FORMER BASEBALL PLAYER RYAN PINEDA TRADED RBI FOR REI Born to Flip
Corona Bust: Can Escalating Trends Balance Markets? MARKET & TRENDS
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Are Your Investments Disaster-Proof? Safeguard your real estate investment during a disastrous market crash!
W e have proven that you can earn passive income while helping families have a home, even during a bust in the market. Given the built-in equity, thanks to our system - call for a consultation at (844) 552-8828 - you do not have to fear losing your investment when the economy goes down. We currently live in a wildly fluctuating marketplace where everyday events cause volatility. We are experiencing everything from bankruptcies to war tensions and disease, any one of these factors enough to cause a market crash. A lot of hardwor- king people lose their homes during such times and a lot of real estate investors lose their assets. Despite any circumstances, families in America need a home to live in, that's a fact. You have a golden opportunity here to become the helping hand. Be the one to help that family or many families own their own homes and a place to raise their kids, while your investment returns an 8%-12% profit.
Imagine investing money on properties that you buy at a discount, and sell them to families we have carefully screened and for various reasons may be rejected by the bank. These families can afford to make the monthly payment to you without having to bend over backward to make ends meet. You can be their helping hand (we are Equity & Help!) and sell them a house while making a profit at the same time. It is now possible for you as an investor to grow your capital, while also helping others have a place to live, to own. Your investment becomes disaster-proof and you continue to hold your asset even during market crashes. When families have a stable home, they tend to perform better in their monthly payments. Especially when they’re not pressured to empty their wallets.
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INSIDE THIS ISSUE
THINK REALTY 8 News & Events
Updates from around the industry.
10 Think Realty Supplier: Office Depot Receive discounts through the Think Realty Supplier Program.
INVESTOR STORIES 12 Contributor Voices Answering tough questions in uncertain times.
16 Presidents’ Circle Members voice how they are adapting during COVID-19.
ENGAGEMENT 18 Mindful Action: The Antidote for Fear and Uncertainty A forward to the Financial Freedom article series. by Gene Powers 20 Builders Finding Buyers Home builders likely to turn to institutional investors as market slows down. by Bruce McNeilage 31 Realty Matters: Investment Protection An anecdote on rent pricing, property management, and asking the tough questions. by Brian Wojcik
BORN TO FLIP
35 Sponsored Content: Investor Review
BUSINESS FUNDAMENTALS 52 First Properties The math behind the question: How much can you afford? by Michael Jordan
Kristina Sawyer: The evolution of an entrepreneurial spirit.
Tips from an attorney to protect yourself — and your investments.
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56 Passive Losses
Will the IRS believe you are a real estate professional? by Richard Hart
62 Higher Yields Getting creative with real estate notes. by W. J. Mencarow
64 Impact Investing
“Making Gary Great Again” is more than profits and payroll. by Tom Olson
STRATEGY 67 Talking Loudly: Creative Ways to Cashflow How creativity in investing can maximize yields and unleash your full potential. by Nathan Trunfio 74 Cash is NOT King Why cash is Emperor — and it has no clothes. by Steve Streetman
DESIGN POINT 78 Design Guide: On Trend Kitchen Featured Designer: Tamara Day
Former baseball player RYAN PINEDA is hitting home runs in real estate.
by Kelli White | photos by Bry Cristobal
82 Dining In Eat-in kitchens are taking center design stage. by Michele Van Der Veen
MARKET & TRENDS 86 Spotlight: Houston, TX Signals show rental prices have room to appreciate while maintaining affordability. by Fred Heigold III
THE POWER OF VULNERABILITY
92 Corona Bust? Escalating trends could re-balance markets. by Ingo Winzer
Making the time to work on your real estate portfolio.
An entrepreneur’s guide to cultivating your tribe through authenticity.
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PUBLISHER & CEO Eddie Wilson
EDITOR-IN-CHIEF Kelli White
SALES MANAGER Rodney Halford RHalford@ThinkRealty.com 816-398-4111 x86122
FULFILLMENT COORDINATOR Blair Pierce
ART DIRECTOR Emily Bowers
DESIGNER Kyle Goens
CONTRIBUTERS Clint Coons Tamara Day Richard Hart Fred Heigold III Michael Jordan Bruce McNeilage W. J. Mencarow Tom Olson
HEY! LET’S BE FRIENDS! GET SOCIAL. STAY CONNECTED.
