RIGHT FOR "BUDGET RENTALS" 15 MARKETS
3 INDICATORS OF PROLONGED HOUSING HEAT
Tuned In to the Market
HGTV'S KEN & ANITA CORSINI ON REAL ESTATE, REINVENTION, AND BEING ALL IN.
10 REAL ESTATE CALCULATIONS EVERY INVESTOR SHOULD KNOW STRATEGY
MULTIFAMILY EDITION: A GREAT DEAL COMES THROUGH IN THE DETAILS RENOVATION ROCKSTAR
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2 | think realty magazine :: september 2018
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TABLE OF CONTENTS
INSIDE THIS ISSUE
THINK REALTY 8 How Much Longer Can Atlanta's Hot Housing Market Last? 3 indicators for a prolonged housing uptrend in Georgia's capital city. by Eddie Wilson
10 Out of the Ordinary
Think Realty supplier Barnett offers more than most realize. by Brian Smith
DESIGN POINT 12 Renovation Rockstar (Multifamily Edition): The Park at LeBlanc A great deal comes through in the details. Featured Investors: Mike Becker & Carl Dean, SPI Advisory LLC (Dallas office) 16 Vinyl Flooring Decisions Made in the Field How real investors decide between natural and manufactured materials. by Carole VanSickle Ellis 36 How the Latest Kitchen Cabinetry Trend Could Affect Your Design Decisions STRATEGY 34 10 Real Estate Calculations Every Investor Should Know Understand the math behind every deal. by Andrew Syrios 42 8 Important Factors in a Successful Wholesaling Business Infrastructure is everything, even in wholesaling. by Brad Chandler MARKETING 54 3 Tips for Maximizing Boosted Facebook Campaign Results Social media strategies to optimize your impact on any budget. by Justin Schneider It may be time to reframe your concept of kitchen cabinetry. by Mary Laipple
TUNED INTO THEMARKET
INSTAGRAMTVAND REALESTATEMARKETING Get in on the ground floor of the "next big thing" in social media.
Life, real estate, and saying goodbye.
4 | think realty magazine :: september 2018
HOUSING NEWS REPORT 44 An Attorney's Guide to Real Estate Investing
"My Take" article from ATTOM Data Solutions. by Kevin Kim
48 The Home Affordability Treadmill [Infographic] Prospective buyers losing ground even as home price appreciation slows. by ATTOM Data Solutions MARKET BREAKDOWN 56 Development Pipeline Creates Near-Term Risks for Multifamily Key factors for potential market volatility. by Paul Fiorilla
62 Market Trend Spotlight: 3 Indicators of Effective Community Revitalization Spotting economic recovery before the crowd arrives. by Carole VanSickle Ellis 90 Looking Back at Harvey to See Forward in Houston This market is more than just weather. by Brian Spitz THE BIG PICTURE 86 The Worst Mistake an Investor Can Make Fail in this, and investing failure is only a matter of time. by Samuel K. Freshman 92 Investor Spotlight: John Manes & Pinnacle Storage Properties Modern investment strategies optimize a tried-and-true investment. by Carole VanSickle Ellis
HGTV's KEN & ANITA CORSINI on real estate, reinvention and being all in.
by Carole VanSickle Ellis :: photos by Jerry King
NUTS & BOLTS
BY THE NUMBERS
SPONSORED CONTENT 67 Investor Review: Residential Edition Top investors and service providers share their insights & latest investing strategies.
15MARKETSSTILLRIGHT FOR"BUDGETRENTALS" Affordable rental markets with premium economies.
A 30-year industry veteran shares the secrets behind his marketing.
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PUBLISHER R. Michael Wrenn
PRESIDENT, AFFINITY WORLDWIDE Eddie Wilson | EWilson@AffinityWorldwide.com
EDITOR-IN-CHIEF Carole VanSickle Ellis CEllis@ThinkRealty.com
VICE PRESIDENT OF MEDIA SALES Rodney Halford RHalford@ThinkRealty.com 816-398-4111 x86122 NATIONAL SALES MANAGER Teresa Stanton TStanton@ThinkRealty.com 816-398-4111 x86224 CONTENT DIRECTOR Abby Tillman ATillman@ThinkRealty.com DESIGN CONSULTANTS Rivet | www.WeAreRivet.com
DESIGNER Emily Bowers
CONTRIBUTING WRITERS John Alexander, Brad Chandler, Jennifer Jo Cobb, Christy Edgar, Charlie Einsmann, Carole VanSickle Ellis, Paul Fiorilla, Samuel K. Freshman, Bill Griesmer, Sam Jacknin, Kevin Kim, Mary Laipple, Justin Schneider, Brian Smith, Brian Spitz,
We’ve Added Even More Suppliers & Discounts! As a Think Realty Member, we provide you with the best possible discounts and perks from our industry suppliers so you can focus on what matters most — investing in your dreams and building a sustainable future. We have added the following suppliers to our lineup: Sherwin Williams Floorcovering: While you are boots on the ground, be sure to save money where you walk. Think Realty members receive commercial wholesale pricing on flooring. Realeflow: Save yourself time while you manage a successful real estate investing business with a FREE 30-day trial. Take advantage of access to 1,000 leads a day and plenty of other benefits! Perks for Pros: Easily control and track the spending of your team with our expense-management solution that allows you to remain funded, mobile, and saving more money.
