TR_October_2021

TM I N FORM . I NS P I R E . E DUCAT E . EMPOWE R .

Can You Diversify and Also Go All-in? FUNDAMENTALS

STRATEGY How to Prepare for the Economic Reset

Markets Showing Steady Growth MARKETS & TRENDS

Hitting the Right Note

DAVE VAN HORN FINDS SUCCESS IN HIS NICHE

OCTOBER 2021 $5.95 U.S. :: $6.95 CAN

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PUBLISHER & CEO Eddie Wilson

EDITOR-IN-CHIEF Kelli White

SALES MANAGER Rodney Halford RHalford@ThinkRealty.com

FULFILLMENT COORDINATOR Blair Pierce

DESIGNER David Rodriguez

CONTRIBUTORS Katie Bean Daniel Blue Ellis Hammond WJ Mencarow Sean Miller Bruce Petersen Gary Pinkerton Bob Preston Craig Sewing Steve Streetman Glenn Stromberg Shawn Tiberio Ingo Winzer Michael Zuber

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FROM THE EDI TOR- IN-CHI EF

Why Diversify?

ust because you CAN doesn’t

went from construction to real estate investor on page 14. Also in this issue,

mean you SHOULD. I’ve said this sentence

multiple times while doling out parenting advice over the years. And while working on this issue of Think Realty Magazine, I realized it applies here as well. Why? Because this month’s theme is Diversification. “The process of a business enlarging or varying its range of products or field of operation.” Or, in your case as real estate investors, investing in multiple markets and/or asset classes. As you grow and scale your REI busi - ness, it might seem like diversification is necessary. But the key is knowing when and how. This month’s cover per- son Dave Van Horn, president and CEO of PPR Note Co., knows a thing or two about diversification. Find out how he

Think Realty’s CEO Eddie Wilson offers his mindset on whether to invest in a fund

and Think Realty Resident Expert Gary Pinkerton concludes his article series on the concept of infinite banking. Plus, this issue includes the third edition of Think Realty’s Commercial Review. From multifamily to self-storage, you’ll want to check out this valuable content if you’re in CRE—or wanting to be. Think Realty aims to share a breadth of expert opinion, knowledge, and experi- ence with readers like you, so you can determine best investing strategies, markets, and tools for your business. We don’t just give you the same information every month. We diversify that informa- tion—because we CAN and we SHOULD. •

Keep Going!

KELLI WHITE, EDITOR-IN-CHIEF

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CONTENTS

INSIDE THIS ISSUE

COVER FEATURE

Dave Van Horn finds success in his niche by Katie Bean

HITTING THE RIGHT NOTE

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THINK REALTY 8 News & Events:

62 Diversification: An Investor’s Safety Net Analyzing the assets that can help hedge against inflation

Think Realty Honors Winners!

by W. J. Mencarow

INVESTOR STORIES 12 Presidents’ Circle Featured Member: Abhi Golhar

66 Big Tech Will Disrupt the Real Estate Business How Realtors can become part of the disruption

by Craig Sewing

FUNDAMENTALS

68 Smart Tech for Build-to-Rent Investors Capitalizing on what buyers are looking for

26 An Alternative Approach to Diversification Can you diversify and also go all-in? by Ellis Hammond 28 Ten Best Practices for Relationship Management Why putting people first is best for your properties by Bob Preston 35 Commercial Review A special Think Realty publication for CRE, vol. 3 52 6 Reasons to Choose Multifamily Rentals Making the leap from single-family to apartment investing by Bruce Petersen, a Think Realty Resident Expert 54 How to Diversify Your Marketing Strategy A different approach to tapping into untapped markets by Shawn Tiberio

by Sean Miller

DESIGN POINT 70 Select Color with Confidence

How to avoid a color catastrophe on your next project by Editorial Staff

MARKETS & TRENDS 74 Changing Times Where will steady growth be? by Ingo Winzer 76 A Different View of Diversification Is it always the right time to diversify? by Michael Zuber 80 How to Prepare for the Economic Reset A look at a recession-resistant asset class by Glenn Stromberg MINDSET 82 Why Invest in a Fund? A universally diverse investment option by Eddie Wilson

STRATEGY

56 Lessons in Diversification from COVID-19 Why reassessing your portfolio is not enough by Steve Streetman 60 Create Wealth and Confident, Financially Educated Children Final part of the series on the mindset of infinite banking by Gary Pinkerton, a Think Realty Resident Expert

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THINK REALTY

NEWS & EVENTS

Each year, Think Realty honors the leaders and change-makers of real estate who represent the best in the industry. These individuals are nominated by their peers, like you, and the winners are determined by voting via public ballot. The winners were honored at the Think Realty Conference & Expo in Baltimore last month. Congratulations to these real estate investing industry leaders! Meet the 2021 Think Realty Honors Award Winners!

