INVEST R A Think Real ty Publ icat ion SPONSORED CONTENT
DAN HANDFORD PassiveInvesting.com
LINDA HYDE AAPL
Hot Market: Charlotte Jim Hitt and American IRA Focus on Five Factors for Going Self-Directed
LEE ROGERS RealProtect
ROBERT NICKELL Rocket Station
The Five Most Important Factors When Choosing Your Self-Directed IRA Company
by Jim Hitt, American IRA
Y ou’re convinced. You know a Self-Directed IRA is a powerful way to build wealth, using its pro- tections to help you get the most out of investments like real estate. But there’s a catch: you can’t move for- ward unless you have a Self-Direct- ed IRA administration firm in your corner. And you’re not sure which one to pick. How can you tell which Self-Directed IRA company has the experience and know-how to make life easier for you? We’ve put togeth- er a list of the Five most important factors to help you decide. FACTOR#1: TEAMKNOWLEDGE Simply put, a Self-Directed IRA company should know things. A lot of things. You’re working with a Self-Directed IRA company, after all, for a long- term commitment. Shouldn’t you be concerned about who it is that will help educate you? You’d be surprised. Many Self-Di- rected IRA companies have leader- ship and speakers with very limited experience in the asset classes they’re teaching you about. For ex- ample, let’s say you signed up with a Self-Directed IRA company because you wanted to invest in real estate. What if you work with a Self-Directed IRA company whose team knows very little about this asset class?
Do you want to learn from someone who’s reading out of a manual? American IRA’s team is comprised of investors who bring value to you from a place of personal experience. Our ownership AND employees are comprised of individuals who have created a 7-figure net worth by in - vesting in real estate.
checkbook if you use their service, while others will not allow check- book control if you’re going to work with them. But isn’t a Self-Directed IRA all about the freedom to call your own shots? American IRA realizes that every client has different goals and needs. For that reason we employ a hybrid approach to checkbook control. For clients that want to utilize a retire- ment account owned LLC, they can do so. For clients that do not want that structure, it is not mandatory. This gives all clients the tools that allow them to optimize their self-di- rected investments. FACTOR #3: FIRM CONTINUITY—ANDALONG- TERMRELATIONSHIP If you were going to propose to get married and knew there was a chance it would only last a year, would you re-think it? That’s often how it works with Self-Directed IRA administration firms. You’re happy to sign up with one if you know you can work with them for years and even decades. But if you knew that the firm doesn’t have a strong history of continuity, you might rethink things. You may think it a bit strange that we compare a Self-Directed IRA
FACTOR #2: LLCSAND CHECKBOOK CONTROL
LLCs like Single Member LLCs al - low the Self-Directed IRA to put a lot of power in your hands. In essence, a “Checkbook IRA,” as its called, can function much like a personal in- vestment account—with the obvious caveats and regulations of a retire- ment account. With Checkbook Control, an IRA/401(k) is a member of an LLC, which allows the investor to directly transact for their investment. There’s no going through middlemen here. They don’t have to check with their Self-Directed provider for paper- work, or for the flow of money for the account. It’s as simple as writing a check. Is there a catch? Of course. You have to set it up properly. Your Self-Directed IRA adminis- tration firm should allow you to do this. You’ll find that some compa - nies mandate that you have to use a
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and a long-term understanding built on that communication. • Knowledge and experience within the team to offer the proper education. FACTOR #4: THE KIND OF SELF-DIRECTED “PROVIDER” YOUWANT There are Self-Directed Providers that are reliant on third parties to stay in business. And if there is a new policy by the custodian, it can mean that this arrangement can be shut down. This is a scary situation. You got into Self-Directed IRAs because you wanted more independence. You didn’t want to cultivate dependence on a third party. Your Self-Directed IRA adminis- tration firm should be fully integrat- ed , meaning it doesn’t rely on third parties to get its work done. FACTOR #5: FEES Simply put: how much does it cost? Even if you have a great Self-Di- rected IRA firm to work with, exorbi -
administration firm to a relationship. But here’s the thing: relationships do matter. Isn’t it frustrating to con- stantly have to reinvent the wheel when your vendor is constantly hiring new employees? It’s like hitting the “reset” button over and over again. There’s no sense of long-term prog- ress. And with retirement investing, long-term progress is the name of the game. When you constantly hit “Reset” because of new relationships, it means that you have to start over again. You have to communicate old ideas again. And you may be working with people who now don’t under- stand the investments you make. Or they might not know the way you prefer to communicate. Look for a Self-Directed IRA admin- istration firm that emphasizes the following: • A strong senior staff, many of whom should have experience at the firm for 8-10+ years. • Real relationships with clients,
