Financial Freedom with Real Estate Investing

Investing in the financial markets is stressful, especially in a crisis. And even if you happen to be brilliant at options trading, $100K in the equity market will still only buy $100K in assets. On the other hand, investing $100K in multifamily will buy you a $500K asset—and earn you five times the return. Not to mention the fact that it’s essentially recession-proof!

Bruce Fraser is the Managing Partner at Elkhorn Capital Partners, a private equity firm that focuses on multifamily residential real estate in economically insulated submarkets. Prior to Elkhorn, Bruce ran a lucrative hedge fund, successfully navigating the financial crisis before his research led him to multifamily. In a few short years, Bruce has built a portfolio of 1,600 units, and he currently serves as a member of the Forbes Real Estate Council.

On this episode of Apartment Building Investing, Bruce joins me to explain what makes multifamily a better investment than the financial markets, especially through the COVID-19 crisis. He tells us about his first multifamily deal (as one of my early coaching students!), discussing the challenges he faced early on and describing how the Law of the First Deal impacted his real estate career. Listen in for Bruce’s insight on the advantage of choosing a niche in distressed assets and learn his aggressive but realistic approach to scaling a multifamily business.

Key Takeaways

What makes multifamily a better investment than the financial markets

  • S&P 500 = 2.5% average annual return over last 20 years
  • Multiplier effect ($100K buys $500K asset, earn $100K vs. $20K)

Bruce’s first multifamily deal as one of my early coaching students

  • 134-unit property in Fort Worth
  • $5.7M acquisition (raise $2.1M)
  • Sold 14 months later for $7.9M

Bruce’s experience with the Law of the First Deal

  • Second deal under contract when first closed
  • Acquire 3 to 4 per year ever since

Why Bruce chose a niche in distressed situations

  • More control over occupancy growth than rent growth
  • Create much more substantive equity in short period

Why Bruce sought out coaching early on

  • Overcome uncertainty
  • Understand deal structure

Bruce’s approach to scaling a multifamily business

  • Manage time wisely (leverage third-party property manager)
  • Be aggressive but realistic

Bruce’s experience through the COVID crisis

  • Investors ready to buy and deals available
  • Biggest challenge = lending environment

Bruce’s goals over the next three years

  • Double portfolio to 2K to 3K units
  • Centralized position in handful of markets

Why multifamily is the best investment through the pandemic

  • Tax efficient distributions
  • Demand for apartments remains high
  • Protects against inflation

Connect with Bruce Fraser

Elkhorn Capital Partners

Email bruce@elkhornpartners.com

Resources

Goldman Sachs Economic Outlooks

Purchase the Replay of Deal Maker Live

Join the Nighthawk Equity Investor Club

Learn More About Michael’s Mentoring Program

Podcast Show Notes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group

Direct download: ABI_224.mp3
Category:Commercial Real Estate -- posted at: 1:00am EDT

There are tons of books out there that teach you how to invest in real estate syndications with other people’s money. But what if you’re the ‘other people’? What resource teaches you how to evaluate opportunities and pick the right sponsor to trust with your money?

Brian Burke is the President and CEO of Praxis Capital, a private equity investment firm that focuses on repositioning multifamily properties. An expert real estate syndicator and investor, he has acquired 3,000 multifamily units and 700 single family rentals in his 30-year career. Brian is also the author of the new book, The Hands-Off Investor: An Insider’s Guide to Investing in Passive Real Estate Syndications.

On this episode of Apartment Building Investing, Brian joins me to explain why passive investors need to look beyond returns when comparing syndication opportunities. He discusses why the sponsor is a more important consideration than the market or the deal itself, sharing the cautionary tale of an investor who lost her life savings to an unethical syndicator. Listen in for Brian’s insight on the benefit of investing in a non-correlated asset like real estate and learn what questions to ask as you evaluate different investing opportunities.