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Single-Family Investing Award

Brian Snider graduated from Ohio Northern University with a Bachelor’s in Middle Childhood Education and spent 14 years teaching reading and math. After working on his master’s degree to become a principal, he decided that was not the path he wanted to take, so he took a job with Simple Wholesaling where he has been Marketing Director, Dispositions Manager, COO and now CEO. Simple Wholesaling now does more than 300 deals per year. “I am so grateful & blessed to be able to make an impact in the real estate space. For me, it is all about improving and leveling-up the community, along with those around me. I have an education background, so being able to help and motivate others is what I am passionate about. Real estate has changed my life in so many ways; from all the connections that I have made, to all the homeowners or investors that I have been able to help—and on a selfish note, to the direction that my own life has had since getting into real estate. My goal is to bring opportunity to everyone I encounter, while spreading the Kingdom of God. Real estate, coaching, and consulting have given me the vehicle to do that, and I am excited about what is around the corner.” —Brian Snider

Brian Snider, Simple Wholesaling

Multifamily Investing Award

Robert Martinez is the Founder and CEO of Rockstar Capital, an investment and multifamily property management firm specializing in the acquisition and management of value-add opportunities across Texas. Currently, the portfo- lio consists of 4,220 units across 22 communities. As the CEO and founder, Robert directs the investment strategy, sources the investment capital, and secures the appropriate financing. “I do multifamily real estate deals because it has completely changed the trajectory of my life and those around me. It has created generational wealth that I’ll be able to pass on to my kids, and through Rockstar Capital, I’ve been able to help our investors enact that exact same change. Today, Rockstar Capital has a portfolio of 21 apartment communities con- sisting of 4,058 units across Texas. That means we’re responsible for the homes of over 4000 families every day, and that’s a privilege we take very seri- ously. Our investor base is nearly 500 strong and our investments have given many of them the opportunity that has made them millionaires. We have the ability to improve the lives of our residents through our oper- ational practices and create generational wealth for our investors, so why wouldn’t I want to keep moving, keep growing, and keep helping more peo- ple? I do multifamily real estate because it gives me that chance to leave an impactful legacy. Going forward, I want to continue growing Rockstar Capital’s reach to over $4 Billion in assets under management, and I want to get there by taking our investors to the top along with me. Rockstar Capital takes pride on its track record of 13-cash out refinances, and industry-leading 19 city, state, and national apartment association awards, and having never lost investor funds. That’s a track record we plan to protect, nurture, and grow with everything we’ve got.” —Robert Martinez

Robert Martinez, Rockstar Capital

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REI Services Award

Kori Covrigaru is the Co-Founder and CEO of PlanOmatic, a provider of Property Insights, 3D tours, photography, and floor plans for single-family rental investors, owners, and operators nationwide. With a national network of contractors and 40 employees, Kori has met the moment with the unique value proposition PlanOmatic offers through technology combined with Property Insights to support their clients’ goals. “Our company’s purpose is ‘We exist to help our clients win’ to ensure the highest level of client service and success at every turn. I’m extremely proud that our team was able to help our clients achieve tremendous success this year by expanding our product offerings and continuing to deliver all orders within 48 hours from the time they are placed. To me, real estate always comes back to home. Our mission is to show one million people their home for the first time and we are well on our way. Being able to help our clients achieve their goals and thus providing shelter to people across the country is extremely rewarding. Real estate is also a lot of fun. From creating this amazing company with talented people I respect and admire to being an investor myself, each day in the real estate business is exciting. Our vision for the future is big and bold. PlanOmatic will be synonymous with property data and visual content for marketing, insurance, and valuation. We intend to elevate the gig economy and continue to invest in our team to cre- ate the workforce of the future.” —Kori Covrigaru

Kori Covrigaru, PlanOmatic

Linda’s Legacy: Industry Impact Award

H. Quincy Long is the founder and CEO of Quest Trust Company. He has been a Texas attorney for over 30 years, specializing in real estate, and is an active real estate investor. Quincy is the author of numerous articles about self-di - rected IRAs and other real estate topics and is well-known as an expert on self-directed IRAs. “I am honored and humbled to be named the 2021 Think Realty Honors Linda’s Legacy: Industry Impact Award winner! In my position as CEO and founder of Quest Trust Company, I have the privilege of showing people how to take control of their IRAs and other retirement assets and invest in what they know best — real estate. Whether the investment is the direct ownership of real estate, loans secured by real estate, or LLCs, limited partnerships, trusts, and other entities that invest in real estate, it can all be purchased within a self-directed IRA. I am passionate about what I do because I believe in freedom of choice, and that includes the freedom to invest in alternative investments in an IRA, like real estate. I also believe that with great freedom comes great responsibility. There are rules that must be followed in order to succeed with a self-directed IRA, so I am also passionate about providing high quality education to our cli- ents about the rules and the various investment techniques. Our best client is an educated client. I expect to publish a book soon on my years of experience investing in real estate, mostly through my IRAs. Real estate has been a part of my life since I was knee-high to a grasshop- per. My family has been involved in real estate since before I was born. I love investing in real estate. It is my past, my present, and my future. Real estate is my passion!” —Quincy Long

Quincy Long, Quest Trust

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The power of premium.

$15/month for everything a real estate investor needs to succeed.

