Everybody's looking for good deals – and there's money on the sidelines. You just have to know where to find them. One of the best deals you can find are those that are off market. But how do you find them?

In today’s conversation, real estate investor Dan Austin shares valuable insights into buying off-market properties and looking at renovation through the lens of capital expense.

After leaving the military in 2012, Dan pursued a degree in electrical engineering and it wasn’t long before he found his passion for real estate. He began BRRRRing ((Buy,Rehab, Rent,Refinance, Repeat) and the moment he began cash flowing $1,000 a month, he got hooked with it immediately.

Since 2020, Dan and his partner have owned over 40 doors, between single-family and multi-family, and have expanded their operations in other states. Together with his partner, Dan hosts the Collecting Keys Podcast, where they give listeners an inside look at what they do in their business day in and day out.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[20:23] Short-Term vs. Long Term Deals

Figure out how you can reduce the risk around short-term investments such as when you’re flipping. Instead of trying to take money off the table now, look into how you can protect those dollars through an asset, knowing that there's a good chance that inflation or appreciation is going to kick in.

[22:30] Looking Through the Lens of Capital Expense

Look at things through the lens of what the property is going to look like in five years. You don’t want to own a property and come back to it in five years seeing all the work that needs to be done. Maybe you need to replace the furnace or the electrical system, or you’ve got to do the roof.

Instead, if you’re going within 6-12 months – whatever the criteria for that property is – spend the money now and make it very structurally sound. Do a robust rehab now and that's going to save you down the road.

[20:19] Where and How to Find Off-Market Deals

To be successful, you have to figure out the marketing piece, specifically, how you're targeting motivated people . Find people with any sort of distress that could really use help.

The other piece is the sales piece. You can find  many great deals. But if you don't have a good sales team that understands people and knows how to ask the right questions, you're never going to close those deals. Because it's not a real estate investment company, it's a people company.

Resources Mentioned:

Instagram: www.instagram.com/investormandan

Podcast: https://collectingkeyspodcast.com

Ready to invest? If you’re wondering which is better – limited partnership or general partnership – perhaps the best way to answer that depends on which actually suits your goal,  lifestyle, personality, or preference. But why not do both?

In this episode, Bernard Pierson, managing partner at a multifamily real estate firm, Equiti Partners, walks us through what it’s like to be a limited partner vs. a general partner.

Born into a family of immigrants from Nicaragua, Bernard is not new to limited partnership and general partnership having experience in both. He has invested in 30 LP transactions across all different asset types of real estate, including mobile home parks, self-storage, industrial, office, and mostly, multifamily. He also transitioned into the more active side of multifamily and has been involved in general partnerships of about 600 units.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[09:36] Limited Partnership vs. General Partnership

Bernard started with doing limited partnerships through meetings and networking with different sponsors and operators. Most of them were referrals, and some of them were even referred by operators because Bernard wanted diversification in terms of geography and asset type.

Every time he gets a return – say, in two years' time –Bernard would then reinvest it.  Sometimes, there are instances where the sponsor chooses to refinance.

On the GP side of things, they buy anywhere from 30 units to 150 units. Although they try to stay above 100 units, they found that buildings under 100 units have less competition. So they have found an opportunity in it even though it warrants a little bit more work on their part.

Some of the key performance indicators they're looking at include occupancy, the number of leads, renewal rates, and budget.

[21:14] Does a Buy-and-Hold Forever Strategy Work?

A long hold period is a great strategy because it becomes a lot easier to manage the risks such as changes in the interest rate or the economy. It's hard to get 10 investors into a “hold forever” strategy or “hold for 20 years” strategy. It’s possible, but it’s going to be very hard.

There are a number of ways to get a number of investors to such a long-term decision, specifically focusing on the return on equity.

[26:00] Why Real Estate Investing is Not 100% Passive

Real estate can be passive, but usually, it’s not really 100% passive. Most people that get into real estate  start off fixing and flipping. Then they figure out very quickly that it’s far from passive. Some people also end up doing syndication and soon find out that it's far from passive. That being said, there are ways to do it passively, especially if you're doing a limited partnership.

Resources Mentioned:

Equiti Partners

Ready to invest in a rental property? Whether you’re looking to invest individually or you’re looking for a partner to invest with, the key to a successful real estate portfolio is to do things long-term. House hacking might still be the best strategy for beginners dipping their feet into the world of real estate. But what should you do when you want to scale from 1 to 100?