Andrew Syrios, Kristin Weekley, Eddie Wilson, and Ingo Winzer.
COVER PHOTOGRAPHY Jerry King
FOR ARTICLE REPRINTS :: Contact Jeremy Ellis at Reprint Pros, 949-702-5390. www.reprintpros.com. SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $28.95 in the U.S. Order online at www.ThinkRealty.com or call 816-398-4085. Provide your full name, address and telephone number. DISCLAIMER :: Think Realty Magazine , its owners, contractors, distributors and their respective representatives do not provide tax, accounting, investment or legal advice and make no guarantee as to the effectiveness or success of any investment or tax strategies discussed herein. Please consult your own independent adviser as to any questions you have or decision you are contemplating. ABOUT THIS MAGAZINE :: ThinkRealtyMagazine isapublicationof AffinityRealEstateMediaLLC.Reproductionoruseofanyeditorial orgraphic,withoutpermission, isprohibited.Wearenotresponsible for thecontentofanypaidadvertisements.Forreprintrights; toob- tainadetailedstatementofourprivacypolicy;and forallsingle-copy requests,addresschangesandothersubscription inquiries:
Login at ThinkRealty.com and head on over to the “Discounts” tab for a full list of suppliers and to activate your savings today!
Think Realty 7509 Tiffany Springs Parkway, Suite 200 Kansas City, Missouri 64153 816-398-4130 ThinkRealty.com Copyright ©2018 Think Realty
6 | think realty magazine :: september 2018
FROM THE EDI TOR- IN-CHI EF
It’s All About Location, and It’s an Honor to Be Here
’m not the first, or the fifth, or the 500th (most likely) to
very worth it. We received literally hundreds of nominations across all sectors of real estate. Those submissions were touching and highly illuminating. For example, I now know who will answer the phone and help me with a deal even if he is on his honeymoon. The examples of real estate investor gener- osity with capital, network connections, time, and knowledge would be astounding to someone outside of our industry and will be humbling to those of us already in it and aware. In this issue, as in every issue, we talk strate- gy, analytics, economics, and investment tactics. We’re so honored to have Ken and Anita Corsini share their 15-plus years of experience with us in this issue, and our expert contributors have been busy explaining practicalities like picking flooring and how to know if a tenant is really going to pay their rent. But before you read anything else, please take a look at page 26 and give our 2018 Think Realty Honors finalists and yourself a great big hand. In an industry that’s all about location, we’re honored to stand beside you on your real estate journey. •
tell you in real estate, it’s all about location, but I do want to be the first to say to you as you read this issue of our magazine that it is an honor and privilege to be with you in this location, in this issue, today.
As the editor-in-chief of Think Realty Maga- zine , one of the best parts of my job is my daily interaction with dozens of real estate investors and industry professionals eager and willing to share information, perspective, strategy, and in- sight. There is no industry quite like real estate. No other population of professionals so innova- tive, so creative, so generous, so dedicated, and, yes: so very stubborn. It is an honor to be with you, here, in this industry where so many unique- ly brilliant minds work, develop, and thrive. It’s a particular honor in this issue of the magazine because our September issue features our finalists for Think Realty’s annual industry awards: The Think Realty Honors. 2018’s awards process was, in a word, arduous. However, just like working your way through that purchase- and-sale agreement for the first time, it was so
CAROLE J. VANSICKLE ELLIS, EDITOR-IN-CHIEF
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HowMuchLongerCanAtlanta'sHot HousingMarket Last?
3 INDICATORS FOR A PROLONGED HOUSING UPTREND IN GEORGIA’S CAPITAL CITY
by Eddie Wilson
T his past July, Atlanta, Georgia’s housing market posted a historic high when the metro area’s median home price exceeded a quarter of a million dollars for the first time in history. Where does this latest real estate benchmark leave Atlanta-area investors? To answer this question, we must examine not just the latest market statistics, but some broader geographic and economic indicators:
INDICATOR # 3 COST OF LIVING CONTINUES TO BEAT OTHER AREAS OF THE COUNTRY: Atlanta continues to be one of the most affordable major metro areas in the country, thanks to the many suburban areas just outside the city itself that offer easy access and a relatively low cost of living. Particularly for companies relocating from elsewhere, Atlanta housing prices and cost of living are extremely reasonable and attractive.
INDICATOR # 1 EMPLOYMENT TRENDS & TYPES:
INDICATOR # 2 HOUSEHOLD AND HOUSING CREATION:
The Atlanta-area economy is incredibly diverse with healthy subpopulations working in professional and business services, education and health services, government employment, and trade, transportation and utilities. Job creation is steady and local universities attract and cultivate STEM talent.
The Atlanta housing market still has the physical space for more inventory. Thanks to relatively low costs for labor and construction in the southeast, suburban markets are playing a key role in single- and multi-family development, with commuter-friendly areas experiencing rent growth and new construction. There are many opportunities for investors to buy low, add value, and either sell or rent high.
IS THE HEAT STILL ON, AND FOR HOW LONG? My Conclusion: The market is still hot and shows no signs of slowing down. Areas that were suspect a few years ago are still experiencing huge growth, such as College Park or East Point. The northern suburbs are predicting double-digit growth over the next 2-3 years and remain the most affordable in the country. With population growth, housing expansion, and job growth, I think the Atlanta market is a “must consider” for national investors and a great perk for Atlanta natives that live there and can invest locally.