tant fees negate the good work you do. Many Self-Directed IRA admin- istration firms charge annual asset fees. This means that your annual fee for an account with 4 properties will be far higher than an account holding 1 asset. Do they charge a higher annual fee as the account balance grows? If so, then your fees grow with your wealth. American IRA charges an annu- al maximum fee of $285 per year, which means that the percentage of the fee relative to your account goes down as you grow wealthier. Your annual fee will not change with an increase in the value of the account or number of assets, and that’s the way it should be. These factors all matter when you choose a Self-Directed IRA admin- istration firm. If you want one that meets all of the criteria here, learn more about what makes American IRA different. Give us a call at 866- 7500-IRA to find out how you can work with us and achieve a stronger retirement nest egg. •
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The Top Five Reasons Every Real Estate Investor Needs a Self-Directed IRA
by Jim Hitt, American IRA
I f you invest in real estate, why aren’t you protecting those invest- ments? Sure, you might own an LLC to protect yourself—but if you want to take it to the next level, a Self-Di- rected IRA is a “must” for any real estate investor. A Self-Directed IRA means that you’ll have access to tax protections and unique ways to save money even while you exercise much of the same freedom you’ll have as a personal investor. Here are the top five reasons every real estate investor needs a Self-Di- rected IRA: Expertise. An experienced real estate investor has expertise in one area. So why should they force themselves to invest in multiple areas? Using a Self-Directed IRA for real estate investing means an investor can use their skills and experience for creating a diversi- fied portfolio of real estate hold - ings. They don’t have to emphasize stocks and bonds if they don’t want to. They’re able to build a retirement portfolio that’s on their terms—and plays to their strengths.
Tax Efficiency. Every dollar saved goes towards building a better re- tirement portfolio. Consider that if you sell a property in your person- al name or LLC, you will typically have a considerable tax burden to go along with it. Tax efficiency is the name of the game for any real estate investor who wants to maximize their chances of retiring with a considerable nest egg in their name. Cash flow. Why don’t more retire- ment investors talk about the im- portance of cash flow? If you achieve enough of it, you have financial inde - pendence. If you don’t…well, you’re still looking. A high yield mutual fund or an individual stock may be in the realm of a 3-5% dividend yield—and that’s assuming good returns and that the company doesn’t slash its dividend. In real estate, it’s very common to see 10% cash flow when purchasing good rent-generating properties. Diversification. Do we really benefit from stock market diversification? What is diversification, anyway, if the stock market goes down and your well-diversified stocks no longer
perform? Over the last few months, we’ve seen how COVID-19 can change everything about the stock market overnight. True diversifica - tion means having multiple asset classes generating cash flow to help boost the quality and quantity of a retirement account. And without cash flow, stocks don’t perform as well when there are unforeseen risks. You know, like an unexpected pandemic. Wealth-building. “Buy land” is some of the oldest financial advice on earth. You know why? Because it often works. Many investors create multi-million dollar portfolios with real estate when compared with the stock market, so much so that it’s often said that real estate results in more millionaires than with any other asset class. There are lots of reasons to use a Self-Directed IRA for any investor who focuses on real estate. But it’s not only about tax protection. It’s about leveraging one’s experience and skills in a unique asset class to maximize your chances of retiring with a solid, cash flow-generating nest egg. •
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Insurance for the Real Estate Investor
Why realprotect?
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As the nation's premier real estate insurance broker, realprotect is the expert in insuring real estate investors. We understand the real estate business and what investors like you look for and need in a comprehensive insurance program. You've built a business out of owning and investing in real estate. Let us help you protect it. We start with an understanding of your properties and design an insurance program that helps you meet your coverage and pricing objectives. We promise that we will work diligently to find the best coverage at the best price for you. Give our process a try and find out why many leading SFR lenders and firms trust realprotect with their insurance and risk management needs.