Gene Powers Heather Self Steve Streetman Nathan Trunfio Michele Van Der Veen
Ingo Winzer Brian Wojcik Michael Zuber
Like, Follow & Share for the Latest Real Estate News, Trends and Insights from Think Realty
COVER PHOTOGRAPHY Bry Cristobal
Are you following Think Realty on social media? Things move pretty fast in real estate. Don’t miss out on the latest trends, tips, insights and news from your trusted resource for all things real estate investing! Follow. Like. Love. Share. Comment. You can do it all with Think Realty’s social media channels. Join the conversations in Think Realty social communities and connect with like-minded members who range from first-time to seasoned investors. Check out all of our social media channels and connect with us - and other investors - today!
6 | think realty magazine :: may 2020
FROM THE EDI TOR- IN-CHI EF
uccessful people find stability in times of
Check out his most recent article from the Talking Loudly series on page 67, and learn how you can creatively make the market work for you. Then, be sure to watch his video on this
uncertainty. They find calm in the chaos and can create something out of nothing. The theme for this issue is Creative Investing and
now more than ever society is experiencing the need to create normalcy in anything-but- normal circumstances. The novel coronavirus pandemic has brought with it “social distancing,” “stay-at- home orders,” and declining markets. But real estate investors are resilient, and often humanity experiences our best results after our lowest moments. Our cover person, Ryan Pineda, found himself in uncertain times last year and it affected his business. But through creative deal-making and investing in himself, he adapted and rebounded better than ever. Read his story on page 22 and learn how discipline brings in deals. Also in this issue, real estate investor and lender Nate Trunfio tackles how to navigate investing hurdles like low inventory, rising construction costs, and higher competition.
topic and more posted on the Think Realty media platform. As always, Think Realty is here for you during these uncertain times, offering a voice of reason in everything real estate, and inspiring you to create your best investment opportunities ever. Perhaps you’ve seen our Voices of Reason video series on social media; have read our Perspectives article series on our home page; or have enrolled in our webinars covering topics designed to guide you through times of instability. Here to educate and inspire you now and into your real estate investing future, Think Realty envisions brighter times ahead if we can stay the course. Get creative. Adapt. Move forward. Because, as history has shown us, if we can get past the treacherous mountain, there is a prosperous valley on the other side. •
KELLI WHITE, EDITOR-IN-CHIEF
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Think Realty's Core Focus is to be the trusted source in the Real Estate Investment Industry by providing products and services focused on serving the Real Estate Investor.
NEWS & EVENTS
O n July 13-14, 2020, attendees can choose among a wealth of real estate information from educational presentations to inspirational workshops. Wholesalers, lenders and investors will mingle in an uplifting, supportive learning environment. Think Realty Resident Experts will share knowledge on topics such as Wealth Building, Establishing Your Business, Intentional Investing, and more. Invest in yourself and sign up before it’s too late! • Think Realty Baltimore Conference & Expo
T hink Realty is highlighting some of the most renowned leaders in the real estate investing industry through the new Titan Talk series. Think Realty owner and CEO Eddie Wilson personally spotlights these great achievers. Look for their videos, interviews, and articles to appear this summer! • Titans Are Talking
Clint Coons Anderson Advisors
Brent Kesler The Money Multiplier
Jason Engelman Freaky Fast Homebuyers
To learn more about upcoming Think Realty events and to buy tickets, visit ThinkRealty.com/TR-Events.
E ach year, Think Realty honors leaders in the industry who exemplify the best in real estate investing. Not only have the winners achieved great success in their own right, but they also demonstrate Think Realty’s mission of being trusted resources within the real estate investing industry. Know someone who fits this description? Nominate them today! Nominations are open for the 2020 Think Realty Honors through May 31. Think RealtyHonors Nominations Open! Go to thinkrealty.com/honors now and enter your picks! Winners will be announced at the Think Realty Conference & Expo held in Atlanta this September.
8 | think realty magazine :: may 2020
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ContributorVoices Real estate investing is inherently an industry full of uncertainties. This is even more apparent now than ever. But experience lends itself to qualified predictions, and seeds of uncertainty can grow to future success if we can prepare and educate ourselves. We asked several experienced investors and Think Realty contributors this tough question: “How do you think the national quarantine crisis this spring and recent 0% interest rates will affect the real estate investment industry?”
