Financial Freedom with Real Estate Investing

The real world is not HGTV. If you are a high-earner looking to get into the real estate game, it is important to understand just how much work is involved in being an active investor. There is a lot of competition in the space, and good deals are hard to find. Add to that the complexities of managing a rental portfolio, for example, and the headache may seem like more than it’s worth. But why work harder than necessary to make less than you could? You can take advantage of all the benefits of commercial real estate investing as a passive investor, letting an expert handle the minutiae while you reap the rewards.

Paul Moore is the Founder and Managing Director at Wellings Capital, a commercial real estate investment firm that focuses on self-storage, mobile home parks, and multifamily property. Paul has 18 years of experience in real estate: He has flipped 50-plus homes and 25 high-end waterfront lots, appeared on HGTB’s House Hunters, rehabbed and managed rental properties, built new homes, and developed a subdivision. Paul is also the author of The Perfect Investment: Create Enduring Wealth from the Historic Shift to Multifamily Housing and cohost of the wealth-building podcast How to Lose Money.

Today, Paul joins me to discuss the advantages of commercial real estate over stocks, bonds and mutual funds. He shares the challenges of being an active investor, explaining why high-earning professionals might be happier as passive investors in commercial assets like apartment buildings, self-storage facilities, or mobile home parks. Paul also offers insight around the commercial value formula, describing how operators can force appreciation with simple strategies to increase a property’s income or compress its cap rate. Listen in to understand the extraordinary tax advantages of multifamily real estate and learn what makes commercial investing an attractive option for high-net-worth individuals looking for a consistent return and minimal risk profile.

Key Takeaways

The pros and cons of stocks, bonds + mutual funds

  • Long track record of growth, great liquidity
  • Highly unpredictable

The pros and cons of commercial real estate

  • Not at all liquid
  • Stability, predictability for long term

The challenges of being an active investor

  • Hard to find good deals + be profitable
  • Time consuming to run large SFH portfolio

The commercial value formula

  • Value = net operating income/cap rate
  • Increase income or compress cap rate to force appreciation

Simple things operators can do to increase income

  • Rental space for trailers, RVs + boats in mobile home park
  • Professional property management in apartment building

Simple things operators can do to compress the cap rate

  • Franchise group of self-storage facilities, find right buyer
  • Multifamily value-add from C+ to B and refinance

The tax advantages of commercial real estate investing

  • Accelerate depreciation via cost segregation study
  • Bonus depreciation (up to $1M) + QREP write-offs

Wellings Capital’s strategy moving forward

  • Expand to self-storage, mobile home parks via partnerships
  • Wellings brings equity and partner-operator finds deal

Connect with Paul

Wellings Capital

How to Lose Money Podcast

Paul on BiggerPockets

The Perfect Investment: Create Enduring Wealth from the Historic Shift to Multifamily Housing by Paul Moore

Resources

Deal Maker Live

The Real Estate Guys

Paul Moore on ABI EP058

10 AMAZING Tax Benefits for Real Estate Investors

Michael on HTLM EP019

Michael on HTLM EP132

Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes by Tom Wheelwright

Nighthawk Equity

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Apartment Investor Network Facebook Group

Michael on Instagram

Direct download: ABI_159_v2.mp3
Category:Commercial Real Estate -- posted at: 2:28pm EDT

Are you using your IRA to invest in a multifamily syndication? Then brace yourself for an unexpected tax bill when the asset sells. If, on the other hand, you’d prefer not to owe the IRS for Unrelated Business Income Tax (or UBIT), it’s time to consider a Qualified Retirement Plan (or QRP) that gives you more control over your money and makes it much easier to invest in real estate!

Damion Lupo is a real estate investor, serial entrepreneur, and high-profile financial consultant. He founded Total Control Financial in 2010 to help people achieve financial freedom. He is committed disrupting Wall Street and empowering Main Street with the tools and teachings of financial transformation. In the last 25 years, Damion has launched and owned 40-plus companies, including a venture capital firm, an insurance agency, and more than a dozen real estate investment and development operations. He is also the author of QRP Book: How to Get Checkbook Control of Your 401(k) & IRA Money Now.

