Financial Freedom with Real Estate Investing

With 3,600 members, Neal Bawa’s multifamily meetup is the largest in the US.

Would you believe that when he started the group, Neal had zero multifamily experience?

Neal’s background is in technology education. He spent 15 years running a traditional company—and paying massive taxes—when his boss turned him on to the tax benefits of multifamily. Neal invested in a handful of single family homes, triplexes and fourplexes to learn the game, and he was ready to take the next step when he learned about a 12-plex deal that he couldn’t afford on his own.

By then, Neal had established his multifamily meetup, where he was candid about the fact that he didn’t have experience. Rather, he shared what he DID know—his research and knowledge of the numbers. And on the night that Neal shared the story of the 12-plex deal, he discovered that he had a knack for raising money as well.

Today, Neal and his partner have 1,000 units, with plans to hit 1,700 by the end of the year. Neal joins me to discuss how he was able to position himself as a leader despite a lack of track record and why his ability to tell the story of a project led to success with raising money. He talks numbers, sharing the importance of understanding the economics of an area before you invest and his take on the top two markets for 2018. Listen in for Neal’s insight around stock market corrections, partnering with experts and diversifying your real estate portfolio.

Key Takeaways

Neal’s transition from single- to multifamily

  • Multifamily scales much better, always the goal
  • Bought single family, tri-/quadplexes to learn
  • Found 12-plex deal, told story in meetup
  • Discovered knack for raising money

Why Neal established a multifamily meetup without a track record

  • Desire to share knowledge, network
  • Honesty re: lack of experience resonated

How Neal’s meetup group supported his growth

  • Encouraged meetup members to form groups (e.g.: underwriting)
  • Learned from each other through open share
  • Experienced future partner joined group

Neal’s advice around avoiding the mistakes he made early on

  • Don’t assume taxes will stay the same
  • Gain understanding of tenant quality

How demographics can impact returns

  • Delinquency levels of African American tenants
  • Marginal difference on western seaboard
  • Three to four times higher in Midwest
  • Vegas as transitional area, high turnover
  • Work numbers into underwriting

Neal’s top market picks with growth and value potential

  1. Sacramento
  2. Orlando

Why multifamily investors should adjust their expectations

  • 23% cash-on-cash returns no longer realistic
  • Interest rates increasing, cap rates decreasing
  • Rent growth slowing down (still above trend)
  • Red flag if syndicator promising same returns

Neal’s take on whether it’s a good time to get into multifamily

  • Anticipate massive housing shortage
  • Gap in supply/demand in Class B, C
  • Once in a lifetime opportunity

Neal’s insight on market corrections

  • Assume will happen, plan for it
  • Returns will drop, but good properties will survive

How multifamily performed in the last recession

  • Better than most asset classes
  • Still had cashflow (down to 4%)
  • Deep crash = opportunity
  • 4% default rate

What’s next for Neal

  • Expand network and diversify
  • Acquire student, senior housing
  • Partner with expert in industrial

Connect with Neal

Multifamily U

Financial Attunement

Email neal@finatt.com

Resources

We Are Apartments

The Financial Freedom Summit

Michael’s Course

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

Review the Podcast on iTunes


Wouldn’t it be great if your first multifamily deal just fell into your lap? If someone would just walk into your office and offer you an 18-unit property? If a bank would provide you with 100% financing and 100% renovation?

Sounds great, right?

But the problem with things being too easy is that you don’t learn. Just ask Nathan Tabor. He got lucky on his first multifamily deal—and that led to a lot of misery, stress, and unanticipated setbacks with his second and third investments.

Nathan is an entrepreneur, business consultant, executive coach and speaker. In the last 18 years, he has successfully founded and operated dozens of businesses, grossing over $150M in sales. His experience spans the areas of real estate, auto sales, web-based marketing and direct product sales. Nathan has been a featured guest on Fox News, Laura Ingraham and C-Span, among others, and his parent company was ranked as one of the fastest-growing small businesses in the US by Inc. magazine in 2012, 2013 and 2014.