Complimentary entry to Think Realty events • Think Realty Magazine delivered monthly • Think Realty Housing News Report online • Discounts from major suppliers • Articles, webinars, videos and podcasts from top experts on REI education and emerging trends • Lender, wholesaler, and REI Group lists • And more

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INVESTOR STORIES

PRESIDENTS’ CIRCLE

ALike-Minded Circle MEMBERS WHO INFORM, INSPIRE, EDUCATE, AND EMPOWER

The Think Realty and AAPL Presidents’ Circle is a select group of top-performing executives and entrepreneurs from both the private lending and real estate investing industries who gather several times a year at exclusive events to network, learn, and encourage each other in a confidential setting.

e asked one of the Circle’s original members, Abhi Golhar, a couple questions from this mastermind and what this month’s theme of diversification means to him. In addition to being a seasoned investor, Abhi is also a national speaker and host of the Think Realty Podcast! W TR What have you learned from being in the Circle so far? AG I’ve learned that clearly identifying your value to the marketplace begins with your customer in mind, and for many leaders in organizations, their customers are not the end users of their product or service, it’s their team. TR What does diversification mean to you in your investing strategy? AG Diversification means being able to sleep comfortably at night knowing all your eggs are not in only one bucket. Many flippers get it wrong here: don’t just flip, buy SFR as well. For me, I enjoy lending, SFR, and investing in businesses.

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Where will your network take you?

The top echelon of the real estate investment and private lending industries meet in one place: the Presidents’ Circle. Circle members build deep connections across the REI landscape, learn tomorrow’s trends from leaders driving the industries, and step into the spotlight via Think Realty and the American Association of Private Lenders’ powerful media outlets. Will you be there? aaplonline.com/presidents-circle

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COVER STORY

DAVE VAN HORN

Hitting the Right Note

Dave Van Horn finds success in his niche

BY KATIE BEAN PHOTOS BY: NICHOLE BENSEL

DAVE VAN HORN started working early—in every sense of the word. In fourth grade, he had a paper route, delivering the news at the crack of dawn. Since then, he’s continued putting in the hard work, but over time, he’s learned how to put his money to work as well. Van Horn is president and CEO of PPR Note Co., based in Ber - wyn, Pa., which offers various note funds for real estate investors. He launched the company in 2007 with his co-founders, Bob Paulus and John Sweeney. In Van Horn’s view, everything he’s done since fourth grade, from the paper route to working in fast food to paint- ing, has molded him and provided lessons he’s used to build his success at PPR. SETTINGACOURSE He wasn’t born into the world of real estate, but his mother did influence his career choice both directly and indirectly. Though she was a single parent of six children, she encouraged Van Horn to take an entrance exam for a college preparatory school in Dela- ware. He protested that the family couldn’t afford it; his mother claimed that since he had good grades, she just wanted to see whether he could get in—no harm done. The next thing he knew, Van Horn was offered a four-year scholarship and looking for hand- me-down suits to wear to class.

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WE’REGIVING INVESTORS ACCESSTOAN ASSETCLASS THEYWOULDN’T USUALLYHAVE ACCESSTO.”

DAVEVANHORN

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In any asset class or category, we don’t want to be too top-heavy. That might lower our returns a bit, but we’re protected more.”

DAVEVANHORN

“The interesting thing was it changed my sphere of influence dramatically,” he said. From there, Van Horn went on to become the only one of his siblings to complete college, and the experience as a whole left an impression on him about how relation- ships can influence one’s path. Though he earned a degree in man- agement, working throughout school and paying as he went, Van Horn couldn’t find a job in his field and couldn’t afford rent. At 25, with a wife and son in tow, he moved home with his mother and worked for a painting contractor. The work was grueling and unglamorous. His moth - er suggested he look into real estate to supplement his income. Van Horn took her advice, becoming a residential real estate agent for a local brokerage. He was a great salesman, but real estate didn’t become his sole focus, even as he began investing. His first foray was a multiunit property, where he lived with his growing family and rented out the addi- tional units. As Van Horn learned the ropes as a landlord and handyman, he gained confidence to continue investing through buy-and-hold rental properties and fix-

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Notes: The Basics

For those not familiar with notes or note investing, here’s a primer on a few basic terms. For a fuller understanding of notes and how note investing works in the real estate industry, visit PPRNoteCo.com/resources to download an e-book by Dave Van Horn, listen to note investing podcasts or discover groups and blogs on the topic. Note: A promise to repay a loan, typically in the form of a contract in which the borrower agrees to repay a certain portion of the loan to the lender within a set period of time and under specific terms (interest rate, penalties for late payments, etc.). Performing note/Re-performing note: A loan on which payments of interest and principal are less than 90 days past due. This note has gone delinquent but regained performing status after at least a 12-month pay history. Nonperforming note: A loan in default or nearing that status. Many loans become nonperforming after being in default for three months, but this can depend on the terms.