Eddie Wilson is CEO of Affinity Worldwide, Think Realty’s parent company, and a Think Realty coach. Learn more from Eddie at ThinkRealty.com/Eddie.
8 | think realty magazine :: september 2018
NEWS & EVENTS
Good Success Community Go-Giver Event Raises Awareness in Gary, Indiana
Think Realty is a part of the Affinity Worldwide family of companies. Here, find exciting news about Think Realty and its sister companies as well as other noteworthy industry news.
Real estate education group Good Success hosted its inaugural Community Go-Giver event in Gary, Indiana, July 25-27, 2018. Good Success president Tom Olson said the event was an enlightening experience for everyone involved, and he hopes that the theme of the event, #flippinggary, continues to gain traction. “This community has all the pieces in place for revitalization and recovery, including great proximity to Chicago, Illinois, and access to all four transport and shipping methods: waterways, trains, interstate highways, and air,” said Olson. “It’s our job at Good Success (and as members of the real estate investing community) to ask the right questions about our markets and our investments so that we are able to connect, profitably and productively, with solutions for recovery and growth.”
National Real Estate Insurance Group has Benchmark Birthday The National Real Estate Insurance Group (NREIG) turned 18 this year, a milestone in an industry that has few tailor-made property insurance options for real estate investors. “Our clients range from individual property investors to large-scale investors, turnkey operators, lenders, property managers, landlords, and rehabbers, and we’ve grown to operate in all 50 states,” observed NREIG senior vice president Shawn Woedl, who is also a Think Realty Coach. Learn more about what sets NREIG apart at NREIG.com and access Shawn’s training videos at ThinkRealty.com/Shawn.
Think Realty Announces Honors Finalists
Think Realty revealed its 20 finalists for the company’s 2018 Think Realty Honors awards this month. All finalists received invitations to the Think Realty National Conference & Expo in Atlanta, Georgia, on September 22-23 at the Westin Buckhead. Winners are recognized at an awards banquet on September 21.
Learn more about the Community Go-Giver event at GoodSuccess.com or learn more about investing in revitalization on p. 62.
Learn more about Think Realty’s 2018 honors finalists on p. 26.
Don't miss our upcoming events!
September 22-23, 2018 | The Westin Buckhead Atlanta THINK PURPOSE : Investing with Impact ATLANTA
Think Realty Conference & Expo - Dallas February 16-17, 2019
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THINKREALTY MEMBER BENEFITS
Out of the Ordinary THINK REALTY SUPPLIER BARNETT OFFERS MORE THAN MOST REALIZE.
by Brian Smith
hen you hear the words “fix-and- flip” or, as I usually hear it at work, “flip” (sometimes with an unprintable adjective thrown in there as well), you probably immediately think of beginnings and endings. If you’re like most people, you think about the beautiful finished product of a cash-flowing rental or a re- tail-ready property ready to list. Then, you likely imagine the “before” photos, which are not as pretty but are still full of hidden potential. If you are a real estate investor, though, it’s the space between the begin- ning and the end that really counts and, in most cases, will make or break your deal. WHAT GOES IN “THE MIDDLE?” The “middle” of a real estate deal, at least when it is a fixer-upper or a flip, is the most important part of the equa- tion. Here are just a few of the things we find fall in the middle – and sometimes through the cracks – when we work with real estate investors: THE BIG STUFF The “big stuff ” includes HVAC com- ponents, doors, flooring, and appliances. W
While very few investors overlook this “big stuff,” a lot of them do miss the opportunity to improve their margins by ordering it through a connected supplier that orders in bulk and, as a result, can offer lower prices even on smaller orders. WINDOW DRESSING According to Remodeling Magazine, replacing the windows themselves can yield returns of 80 percent or more. If you don’t want to do that, howev- er, just installing clean, fresh window treatments, like mini-blinds, can help a home feel move-in ready. Many investors do not realize these, too, can be purchased at a discount, delivered to a vacant property for a fast installation, and even ordered via mobile app with some materials providers. THE INVISIBLE STUFF We do not refer to this stuff as “the small stuff ” because some of it is not necessarily small. Instead, it is invisible and therefore sometimes overlooked or forgotten. This category includes big things, like pipes and plumbing, and truly small things, like fixtures and hardware.
PUTALLYOUR “STUFF” IN ONE PLACE
Most investors do not realize that some materials suppliers actually can coordinate delivery of all of these categories of “stuff” and, additionally, may even offer coordi- nated ordering and inventory if your busi- ness is large enough. Think Realty supplier Barnett, a Home Depot company, not only offers all of these options to investors on all scales, but also provides access to multiple discount opportunities through Think Realty’s Supplier program. •
Brian Smith is Barnett's national sales manager, and Barnett is a The Home Depot company.
Think Realty members save an average of 15-25% off retail pricing on many of their flipping supplies. Learn how at thinkrealty.com/supplier-discounts.