Joining this conversation today is real estate investor Gary Jonas. Gary is a visionary and partner at The HOW Group, the one-stop shop for everything real estate, serving Philadelphia and its surrounding regions. Gary is here to provide his golden insights into getting started with real estate investing, the recipe for a successful partnership, and some things to consider when you’re thinking about scaling your investments.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[05:05] What It Takes to Develop a Long-Term Real Estate Portfolio

If you're planning to grow your real estate with a two-year plan or a three-year plan, I have no advice for you, I can't really help you. If you've got a 15-year plan, I can help you, because that's what I think it takes to really develop a successful long-term real estate portfolio.

[05:25] How to Get Started with Real Estate Investing

House hacking could still be the best strategy for a young person getting started with real estate investing. First, buy a multifamily property with up to four units. That way, you can still get an FHA loan and put 3% down on a four-unit property. You can live in one of the units and then rent the other three out. Generally, that's going to let you live for as close to free as possible.

Then you move out of the house and rent it out so you can move to a bigger house. Buy a second property. Have a couple of people move in with you, and you do that process again. Now, you own two properties with some decent equity. You do some things over a couple of years and create some equity. So now, that creates options for you.

[11:38] What It Takes to Have a Successful Partnership

You can't keep score. In every partnership, there’s always going to be somebody who has to do a little more than the other. And even if you’re putting the same effort as the other person, either of you could still be outperforming. Now, everything in the partnership is about keeping score. And when that happens, eventually, you're going to disagree on who's providing what value. Now you have a problem. Instead, change your metric to EFFORT, which is what you should really care about.

Resources Mentioned:

www.howgroup.com

One of the biggest things when it comes to property management is how to optimize utility consumption. Unfortunately, a lot of old buildings lack efficiency in terms of insulation, windows, mechanical systems, and plumbing systems because people weren’t really thinking about utilities and energy consumption 25 years ago, much less for 100-year-old buildings.

No matter how old your property is, the good news is you can hire the right partner that offers innovative energy solutions. Make utility efficiency a top priority, so make sure you don’t skimp out!

In today’s conversation, Jerry Armstrong of Thuesen Energy shares some ways to optimize your utilities, drive up the net operating income of your properties, and provide more value to your residents in terms of saving money on electricity and other utilities.

Jerry has been in the energy space for several years now. Aside from its robust metering technology, Thuesen Energy also has a system for billing. He helps owners, especially during the due diligence phase when they’re looking at buying apartment buildings.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[02:30] Getting Started with Energy Efficiency

In terms of energy and utilities, the rates are just going through the roof and you have new laws to abide by. As an owner-developer, the first thing you want to do is find a good partner that can guide you in the right direction. You don't want to get into a situation where, after you acquire an asset, or after you're operating something, it's beyond the reactive. And so, you want to be on the proactive approach.

Next, look at the T12, which stands for the trailing 12 months, that looks at the property's performance over the past year. Check the spending on the utilities, and then develop a strategic plan where you’re making the utilities more of a profit center.

[09:52] How Thuesen Energy Can Help Building Owners

Thuesen Energy specializes in taking a holistic approach, looking at it in an entire system of solutions, and making sure each piece of the puzzle will work together in longevity.

With them as a partner in the background, they’re able to provide oversight onto the system, make sure it's performing the way it is, handle the individual charges going to the residence, and identify anomalies that may happen. It’s all about fully understanding that picture, but also having that partner to guide you along the way.

[20:05] Reducing Energy Costs and Consumption

For single-family, look at the building envelope. Find yourself an inspector that does a blower door test. Next, take a look at the electrical fixtures. Do you have LED lights or do you have the old filament-style light bulbs and light fixtures? Then, look at the plumbing features. Toilets nowadays use 1.28 gallons per flush. So make sure you’re not using toilets that are still 3.5 gallons per flush. 40% of your overall water consumed in a residential space is at the toilet, and over 75% of water waste happens through the toilet.

Resources Mentioned:

https://thuesenenergy.com

If you still haven’t dipped your toes into the world of syndication, then this episode is just for you! Today, Timothy Kelly of Active Duty Passive Income talks about his journey from the military to multifamily.