Secured note: Backed or secured by an asset such as hard real estate

Unsecured note: Not backed by an asset; examples include student loans, credit card debt or medical debt

and-flips. Meanwhile, he had also started his own business, Van Horn Painting. At 42, Van Horn reached a crossroads. He was injured and couldn’t work in his painting business. Fortunately, he had built up enough properties that he still had income. He decided to transition fully into real estate. With 40 rental units, he was well on his way toward a goal he’d set to own 100 rentals. Like many investors, Van Horn was always on the hunt for leverage. In the beginning, he was using traditional bank financing. Later, he was introduced

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• Commercial notes: Short-term business loans and real estate investor loans, including construction, fix- and-flip, bridge loans, and hard money loans. • Commercial real estate: PPR has begun investing in multifamily properties within the past year and now works with about nine operators in markets nationwide. • Affordable housing: For this new aspect of the busi- ness, PPR works with a woman-owned nonprofit, providing capital to acquire assets and build new, affordable housing. As it has grown, Van Horn said PPR has evolved from an asset manager to become primarily a “capital allocator.” It makes sense to work with joint venture partners who are experts in their niche and who have access to a prod- uct or better execution, he said. That allows PPR to focus on its strength, which is raising capital. Through its ventures, Van Horn said PPR helps inves - tors build wealth and passive income while providing an avenue for community stabilization. His wealth manage - ment motto is “share, build, preserve.” “We’re giving investors access to an asset class they wouldn’t usually have access to,” he said. “The result is financial freedom for them through passive income.” At the same time, PPR’s expertise allows its partners to grow. “We help our JV partners in what they find difficult, which is finding private equity quickly,” he said. Through its note collections business, Van Horn said the goal has always been to help the individuals as well as the community. He considers it socially conscious investing. “Collections is never a popular thing, but we can still do good work. You have to be empathetic and understanding. We can usually help people in those situations [of having a nonperforming loan],” he said. “We have more flexibility than banks because we bought the loan at a discount, and we can sometimes share that discount with the borrower or help them in moving on.” “Our main goal is to keep people in their homes, or if it’s vacant, we look at ways to get it back into the commu- nity and get it back on the tax rolls,” Van Horn said. Van Horn can call on many examples of people his company has been able to help. One borrower hadn’t been paying on his second mortgage. As it turned out, he had been injured on the job and had fallen behind on bills. He had returned to work but needed to keep his payments closer to $500 than the nearly $700 his current terms required. PPR was able to modify the loan terms, allowing the borrower to get back on track and stay in his

People have faith in us becausewe treat their money like it’s our own money.”

DAVEVANHORN

to the idea of using credit cards to finance his purchas - es and renovations. At the time, there weren’t prohibitive cash advance fees, so he would write himself a check from one credit card, deposit it, and buy a house in cash. Using another credit card, he’d fix up the house. Once he found a tenant, he could refinance to pay off the credit card debt. The tenant would pay back the refinance loan, and Van Horn often had money left over to continue the process. Through a local networking group, Van Horn learned about private money lending and was introduced to a hard money lender. As the credit card fees increased and banks turned him down for holding too many mortgages, private money lending allowed him to continue to grow his investments. However, as he racked up rentals, Van Horn realized how busy he had become with tedious tasks, like inspec- tions and eviction court appearances. Once again, his real estate investor networking group introduced him to a new concept: private notes. BECOMINGACAPITALALLOCATOR When PPR got started, it was just Van Horn, Paulus and Sweeney. Sweeney had experience as an investor-friend- ly lender, and Van Horn and Paulus were skilled at raising capital. Dealing in note funds, they were able to achieve cashflow without the hassle of directly dealing with tenants. Over time, the operation grew. Today, PPR has four streams of business that make up its funds: • Nonperforming notes: PPR’s original focus, which remains the majority of their business, is dealing in residential loans that have gone delinquent.

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Most of my life, I was a blue-collar guy.”

DAVEVANHORN

POWER OF 100 “Shoot for the moon. Even if you miss,

you’ll land among the stars.” – Les Brown Dave Van Horn has set many lofty goals in his career, and he has an affinity for the number 100. As a real estate investor and property manager, his aim was to own 100 rentals. Later, as he transitioned to note investing, his goal was 100 notes. Now, as he and PPR have entered multifamily investing, he says his current dream is 100 multifamily properties.

also deals with investors directly and makes himself available for meetings with them. Just knowing they can reach a person—including the CEO—humanizes the experience and makes investors more comfortable, Van Horn said. “People have faith in us because we treat their money like it’s our own money,” he said. “It makes them more comfortable and confident with us.” Van Horn’s philosophy is to treat everyone the same, regardless of status at work or the size of investments. “You never know who you’re going to meet or where,” he said. Putting that into practice has served him well in all aspects of business. A man who previously answered the phones at one of PPR’s partner companies later started his own business, which he grew into a multibillion-dollar venture. He was offered a buyout from his company and now consults for PPR. Similarly, an investor who started out putting $25,000 into funds at PPR—the minimum— has become a multimillionaire who now invests more

home, while recouping much of the company’s investment through a lump sum arrears payment. PPR’s new affordable housing arm plays into the same aim of community stabilization. Affordable housing is a strong need in markets nationwide, but it’s often not profitable—and therefore most businesses won’t take it on. However, with PPR’s expertise in both multifamily and raising capital, Van Horn sees an opportunity to make a difference by working with its nonprofit partner to fill that gap for families across the country. THE HUMAN ELEMENT As Van Horn discovered through his networking groups, relationships are one of the most important assets a person can have in the real estate industry. He has built that into PPR’s DNA. Every investor is assigned to a direct point of contact so they never have to go through a chatbot or phone tree to get information. He

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Most of our investors will become high net worth at some point, but we don’t knowwhich ones.”