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Real Protection for Your Properties
by Lee Rogers, realprotect
A s the real estate insurance program of Norton Insurance, realprotect is not only comprised of insurance professionals, but is also a real estate firm that has over 200 licensed agents and property managers. realprotect is the expert in insuring real estate investors and understanding the real estate business and what you look for and need in a comprehensive insurance program. You have built a business out of owning and investing in real estate, and realprotect wants to help you protect it. realprotect starts this process by gaining an understanding of your properties, business structure, and operations. Then, realprotect will de- sign an insurance program that helps you meet your coverage and pricing objectives. realprotect promises to work diligently to find the best cover - age at the best price for you – based on your actual needs. realprotect takes risk manage- ment and loss control seriously for every single client. realprotect has
risk management resources to offer you the tools you need to under- stand the risks that you face and has partnered with industry-leading companies to provide you risk con- trol products at discounted rates. At the helm of realprotect is Lee Rogers, President. As an insurance professional that has worked and consulted with different Sin- gle-Family Aggregators, Rogers brings unique value and perspec- tive for investors, fund managers and operations professionals. He and the Aggregation Risk Man- agement Team at realprotect have helped design and implement insurance and risk management strategy that is above and beyond what is being set as an industry standard for insurance structure in Aggregation Portfolios, while keeping costs contained and risk properly manage and transferred. Based in Atlanta, Rogers has unique insight and knowledge of many insurance markets, with direct access to many of the world’s lead-
ing insurance carriers. Rogers has helped develop analytical tools and insurance philosophies that are in line with the true risk exposures that Single-Family Aggregators are fac- ing. He understands that the Aggre- gation Market is unique, and that the insurance industry must be able to adapt to this emerging asset class. Rogers uses his vast experience and innovativeness to focus on building business relationships with prospective clients, marketing products and advising investors on coverage options for their real estate assets – while making sure that his entire team at realprotect provides the same quality experi- ence for each client. Lee Rogers and his team at realprotect work with industry leaders such as lenders, market- places, and property managers and wholesalers to provide them with the protection and service that their hard work deserves. To learn more about realprotect, please visit www.realprotect.com. •
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Real ROI
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Visit www.realpropertymgt.com to learn how Real Property Management can put our experience to work for you, giving you real commitment, real ROI and real peace of mind.
Each office is independently owned and operated. © 2020 Property Management Business Solutions, LLC.
Real Property Management is the trusted leader in reliable, cost-effective management of residential properties. With local expertise, highly-trained and responsive teams, independently owned and operated Real Property Management franchisees collectively manage tens of thousands of properties for individuals, investors, and institutions throughout North America.
We Offer:
Comprehensive Marketing and Advertising For each day a property is vacant, that’s
Online Reporting Owners maintain control of their property and keep tabs from afar using their own online account, with easy access to updates on property activity, including vacancies, leasing, maintenance, property evaluations and financial reports. Cost-Effective, Reliable Maintenance Relationships with preferred vendors result in discounted equipment and services. Maintenance staff is available 24/7 to handle emergencies and to make sure maintenance is timely, cost-effective and done in a professional manner. Timely Rent Collection Nothing affects cash flow more than late or missing rent payments. In addition to offering incentives for paying rent on time, our collection processes are professional but tough, and we are extremely diligent in collecting rent through a systematic, timely process. Strict and Compliant Evictions Even with careful placement there is occasionally a tenant who needs to be evicted. Our offices are knowledgeable in state and local landlord and tenant laws. If rents are not paid on time, we strive to minimize costs by following the legal steps quickly and efficiently to get the property leased again.
money lost. Professional management costs are easily offset by shorter vacancy. Our advanced planning and heavy advertising gets vacancies filled fast.
Thorough Tenant Screening and Selection
Placing the wrong tenant can quickly cost you more than professional management fees. We make every effort to find tenants who will pay rent on time and take care of the property with the use of criminal, credit, and employment checks. Full-Service Leasing In addition to advertising properties and screening tenants, our full-service leasing process also includes rent-ready guidance, market rent analysis, professional showings, move-in property assessments, and professional tenant education at lease signing. Routine Property Evaluations Regular assessments of both the inside and outside of your rental property ensure tenant compliance with the lease and identifies maintenance needs to preserve your property.
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Are you interested in learning about investing in apartments? Get this free guide with answers to the most common questions! Simply text PASSIVE to 803-590-1080 to receive access!
