Auburn Investment Properties Podcast with Chris Kearns

In this episode, we talk about buying in your name vs buying in an LLC, and some advice on partnerships and other types of "corporate" organizational structures.  If you are just buying 1 house as 1 person, you have plenty of options available.  But if you are joining forces with another investor or moving up to commercial property, then there are organizational contracts that are better then just buying in your name, and sometimes the bank will require something called a "single purpose LLC", so we'll talk about that a little bit, as well as how these things affect your taxes and even ways to do some wealth/estate planning for your family too.  As you may have already picked up on, I think that having a good Real Estate attorney is important to give you guidance but also peace of mind.

Then we look at the financial side of things, starting with a bank or mortgage company, and moving on from there.  What are the 2 main parts of a mortgage - and why is that important?  Well, sometimes you may need - or want - borrow from someone you know, either for the down payment or a rehab or just for a large unexpected expense.  And if you understand how that is done, then you can do it without the bank as well.  We'll talk about using IRA's, both yours and other people's, as a source of funds as well, and that can be Roth IRA's and Traditional IRA's.  Another option would be a margin loan on stocks, and you have to know what the pros, cons, and consequences are to using all of these more "exotic" money sources.  Lastly, we circle back to refinancing, and we talk about how you might use it to get a better rate, of course, but also to shorten or extend your payoff period, depending on your goals.

In the Tips and Takeaways section, I'll compare investing in Real Estate to playing LEGOs, and how the real fun begins once you've got some experience under your belt and you can create the deals you want instead of just buying off the shelf.  I'll also tell you how, why, and when we used different LLC's over the years, how we named them, which ones are still around today, and I'll introduce an inexpensive tool to help ease the fears of your private investors if you are out there trying to raise money. 


Links from this episode:​​

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, I interview my friends and local investors, Bryan and Erin Waits of The Backyard.  We talk about how they got started, how they run their properties from day to day, what their big picture strategy is.  I was Bryan's Real Estate broker for many years, until his wife got her license, but we've known each other for almost 20 years, since I was selling Mobile Homes at Ridgewood Village trailer park in Auburn.   Now his business, The Backyard is the best place in town to go for an awesome outdoor kitchen, firepit, patio, or any other type of outdoor living space.  Somewhere in the middle of those 20 years, we all hit some tough times during the recession, and those scars have shaped our moves going forward.  For us, that wasn't a reason to get out of Real Estate, but it has definitely influenced our moves since then.

The conversation was great, and frankly, it is conversations like this that Bryan and I have all the time that led me to start recording them in a more formal way, which eventually evolved into this podcast series.  A few years ago, we were on 2 completely different investing paths, and we kept debating both strategies, trying to poke holes in the other guy's plan.  Those debates with Bryan are the origin of the question I often ask my clients: "All things considered, would you rather have 20 units paid for, or 100 units with a 20% down payment on each of them?"  I'm curious as to your thoughts on that, but whatever the answer is, you can make it work for you.  Also, I thought it was interesting how they both answered the "Are you playing Offense or Defense" question.  Take a listen, I think you'll enjoy this one a lot!

Links from this episode:​​

• Work with Me
• The Backyard of Auburn: BackyardAuburn.com
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, we look at various types of contracts you may come across as you get started and grow as an Investor.  We start with basic Purchase & Sale Contracts, and how you can use an Addendum to keep things clear as the deal evolves.  Beyond those basics, we also look at Right of First Refusal, Pre-Sale Contracts, Options, and my Favorite: Lease Options.  I also explain the concept of "Hard Money", in terms of the stages of a contract, but NOT in terms of a "Hard Money Lender", which I definitely DON'T recommend using.

In the Tips & Takeaways Section, I'll give you 3 "real life" examples of Lease Option deals I did in Auburn, with the prices, rents, and addresses so you can drive by or look them up on Google Maps.  The point of the Tips & Takeaways section is that you need to understand there is a difference between owning a property and controlling it, and then using the right method for to accomplish your goals with a particular property.