“In any asset class or category, we don’t want to be too top-heavy,” Van Horn said. “That might lower our returns a bit, but we’re protected more.” Van Horn’s experience in all aspects of real estate investing comes into play by mitigating risk for the busi- ness and its investors. For example, his strong background as a contractor and property manager gives him insight into the risks facing any new construction projects PPR may invest in. “I can tell a lot from a site visit,” he said. For those starting out in note or real estate investing, Van Horn offers the following advice—much of it earned through experience: • Understand the scope of risk for each category of investment. For example, performing notes are less risky than nonperforming; first mortgages are very different from second mortgages in due diligence and how they’re sold. “You’ve got to know what you’re doing because there are reasons for everything,” he said. “Start out in a less risky category until you know what you’re doing.” • In the same vein, he emphasized knowing your note seller and making sure it’s someone you want to do business with. Early on, Van Horn said, his team was burned by a seller “who would rip you off.” • Though note investing is “somewhat of a learn-by-do- ing” process, Van Horn said there are a few ways to gain understanding without using your own money. He rec - ommended shadowing a deal that a colleague or men- tor is doing, or overseeing someone’s deal and adding value to them without having to put up your own capital. • When investing in rentals, it helps to know the laws in each state you may be investing in, particularly con- cerning eviction proceedings. In some places, it can take months; in others, it can last years. Investors might decide some properties aren’t worth the risk based on the applicable laws. As he alluded to earlier, inexperience can be an investor’s worst enemy. New note buyers often have few assets, so their exposure to each one is significant. His main takeaway: “Usually, the biggest risk in the note business is you,” Van Horn said. Knowing that, his goal at PPR is to educate investors and mitigate risks through PPR’s funds, allowing inves- tors to overcome that initial hurdle and create financial freedom. Just as he has discovered ways that his money can work for him, Van Horn aims to create pathways for others to do the same, which ultimately affords them the most valuable resource: time. •

DAVEVANHORN

than $1 million with PPR. He’s also become a great friend of Van Horn’s. “Most of my life, I was a blue-collar guy,” he said. “Most of our investors will become high net worth at some point, but we don’t know which ones.” Van Horn has developed many relationships through the education he provides about real estate invest- ing and wealth management. He began sharing his knowledge on various platforms, and after about seven months of laying the groundwork, he was asked to appear on podcasts and had articles featured on real estate investing blogs. His topics struck a chord, result - ing in a boost of recognition. He’s been in restaurants where strangers ask, “Are you Dave? It’s not like Hollywood, but in your niche, you are (a celebrity).” Van Horn has parlayed that interest and recognition into capital building for PPR. When he had maxed out his own contacts, he began looking at other networks where he could raise funds, and he has been able to leverage his name recognition to add investors. “It became less of who I knew and more of who knew me,” he said. ADVICE FOR SMART INVESTORS PPR started out as a “one-legged stool” of note invest- ing, Van Horn said. But over time the company has worked to diversify its business. The strategy protects the company from being affected by big changes in any one area. It also offers its investors a naturally diversified option: PPR funds now include notes, commercial loans, short-term business loans, multifamily investments and other investments. These investments are in markets nationwide, which also naturally mitigates risk by invest- ing across geographic regions.

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Filmed on location, Titan Talk is a one-on-one interview between you and Eddie Wilson, CEO of Think Realty and the American Association of Private Lenders. This personal endorsement carries extensive publicity, marketing opportunities, and bragging rights, naming you as the exclusive Titan of your real estate sector for a year.

What’s Included

CONTACT SALES@THINKREALTY.COM FOR MORE INFO!

• A One-on-one, 20-minute video interview by Eddie Wilson filmed on location, with B-roll footage of your office shot for use in the video. • A featured article in Think Realty Magazine and Private Lender magazine, with the article publicized as a preview line item on the magazine cover and highlighted in the corresponding newsletter. • A Titan Talk web page dedicated to you as the exclusive Titan of your real estate sector for 12 months. The page will headline your video interview, profile, featured article, and other articles by you. • Your video interview posted on Eddie Wilson’s personal social media pages and website. • Your video interview posted on the Think Realty Podcast page.

• Six social media posts on Think Realty and AAPL’s Facebook and LinkedIn pages. • Presidents’ Circle membership for one year.