Nathan has done 26 multifamily deals in the last 11 years, and his current portfolio includes three apartment buildings with a total of 168 units. Today he joins me to share his story, discussing how that easy first deal led to big mistakes with his second and third investments. Nathan walks us through the lessons he learned around financials and zoning and explains why aspiring investors should focus on the first deal. Listen in to understand how his multifamily strategy has changed over time, and get Nathan’s insight on serving others first to achieve lasting happiness.

Key Takeaways

Nathan’s stress-free first deal

  • Opportunity to buy 18-unit complex
  • 100% financing from small community bank
  • Added 12-unit complex nearby
  • Flipped after eight months, made $250K

Nathan’s disaster of a second deal

  • Purchased 24 units for $225K
  • Couldn’t get building permits
  • Lost grandfathering, had to bring up to code
  • Cost $150K more than budgeted
  • 18 months of misery and stress
  • Good investment in long run

Nathan’s multifamily strategy

  • Class C, value-add opportunities
  • Flip OR refinance into nonrecourse debt
  • Current portfolio of three complexes, 168 units

Nathan’s third multifamily deal

  • Rent-roll advertised $28K, only $7K coming in
  • Forced to rework numbers, renegotiate with bank
  • Learned to verify financial via bank statements
  • Eventually sold property, made $800K

The lessons Nathan learned from his mistakes

  • Don’t wait to resolve problems
  • Follow instincts if something feels wrong
  • Seek the advice of mentor/coach
  • Do foundational work to get educated

How Nathan’s multifamily strategy changed over time

  • Started out flipping properties
  • Learned about nonrecourse debt
  • Look for properties that meet nonrecourse criteria
  • Banks started asking for more money down
  • Uses income from flips to finance next deal

Why multifamily appeals to Nathan

  • Monthly income not dependent on working 40 hours/week
  • Opportunity to help people in difficult situation (C class buildings)
  • 90% of tenants just want safe, well-maintained place to live

Nathan’s advice for aspiring multifamily investors

  • Define your niche
  • Develop business plan
  • Start somewhere, build up
  • Work with partner if necessary
  • Focus on the first deal

Nathan’s insight on work-life balance

  • Moments of joy based on money don’t last
  • Take care of health, relationships and faith first

Connect with Nathan

Nathan’s Website

Resources

The Financial Freedom Summit

Michael’s Course

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

Review the Podcast on iTunes


Andrew Campbell was 27-years-old, working a good corporate job when he got the call that his father had suffered a massive brain hemorrhage. So he moved back home to Austin and reconsidered what he wanted out of life.

Flexibility and freedom became priorities for Andrew, and when an experienced friend invited him to partner up on the purchase of a duplex, he agreed. Very quickly, Andrew was ‘addicted to real estate,’ and he began to envision a long-term plan that would allow him to quit his job and pursue real estate full-time.

Now Andrew is a managing partner with Wildhorn Capital, a real estate investment firm focused on multifamily properties in major Texas markets. Today he joins me to share how he made the transition from duplexes and fourplexes to his first multifamily deal, a 192-unit building in San Antonio. Andrew walks us through his first experience with raising money, explaining how being a real estate junkie helped him build a network organically. Listen in for Andrew’s insight on redefining success, taking risks, and leveraging an addiction to real estate to live the life YOU design.

Key Takeaways

How Andrew got into real estate

  • Corporate job out of state
  • Moved home after dad’s massive brain hemorrhage
  • Changed notion of what success looks like
  • Bought duplex with experienced mentor

Andrew’s initial investment strategy

  • Goal to create passive income
  • Envisioned 15- to 20-year plan
  • Add duplexes, fourplexes to portfolio
  • Managed himself to learn business

Why Andrew limited himself to four units or less

  • Qualified for residential loans (up to ten)
  • Model was familiar

 Why Andrew transitioned to multifamily

  • Reaching maximum # of residential loans
  • Realized could realize dreams sooner
  • Wife encouraged him to ‘go for it’