I do think that people should be looking to refinance or by income producing properties at this time. With cheaper rates comes the long-term arbitrage of our money being worth a lot less in the future than it is worth today meaning you’re basically paying less for the property than it’s worth. However, understand that as the Fed rate goes down, mortgage rates do not always fall in line and when they do, it is not done immediately. I do see Fannie Mae rates dipping below 4%, but I don’t think they will go much lower than that.
I think the reduction of interest rates to 0% shows a certain tone deafness by the government to the issue. Access or expense to capital is not the current issue, the problem is access to labor, which is not a factor of interest rates. If people cannot go to work, companies cannot produce, even with interest rates at 0%. My fear is that employers will borrow at this rate to keep themselves afloat, but ultimately will not be able to pay back the principle if the work stoppage continues.
The recent Fed rate cut has created more confusion than anything for the Real Estate world recently. Many seeking to leverage have been holding out for this day anticipating to borrow money for nothing when the Fed zeros out the rate only to be disappointed that long term rates have increased. I encourage many to understand the Mortgage Backed Security (MBS) to know what drives long term rates. Not the Fed, not the 10-year treasury. Seek to under- stand the MBS.
TOM OLSON GoodSuccess
AARON CHAPMAN SecurityNational Mortgage
SUSAN NAFTULIN Rehab Financial
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Changing the Narrative THE EVOLUTION OF AN ENTREPRENEURIAL SPIRIT
At 21, I purchased my first investment properties: two
ristina Sawyer, director of loan operations for Arixa
to build my career and continue to build my portfolio. This, my friends, is the power of leverage. TR What does success mean to you, in terms of your occupation? Describe a situation in which you experienced this kind of success and what you believe led up to it. KS In my career, I have seen the good, the bad, and the ugly in real estate and private lending. I was an investor during the downturn, and it was not pretty. I have worked in different segments of the industry, in many positions, and the
adjacent five-plexes. I managed the properties for the owner, and when he was ready to sell, I purchased them off-market. Then I purchased a four-plex through an owner- occupied FHA loan. I lived in the smallest unit while the other three paid my mortgage. I earned an extra $200 per month of cashflow, which allowed me to build a reserve for capital improvements, turnovers, and emergencies. Then at 24, I refinanced my four- plex, pulled out some cash, and moved to the beach of Los Angeles
Capital, shares her real estate story and what she has learned to help others on their path to success. TR What is your start-up story? Why real estate? KS I knew I had an entrepreneur mindset when I was sixteen; my father offered me $300 to pull the weeds and clear the brushes on a rental property. Entrepreneurs think action, so I acted and hired a handyman to do the job for $150, leaving me with pure profit. I was hooked.
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was tailored to the sponsorships need to cover delinquent taxes, an interest reserve, points and closing cost. Arixa cross collateralized their retail property to provide max proceeds (67 percent CLTV). These are examples of us using our balance sheet to solve a borrower's need without putting our investors at risk.
On the acquisitions team with Portfolio Properties, I learned the skill of valuation, cap rates, rent rolls, comparable sales, and how to review preliminary title reports. Then I joined the loan team with Portfolio Funding, brokering loans on commercial assets, multifamily, and mobile homes. I learned how to collect, review, and submit the due diligence packages to lenders. All these positions played a pivotal role in my career growth and led me to become the Director of Loan Operations at Arixa Capital. Our focus is providing short-term bridge or construction loans to real estate developers. TR Describe a situation in which you utilized creative means that resulted in a deal that might otherwise wouldn’t have happened? KS An investor with a strong portfolio of multifamily properties was presented with an opportunity to purchase an investment at a discount if he could close in two weeks. This borrower was not liquid at the time for the 20 percent down payment and closing cost. Arixa Capital provided $4.7M in financing for the purchase of a 12-unit multifamily property in Los Angeles, CA. The borrower benefited from Arixa’s creative solution by cross collateralizing his already-owned 16-unit multifamily property in Beverly Hills, CA. By doing this, we utilized the equity in the crossed property to provide max proceeds (74 percent CLTV). Another example is the refinance and construction completion loan of a 35-unit, single-room occupancy, multifamily property in Ventura, CA. The developer had built equity into the project and needed additional funds to finish. Arixa’s solution
TR What advice do you often give newbie real estate investors?What do you often say to seasoned investors?