After spending over 15 years in the U.S. Navy, Tim wanted more control of his own wealth and financial future. After some thorough self-education through books and podcasts, as well as investing in mentorship and coaching, Tim saw a pattern in real estate investing that has made a lot of millionaires – and the good thing about it is anybody can do it.

Fast-forward to today, Tim runs an impressive real estate portfolio, doing syndications for multifamily properties with a focus on apartment communities, mobile home communities, and storage facilities.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[16:33] What is Syndication?

Syndication is one of the ways that you can acquire large commercial real estate, whether it’s a huge apartment building, a mobile home community, storage facility, mall, or office building. It’s all about creating a structure between general partners and limited partners.

General partners are investors who basically do all the work. They find the deal, structure it, and put their own money in or raise capital for the deal. They conduct all the due diligence, and while it's under contract, they manage the asset.

Limited partners are the people with the money. They’re the capital investors. On the other hand, general partners don't have to have all the money needed to buy a multimillion-dollar deal.

[18:36] How Much Do You Need to Invest?

Generally, the general partners will put in some of their own money, especially risk capital. In order to get the deal under contract, they have to put an earnest money deposit down, which is usually 1% of the total purchase price. Limited partners do nothing except give the rest of the money for the down payment.

One of the main reasons syndication is so attractive is that as a general partner, you can actually get in for little to no money and be an owner of a massive commercial real estate property. You’re basically leveraging other people's money, not only the limited partners’ but also the bank's money. You become an owner of a big asset just because you spent some time.

[24:49] How to Hedge Against Inflation

Two of the most recession-resistant asset classes are apartment communities and mobile home communities. No matter what’s going on in the world, there’s always going to be a demand for affordable, functional, clean, safe housing. And if you could provide that, especially in the long term, it’s going to be a success.

Another way to hedge against inflation is diversifying in different asset classes and in different markets. Diversify different categories, not only in different asset classes of commercial real estate (ex. apartment complex, mobile home community, storage facility, RV parks) but also in different markets (ex. southeast, midwest, etc.)

Resources Mentioned:

Active Duty Passive Income

Book: What Got You Here Won't Get You There by Marshall Goldsmith

Instagram: @thetimothykelly

LinkedIn: @thetimothykelly

April Crossley had her son at 16 years old so she had to do what she had to do as a full-time mom, a full-time student, and a part-time employee. Relying on food stamps to pay for groceries, she learned how to become resilient at an early age and work her way out of poverty.

In 2004, she bought her first property and got so obsessed with real estate that she dropped out of her master's program so she could afford to pay for a real estate course. By 2006, she bought a six-unit property and then kept flipping houses and buying rental properties all the way up until 2013.

Currently, April is in learning mode in terms of making affordable-housing projects work as a business, especially at this time of this huge affordable-housing crisis. Specifically, she hopes to help solve the affordable-housing problem within the senior space, a segment of the population that she holds near and dear.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[09:01] Looking for Funding

Everybody's about finding deals and the money will come in because there is more money in the market than ever before right now. There are private money lenders everywhere looking to place money, but you have to make an effort and intention to connect with private money lenders. Hence, you have to be looking for deals and money simultaneously, which happens through networking or joint venturing with other investors.

[15:14] Affordable Housing for Seniors

We all know about senior residential assisted living and senior luxury apartments, but nobody actually talks about seniors having access to affordable housing. These folks want to live in a community where they still have contact with other people and friends, and not be lonely and isolated.

April believes in a world where you can provide affordable housing without having to provide the healthcare aspect, which can be done by a third party.

[34:29] How to Keep Rent Affordable

Keeping the rent affordable can be pretty difficult when you’ve got high renovation costs. April recommends looking to grants and tax credits. Also, consider doing a mix of affordable housing and high-end housing in one complex.

Resources Mentioned:

Facebook: www.facebook.com/groups/rvrei

*Book mentions:

The One Minute Millionaire

21-year-old Nathan Krauthamer got kicked off campus. He had no choice but to rent off-campus, but he later figured out a better way – house hacking. He bought his first house which he rented out to three other roommates.

21 years later, Nathan is taking down warehouses and converting them into new spaces. His current project is a 50-unit warehouse in Philadelphia that will soon become 50 creative office studio spaces. And it's 75% done!