Brought to you by:

22 | think realty magazine :: october 2021

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INVESTOR RESOURCES

WHOLESALING

The Ins and Outs of Real EstateWholesaling WHAT IT TAKES TO BE SUCCESSFUL IN THIS ENTRY TO REAL ESTATE INVESTING

by Grace Souiedan, Temple View Capital

f you’re familiar with the word “wholesale,” then you’re half-

Jenny sold her home quickly and pocketed $55,000, the investor bought a profitable fix and flip prop - erty for $60,000, and the wholesaler pocketed the $5,000 difference as the wholesale fee. In a nutshell, this is what real estate wholesaling looks like in action. In short, think of the wholesaler as the middleman between seller and investor. Real estate wholesaling is a very short-term investing strate- gy, often with distressed or on-the- verge-of-foreclosure homes that owners are looking to sell quickly and effortlessly. What properties are ideal for real estate wholesalers? How do I find them? Since part of the appeal of real estate wholesaling is the low capital

requirements, wholesalers often look to properties that are already distressed, giving homeowners an incentive to sell their homes below market value. To be a successful wholesaler, you need to network, network, and network some more. The more industry contacts you have, the more meetings and events you attend, the more likely you are to not only discover properties, but have access to buyers, too. Organized meetings between local real estate professionals and inves- tors are opportune moments for new wholesalers looking to make connec- tions with agents, contractors, and appraisers. These meetings often result in e-blasts or newsletters going out to mailing lists, highlight- ing available properties for sale.

way to understanding what real estate wholesaling is. A real estate wholesaler is someone who looks to buy a home directly from the own- er then turns around and sells it to an investor for a slightly higher cost, pocketing the difference as the wholesale fee. For example, let’s say Jenny is approached by a wholesaler who offers to buy her home for $55,000. She is looking to sell the proper- ty quickly and seamlessly, so she agrees. The wholesaler and Jenny sign a contract agreeing to the price and terms. The wholesaler then turns to a found investor who flips houses. The investor agrees that it’s a profitable property and proceeds to buy it for $60,000.

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Common methods for connecting with sellers are putting up bandit signs, mailing flyers, and working with real estate agents who spe- cialize in investment properties. Searching through probate court documents is also an effective way to scope out potential properties. By accessing the documents, you can use more targeted marketing efforts to send flyers or letters to homeowners proposing to buy their property. It’s also important that as a whole- saler, you have a title company, con- tractor, and appraiser on your team to help finalize the sale and make it a more seamless process. Getting an appraisal on the property ensures that you are paying the right price for it and will have room to resell and make a profit. The title compa - ny runs a search on the property to confirm that it’s a legitimate piece of real estate, and the contractor can look through the property and draw up an estimate of repairs—a critical detail for when the time comes to find a buyer. Just as important—if not more so—is a wholesaler’s math capa - bilities, and the longer you’ve been a wholesaler with a successful

track record, the easier the math becomes. Knowing what to offer a seller really begins with the ending, meaning, you’ll have to work back- wards to come up with an appropri- ate number that benefits the seller, you as the wholesaler, and the inves- tor who will flip the property. Key numbers that will help you decide the best maximum allowable offer (MAO)—or the price you end up paying for the property—include: • The flipper’s profit (have you found a flipper, and if so, how much do they want to make off the property?) • After repair value, or ARV (the final price the house flipper is going to sell the property for) • Repair costs (how much will it cost to fix up the property?) • Fixed costs (how much is the deal going to cost the flipper?) • The wholesale profit (how much do you, the wholesaler, want to make?) As is the case with most things, experience and success make it easier to put a price to these points, resulting in a quicker and easier pro-

cess with each successful property purchase you make. What are the risks associated with becoming a real estate wholesaler? While the practice is legal, there has been controversy surrounding wholesaling on the basis that it’s essentially brokering real estate without the license to do so. Howev - er, laws around brokering vary wide- ly from state to state, leaving room for interpretation. As the middleman, wholesalers aren’t looking to actually settle on the property, they merely assign the contract to another investor. Ulti- mately, a newcomer to the world of real estate might find wholesaling an appealing route since it requires minimal capital to make a profit. • Grace Souiedan is Chief Lending Officer at Temple View Capital, a national private portfolio lender that offers flexible financing for investors in residential real estate. Founded by entrepreneurs with more than 20 years of residential mortgage and real estate investment experience, Temple View has been at the forefront of innovative product development since its inception. Utilizing a common-sense underwriting approach, deep commitment to customer service and a well-capitalized balance sheet, Temple View enables real estate investors, correspondent lenders and brokers nationwide to optimize financing efficiency on real estate investment projects and rental properties.