10 | think realty magazine :: september 2018
thinkrealty . com | 11
Exterior after Photos courtesy of Brandroids Media
The Park at LeBlanc A GREAT DEAL COMES THROUGH IN THE DETAILS.
by Carole VanSickle Ellis | Featured investors: Mike Becker & Carl Dean, SPI Advisory LLC (Dallas office)
aking over a 168-unit apartment complex is no simple task, even when you have more than a dozen deals under your belt. When Michael Becker, Principal at SPI Advisory LLC in Dallas, Texas, first encountered The Villas at LeBlanc Park (part of the renovation included a new name), he took a close look at the details before taking on the project. “Fortunately, the deal was off-market from a broker who already knew us as a solid buyer,” said Carl Dean, an as- set manager for SPI who was involved in both the physical renovation of the property and the operations “upgrade.” He added, “We were able to identify a number of issues that would allow us to add value to the property by making some changes, including management issues, deferred maintenance in the common areas, and outdated units leased under market rates. We saw the property had close proximity to a high-end shopping center with lots of employment and a number of close comparable properties that had recently been renovated and brought up to market and believed we could compete with this property.” Once the property was purchased, he said, “We just had to execute.” Part of execution on this type of project involves something difficult: waiting. Dean reported the investors decided to up- grade about 40 percent of the units in the building in order to judge how effective the upgrades were and maintain leasing momentum during the renovation.
In-place rent at purchase: $0.92/square foot
In-place rent (estimated) at end of Y3 based on current performance: $1.14/square foot
Approximate rent increase: 24%
Approximate Net Operating Income (NOI) increase: 40%
Timeline for first subset of units: September 2017-April 2018 (common area items) April 2018-June 2018 (unit upgrades) Note: The investors used the winter months when most units were occupied to renovate the common areas, then shifted to units as they became available.
Renovation Budget: $756,000
Funding: Fannie Mae/Hunt
12 | think realty magazine :: september 2018
The exterior of the property was in relatively good condition, so the investors put on a new coat of paint and installed “cedar extended backyards” on the ground floor units.
New furniture, paint, and a resurfacing job made the new pool at the Park at LeBlanc sparkle.
Modern signage and a name change refreshed the property’s curb appeal.
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RENOVATION NOTES & NUMBERS
lender-required repairs $29,000
interior upgrades (60 units at $4,000/unit) $240,000
pool resurfacing and furniture $25,000
office remodel $70,000
cedar extended backyards $60,000
INVESTOR WISH LIST:
exterior paint $75,000
Although the pro- cess is going well so far, Dean admit- ted there are always things that stay on the wish list when an investment is underway. “In the future, I would consider adding a package locker system, a new perimeter fence stained to match the wood through- out the facility, and a Tahoe-col- ored pebble-tech liner for the pool to make it look similar to a lot of the newer, class-A pools in the area.”
new signage $25,000
dog park $10,000
landscaping foundation roofing deferred maintenance REMAINDER
14 | think realty magazine :: september 2018 august 2018
Completely upgraded kitchens with brushed nickel fixtures, new cabinet doors and hardware, and glazed countertops gave the upgraded units a modern feel. The ghost-wood grey vinyl plank flooring contributes to the stylish, modern look while retaining the advantage of being low-maintenance. Investor’s Note: Because the group opted to rehab about 40 percent of the units, they have several options for the investment after tracking performance of the upgraded section: “We can either refinance and raise more capital to do the remaining units or list the property with our strategy and some meat on the bone for the next owner,” Dean explained.
Dog park before
After reviewing the demographics and preferences of their target residents, the investors decided to replace the facility’s simple playscape with a dog park. “In today’s market, many people are dog owners, so adding a dog park has always helped us expand our tenant base,” said Dean. “In the case of The Park at LeBlanc, there is a large municipal park in the lot next door with all the bells and whistles a kid could wish for, so the decision to demo the old and outdated playground was a no-brainer.” •
Dog park after
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Vinyl Flooring Decisions Made in the Field HOW REAL INVESTORS DECIDE WHAT RESIDENTS AND BUYERS WILL WALK ON.
by Carole VanSickle Ellis
LUXURYVINYL PLANK “We install luxury vinyl plank in our brand-new homes and our renovated turnkey properties. The look is appealing to our residents and vinyl’s durability and low costs of maintenance and replacement appeal to our investors.” – James Wachob, Memphis Investment Properties
or investors, flooring decisions are largely practical and revolve around return on investment (ROI) at the point of resale and maintenance prevention during ownership of the property in question. As technology improves, what used to be a relatively simple question (carpet or hardwood?) has evolved into a much more complicated discussion thanks to the evolution of vinyl flooring. Here, we break down the basics of vinyl flooring and how it compares to that classic flooring, hardwood, with insights from some of the highest-volume and most successful real estate investors, rehabbers, contractors, and builders in the country. WHAT ISVINYL FLOORING? Vinyl flooring, or sheet vinyl, and luxury vinyl plank (LVP) are made from colored polyvinyl chloride (PVC) chips formed into solid sheets and installed onto smooth, leveled sub-floor using special adhesives or mortars or using a click-lock system. "For rentals, luxury vinyl tile (LVT) or luxury vinyl plank (LVP) is best by far for durability and ease of replacing only a specific damaged section – if it ever damages.” – Bryan Blankenship, Ohio Turnkey
PROS • Extremely durable • Moisture-resistant • Lots of design options • Easy to replace partial sections
CONS • Does not absorb sound • Health & safety risks associated with falls and slipping, which are the leading causes of workplace injuries Cost of Installation: Sheet Vinyl & Luxury Vinyl Plank The cost of vinyl plank flooring runs the gamut depend- ing on materials and type of installation. For this reason, we
16 | think realty magazine :: september 2018
