50] Whitney’s philosophy around taking action

  • Once you buy, three options (sell, rent, do something creative)
  • Play ‘what if’ too long, someone else will take your deal
  • Not bothered by not knowing what’s next

[24:27] How Whitney chooses people to do deals with

  • Lease option not for everyone
  • Focus on people tired of being landlord or making payment on empty house
  • Adopt take-it-or-leave-it attitude

[25:45] What sets Whitney apart from other investors

  • Talks to five to ten sellers per day
  • No fear, just put it out there
  • Finds off-market deals via personal Facebook page
  • Provides HGTV-style edutainment on social media
  • Local authority (crooked ‘I buy houses’ button)

[28:14] Why Whitney believes all women need a real estate portfolio

  • Allows to control own destiny
  • Statistically live longer, may have tendency to spend more money
  • Already do unpaid work at home, no time to pick up extra job
  • Extra $10,000 provided by real estate can make or break marriage, retirement

[30:03] How Whitney’s family reacted to her real estate investments

  • Husband, family not always on board
  • Thought she was wasting time, money
  • Started to take seriously after first $60,000

[32:34] Whitney’s advice for aspiring apartment building investors

  • Take action, figure out as you go
  • Don’t sign your name on $100,000 loan if not comfortable
  • Start small (land, dinky house, ‘lipstick-on-a-pig flip’)
  • Real estate is not complicated

Connect with Whitney

 whitneynicely.com

Whitney Buys Houses on Facebook

 7-Day Lead Challenge

 Resources

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building


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