You may never use these more exotic types of contracts to build your Real Estate holdings, but just in case you need them they can be very valuable things to have in your dealmaker's toolbox.

Links from this episode:​​

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, we go through a Skills & Time Assessment to help us narrow down the right property for us to buy at this point in our Investing Career.  It doesn't mean our capabilities are the same as they were a few years ago, and it doesn't mean that we won't be able to handle more extensive rehab work or bigger properties in the future, either.  It simply means we need to take an honest look at what we can handle NOW, and still meet our goal of getting each property we buy ready for a tenant within 30 days of our closing.  And I don't think "how much can I afford?" is the #1 constraint that so many beginners think it is.

I'll help you separate each item on your TO DO List into one of three categories:

1. Things I can do myself or with unskilled help
2. Things I can hire out
3. Things I can't do or delegate effectively right now.

We also look at how we can plan our work and the work of our contractors and helpers to meet that 30 day schedule.   How many things can we do before we even close?  You want to think about this as a valuable way to compress your rehab timeline and hit the 30 day goal.  YOU are the driver here, so the success of a project is ultimately our responsibility.  It's important to stay positive and proactive, and not become frustrated and disinterested.  Every project has hiccups along the way.

Links from this episode:​​

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, we go through the numbers of a typical investment property in Auburn, a single family house similar to what our clients often buy.  We look at rent, common expenses, and give you an easy and quick way to do "back of the napkin" math while we are out looking at houses.  We;'' see how that one house can help us in the 3 main ways that you can make money from Real Estate:

1. Positive Cash Flow in your Pocket
2. Increase in Property Value
3. Paying Off Loans with Someone Else's Money

In the Tips and Takeaways section, we go down a different path with a quote / challenge:
- Be someone no one thought you could be… even yourself.
We are often quick to accept labels related to our families, our careers, and those that others put on us.  But we are slow to expand our identity to include new things we want in our lives.  Our brain's are wired to help us SURVIVE, and expanding our comfort zone feels directly opposed to that survival.  So we need to make a conscious effort to do what investors do, and take the steps to make that new thing part of our reality.  Instead of "fake it til you make it", why not try "do the work and you'll get better at it"?

I also talk about how my similarities to the Anal Retentive Chef from Saturday Night Live has held back my business for 20 years, and how I am putting that behind me by creating systems that work for me and finally eliminating roadblocks.

Links from this episode:

• The Anal Retentive Chef from Saturday Night Live
• A Great Online Mortgage Calculator
• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, we focus on Commercial Properties: how they are valued and 3 ways to increase their value as an owner.  We look at the ways that the Net Operating Income (NOI) and Cap Rates work together to determine the value of a Commercial Property, and easy ways that  you as an owner can improve both of them to have a major impact on the value of your property in just 2-3 years.  There is a simple recipe for success in this part of the Real Estate Investing world, and I'll introduce it here.

The 2 Components of Commercial Property Valuations:

• Net Operating Income (NOI): 
  • Take all the income and subtract out all the costs associated with running the property.  (usually everything but your loan payment)
  • This number is a FACT.
• Cap Rate:
  • The desired return a new buyer would want (or need) to get if they are buying a property
  • This is an OPINION.

The Value of a Commercial Property is found like this:

• NOI / Cap Rate = Value
• $100,000 per year / 8% return = $1,250,000
• 100,000 / .08 = 1,250,000

Commercial Property Quick Tips:

• Renovating the Management is easier & cheaper than renovating the "property" itself
• Give yourself 2-3 years to implement your plan on an apartment turnaround and longer for retail or office spaces  

Links from this episode:

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, we talk about how Residential and Commercial Properties are valued, what makes them different, and how to improve your property's value.  And where do apartments fall - are they residential or commercial?  How are the appraisals different?  We also talk about how the same characteristics that make single family homes safer for the new Real Estate investors wind up making things tougher for the more experienced investors, and why those factors push many of the pros to trade up to Commercial Properties eventually.