distinguish between sheet vinyl, which is the least expensive option in this category but must be replaced completely if damaged, and LVP, which is more time-consuming to install and more expensive than sheet vinyl. LUXURYVINYL PLANKVS. HARDWOOD FLOORS Hardwood floors have traditionally been considered the height of beauty and luxury in flooring. However, modern technology is rendering high-quality LVP nearly indistin- guishable from hardwoods, making the advantages that come with LVP more accessible even in high-end homes where historically hardwood floors would have been the only design option. LVP installation and materials cost a fraction of that of hardwood, require very little upkeep, are moisture-resis- tant, and offer a “green factor” (they are recyclable and often made from recycled materials). This leaves marketability as hardwoods’ main benefit to the investor. COST OF INSTALLATION: HARDWOODS The price of hardwood flooring varies widely from $3-$6 on the low end (pine) to $5-$10 for mid-range woods (oak or teak) to more than $14 per square foot on the high end (tiger- wood or mahogany). Installation costs alone are as follows: Typical range for home installation: $2,543-$6,493 (HomeAdvisor.com) National average: $4,396
$.50 - $2.00 per square foot for materials (HomeAdvisor.com) $3.00 - $4.00 per square foot for installation National average: $1,098
Note: you may need to factor in additional money for old flooring removal and disposal. (Porch.com)
$2.50 - $5.00 per square foot for materials (HomeAdvisor.com) Installation ranges from $1,500 - $5,000 (national average)
Note: different types of LVP come with different types of finishes both protective and ornamental. The cost of the finish may not be included in the cost of installation and materials. •
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KEN & ANITA CORSINI
IN TO THE MARKET
HGTV's Ken & Anita Corsini on real estate, reinvention, and being all in.
BY CAROLE VANSICKLE ELLIS PHOTOS BY JERRY KING
18 | think realty magazine :: september 2018
IT’S AMAZING TO THINK BACK ABOUT THE MARKET CYCLESWE’VE BEEN THROUGH. 2005WAS A SCREAMING HOT MARKET, THEN 2008 BROUGHT IT TO A SCREECHING HALT. WEWERE ABLE TO THRIVE IN THE DOWNTURN, BUT ITWAS MAINLY BECAUSEWE HAVE ALWAYS BEEN ABLE TO QUICKLY CHANGE STRATEGIES.”
KEN CORSINI RED BARN HOMES
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w hen Ken and Anita Corsini first entered the world of real estate in 2005, the scene was very different than it is today. “It’s amazing to think back about the market cycles we’ve been through,” Ken recalled. “2005 was a screaming hot market, then 2008 brought it to a screeching halt. We were able to thrive in the downturn, but it was mainly because we have always been able to quickly change strategies.” “Every couple of years we see the market is doing something new, reorient ourselves, and implement new strategies to be successful,” Anita added. “I think they could re-make that sci-fi movie, Adaptation , about us and real estate!” NOTNEWBIES, BUTNEWIDEAS The couple, perhaps most widely known for their hit television series, Flip or Flop: Atlanta on HGTV, is not nearly as new to real estate as they are to television. The two bought their first house, “right out of college” as Anita said, when they were both 23 years old in 2000. Less than two years later, they purchased two acres and began building the home of their dreams. “From building retaining walls to laying secondhand hardwood flooring and pouring our own driveway, we learned a lot about homebuilding,” Ken said. When the house was done, they had three very important results: their “very own slice of heaven on two acres,” an investment property in the form of their first house, and an appreciation of the potential for their future that lay in real estate. Also, on that slice of heaven sat a red barn that served as an incubator for their current real estate business, Red Barn Homes, for the next four years. In 2005, Ken departed a corporate job to invest in real estate full-time. Anita left her first passion, teaching A.P. calculus, in 2007 to officially join him in the business. By this point, Ken had kept his head above water through the worst of the housing crash and “houses were cheap and plentiful
in Atlanta,” as he described it. Anita put it a little more bluntly: “The world was our oyster.” The two began acquiring distressed properties, fixing them up, installing tenants, and then selling them to investors in the first manifestation of the turnkey model. That model continued to evolve over the course of the next seven years, only to change when “the hedge funds descended on Atlanta and started gobbling up the inventory,” Ken said. “It was time to reinvent ourselves again. Prices were creeping up and you couldn’t find deals that made sense for our model anymore, so it was getting difficult.” Today, in addition to their central role in the television coverage of their deals all over the Atlanta metro area, the Corsinis have launched a real estate brokerage, Red Barn Real Estate, which has grown to 100 agents in its first year, and are busy running their boutique new-construction business, which launched in 2014. “It really just made sense to make that change,” said Ken. “We had to pivot because the market was creating a situation where it enabled us to sell houses retail rather than directly to investors.” “Our average rehab right now is hovering [in cost] around $89,000,” Anita said. “That’s practically like building a new house. Today, our time and energy are best spent selling to retail, but in a year, I might tell you something completely different. The Atlanta market can be tricky. If you stick with the same things you have always done, your opportunities are going to dry up quickly.”
mortgage fraud and drastically distressed housing in the area. “It just goes to show you should never say never!” he laughed. “Today, nearly all of our deals are inside the perimeter because there are so many blighted neighborhoods that are turning very quickly and there is also a large inventory of older housing stock. With the huge demand right now from buyers to be close to Atlanta, there is so much interest in that area,” he said. One thing that makes the Corsinis’ homes stand out from the crowd is Anita’s keen eye for going just beyond the norm in both design and staging. Interestingly, she credits her success in this area not just to careful analysis and cost-benefit
STRATEGY& STORY: TODAY’S FAVORITE IS THE FIX-AND-FLIP
At present, Ken and Anita are focused on properties in the metro Atlanta area (see map on opposite page), which Ken finds amusing since at one point he had sworn off a certain metro ZIP code because of the high incidences of
20 | think realty magazine :: september 2018
YOUCANNEVER KNOWFOR CERTAIN WHATTHE FUTURE HOLDS INTERMS OF REAL ESTATE. YOU HAVETOBEWILLING TOMAKE CHANGES, TOADAPTTO IT.”
