On this episode of Helping Others Win, the hosts Marceid Hatcher, Dennis Earls, and Ennis Williams discuss the intricacies of investing in real estate. They emphasize the importance of understanding the payment methods and fees involved, and managing the properties effectively.
1: Managing Investments
- Some investors want to be more involved and in control of their investments
- Managing real estate assets takes a lot of time, energy, and effort
- Managing everything requires trial and error and an infrastructure in place
2: Investing in Real Estate
- Investing in multi-unit real estate is a safe way to invest money compared to the stock market
- There are still risks involved, but due diligence can minimize risks
- Syndicating deals to larger assets with smaller amounts of investment is less risky than doing it alone
- Multi-unit rental spaces have been a profitable sector for a long time
3: Payment Methods in Real Estate Investment
- Three ways to get paid from an investment in real estate
- These payments include appreciation paid upon refinancing/sale, annual depreciation via K One, and quarterly dividends
- The importance of understanding these payment methods is emphasized
4: Fees in Real Estate Investment
- Managing members/partners are legally entitled to receive fees
- These fees include acquisition fees, disposition fees, management fees, and promote fees
- The majority of dividends go to the investors who own the lion's share of the LLC entity
- The managing members also receive a dividend check based on their percentage of ownership in the entity
5: Challenges in Managing Properties
- Dealing with different social styles and personalities while managing properties
- Generally don't have direct communication with tenants but hear about issues through the onsite manager
- Maintenance and personalities of the maintenance person and onsite manager can be challenging
6: Real Estate vs. Stocks/Bonds
- Real estate shouldn't be seen as competing with stocks and bonds
- Real estate is a semi-fixed part of a portfolio that should be done simultaneously with investments in the stock market
7: Growing the Company & Monitoring Market Trends
- Importance of growing the company by managing properties effectively and communicating with investors regularly
- Need to stay engaged and educated on market trends, including inflation and labor rates
- Importance of monitoring new investments in different cities
- Caution against getting too comfortable and emphasize the need to stay aware of what's happening in the market at all times
8: Fiduciary Responsibility of Financial Advisors
- Speaker is a financial advisor
- Advisors are usually paid based on assets under management
- Speaker promises to always act as a fiduciary and do what's best for the client, regardless of their own pay
- However, many advisors may still consider their bottom line when making recommendations
- Advice may be affected if moving large amounts of money from an account to a new investment
9: Diversifying Investment Portfolio
- Speaker advises people to diversify their investment portfolio for financial security
- Adding a fixed or conservative piece to the portfolio can help in volatile markets
- Real estate, especially cash-driven multi-unit properties, can be a good addition to an investment portfolio
- Speaker discusses the advantages of pooling money to buy larger properties
- Not everyone is suited for real estate investment, and the decision should be carefully considered.
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