1. Don’t adopt your tenants. It’s hard to hear your tenant’s problems and not try to help. 2. Allowing them to live rent-free is not a burden you can carry and still make your mortgage payments. 3. Be an investor, not a landlord, and understand the difference. Being a landlord takes away the enjoyment of investing, hire a property management company. 4. Hire the experts in their field and focus your time on what you do best and what you most enjoy. Trying to save a penny doing it yourself will only cost you more money in the long run. After all, time is money. 5. Whom you do business with makes a difference. Vet and hire the right GC; vet and choose the right lender. The lowest bid or cheapest rate isn’t always the best or most inexpensive outcome; a lower rate doesn’t save headaches. •
knowledge I have gained through this process has provided a path to become a creative-solution provider for clients. Helping others reach their financial goals and becoming their lending partner is what professional success means to me. I contribute my success to my versatile background in operations. I was fortunate to start my career with Portfolio Property Management. The value-add service was to work on landscaping, turn units, remodel, rent increases, and all the details in between. This is where I learned the ropes of managing investments.
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Presidents' Circle ADAPTING AND LEARNING IN UNCERTAIN TIMES
The Presidents’ Circle is a select group of top-performing executives from both the private lending and real estate investing industries who gather at exclusive events to network, learn, and tackle challenges in a confidential setting. For the past ten months, we have featured Presidents’ Circle members in Think Realty Magazine with a fun, get-to-know-them article. This month, we are mixing it up and asked some Presidents’ Circle members:
“How have you ADAPTED business operations and/or investments during the COVID-19 crisis and what have you LEARNED about your business practices during this time?”
“As an active investor and speaker, it has been a challenge to come up with ways to stay connected. First, I have reached out for more one-on-one “networking” using Zoom and social media platforms to stay connected. One bonus of keeping connected this way, is the qual- ity of the interaction, keeping other investors and myself motivated during these challenging times both economically and emotionally. Also, I have learned to be as prepared as possible. Real estate investing can be somewhat risky if you are not careful about doing your due diligence whether buying properties or lending. This crisis might have caught us off guard, but my investment strategy has worked during down times and up times. Our current projects were under way for full rehab when the shelter-in-home orders came out. Since real estate was considered essential business, we were able to continue with our projects, and get them ready for market. Our first strategy was owner financing; however, it became apparent that peo- ple want to hold onto their cash, and the interest rates had dropped so low, it was attractive to buyers to get their own financing. We decided to put a few more dollars in the properties, and now we will either sell retail or rent the properties. We try to stay on point with keeping our target price range so that we don’t get caught with a property that we cannot recoup our investment in an unexpected turn in the market. The bottom line is that people will always need a place to live, and by focusing on affordable housing, a savvy investor should be able to weather any storm!”
NANCYWALLACE-LAABS KBN Homes
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“On the construction side of our business, we have benefited because contractors have been getting laid off from others, so we have been able to hire some additional contractors and increase the number of projects going. From the rental side of things, we had 16 percent of our residents affected enough to where they could not pay rent on April 1. We have been helping them to file unemployment, giving them contacts and resources, waiving all late fees, and doing everything we can to help. We even took some food to a couple of tenants who unfortunately got laid off and liter- ally couldn’t afford groceries. Having gone through the crash and losing everything back in the 2007-2010 era, I have been a huge proponent of owning every- thing free and clear. I know that is the minority view as everyone wants to leverage, but I kept focused and stayed with that strategy for the past 10 years. Now, since nearly all my rentals are free and clear, I sleep comfortably because whether all my tenants pay rent or not, I have no mortgage payments. I learned that my strategy works very well during times like these, and I don’t have to worry about what goes on in the market.”