Today, Damion joins me to explain why the current retirement system is broken and discuss the problem with using your IRA to invest in multifamily real estate. He walks us through the fundamentals of UBIT, describing how you can be blindsided by a BIG tax bill when an asset sells.  Damion also offers insight around the alternative to the IRA that is exempt from UBIT, the QRP. Listen in to understand the multiple benefits of the QRP as a retirement vehicle—and learn how to regain control of your retirement savings AND maximize your profits as a multifamily investor.

Key Takeaways

Why the retirement system is broken

  • Hand $ to someone else + hope for best
  • Better to create own wealth

The shortcomings of the 401(k)

  • No control over money, high fees
  • Limits around what invest in

The problems with the IRA

  • Hit with taxes if invest in syndications
  • Pay unlimited fees to custodians

The fundamentals of UBIT

  • 35% tax on profit from debt
  • Hit with UBIT when asset sells

How to avoid UBIT

  • Move asset into QRP (in-kind rollover)

The benefits of the QRP

  • Ability to control own money
  • Higher contribution limits (up to $50K)
  • Borrow up to $50K to invest in self
  • No custodian = much lower fees
  • No third party for paperwork

Short- vs. long-term real estate investments

  • Short-term investments need tax shelter like QRP
  • Don’t put long-term investments in retirement account

When it’s worth it to get a QRP

  • Cost between $1500—$6K (depends on # of employees, companies)
  • Makes sense even for $50K investment

Connect with Damion

Damion’s Website

QRP Book: How to Get Checkbook Control of Your 401(k) & IRA Money Now by Damion S. Lupo

Resources

The Real Estate Guys

Deal Maker Live

Hal Elrod

Damion Lupo on ABI EP079

Tom Wheelwright

Michael’s Mentoring Program

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Apartment Investor Network Facebook Group

Michael on Instagram

Direct download: ABI_158.mp3
Category:Commercial Real Estate -- posted at: 1:50pm EDT

So, you want to achieve financial freedom with real estate investing, but you’re a busy person with a demanding job and a lot of responsibility. You don’t have time to learn the ins and outs of putting together an advisory team, finding a good deal, or making decisions about the financing and management of a property. The fact is, you can STILL enjoy the benefits of real estate investing by becoming a passive investor in a multifamily syndication!

Doug Marshall is the founder and president of Marshall Commercial Funding, a firm dedicated to helping clients get the best possible financing for their rental properties. Doug has 36 years of experience as a mortgage broker, and he received his CCIM designation in 1999. His journey into passive investing began 10 years ago, and to date, he has invested in 11 properties—8 of which were apartment buildings. Doug is also the author of Mastering the Art of Commercial Real Estate Investing:  How to Build Wealth & Grow Passive Income from Your Rental Properties.

Today, Doug joins me to discuss how he achieved financial freedom through passive investing in commercial real estate. He describes the difference between an active and passive investor, sharing his goals as a passive investor and the characteristics of an ideal candidate for passive investing.  Doug also offers insight around his preference for multifamily over other asset classes and explains how to calculate the amount you need to invest for a particular cash-on-cash return. Listen in to understand the incredible tax benefits of real estate investing and get Doug’s take on the #1 thing passive investors should consider before handing their money over to a syndicator.

Key Takeaways

Doug’s path to financial freedom with passive investing

  • 20 years living paycheck to paycheck
  • Went into business for self as mortgage broker (3X income)
  • Partnered with client as passive investor

The difference between active and passive investing

  • Active investors make ALL decisions (team, management)
  • Passive investors decide WHO to trust to achieve returns

Why Doug prefers multifamily over other asset classes

  • Vacancies have less impact on returns
  • Low vacancy rates during recession (5-10%)

The advantages of multifamily real estate investing

  • Deferment of capital gains taxes
  • Generates cashflow
  • Opportunity to buy below market
  • Depreciation limits income taxes
  • Leverage properties to amplify return

Doug’s goals as a passive investor in multifamily

  • No hassle of day-to-day decision-making
  • Cashflow + upside appreciation
  • Financial freedom (family trip to Scotland)

