Financial Freedom with Real Estate Investing

Alan Schnur was away on a business trip when a plane struck his office building, killing 40 of his 44 team members. In the aftermath of 9/11, Alan spent a lot of time questioning what he wanted out of life and the experience informed his drive for continuous growth. Because you never know when another plane is coming, Alan doesn’t believe in complacency. In fact, he makes it a point to reinvent himself every few years and take on new challenges in residential and commercial real estate.

Alan is a wildly successful real estate investor based in Houston, Texas. He began his real estate career rehabbing single family homes, owning a portfolio of 120 before making the transition to apartment buildings. Alan’s go-big-or-go-home mindset translated to multifamily, and he invested in 2K units across 18 complexes—AND founded a property management company that handled 7K units across 40 properties. Now he is taking on a new challenge in commercial real estate, investing in shopping centers along with medical, office and warehouse buildings. Alan is the author of three books on real estate investing, including The Cashflow Mindset: Millionaire, Billionaire & Zillionaire Designs for Financial Freedom & a Fulfilled Life.

Today, Alan joins me to share the story of his reawakening in the aftermath of 9/11 and explain how his skill set as a commodities broker translated to real estate investing. He speaks to the single family formula that dominated the first ten years of his career and his subsequent shift to apartment buildings during a trip to Japan that may or may not have involved saké. Alan describes his apartment addiction, discussing his best and worst multifamily deals as well as his reasons for pursuing syndication. Listen in for Alan’s insight on being flexible with geography and asset classes, taking on new challenges in commercial real estate, and stepping out of your comfort zone to take ACTION!

Key Takeaways

Alan’s AHA moment

  • Job as commodities broker on 101st floor of World Trade Center
  • On business trip during 9/11, lost 40 of 44 team members
  • Week in hotel room led to reflection, reawakening
  • Move to Houston with company, rented condo in NYC

Alan’s experience with single family homes

  • First purchase for $23K, profit of $100/month
  • Bought one/month for 10 years (120 houses)
  • Formula: Rehab, Rent, Refi, Repeat

Why Alan made the transition to multifamily

  • Accumulated enough assets to quit job
  • Bought 25 houses during trip to Japan
  • Realized potential of apartment buildings

Alan’s first multifamily acquisition

  • $40K down on 76-door building (owner financing)
  • Generated more income than 100 houses

Alan’s ‘addiction’ to apartments

  • Buy one every 90 days
  • 18 complexes with 2K units

When Alan got involved with syndication

  • Running out of money, wanted to share risk
  • Started raising money on second or third complex
  • Began with general partner at 30%, 70% for sale
  • Work up to 40-50% for general partner

Alan’s best multifamily deal: The Bangkok Close

  • 1031 buyer wanted 300-unit deal
  • Invested $7M, sold for $14M

Alan’s worst multifamily deal

  • Paid $5K/unit for 160-door complex
  • School across street closed and knocked down
  • Money from bank robbery hidden in sewer line
  • Inspired shift to higher quality assets

Alan’s shift to commercial properties

  • Apartments have variable costs (unpredictable)
  • Triple net lease makes commercial predictable
  • Business renting covers repairs, insurance/taxes

Alan’s shopping center deal in Boise, ID

  • Bought six storefronts for $1M
  • 50% discount (three vacancies)
  • Closed at $2.4M

Alan’s outlook on asset classes

  • Be flexible with geography, asset classes
  • Try more things = better chance of success

Alan’s advice for aspiring real estate investors

  • Put book down and get out to property
  • Join networking group or pay for mentor
  • Watch and learn by joining syndication

What Alan is excited about moving forward

  • Retail syndication
  • Education, helping others

Connect with Alan

Alan’s Website

Resources

The Cashflow Mindset: Millionaire, Billionaire, Zillionaire Designs for Financial Freedom & a Fulfilled Life by Alan Schnur

Books by Alan Schnur

LoopNet

International Council of Shopping Centers

National Apartment Association

National Real Estate Investors Association

Michael’s Coaching Program

Michael’s Products

Michael’s Syndicated Deal Analyzer

Michael’s Deal Maker Mastermind

Financial Freedom Summit

Partner with Michael

Invest with Michael

Michael’s Course

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

Review the Podcast on iTunes


If you are new to the idea of raising money to invest in apartment buildings, the particulars of complying with SEC regulations may have you spooked. No one wants to inadvertently break the law and face restitution, sanctions, or worse—fines and jail time! The good news is, with an assist from an SEC attorney, it is not as difficult to comply with securities laws as you might think.

Mauricio Rauld is the founder and CEO of Premier Law Group, a boutique securities firm specializing in asset protection and SEC compliance. Mauricio has 18-plus years of experience helping multifamily investors increase and safeguard their wealth through syndications. He is a regular contributor to The Real Estate Guys Radio show and a faculty member of the Summit at Sea, a week-long conference for elite real estate entrepreneurs. In addition, Mauricio serves as legal advisor to The Real Estate Guys and asset protection advisor for The Elevation Group.

Today, Mauricio sits down with me to explain his role as a syndication lawyer. He discusses the two legal routes to SEC compliance, the idea of a ‘preexisting substantive relationship,’ and the consequences of breaking the law. Mauricio shares the difference between 506(b) and 506(c), describing the right way to use social media to connect with investors under each exemption. Listen in as Mauricio walks us through the process of working with an SEC attorney, including the general timeline and approximate cost for ensuring compliance with securities law.

Key Takeaways

Mauricio’s role as a syndication lawyer

  • Helps real estate investors scale business
  • Raise money legally for bigger deals

What qualifies as a security

  • Returns generated from your efforts
  • Must comply with federal, state laws

The two legal routes to compliance

  1. Register with SEC (two-year process)
  2. Find exemption, follow rules

The consequences of not following the law

  • Restitution—return money to investors
  • Sanctions—prohibited from raising money
  • Fines, jail time

Mauricio’s advice around disclosures

  • Full disclosure required for non-accredited investors
  • Not required for accredited investors ($1M net worth)

The benefit of using an exemption

  • Creates safe harbor, certainty
  • Preempts state law

The features of the 506(b) exemption

  • Raise unlimited amount of money
  • Up to 35 non-accredited investors
  • Prohibited from advertising

The features of the 506(c) exemption

  • Lifts prohibition against advertising
  • Accredited investors only, reasonable steps to verify

The idea of a preexisting substantive relationship

  • Citizen VC outlines nine points
  • Deep conversation, questionnaire, credit report, etc.

How to use social media to connect with investors under 506(b)

  • Talk about business in general terms
  • Don’t discuss specific offer or prior deals

The process of working with an SEC attorney

  • Work together on business plan, structure
  • Lawyer drafts offering documentation
  • Includes PPM, operating/subscription agreements
  • 506(b) = investor questionnaire
  • 506(c) = CPA letter or third-party verification
  • Accept money only after documents returned

Mauricio’s insight around the timeline and general cost of compliance

  • One week to draft docs once business plan complete
  • Include $15K ‘legal and compliance’ line item in budget

Connect with Mauricio

Premier Law Group

Email cs@premierlawgroup.net

Resources

Citizen VC Letter

Verify Investor

Michael’s Coaching Program

Michael’s Products

Michael’s Syndicated Deal Analyzer

Michael’s Deal Maker Mastermind

Financial Freedom Summit

Partner with Michael

Invest with Michael

Michael’s Course

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

Review the Podcast on iTunes


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