GREG SLAUGHTER First Class Equities
“The Norris Group has doubled down on providing our Califor- nia network with the most area-specific and updated content on regulatory, legislative, and Covid-related challenges. California has been making updates at the state regarding evictions and moratori- ums and then permitting cities to do the same making local, boots- on-the-ground knowledge invaluable for the foreseeable future. We’ve been covering federal, state, and local resources for both real estate investors as well as tenants knowing our investors will likely have to be the conduit to tenants on how to get help. We’re trying to be a voice of hope and know-how in a sea of noise and fear. 90 percent of our team is working remotely despite the real es- tate sector in California falling under “essential services.” Fortu- nately, we’ve been creating systems and infrastructure for a while to prepare for an emergency. Here we are, and we’re still open for business! We are still funding in California and Florida as well as building new construction in Florida. Moving forward, we will continue with our Covid-19 investor series, with experts across the real estate sector covering taxes, retirement accounts, regulation, and area-specific intel. We update our investor resource page for Covid-19 every week and try to track the many moving parts as best as possible.”
AARON NORRIS The Norris Group
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Mindful Action: The Antidote for Fear and Uncertainty A FORWARD TO THE FINANCIAL FREEDOM ARTICLE SERIES
by Gene Powers
n coming months, you will read a series of articles outlining the seven steps to achieving financial
our investments, the world economy, and the markets. In the area of stocks and business, investments are already under siege and threatened with serious losses, and the end is not yet in sight. Do any of us really believe that this economic crisis in the aftermath can be cured by more debt and printing money, or that we will soon return to business and investments “as usual” before the crisis? Will the housing market remain at all-time highs? What do we do NOW, in
freedom, but first it is imperative to cover an essential discipline for attaining financial freedom, or any goal — keep the goal in mind and STAY IN ACTION! We are living in great uncertainty and unprecedented levels of fear that are escalating throughout the world’s population faster than the coronavirus itself. We don't yet fully know the final impact on our jobs,
18 | think realty magazine :: may 2020
marginal assets and expense lines; downsize operations to be profitable and to have cash on hand for new opportunities emerging now and in the future; consider and evaluate other asset types for investment — these are mindful, and positive actions well worth your time and attention today. Often, a crisis provides the perfect opportunity for us to slow down, to stop and think, to seek further information and education, and to ACT to reposition and/or redirect our assets and investing activity. Now is time to assess where this downcycle will take your investments and how to consolidate your holdings, so as to not just weather the downturn but to position to take advantage of the almost-certain “buy low” opportunities that will emerge in every facet of our economy. As investors in real estate, we need to study our markets, assess our holdings, and the opportunities that are likely to come during the next several years. Review history and market cycles and anticipate the new opportunities in real estate that will emerge in coming months. Be creative. Use seller finance loans to buy and sell property as markets decline and lending dries up. Consider other investment opportunities where you can “buy low." Focusing on emerging opportunities and taking action now in place of hours spent on the news and social discourse about the pandemic will put you far ahead of the crowd when the virus has been tamed. It is with sincere gratitude and humility, that I can say that balanced Financial Freedom is what allows my wife and I to face this time of unprecedented uncertainty and anxiety from a position of greater security and strength. I wish that for everyone. I look forward to sharing our foundational "7 Steps to Financial Freedom" in future issues. For now, STAY IN MINDFUL ACTION towards your investment goals. •
the midst of the storm? As one of my mentors often reminds us regarding investments, “Hope is not a good strategy!” The best antidote for the current level of fear and/or uncertainty regarding volatile and declining markets is MINDFUL ACTION. This is true during any crisis — the most good comes from being mindful of all possibilities, resources, actions, and outcomes. MINDFUL ACTION comes when you keep the end in mind and STAY IN ACTION toward the end. Where are you heading? Where do you want to arrive? Most investors have a good idea of where they want to end up (with increased net worth) and have at least a rough plan on how they will get there. The current economic changes that are now upon us demand that you revisit your plan in almost every case. Quickly assessing the rapidly changing markets, your current asset holdings, resources and financial plan, and being willing to consider change and detour from your original plan are key steps. Review and eliminate
©2020 Nationwide Publishing Trust - All rights reserved.
Gene Powers is President and Founder of Nationwide Secured Capital, a brokerage and investment company that purchases private loans secured by real estate for its own portfolios and numerous private investors and funds. Nationwide provides cash out and recapitalization options to those receiving payments on first position private loans. This includes real estate investors/property owners who provided owner financing on properties sold. Call (800) 853-0573 or go to www. NationwideSecuredCapital.com for offers.