Key Takeaways

The cautionary tale Brian included in The Hands-Off Investor

  • Grocery clerk sold fourplexes to invest in TIC syndication
  • Sponsor ran off with money and she lost life savings

The three indicators used to measure the performance of a real estate investment

  1. IRR
  2. Cash-on-cash return
  3. Equity multiple

Why passive investors must look beyond returns when comparing opportunities

  • Sponsor can manipulate what forecasted cashflows will be
  • Look at what’s behind numbers to determine if reasonable

Why the sponsor is more important than the market or the deal itself

  • Bad sponsor can ruin good investment in great market
  • Take time to determine moral character, track record

What secrets sponsors don’t want passive investors to know

  • Hidden asset management fees
  • Treatment of bad debt
  • How distributions made

The pros and cons of being a passive investor in multifamily syndications

  • Professional edge (make more money working with expert)
  • Give up control, can’t exit if don’t like what’s happening

The benefit of investing in non-correlated assets like real estate

  • Drop in stock market unlikely to impact real estate
  • Reduces any single point of failure in portfolio

Brian’s advice for skeptical investors looking at multifamily real estate

  • Look at where world’s wealth made
  • Minimize risk with balanced portfolio

Connect with Brian Burke

Praxis Capital

Praxis Capital on LinkedIn

Praxis Capital on Facebook

Praxis Capital on Twitter

Praxis Capital on Instagram

Resources

The Hands-Off Investor: An Insider’s Guide to Investing in Passive Real Estate Syndications by Brian Burke

Brian on Apartment Building Investing EP005

Purchase the Replay of Deal Maker Live

Join the Nighthawk Equity Investor Club

Download Michael’s Free Report—What’s the Best Investment: The Stock Market or Real Estate?

Podcast Show Notes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group

Direct download: ABI_223.mp3
Category:Commercial Real Estate -- posted at: 1:00am EDT

In the world of startups, entrepreneurs take a lean approach early on with an eye to grow quickly. Ellie Perlman applied these principles to real estate, building and scaling a syndication business in a few short years. So, how do you shift from being a syndicator to managing a syndication business?

Ellie is the Founder and CEO of Blue Lake Capital, a real estate investing firm that specializes in value-add multifamily acquisition and management. She also leads REady2Scale, a mentoring program for aspiring multifamily syndicators, and hosts the REady2Scale Podcast. Ellie began her career as a commercial real estate lawyer and later transitioned to the role of property manager, overseeing properties worth more than $100M. She earned her MBA from the MIT Sloan School of Management.

On this episode of Apartment Building Investing, Ellie joins me to explain how growing up poor in Israel gave her the drive to succeed and share her journey from cleaning synagogues to earning an MBA from MIT. She discusses the decision to start her own real estate business, describing how multifamily syndication fulfilled her vision to both scale quickly and earn passive income. Listen in for Ellie’s insight on the magic of scaling a startup and get her advice on how to grow YOUR real estate business—even if you don’t have a budget!

Key Takeaways

How Ellie developed the drive to succeed

  • Cleaned synagogues as poor child in Israel to help family
  • Sent to youth village at 15, wanted better for own kids

What inspired Ellie to go to law school

  • Married at 18, working 3 jobs to provide for husband
  • Saw education as ticket out of ‘survival mode’

How Ellie developed an interest in real estate

  • Exposed to deals in international real estate department of law firm
  • Transitioned to property management to understand business side

What brought Ellie to the United States

  • Pursue MBA at MIT to learn how to start companies
  • Aunt had moved to US and achieved success

Ellie’s decision to go into business for herself

  • Desire to fulfill potential as self-made woman
  • Scarier NOT to try than to try and fail

Ellie’s insight on the power of believing in yourself

  • Causes to act in way that sets up for success
  • Changes other’s perception of who you are

Ellie’s big vision for building a real estate company

  • Reverse engineer plan based on net worth goal at age 50
  • Multifamily met requirements for scale, passive income

What Ellie would tell her younger self

  • Don’t listen to doubters + keep going
  • People project their own fear on you

How Ellie thinks about potential discrimination in real estate

  • Focus on what CAN change and improve self
  • Not productive to get stuck in victim mode

Why Ellie started a training program and podcast

  • Build relationships with potential investors
  • Learn something new to implement in business
  • Rewarding to see other people succeed

