Street Smart Success

Most real estate asset classes are efficiently priced and hard to find great deals. With land investing, however, you can buy land for literally 50 cents on the dollar with little competition. You basically just need to follow a formula that entails marketing and follow through. With very few start-up costs, you can launch a Direct Mail marketing program that gets you a deal in your first couple months. Daniel Apke, Founder of Land Investing Online, has been very successful flipping land on his own and is now teaching others how to do what he’s done with a great, affordable step-by-step online course.

In the world of multifamily, few operators are scaling with 2-15 unit buildings. These are too large for most ma and pa operators and too small for larger syndicators. Ray Heimann, Managing Director of Terra Capital, is acquiring older properties in gentrifying neighborhoods in midwestern cities with strong job and population growth. These properties are more labor intensive from a construction standpoint, yet Terra Capital has mastered this process which has resulted in great returns for investors. Terra Capital is institutionalizing smaller multifamily Real Estate by aggregating portfolios of these properties to sell to larger institutions.

If you’ve been looking to make passive investments in hard assets but are finding it difficult to get the returns you’d expect, there are other great vehicles that can generate 10 % or higher with relatively conservative risk. Business loans made to well-run, established and profitable businesses that are not served by traditional banks can provide an attractive risk adjusted yield. Jamie Shulman founded Meriwether Capital with the purpose of providing short-term financing up to $5 million to businesses with $2 million to $50 million in total revenues. Jamie raises capital from investors and provides a steady 10% return.

There aren’t too many asset classes within Commercial Real Estate right now where you can generate 10% or more cash-on-cash returns before creating extra value and executing a new business plan. One exception to this is campgrounds. There are approximately 15,000 campgrounds in the U.S. and many of them are filled to capacity during peak seasons. Several of these facilities are owned by ma and pa owners that have not maximized their true revenue potential which makes them great opportunities for professional operators to add value. Don Spafford, Partner and Investor Relations Specialist at Happy Camper Capital, is acquiring campgrounds all over the country and generating great returns for investors.

In supply constrained major metro markets with large employment bases, there’s always a strong rental market of young professionals who crave quality amenities. After the first Covid waves, we’ve seen rents come back in major metropolises and even exceed what they were pre-pandemic. Although there can be more brain damage dealing with challenges like regulations in these markets, prices have moderated and there are great buying opportunities for buildings with under market rents. Arie Van Gemeren, Principal and Founder of Lombard Equities, is buying older buildings in the urban cores of the Bay Area and the Pacific Northwest with almost no downside risk and great long-term potential.

When it comes to underwriting, stick to your guns and don’t compromise or you may regret it. Even when you make conservative assumptions, expenses tend to rise and occupancy and rents typically contract when the economy goes South. Despite your best attempts at conservative underwriting, there are always surprises. Tim Bates, Partner at Worth Commercial Real Estate in Ft Worth, has returned an investor level 38% IRR to his investors since 2105 by being incredibly disciplined with his underwriting and very patient with his acquisitions of mostly C Class apartment communities.

Today’s investing environment is fraught with many pitfalls. Over the last couple years, many multifamily sponsors in particular took on super high leverage with variable rate loans. These same sponsors are now encountering stiff challenges getting loan extensions because of lower occupancy and rental rates combined with higher borrowing costs. As a result, many of these sponsors will have to reach out to their investor bases for more capital or obtain rescue capital to keep their deals afloat. Randy Smith, Founder of Impact Equity, helps investors avoid these traps and invest with sponsors with great track records and sound business plans that are positioned to prosper in this challenging environment.

Real Estate can be an amazing investment to grow wealth. It has cash flow, appreciation, and tax advantages, but most Real Estate operators only allow accredited investors and request high minimums to boot. Accredited investors are individuals with gross income exceeding $200,000 or joint income exceeding $300,000 or have a net worth that exceeds $1,000,000 excluding the person's primary residence. Levi Brackman, CEO and Founder of Invown, has created a portal where Real Estate operators post available deals and accept investments from unaccredited investors for as little as $500.

Not every mortgage is held by a traditional bank. There are a number of extenuating circumstances where banks won’t make loans to solid borrowers so borrowers need to find other alternatives. In these cases, there are private money lenders who will make these loans. Retail investors who are looking for yield can invest with these lenders who make loans to the end borrower. In doing so, these retail investors get a conservative and attractive monthly return on their money. Pacific Private money, a lender based in the San Francisco Bay Area, has several loan funds that loans money to end borrowers that you can invest in and get a 7%-9% return on your money.

Many people don’t know you can invest directly into a large cash-flowing apartment building without having to be involved with the operations of the property. Until the past few years and even more recently, several high-income earners were only aware of the stock market as a place to invest money. Thanks to Multifamily Real Estate experts like Bronson Hill of Bronson Equity, however, mainstream investors can participate in large Real Estate syndications by buying fractional shares of buildings while benefitting from cash flow, appreciation, and depreciation.