The ideal candidate for passive real estate investing

  • Made good money over lifetime
  • Desire to generate passive income

How to calculate the right amount to invest for retirement

  • Living expenses minus social security benefits
  • Cover difference with cash-on-cash return

The cash-on-cash return Doug looks for in a property

  • 4-5% from start with value-add opportunity
  • Up to 8% once improvements made

The most important considerations for passive investors

  • WHO to invest with (vet syndicator for integrity)
  • WHAT asset class to invest in

Connect with Doug

Marshall Commercial Funding

Mastering the Art of Commercial Real Estate Investing: How to Successfully Build Wealth & Grow Passive Income from Your Rental Properties by Doug Marshall

Resources

Deal Maker Live

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Apartment Investor Network Facebook Group

Michael on Instagram

Direct download: ABI_157.mp3
Category:general -- posted at: 1:02pm EDT

The vast majority of real estate investors were blindsided by the crash in 2008. And with many economists warning that we’re headed toward another downturn, it is prudent to take off our rose-colored glasses and move forward with an eye to the broader economic picture. It is crucial for multifamily investors to study the markets, identify trends and consider the economy’s impact on our investments—and the people who rent from us.

Robert Helms is the founder and host of Real Estate Guys Radio, a media platform dedicated to helping investors stay focused, motivated and informed. He has a wealth of experience teaching Landlord Boot Camp for newbie residential investors as well as college-level real estate courses. Robert also spent 18 years working in a real estate brokerage where he became a top producer and refined his skills in marketing, negotiating and relationship management. Now, Robert is a professional real estate investor and developer with a portfolio that spans eight states and five countries.

Today, Robert joins me to share a high-level overview of The Real Estate Guys’ recent Summit at Sea. He explains why it’s critical for investors to keep an eye on the economy and offers insight into what market trends we should be looking out for.  Robert also discusses what he learned from the crash in 2008 and outlines his current concerns around sources of capital for multifamily investors. Listen in for a summary of the key takeaways from the Summit at Sea and find out how you can learn more from the expert faculty through The Future of Wealth and Money video series.

Key Takeaways

 

An overview of The Real Estate Guys’ Summit at Sea

  • Focus beyond real estate to broader scope economics
  • Bring together smart people to interact without agenda

Why it’s crucial for investors to keep an eye on the economy

  • Study markets to identify opportunity, trends
  • Examine how tenants might be affected

Robert’s insight on the current economic climate

  • Anticipate general slow down
  • Pay attention to interest rates, demographic shifts

What Robert learned from the crash in 2008

  • Surround self with people who understand economy
  • Investments float in sea of larger economic picture

The aspects of the economy investors should watch

  • Jobs, durability of income + housing demand
  • Major shifts in markets, technology, etc.

Robert’s insight around interest rates

  • Not expecting huge increase in interest rates
  • Concerned about sources of capital (government agencies)

The Real Estate Guys’ mission

  • Put education to work via effective action
  • Create community + collapse time frames

What you can learn from The Future of Money and Wealth

  • Sense of what future looks like around money
  • Continue to acquire wealth in uncertain age

Robert’s top advice for real estate investors

  • Recognize larger economic realities
  • Be aware of other investing opportunities

Connect with Robert

The Real Estate Guys

The Real Estate Guys’ Events

Future of Money and Wealth Video

Resources

The Real Estate Guys’ Summit at Sea

2019 Summit at Sea Faculty

Peter Schiff

Dr. Doug Duncan’s Market Predictions

Crash Proof: How to Profit from the Coming Economic Collapse by Peter Schiff and John Downes

The Creature from Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin

The Real Estate Guys’ Goal-Setting Retreat

Hal Elrod

The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM) by Hal Elrod

Joe Quirk at The Seasteading Institute

Tom Hopkins

The Real Crash: America’s Coming Bankruptcy—How to Save Yourself and Your Country by Peter Schiff

Peak Prosperity

Deal Maker Live

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Apartment Investor Network Facebook Group

Michael on Instagram

Direct download: ABI_156.mp3
Category:Commercial Real Estate -- posted at: 12:41pm EDT

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