This article series outlines the 7 foundational STEPS that Gene and his wife learned on their journey. Email FFReadMore@CPFFCorp.com for more.
thinkrealty . com | 19
Builders Finding Buyers HOME BUILDERS LIKELY TO TURN TO INSTITUTIONAL INVESTORS AS MARKET SLOWS DOWN
by Bruce McNeilage
ome builders are starting to see a slowdown in new home sales, and it’s likely to get
houses sell. Unfortunately, that’s bad for everyone in the neighborhood. When other nearby homeowners go to sell or attempt to refinance, they’ll find their own home values have taken a dip. Selling spec houses to institutional investors keeps prices up for everyone. For builders, they can help entice institutional investors by providing important items to the buyer: refrigerators, blinds, garage door openers, and closing-cost assistance and title insurance. This helps reduce the investor’s capital outlay and is more likely to lead to a faster sale. How the real estate market reacts to a post-COVID-19 world remains to be seen, but it’s likely to take a step backwards. Builders who look for creative ways to find buyers will weather the storm. Collaborative partnerships being formed by single-family rental operators and homebuilders is a likely scenario over the coming months. How long will this last and will it be profitable for both sides? Only time will tell. But, for now, it’s a win for builders, investors, and neighborhoods looking to keep property values up. • Bruce McNeilage is the managing member and a co-founder of Kinloch Partners and a partner in Harpeth Development.. He is a passionate advocate for housing affordability and homeownership, and invests heavily in Nashville, Tennessee, as well as throughout the southeast. Learn more about his projects, including single-family built-to-rent communities and the Solo East and North condominium projects at www.Kinlochpartners.net.
worse before it gets better. The economic impact of COVID-19 is leading to business closures and spikes in unemployment insurance claims. This will most likely lead to a rise in credit delinquencies for car payments, credit cards, and/or rent and mortgage payments. It also means customers who might have bought a spec house pre-virus could be on the sidelines for now. This has homebuilders scrambling to sell spec houses that are already finished or currently being built. Builders are looking for options to move these houses. Forming alliances with investors who can purchase multiple houses at a time provides an excellent option. These are often institutional buyers with deep pockets who are stable enough to withstand an economic downturn and willing to buy homes already finished or currently under construction. They frequently turn the new homes into rental opportunities. These investment firms can give builders the opportunity for predictable cashflow in a market that is dependent on interest rates and credit scores. Entry level home buyers can be the most challenging with regard to financing. A guaranteed purchase by an institutional buyer is seen as a positive without having to worry about failed financing, providing closing- cost assistance or even paying sales commissions. The alternative to selling to an institutional investor is to cut prices by perhaps 5 to 10 percent until these
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RYAN PINEDA BORN TO FLIP Former baseball player Ryan Pineda traded RBI for REI
BY KELLI WHITE PHOTOS BY BRY CRISTOBAL W
hen former baseball player turned real estate investor, business owner, and mentor, Ryan Pineda was just 12 years old, he was suspended from school for selling… Pokémon cards.
You read that right. He was suspended for selling popular trading cars to his friend for $100. It was an upfront deal. No shenanigans. But in the end, parents and policies prevailed, and Pineda was instructed to return his profit. But as a savvy businessman, he got his cards back first. Later, in his twenties, Pineda traded up when he transitioned his trading- card business for his furniture-flipping business. Earning upwards of $8,000 per month buying, rehabbing, and selling couches listed on Craigslist, Pineda had a knack for buying low and selling high. Perhaps Pineda is a natural-born flipper, but he was not satisfied with his lucrative and flexible business. Destined for something greater than couch- flipping, he knew he needed something more substantial for the long term. “After a couple years of fixing up furniture for resale, I thought, ‘what else can I do?’ I couldn’t scale. Plus, it was not fulfilling, so I was looking for a way out. At that point, I had been in the minor leagues for years and knew the Big Leagues were unlikely,” he said. He had earned his real estate license for a means of income during the off-season and now had several years’ experience as a Realtor ® , but he didn’t enjoy it enough to make it his career. “I didn’t have a back-up plan to baseball,” Pineda said. “Being a real estate agent was my first real job, but I got burned out after just a couple years.” A man of faith, Pineda prayed for a sign leading to his next step. He was 24 years old. He was a newlywed. Little did he know he was about to no longer be a Realtor ® , but rather a real estate investor.