In today’s discussion, Nathan talks about his process for finding and closing deals, the power of mastermind groups, and the best way to handle naysayers.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[09:39] Ways to Find Deals

There are different ways to find deals, you’ve just got to find the ones that work best for you based on timing. For instance, Nathan used to get a lot of deals from auctions, but the values have since gone up in the last year or two. Instead, direct-to-seller deals are doing well right now. Nathan recommends finding distressed properties.

[11:12] Due Diligence Period

Before starting on a development project, Nathan looks at the numbers first, figuring out the construction cost, the estimated rental cost, and the potential market. In other words, you have to think like an appraiser.

He also observes a due diligence period because you could miss so many things including environmental problems. If you get into a big environmental issue, there’s a slim chance you could get any bank financing; so new investors have to be careful with this. Hence, it’s smart to get to Phase 1 first before making any deposit.

[18:19] How to Deal with the Naysayers

There are people who are going to tell you not to do it, but sometimes you just need to follow your heart or your gut instinct and go with what you believe in. A lot of people try to talk you out of it because they just don't know.

The people who are telling you not to do something usually don’t have the ability to even help you with doing it anyway. Therefore, don't let somebody tell you “no” if they don’t have the power to tell you “yes.”

That being said, one of the biggest problems new investors have is recognizing a good rental property or a good deal. And so, they need someone that's able to guide them. This is also why being a part of a mastermind group is very useful.

[23:19] How to Work Through Tough Times in Real Estate

In real estate, there are lots of ups and downs. It’s a huge roller coaster where everybody's going to have some ups, which are the easy parts. But when things are down, find a way to push through when other people would have otherwise given up. Everybody's going to have those lows. It’s just a matter of what are you going to do once you’re there.

Resources Mentioned:

Email: ​​[email protected]

Text/Call: 301-254-9856

*Software and tools used:

QuickBooks

Folio

Finding a town to invest in can be tricky. Would you rather buy cash flow in places that won't ever appreciate? Why not buy one that does both where you can have your cake and eat it too?

Being in the real estate investment space for 22 years now,  Anil Dham shares some gold nuggets of insights when it comes to investing in a town. Find out the things you need to be looking for before you even make a deal.

Anil Dham is also the Council President in the Royersford Borough, a small suburb with 4,800 residents. He ran for office in 2013 with the hope of reviving a once dilapidated town. Eight years later, Anil has helped facilitate the transformation of Royersford, attracting more investors, improving their housing stock, and cultivating relationships.

Here are some power takeaways from today’s conversation:

Episode Highlights:

[19:20] How to Find a Municipality That’s Easy to Work With

*Call the municipality and see how they answer the phone. If they're not answering the phone or returning calls, you already know what you're going to expect.

*Call the code enforcement officer and just have a conversation. If they're brushing you off, you're probably not dealing with a place that's going to be worth it.

*Go to a meeting and ask a question. Tell them you're looking to buy in their town and see how they feel about investors.

[23:22] What to Look For When Investing in a Municipality

*One of the first things to look at in boroughs is the school district because it's what drives value. People buy the school district, and they do not necessarily buy the town first. If your school district is in the top 15 in the state, you're probably in a good place to invest.

*Look at housing trends. Look if house values went up or doubled the increase of the county average. Count the appreciation.

[28:48] What to Look For in a Development Project

*Short-term rental (the highest price per night)

*Co-living (ex. renting by the bedroom, weekly membership, monthly membership)

*Subsidized affordable housing (ex. two-year lease)

*Retail client

​​Investors typically have a reputation for being cheap or doing cheap work. Just spend the extra money, and it'll pay itself off really well. Don’t cut corners because it’s so much easier to do it right the first time.

Resources Mentioned:

LinkedIn: https://www.linkedin.com/in/anildham/

*Software and tools used:

PayRent

QuickBooks

*Recommended groups:

Diversified Investors Group (DIG)

National Real Estate Investors Association

There is a famous quote that says you make your money when you buy real estate, and that's true, for the most part. But you can't keep that money and grow it, unless you have exceptional property management skills.

Living Well with Rentwell is for anybody who owns real estate and wants to learn how to manage their properties or manage their property manager.

Each week Rob and TJ share their insight and talk to investors to learn how they vet potential deals, evaluate potential new communities, and put into action the steps necessary to buy these new properties and multi-family communities!