Why Ellie is an advocate for scaling your business

  • Burn out when try to do all on own
  • Magic in scaling to grow + grow quickly

Ellie’s advice for building and scaling a syndication business

  • Map out business want to create and define roles
  • Choose area of focus, partner or outsource rest

How to build a syndication business on a small budget

  • Hire intern through Handshake
  • Pay small stipend or offer equity

Connect with Ellie Perlman

Ellie’s Website

Email ellie@ellieperlman.com

REady2Scale Podcast

REady2Scale Mentoring Program

Blue Lake Capital

Resources

Register for Michael’s Free Masterclass: How to Do Your First Apartment Deal

Register for Deal Maker Live

Join the Nighthawk Equity Investor Club

BiggerPockets

Upwork

Handshake

Podcast Show Notes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group

Direct download: ABI_222.mp3
Category:Commercial Real Estate -- posted at: 1:00am EDT

Doing something monumental like moving your family across the ocean to Hawaii or buying a 100-unit apartment complex may feel overwhelming. But Brandon Turner has done both of those things, and he contends that any process is easy IF you break it down into a series of tiny actions that take five minutes or less.

Brandon is the Founder of Open Door Capital, Vice President of BiggerPockets and Cohost of The BiggerPockets Podcast. He owns more than 500 rental units totaling $20M and has dozens of rehabs under his belt. Brandon’s work has been featured in Forbes, Entrepreneur and Money Magazine, and he is the author of several books, including The Book on Rental Property Investing and How to Invest in Real Estate.

On this episode of the podcast, Brandon joins me to share his assessment of the impact of COVID-19 on real estate investing, explaining how we should adjust our underwriting in light of the pandemic. He walks us through his favorite investing strategies right now, describing the opportunities he sees in real estate over the next 10 years. Listen in to understand the marketing techniques Brandon uses to raise LOTS of money online and get his advice on developing a clear VISION of where you want to be—and taking tiny action each day to get there!

Key Takeaways

Brandon’s assessment of the impact of COVID

  • Depends on whether second round of virus triggers another shutdown
  • 85% confident pandemic will be interesting memory in 6 months

How real estate investors should adjust their behavior right now

  • Less optimistic in underwriting (don’t count on raising rents in Year 1)
  • Good time to revisit fundamentals, be more conservative

The opportunities Brandon sees over the long term

  • Migration to South as more and more people reach retirement age
  • Invest in mobile home parks, senior living and low-income multifamily

How this economic crisis differs from the last recession

  • Last downturn CAUSED by shady practices in real estate
  • Less impact on real estate this time (except vacation rentals)

Brandon’s favorite real estate strategies right now

  • House hacking good for new investors
  • Rehab or value-add (BRRRR method)
  • Mobile home parks

Brandon’s insight around COVID’s impact on low-income earners

  • Still paying rent at mobile home parks
  • Government won’t allow economy to fail

BiggerPockets’ most successful marketing strategies

  • Build trust and credibility with content (blog, podcast)
  • Make money as software company, not education

How Brandon uses content marketing in his investing business

  • Build trust and credibility at scale with content
  • Leverage video to raise money, send thank you letters
  • Focus on growing Instagram audience (125K followers)

How Brandon architects his life around his family and business

  • Develop clear vision of success, know where want to be
  • Keep asking, ‘What’s the next little tiny step?’

Connect with Brandon Turner

Open Door Capital

Brandon on BiggerPockets

Brandon on Instagram

Resources

Join Michael’s Investor Incubator Mentoring Program

Register for Michael’s Free Masterclass: How to Do Your First Apartment Deal

Register for Deal Maker Live

Join the Nighthawk Equity Investor Club

Syndicated Deal Analyzer

Joe Fairless

Loom Video Messaging

The Book on Rental Property Investing by Brandon Turner

Bryce Stewart on BiggerPockets Podcast EP276

Vivid Vision by Cameron Herold

Podcast Show Notes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group

Direct download: ABI_221.mp3
Category:Commercial Real Estate -- posted at: 1:00am EDT

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