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FUNDAMENTALS

INVESTING PRINCIPLES

An Alternative Approach to Diversification

s diversification really good advice? We’ve heard it preached religiously from financial advisors and

institutions. However, Warren Buffett has said, “Diversi - fication is a protection against ignorance. [It] makes very little sense for those who know what they’re doing.” Take that traditional financial advice! Let’s explore this advice a bit more. Is he serious? Well, when Warren Buffett was only 20 years old, he followed his own advice, staking over half of his net worth at the time in a young company called “GEICO.” In the 1970s, Buffett significantly increased his stake even though the company was experiencing heavy losses. Clearly, this approach has paid off for him. He has done this again in other companies like Coca-Cola, Apple, and Kraft-Heinz. So, should we take this same approach in real estate investing? What can we learn from Buffett and this alter- native approach? Here are a couple investing principles that investors like Warren Buffett and others have inspired me to live by:

CAN YOU DIVERSIFY AND ALSO GO ALL-IN?

by Ellis Hammond

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Ellis Hammond manages a private network of investors seeking passive investment opportunities in multifamily syndications across the United States. Ellis is passionate about the intersection of faith and capital and hosts a weekly podcast show, Kingdom REI, in order to educate and inspire other investors and entrepreneurs to see capital as a means for greater Kingdom influence. To learn how you can invest alongside Ellis and this community, visit EllisHammond.com. ANYTHING BUT AVERAGE Average thinking leads to average action, which leads to average results. If you are constantly influenced by main - stream media and traditional wealth management advice, then you can expect “traditional or average results.” Just look at the majority of the middle class. CONVICTION IS KEY Warren Buffett clearly showed his conviction in Geico when he doubled down on his investment when every- one else was jumping ship. How did he keep a level head when everyone else was screaming “JUMP!”? He had conviction! He built that conviction because he spent TIME getting to know the CEO, understanding the ins and outs of the company, and having a firm grasp on the scope of the financial industry and market share Geico could eventually overtake. GO “ALL-IN” AND THEN DIVERSIFY Clearly diversification has its place in managing wealth. However, if one is serious about creating large amounts of wealth, you have to display the guts to go all-in on an opportunity. Let me be clear, I don’t think this approach is for everyone. Clearly, Buffett didn’t think so either. He’s also famous for the 90/10 approach where he recommends investing 90 percent into index funds. The S&P 500, for example, has over 500 companies. Did he change his mind? I don’t think so. He realizes that most investors won’t do the proper research to form the conviction needed to double down when times get rough and have the guts to go all-in when everyone else seems to think otherwise. So back to the question we began with, “is diversifica - tion a good thing?” My opinion: Diversification is a great idea for most investors who want to reduce risk in their portfolio while building a steady and growing nest egg to live from in retirement. On the contrary, investors like Warren Buffett, Elon Musk, and the many new “bitcoin millionaires” I person- ally know show what’s possible for those who think out- side the box, display conviction, and go all-in. •

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FUNDAMENTALS

PROPERTY MANAGEMENT

Ten Best Practices for Relationship Management WHY PUTTING PEOPLE FIRST IS BEST FOR YOUR PROPERTIES

by Bob Preston

think we would all agree that Property Management is a

possible experience a customer has in their journey with your company. It involves maximizing the possi- bilities with these stakeholders to develop trust, inspire and influence, build bonds, create understanding, gain agreement, and resolve conflict. Here are ten strategies that I con - sider to be best practices for Rela- tionship Management in a Property Management company: NO. 1 Online Presence Your online presence will be the introduction for most of your busi- ness relationships. In fact, according to Adaptive Marketing, 97 percent

of consumers use the internet to find their desired service. They may have found your website from Google search, spotted a social media post, or landed on your Zillow listing. Either way, they are already deter - mining if your company is worthy of their business. Having clear messaging, great images, and well written descriptions is what makes them want to engage with you. Make it easy to interact by having live chat, free downloads, a request quote form, and even a link to set an appointment. Your online presence is your chance at a good first impres - sion, so make it count!

“relationship business.” Think about all the people your team interfaces with daily in making your business successful: property owners, ten- ants, vendors, prospective tenants, HOAs, and more. Managing relation - ships is integral in every aspect of property management businesses. For the purposes of this article, I will refer to these different stakeholder groups as “customers.” Relationship management is not just about closing a sale or providing good customer support, but rather laying the groundwork for the best

28 | think realty magazine :: october 2021

NO. 4 Building Trust Building trust is a critical factor in fostering quality relationships. Follow through after that first con - nection lets people know that you do what you say. People prefer to do business with those they can trust to act in their best interests. If you have set up a meeting or a next call, it is critical to show up on time and be prepared. If that trust breaks down in the early stages, it can be difficult to salvage the relationship. The treasured tradition of a thank- you note goes a long way to further trust and confidence, whether it is a hand-written note, simple thank you email outlining next steps, or a creative video clip. This is the stage where you will “win” the business. NO. 5 Regular Communication When North County Property Group was a new and fledgling company, one of our property owners called me and started the conversation with “we have not heard from you in a while.” I knew right away it would be a difficult conversation! An ongoing and open line of communication is critical to relationship management because it fuels customer retention. Particularly during times of crisis, like the COVID-19 pandemic or Cali- fornia wildfires, your customers want to hear from you! Most of us have technology at our fingertips to email and text owners and tenants directly from our property management soft- ware. We email monthly “updates” to owners and tenants, covering what is going on in the company, introduc- ing new staff members, explaining market shifts, etc. This is a great way to keep communication open and typ- ically results in an open rate between 50-75 percent. This is also a good way to demonstrate your knowledge of Property Management without being pretentious and to let them know you have got their back.