Atlanta residents often refer to I-285 (circled above), which encircles the city, simply as "the perimeter." The area inside the loop may be considered informally as being in the city, while "outside the perimeter" generally indicates the suburbs.
thinkrealty . com | 21
Anita's focus on the "story" in a property helps her design functional, highly attractive living spaces for the properties the Corsinis flip.
equations, but to her love of “the story” behind every deal they do. “You are taking an old house and basically turning it into something new, but the story in the property is still there,” she said. An example of this is a 100-year-old tear-down that the two opted, ultimately, not to tear down. “I hated to even let Ken sell that one because I love it so much,”
Anita laughed. The property will likely be featured during the second season of their television series, and it was, in Anita’s words, “very dilapidated” at the time of purchase. “Dilapidated is a really nice word for it,” she said. “The foundation was literally held up by rocks,” Ken explained. To Anita, the deal did not just look good
on paper; it also was intensely appealing from an emotional angle. “When we looked at the property for the first time, we realized we could bring that house back to life in a way. Sure, the house itself is not alive, but its story could be.” About $100,000 worth of rehab work later, the property is stunning and the neighborhood is thrilled. “Neighbors and even some of the people who used
2009 Ken starts work on his
2015 Casting director calls
master's degree in building construction and general contractor's license
2014 Launch of boutique new-construction business and shift focus to flipping
2007 - 2014 Focus on turnkey rentals
2003 Ken & Anita start Red Barn Homes
22 | think realty magazine :: september 2018
5THINGS KENANDANITAWANTTO SAYTO INVESTORS
before you jump in
Both Ken and Anita spend a lot of time talking to real estate investors, es- pecially new ones. “We actually have certain things we really want everyone to know about real estate investing, that we feel helps kind of frame the con- cept,” Ken said. Here are the five things they feel every investor should know (and implement) as early as possible in their real estate investing business:
educate yourself and wait for the right deal. You need to be careful not to have that ‘paralysis of analy- sis,’ but that’s where the partner or mentor comes in.” “You need to have that balance,” Anita added. “Have two opinions and a backup plan. The great thing about real estate is that you can always fall back on another strategy. When the house doesn’t sell the way you expected – and there will be times when it doesn’t – then real estate always offers other options and you need to make sure you know in advance what they are.” The thing is, if you have memories in a home you grew up in, those memories are valuable. Those are the things you want to hang onto, those diamonds in your life,” said Anita. “This house was destroyed and hurt; it was sad. Then we came in and sure, we changed everything, but it brought the house back to life and now a new family lives there and the story continues instead of just being over.” THE FUTURE IS FLEXIBILITY Anita may joke about loving a property so much she cannot let Ken sell it, but the two do flip the majority of their projects. However, when the situation is right, they employ other strategies.
studs and framing,” Ken recalled. “Our project manager didn’t want to touch it,” Anita added. “It had a really bizarre layout, just a series of rooms. We figured it was a boarding house of some kind. The upstairs and downstairs were just hallways and bedrooms,” Ken said. Despite the strange layout, the property had a great deal of square footage, which is why the two ultimately decided to take on the project. Over the course of the rehab, they learned that the original owner was a grandmother who raised over 100 foster children in the home. Many of them returned when they learned the house had been restored, renovated, and listed for sale. “They couldn’t have been more thrilled. 4. Consider working with a more experienced partner or mentor 5. Work out a viable backup plan for every investment “I remember in the mid-2000s, I just wanted to jump right into real estate so badly,” Ken said. “I just wanted to find a deal and do it for the sake of getting started in invest- ing. We’re seeing that mindset a lot again now, and it is so important to
1. Be patient
2. Be analytical
3. Decide on your strategy
to live in the house came by to see what we’d done,” Ken said. “That restoration and renovation is a celebration of the fact that the house, the story, was saved,” Anita added. “Does it look like it used to? Not at all, but the footprint and the story are still there and the property itself is now part of the community’s story again instead of being a negative for the neighborhood.” “Ultimately, we opted to put that one on Airbnb rather than sell it,” said Ken. “It’s come a long way from the house some of the neighbors wouldn’t even drive past if they could avoid it!” Another favorite story for the Corsinis is a former boarding house they restored last year. “That house was gutted. It was down to
2018 Season 2 of Flip or Flop: Atlanta airs, Corsinis continue flipping and expand new construction
Don’t let the timeline fool you. While on the surface it may appear that the couple are masters of that on-a- dime “pivot” Ken described, in reality they are constantly watching the market and monitoring their business’ performance. In 2009, Ken saw “the writing on the wall” and returned to school to earn a master’s degree in building construction from Georgia Tech and obtain a general contractor’s license in preparation for the market today. Anita, who has a master’s degree in mathematics, leverages her analytic eye against everything from how her design decisions perform to what the local market is doing in every geographic sector of Atlanta.