22 | think realty magazine :: may 2020
SUCCESS DOESN’T REVEAL AS MUCH AS FAILURE”
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said. “I called hard money lenders. I didn’t know anyone with money and had only $10,000 in the bank. I took out a cash advance on my credit cards and kept themmaxed out so I could keep buying deals.” He flipped five homes his first year, all with his own money. His second year in REI was 2016, and he flipped 20 properties. In 2017, he was officially released from baseball and his real estate business was exploding, so he focused on flipping. He knew he had given his all at baseball, and now he was going to give his all to the game of real estate. “It was the first time in my life that I didn’t have baseball, so I devoted all my energy and competitiveness into real estate investing. I didn’t know what I was doing, but it was working!” In 2018, Pineda had his best year to date. He flipped more than 140 homes. He felt successful and happy with his choice to pursue a career as a real estate business owner.
ANEWPATH In 2014, Pineda and his wife celebrated their one-year anniversary with a trip to New Orleans. Despite his lack of affinity for a career as a Realtor®, the Pineda’s sold their first home and made good money. It was from that sale that Pineda realized the profit in real estate. This was also around the time he was searching and praying for a sign to his next step. “During our trip to New Orleans, I saw a commercial about real estate investing and at first thought it was B.S. But it influenced me enough to buy some books on the topic and to start learning. And then, I somehow knew my next step was to invest in real estate,” he said. On the plane back home, Pineda sat by an experienced flipper. They conversed on the long flight back to Las Vegas. “That was my sign that I was on the right path,” Pineda
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GAME CHANGERS For business owners looking to scale their companies and for investors looking to get more deals done, delegating is key. Ryan Pineda quickly learned he couldn’t do it all when he was flipping a triple-digit amount of homes in a year. He recalls his first two hires: “The first person I hired was a project manager to deal with contractors. That was a game changer because it allowed me to get more deals, which is what I do well,” Pineda said. “The second person I hired was my sister. She became my assistant and handled all the paperwork and insurance. She is much better at the stuff I dislike!” Pineda removed himself from management tasks because he realized that was not the best seat for him; in turn, his business boomed because he chose to step back from managing and step up to acquiring deals. Now, Pineda has dozens of people to whom he delegated roles while he can focus on finding deals. Pineda owns four companies: his flipping business called HomerunOffer.com; his brokerage company called Forever Home Realty; his accounting company called TrueBooks CPA; and his education platform called Future Flipper.
But, 2019 brought a slower market and some personal adversities, which led to a temporary setback. Although, he still flipped 100 homes! Pineda welcomed the challenge of navigating through the cold Las Vegas market and breaking through that ceiling. He learned that “success doesn’t reveal as much as failure.” “In 2019, I truly failed at real estate. A good market hides mistakes,” Pineda said. “I had to practice self- awareness and assess my inefficiencies. I learned plenty about failure in baseball. If a baseball player fails seven out of 10 times, they’re an all-star. But that’s not the case with real estate. You cannot hold on to failure. Every day is a process.” Pineda said he practices continual self-assessment and keeps striving for improvement, methods essential for an influencer. And because he gets so many of his leads and clients through social media, Pineda is, in fact, an influencer. “My message is all about balance,” he said.
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ACALL FOR COACHING As a professional baseball player, Ryan Pineda is no stranger to coaching. He’d been coached nearly his whole life. But when he transitioned to real estate investing, he thought he could
learn the business on his own. “I actually paid for coaches in
baseball, and they helped me improve. But I didn’t realize at first that I needed coaching in real estate. Finally, it clicked for me that if you have the right person, it pays off,” he said. In 2018, he decided to invest in himself as a real estate investor. He signed up for courses and seminars and had his best year ever. The next year was a setback, however. “In 2019 I stepped backed. I got away from investing in myself through real estate education,” he said. “I wasn’t focused due to family issues but also due to not having coaching. And it showed in business.” This year, he joined a mastermind and invested in his business with both in time and money. “I invested $45,000 in a month and earned it back within 60 days. I am a huge believer in paying for coaching if it fits your core values,” Pineda said. He suggests checking out social media for transparency, which will help ensure the coach’s credibility. Now, Pineda is coaching other real estate investors and has students nationwide, most of which find him through social media. “I do the group coaching style. We have weekly calls and meetups. It is rewarding to see others gain success, but it is also a profitable business,” he said.