not respond it will be impossible to form a relationship. Nothing makes a prospective customer happier and more satisfied than a fast response. According to SuperOffice (October 15, 2020) 88 percent of customers expect a response from your business within 60 minutes. Further telling is that 30-50 percent of new business goes to the company that responds first. Email autoresponders and drip cam - paigns may help keep the lead warm in the meantime, but there is no replacement for the personal voice connection. On the other hand, being hard to contact creates doubt and will bring the reliability of a relationship with your company into question. Responsiveness is key, but speed alone is not good enough. You need to be quick while providing a QUAL - ITY response. The person or team responding to leads should be con- sidered the “Director of First Impres- sions.” Being purposeful, succinct, and equipped with solid baseline knowledge will allow your response team to move things to the next stage in the customer relationship.

NO. 2 CRMSoftware If you do not yet have a software for Customer Relationship Man- agement (CRM), you are already behind in your best practices. In the early days of starting North County Property Group, I kept track of all our contacts informally, mostly in a virtual rolodex I had in my head. Then one day, the owner of one of our listings asked me how many people had inquired about their rent- al property. I am embarrassed to say that I did not know the answer. That day, I subscribed to cloud-based CRM software for tracking all client and tenant leads and the specifics of their inquiry. What an immediate impact that made on our business. It is now hard to imagine a world without it. Everything related to rela - tionship management can be found in one place – names, addresses, numbers, data, notes, and metrics. NO. 3 Responsiveness Maybe you have made it easy for people to find your business and you have captured the lead, but if you do

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date on new approaches, solutions, and technologies to solve age-old Property Management problems. This is what I call “staying ahead of the curve.” What is better for your relationship management, being considered a creative and innovative company in touch with new trends in the industry, or being considered old school and stuck in your ways? Change can be scary and at times paralyzing. However, customer needs are constantly changing, and our Property Management businesses must also change to reflect these demands. If you recognize the need for change, get ahead of the curve, and embrace the steps to make it happen; it will result in positive impact to your relationship management. Relationship management is not always about your company’s bottom line. Do not focus so much on financial performance that you forget other values in forming good relationships. You never know when a person you were good to a couple of years ago refers a friend who then becomes a customer. Above all else, create a company culture to be genuine, treat others with respect, and welcome feedback. By doing so you will instill a great pro- gram for relationship management and maybe even get new customers in the process! • Bob Preston is the Broker/Owner of North County Property Group in Del Mar, California, and a member of the National Association of Residential Property Managers® (NARPM). Members of NARPM® receive information like this article every month through its news magazine, Residential Resource. To join or learn more, visit NARPM.org. Bob can be reached through his company website, www.ncpropertygroup.com or by email bob@ ncpropertygroup.com.

NO. 6 Reviews In your ongoing communications with your customers, let them know they can come to you with their prob- lems. It might just save you a nasty review. When you solve problems, thereby meeting or exceeding their expectations, let them know it would make your day if they would leave an online review! While you have no control over what they say about your business, it helps stoke the relationship by inviting them to voice their opinion. If you receive a review, good or bad, ALWAYS respond and thank them for their feedback. I respond to our reviews personally as the owner of the business. As a result, we closed many new cus- tomers because of the way we have responded to reviews. Your replies to reviews matter because it gives you an opportunity to show your pro- fessionalism, appreciation for their comments, and in some cases hum- ble appreciation for frustration they may have experienced. NO. 7 CustomerAppreciation At certain times of the year, make sure you dedicate attention and focus to show appreciation to your existing customers. Your custom - ers are more than a profit center and number on a spreadsheet. They need to know that! This is a proac- tive approach to let customers know that they make a difference in your company and that you are grateful for their business. Any small ges- ture can go a long way to showing you appreciate your relationship: a hand-written birthday or holiday card, a goodie bag or gift basket delivered to their doorstep, or a copy of your favorite book to say thank you! Show them you care, and your relationship will be strengthened!

NO. 8 Give Back

Showing your customers that you are a socially responsible company and give back to your community can go a long way toward indirectly improving customer relationships. Community service, charitable giving, and acts of generosity not only improve your business rep- utation but strengthen customer loyalty. Prior to the November 2020 election, North County Property Group joined a movement of 1,500+ companies known as Time to Vote. It was a pledge to our staff to make election day “meeting-free” and provided up to four hours of paid time off to get out and vote. Word got out and we received hundreds of positive comments online, by phone, and email from our customers applauding this one simple gesture of social responsibility. NO. 9 Dispute Resolution Property management can at times be a conflict-laden business. It is never comfortable relaying bad news to a customer, but it is your mor- al obligation to do so when such a situation presents itself. In some cas- es, bad news can lead to criticism, blame, or even a dispute from your customer. Such situations can pro- voke anxiety but can also be amazing opportunities to do the right thing. Some of our most loyal customers are those with whom we had a previ- ous conflict. Always remember that working with your customer through a challenge toward a mutually acceptable solution can be a power- ful relationship-building experience. NO. 10 StayingAhead of the Curve As members of NARPM, one of our greatest benefits is staying up to

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