I'll also introduce some new terminology that you need to become familiar with when it comes to commercial properties and values.  We'll also look at a realistic renovation budget for various aspects of a typical 1,500 sf single family rental in Auburn, using my own historical costs from the past few years.

Links from this episode:

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• ​Real Estate Investor Coaching: BetterREI.com

In this episode, I interview Josh Davis of 256 Realty in Huntsville, Alabama.  Josh and I met when he was in school in Auburn over 15 years ago, and we have been picking each other's brains about Real Estate ever since.  Join us for this hour long conversation that covers how he got started, what he does now as the Owner and Broker of 256 Realty, and what advice he has to share with Investors just getting started.  It's the first interview I've ever done, so I'm not sure how the audio will come out, but the information is great!

Links from this episode:

• Work with Me
• 256 Realty in Huntsville, AL: 256Realty.com
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Badger Properties, Auburn: BadgerProps.com
• Real Estate Investor Coaching: BetterREI.com

Description & Show Notes:
In this episode, we wrap up our 3 part series on The Basics with our third part: Basic Management Stuff.  We're going to talk about what role a Property Manager plays on your team, and how to decide if you want to self-manage or hire someone else to do it for you.  We'll talk about the rates they will charge and what you will get - and not get - for that monthly fee.  The middle part of the episode is about tenant screening and Federal Fair Housing laws you must be aware of if you choose to self manage.  Then in the Tips and Takeaways section, I'll make my case with 4 points in favor of self-management as well as give 3 different options I could have (or should have) done instead of selling off my apartments and we'll talk about how to use a scoring system to get the best tenants possible for your rentals. 

Duties of a Property Manager

• Advertising
• Screening
• Leasing
• Rent Collection
• Financial Reporting
• Coordinating Repairs
• Not Included: Making Repairs (billed hourly for labor, plus materials)

Typical Rates for Property Management in Auburn:

• 1 Unit: 10% of rent collected
• Multiple Units: 7-9% of rent collected
• Apartment Buildings: 6% of rent collected
• Some managers are doing 4% on apartment portfolios, but that's not sustainable, so don't budget for that.

7 Protected Classes for Federal Fair Housing:

• Race
• Color
• National Origin
• Sex
• Religion
• Family Status
• Disability (within Reason)

States may also include protections for:

• Marital Status
• Sexual Orientation

Links from this episode:

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Badger Properties, Auburn: BadgerProps.com
• Real Estate Investor Coaching: BetterREI.com

In this episode, we continue another easy 3 part series on The Basics with our second part: Basic Property Stuff.  We're going to look at different property types you can choose from as an investor, the pros and cons to each, and recap our Classes discussion from Episode 003.  Each investor is better suited for a specific type of property at any certain point in their career.  The second part of the episode goes through the 5 major changes I've made in my own investing  journey over the past 20 years, so you can see how your own career might evolve over time.

Major categories or property types:

1. Single Family - Detached
2. Single Family - Attached (twin home or town home)
3. Duplex (or tri-plex or 4 plex)
4. Apartments
5. Condos (differences in financing & cycles)
6. Commercial Property

Auburn Specific Differences:

• Student or Non-Student
• Unrelated Occupancy Rules

Major changes in my own journey

1. Buy a condo for me turn it into a rental later.  add 1 more condo
2. Mobile home sales, "buy here, pay here" - bad idea!
3. Mobile home broker for students - better idea!
4. Condo conversions and multi-family projects - big money, big responsibility
5. Real Estate brokerage
6. Single family rentals

Differences in Property Valuations:

• Residential: based on the prices of similar properties nearby
• Commercial: based on the net income coming out of the property

Links from this episode:

• Work with Me
• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com