2017 Season 1 of Flip or Flop: Atlanta airs, Corsinis continue to focus on flips
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While investors traditionally are encouraged to remain inside a fairly unremark- able “box” when it comes to design decisions, Ken and Anita like to push the limits in their remodeling designs. “Historically, investors stay neutral because you do not know what a buyer will really like in a house. You use the same materials over and over because they are safe. Buyers know that now, though, and we find that we are nearly always rewarded with a higher dollar amount when Anita goes outside the box creatively with her design decisions on our flips,” Ken said. “It’s important to remember that you are still an investor, though,” Anita added. “You are not designing for a homeowner. You are designing for an imaginary buyer.” Here are a few of the Corsinis’ design suggestions for investors: "YOU MAY NOT KNOWYOUR BUYER, BUT YOU CAN GET TO KNOWYOUR NEIGHBORHOOD.” – ANITA Anita recommends always walking the street of the neighborhood whenever possible. “You cannot just look at a picture of a house if you are going to design this way. You have to get a feel for the neighborhood.” For example, the two recently painted a flip an unconventional color, green (as seen below). “That would not have
worked in every neighborhood, but we were working in a neighborhood with a lot of historical charm,” Anita ex- plained. “You can’t paint a house green if it is located in suburbia and every- thing is brick, but in this location the color made the house look brand new while retaining the historic charm.” “ACCENTUATE THE HOME'S CHARACTER.” – KEN As it becomes harder to locate new- er homes that fit the parameters for a profitable flip in many hot markets, a lot of older neighborhoods are prime locations for fix-and-flip investors.
“We are always evolving, and this is a prime example,” Ken observed. “For example, we recently picked up a whole handful of townhouses. Some of those will definitely play into one of our newer investing tactics: Airbnb rentals.” He continued, “We do not maintain a massive rental portfolio, but we do have a number of Airbnbs right now.” Ken noted Airbnb is an ideal fit for any investor who is holding a property longer than planned and for investors experiencing shifts in their local markets that may be affecting their planned timelines. “People do not realize you do not need a premier location in order to run a really successful Airbnb investment,” he said. “For example, in our area, there are not a lot of hotels and we’re not really a big tourist destination, but there are a lot of kids’ sports tournaments. People come up here with their families and need a
“Accentuate that old bannister. Build up that old front porch to be the best front porch (see porch and swing staging above) in the neighborhood,” Ken said.
“DON’T BE AFRAID TO PUSH THE LIMITSWITH DESIGN.” – ANITA One thing that sets Anita’s design decisions apart from those of most other investors is that she is willing to push the limits with color, texture, and pattern. “With an investment property, it is definitely a question of balance,” she said. “You want to go just far enough outside the box where you do not look cookie cutter but still appeal to a wide enough audience that you have plenty of potential buyers.” The two recently received an unexpected payoff for their willingness to get creative: One of their projects was written up in a local real estate magazine as an example of what real estate investors can do with design. “They made particular note of the fact that we are investors and we did the rehab and design ourselves,” Anita said. Many of the Corsinis’ favorite projects are featured on their television series, Flip or Flop: Atlanta. You can view episodes past and present at HGTV.com/fliporflopAtlanta or see their portfolio of work at RedBarnHomes.com.
24 | think realty magazine :: september 2018
place to stay. They need choices and a lot of times they need something other than a hotel room. Airbnb is a really great alternative.” Anita, as usual, provides a little more insight into the “story” behind an Airbnb investment model. “When we use Airbnb, we love it for the space and the fact that it is a house instead of just a hotel room. We have three kids, so a hotel room is tight! In an Airbnb we have more space; I can cook for them if I need to, and it's just better a lot of times." When we’re looking at renting out our Airbnb investment properties or at acquiring new ones, we think about these same things. It’s just another way of evolving and preparing for the market in the future.” • The backyard living area of this property showcases German smear, a finishing tactic for brick that gives the home a unique look. Both Corsinis report adding unusual elements like this finish make their homes more marketable. This project will appear on Season 2 of Flip or Flop: Atlanta.
Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at email@example.com.
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Each year, Think Realty honors the leaders and change-makers in our industry who represent the very best real estate has to offer. These individuals are voluntarily nominated by their peers and evaluated by an independent, blind panel of former Think Realty Honors recipients to establish a field of 20 finalists. This year, Think Realty received more than 200 unique nominations for these honors. We are incredibly proud of our finalists, and we'd like you to meet them all. All finalists are invited to attend the Think Realty National Conference & Expo in Atlanta, Georgia, on September 22-23, 2018, and winners are recognized at an awards banquet the night before the event. Reserve your spot at the conference by registering at ThinkRealty.com/Atlanta.
26 | think realty magazine :: september 2018 august 2018
SINGLE FAMILY INVESTOR OF THE YEAR: This award recognizes an investor excelling in the single-family sector using any strategy related to single-family residential real estate.
Michael Green MP Green Management Company Why he invests in real estate: “I love fixing up homes and taking them from run-down to beautiful homes families can live in. It’s also the highest-paying gig I’ve found for a 10th-grade dropout!”