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For Pineda, the acronym RAISE is his beacon to keep him on the right track. He assesses these five life areas every day: 1. Relationships 2. Assets 3. Intellect 4. Spirituality 5. Exercise
“I do not strive to destroy other flippers,” he explained. “But rather, being competitive influences my desire to want to get better. I want to surround myself with as many movers and shakers I can because it inspires me to get better. Business is business and you will lose if you don’t keep evolving.” One specific way Pineda has learned to evolve as a real estate investor and business owner is by negotiating creative financing. By entertaining creative capital, he has figured out how to turn “dead deals into big deals.” “On our acquisition side, we’re super creative on our deal structure,” he said. “We just had a deal where the market value of the homes was $825-850,000 on three different properties. They wanted 900k for all three. I thought, ‘no one would pay 900.’ Other investors might offer 600. I structured the deal and said I would give them 900 but on the conditions that they would finance over 15 years with no interest. Principle-only payments. And I would put $15,000 down, $5,000 per property. They like the deal because they get what they want. But I understand that I will cashflow on three properties for only 15k and at the end of 15 years, I’ll only owe about $300,000 on three properties. At three percent appreciation, they’ll be worth 1.3 million. Due to creative financing, I turned a deal no one else saw as a deal into a win-win for the seller and me and a potential $1million 15 years down the road. We accepted an offer to wholesale to someone else for $100k assignment fee. That hasn’t closed yet, so we’ll see. But either way, whether we make $100,000 today or $1million 15 years from now, I know it’s a great deal.” Another example of Pineda’s creative financing is a 10-unit apartment complex in Vegas that he bought with seller-financing. He said he negotiated no payments for three years while his company fixed it up. Now, it’s a cash-flowing property. “There are so many creative ways to make deals out of nothing,” he said. •
“This self-awareness practice has helped me shift my mindset to realize it’s not all about dollars.”
CREATIVE CAPITAL When someone transitions from one profession to another that is seemingly completely unrelated, it bares questioning what, if anything, correlates between the two. How, then, is a professional baseball career related to crushing it in real estate? For Pineda, the answer is two-fold: Extreme Discipline and Competitiveness. “Athletes understand discipline. They must develop a routine and become robotic because that’s the only way to develop their skills and to get better,” Pineda said. “The same is true in real estate. To be successful, you must be on the phone prospecting, or knocking on doors, or whatever the case is for you. You must be disciplined in your routine and understand that with the more reps you do, the better you’ll get. I see many people get bored, but when you learn to love your craft, you have a greater chance of success.” Pineda’s competitive nature served him well as an athlete, and he has noticed this trait serve him well in business. But a competitive nature does not mean wanting others to fail.
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28 | think realty magazine :: may 2020 IVY BACA VP SALES 213.784.2497 email@example.com www.universalcommercialcapital.com
Under Construction WHAT TO KNOW ABOUT CONSTRUCTION LOAN DRAWS
by Eric Tran, Universal Commercial Capital
M any times, fix and flip investors have come to us to ask for a small bridge fund to carry them on until their construction lender(s) release the requested construction draw. To avoid any of these shortfalls during the course of construction, it is important to know these rules that construction lenders adhere to: 1) The construction fund request must be completed in its en- tirety and signed by the owner and general contractor. 2) The payee list should include the date, draw number, exact project, and owner’s name. The listing shall include the name of the material supplier and/ or sub-contractor, amount of payment, payee address, corre- sponding cost breakdown, and
been installed or integrated into the site.
line item number. This docu- ment must be signed by the owner and the contractor. 3) All draw requests previously paid by the contractor must be supported by these items:
5) Only those draws for items within the amount stated on the cost breakdown will be hon- ored. If it is not sufficient, owner and general contractor have to make a request to tap into the contingency fund or any surplus from other line items on the cost breakdown. If you don’t think you can fulfill these requirements from your lender(s), bring it up and discuss with them before the construction has started. •
a) material receipts marked PAID;
b) paid receipts from con- struction personnel;
c) copy of canceled checks; and
d) unconditional labor and material releases.
Eric Tran is the CEO of Universal Com- mercial Capital, a private lender based in Southern California specializing in Fix and Flip and Rent and Hold loans. Universal Commercial Capital also offers a no-tax-
4) Draws will be honored only if the inspector has verified that the labor has been performed and/or the above material has
return, non-recourse apartment lending program. Learnmore at UniversalCommercialCapital.com.
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