Andrew’s first experience with raising money

  • Client through consulting work offered $100K
  • Gained confidence, snowball effect

Andrew’s first multifamily deal

  • 11 months from decision to close
  • Relationships with brokers in San Antonio
  • Purchased 192-units for $16M ($6.5M raised)

What inspired Andrew to ‘go big’ on his first multifamily deal

  • Property management companies look for 125-plus
  • More efficient to go bigger

How Andrew was able to raise $6.5M

  • ‘We networked our asses off’
  • Five meetings/week with new people

Why Andrew chose to work with a partner

  • Sees real estate as ‘team sport’
  • Met at conference, same business model/markets
  • Complementary skill sets (both intense hustlers)

 What’s next for Wildhorn Capital

  • Strategic, disciplined to find deals that work
  • Goal to expand to 1K units in 2018

How Andrew’s life is different as a full-time investor

  • ‘Life by design’
  • Flexibility, freedom
  • Feels he can do/achieve anything
  • Full-time job no longer in way

Andrew’s advice to aspiring multifamily investors

  • Start buying property now
  • Don’t be afraid of value-add
  • Don’t be afraid to use other people’s money
  • Take ownership, risks

Connect with Andrew

Wildhorn Capital

Email andrew@wildhorncap.com

Resources

The Millionaire Real Estate Investor by Gary Keller, Dave Jenks and Jay Papasan

Rich Dad Poor Dad by Robert T. Kiyosaki

Michael’s Course

Michael’s Contact Form

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

Review the Podcast on iTunes

Direct download: MB_094_-_Life_by_Design_with_Andrew_Campbell.mp3
Category:Commercial Real Estate -- posted at: 3:10pm EDT

You’ve been served.

Those are scary words for a real estate investor, but the truth is that you are likely to face a lawsuit at some point in your career—take it from me. So how do you keep your assets safe and protect yourself from frivolous litigation?

Scott Smith is an attorney as well as a real estate investor. His firm, Royal Legal Solutions, provides business, tax and legal solutions geared exclusively for real estate investors. Scott has eight years of experience deconstructing the industry, and asset protection is his specialty.

Today Scott covers the statistics around lawsuits in the real estate investing space, explaining his ‘if, not when’ approach to protecting yourself as a real estate investor. He shares case studies of investors who were not protected and walks us through the benefits of hiding and isolating your assets. Scott offers his best strategies, including separating operations from ownership, removing equity from your properties, and doing your due diligence—every single time. Listen in and learn how to leverage a series LLC structure in combination with a land trust to remain anonymous and compartmentalize your assets, making you less susceptible to litigation.

Key Takeaways

The focus of Royal Legal Solutions

  • Help real estate investors protect, hide assets
  • Keep retirement, assets safe

The likelihood you will be sued as a real estate investor

  • Most litigated industry in US
  • 3-8% sued every year
  • Almost guaranteed lawsuit during lifetime

The potential outcomes of a lawsuit

  • Prevent by hiding, isolating so client looks unattractive
  • Let insurance company’s lawyers bully into low settlement
  • Insurance only covers negligence (nothing else)

 Scott’s strategies for protecting real estate investors

  • Transfer properties into asset holding company
  • Separate operations from ownership

The level of effort required to open and maintain multiple LLCs

  • Only need one operating company, one asset company
  • Asset holding company can employ series LLC structure
  • Infinite scalability
  • Compartmentalization of every asset
  • Cost to expand goes to zero
  • Move property into land trust (can’t be traced back to you)
  • Creates doubt in mind whether you still own property

Scott’s best advice for real estate investors

  • Separate assets from operations
  • Remove equity from property

Scott’s call-to-action for protecting your assets

  • Remove your name from assets
  • Be sure you’re well-insured
  • Do your due diligence every time

Connect with Scott

Royal Legal Solutions

Email scott@royallegalsolutions.com

Call 512-757-3994

10 Ways to Protect Your Real Estate Investments

Resources

Michael’s Course

Michael’s Coaching Programs

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

Review the Podcast on iTunes


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