Proudest Moment: “I was able to take one of the biggest problems in real estate and solve it by completing a $45,000 renovation in seven days. I broke down every limiting belief I always had about contractors working together as a team to create an unbelievable outcome.” On Solving Problems: “One of my students was in a bad spot because a contractor who was supposed to install cabinets never arrived. We had a cabinet-installation learning day for my mastermind group.”
Tom Olson Good Success, Olson Group
Why he invests in real estate: “Housing is something people will always need. I want to live my life to glorify God by adding value to my communities, and one of the best ways I know to add value to people’s lives and in communities is through real estate.”
Favorite Sayings: “Work to have to give.” “Be a conduit, not a bucket.” What people say about Tom: “Tom is always striving to make a difference not just in our geographical community, but also in our industry’s community.” “Tom heavily invests in others with his knowledge and believes everyone should be a conduit as opposed to a bucket. He truly lives this every day.” “Tom is the entire package.”
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REAL ESTATE SERVICES: This award recognizes an investor, company, or association excelling in providing real estate-related services including remodeling, contracting, investment management, business services, software development, data management, web-based investing platforms, social media, and community development.
Anthony Cazazian | Renters Warehouse Real estate investing goals: “My goal is to help investors achieve their goals of financial freedom through real estate.”
Biggest real estate “win” so far: “Getting involved in the single-family rental sector early in 2013 while the asset class was just beginning to become more institutionalized. Since then, I have helped two companies that service the asset class through lending and property management, [including] helping build the largest corporate-owned SFR property management company in the U.S.” Why real estate? “Single-family rentals offer many advantages over other investments, such as monthly cash flow, tax benefits, ability to leverage, diversification, downturn protection, inflation hedge, and many more.” Brett Crosby | PeerStreet Real estate business philosophy: “I believe in putting all the chips on the table to invent and rethink entire industries. I enjoy the challenge of applying technology, analytics, and innovation in different ways than they’ve been applied before.” Biggest real estate “win” so far: “That PeerStreet has become what I believe is and will continue to be a stable, long-term capital source for lenders and an investment platform for investors of all sizes to access real estate debt.” Why real estate? “To conceive new ways of transforming the core of the industry in a way that is beneficial to participants and society as a whole. Outside of my main career at PeerStreet, I enjoy developing personal real estate projects with my wife.” MULTIFAMILY INVESTOR OF THE YEAR: An investor excelling in the multifamily sector using any strategy related to multifamily real estate. This includes but is not limited to apartments, condominiums, cohousing, duplexes and larger multiunit investments, townhouses, and other intentional multifamily communities. Hector Padilla | HP Capital Investments, Inc.
Why do you invest in real estate? “Real estate is a time-proven investment vehicle that can be leveraged in creative manners to earn exponential growth, which leads to time freedom and financial freedom. Plus, it gives me the opportunity to be a blessing to many by providing housing, work space, and jobs.” Biggest real estate “win” so far: “My biggest win has been learning that to create exponential growth you need five things: good self-esteem, self confidence in your business, positive life and business philosophy, [ability to] take massive, skilled action with
adjustments, and a time-proven mentor and team.”
28 | think realty magazine :: september 2018 august 2018
Joe Fairless | Ashcroft Capital Why real estate? “To help my investors achieve their financial goals. I believe if they achieve those goals, they will have more free time, and if they have more free time (as well as more money), they will use that time and capital to improve the world.” Proudest moment in real estate: “Receiving a voicemail on a Saturday from one of my investors saying our team has far exceeded his expectations.” He’d like you to know: “All of my revenue streams, directly or indirectly have a philanthropic component. Since 2012, I have been offering advertising scholarships
to Texas Tech students. All of the profits from my first two real estate books were donated to Junior Achievement, and this year, we launched BestEver Causes, where we highlight and support a new cause or charity each month.”
COMMERCIAL INVESTOR OF THE YEAR: An investor excelling in the commercial real estate sector using any strategy related to commercial real estate. This includes but is not limited to retail space, office space, industrial space, restaurant space, corporate leasing, mixed-use development, new construction, and community master-planning and development.
Madan Goyal | PRG Balakieson Why do you invest in real estate? “It is a safe bet for potential gains, the need and demand for all kinds of real estate is increasing all the time, and, unlike man-made products and services, God is not making any more land.”
Proudest moment in real estate: “On my very first investment, I intended to convert a house to offices. I got the zoning changed and got two tenants quickly after minor repairs and new entrances for each. [Now it generates] regular cash flow and I have refinanced it twice, to date, with major equity cash-out each time for other investments.” What people say about Madan: “He is the best in small- and medium-sized office buildings, warehouses, and similar properties.” “He is most helpful to anyone interested in commercial property investment.”
Salvatore Buscemi | The Commercial Investor Proudest moment in real estate: “Raising $30 million from a hedge fund in NYC at the age of 29 to start my own distressed mortgage fund.”
Biggest real estate “win” so far: “My strong and consistent track record in all of our transactions. I’ve mastered when to call the tops and then prepare to buy at the bottom.” He’d like you to know: “I started my career at Goldman Sachs in NYC as an investment banker, then fell in love with commercial real estate investing.” What people say about Sal: “Sal is a highly intelligent, innovative, and sophisticated deal-maker who not only wants to make money but wants all of his investing partners to make money also.”
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