The PassiveInvesting.com Team acquires institutional-quality multifamily assets throughout the United States. We strive to improve our communities through moderate interior and exterior renovations. In addition, our team is experienced in identifying operational inefficiencies which allows us to improve operations to exceed investor expectations. Managing Partners of PassiveInvesting.com:
Dan Handford Danny Randazzo Brandon Abbott
Red Flags for Passive Apartment Investing
by Dan Handford,PassiveInvesting.com
M any investors have asked how to make sure they are investing with a “good” operator when placing capital into passive apartment investing. I am currently invested in 21 different passive real estate syndications and this list was developed for my own personal investments. Feel free to use this list for your own investments and if you want to chat further feel free to email me directly at dan@ passiveinvesting.com. SUCCESSFUL BACKGROUND IN BUSINESS One of the sponsors of the syndication must have a successful background in business. The key word here is “successful” since I know people who know how to run a business, but they know how to run it into the ground. I want to invest with an operator that can successfully run a business even when times get tough like we are seeing with the COVID-19 pandemic. The reason why this is important is that when we are buying a large $20mil+ asset, it is more like we are a buying a fully operational business that just so happens to have real estate attached to it. The operator must know how to manage people, put system, procedures, and processes in place, and also be
able to set proper key performance indicators (KPIs) in place to monitor the performance of the asset on a consistent basis.
MUST PROVIDE PREFERRED RETURNS Every deal must have preferred returns for the limited partners (investors). The preferred returns align the interests with the investors so that the investors get the preferred treatment. The preferred return allows the investor to receive 100% of the cash flows and sale proceeds first up to a certain return amount, typically 6-8%. The deal could not be done without the investors and the operator should be willing to provide the preferred returns to maintain a successful relationship. SKIN INTHE GAME – EVERY TIME! Last but certainly not least, the operator must have skin in the game. I really like to see 10% of the equity required invested in the deal alongside the limited partners. However, some operators cannot invest that much so at a minimum I want to see $100k invested from the operator. I want to make sure that the operator is making the best decisions and they have money to lose so I can ensure they make the best decisions for all of us in the deal. •
FULLTIME OPERATOR This is a full-time business and must be treated as such. There are many people that are getting into the apartment syndication business, but they want to keep their W2 income. I have worked hard for my money and do not want someone who is not all-in to manage my investment. This type of business cannot be run like a hobby in the nights and weekends. I demand full time efforts to watch my investments. MORE THAN ONE PARTNER My preference is to have at least 2 partners (ideally 3 partners) on the project. You should NEVER invest with an operator if there is only 1 partner. I know an investor personally that invested $200k of his own money and he also brought in $200k of his friend’s money to deal where the operator went ghost on them after 6 months. They cannot find the operator and they can’t get their money back. The likelihood of a group of 2-3 managing partners going ghost on you is highly unlikely.
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To find private money you can trust, start here. Our members are the most-trusted private lenders in the business. They’ve pledged to follow the industry’s only Code of Ethics , enforced by the oldest and largest association for private lenders. Find your next financial partner today at aaplonline.com/directory.
Where Can You Find Funding You Can Trust?
by Linda Hyde, AAPL
W e at the American Association of Private Lenders field hundreds of emails and phone calls monthly asking for referrals to lenders that real estate investors can trust. We’ve heard the bait-and-switch stories, the haphazard and stressful closings, the exhausting search of shopping a deal around. Real estate investors are looking for experience, partnership, and above all: trust. Every day at AAPL, we work to bring that trust to our industry. We set the standard for professional conduct and are the only organization that enforces a Code of Ethics. We pledge to our members to provide structure and legitimacy to the private lending industry, and in turn, they promise us – and you – that they will uphold the trust you place in them.
• Adhere to all laws with respect to the services in which they engage. • Not discriminate against borrowers based on sex, age, race, sexual orientation, or religion. • Be honest and forthright in all their dealings. • Only change their loan terms with just cause and perform in accordance with the agreed-upon terms. • Not originate loans intending to see the borrower fail in order to obtain title to the property. • Adhere to all advertising laws as defined in the Truth-in-Advertising Act • Respect the intellectual property rights of others and comply with regulation related to copyrights, trademarks, patents, and trade secrets.
LINDA HYDE AAPL
Each year, we host the nation’s largest gathering of private lenders in Las Vegas, NV. This year will be our 11th Annual Conference on November 15-17 at Caesar’s Palace. Register at aaplconference.com to join more than 400 private lenders dedicated to learning the industry’s latest and best practices and find the trustworthy capital you’re looking for. Our members proudly display the AAPL Member emblem below. Look for it in your lender’s email signature and on their websites, and then visit aaplonline.com/directory to verify their membership status. You should be able to trust the people funding your business. Let us help. •
OURMEMBER CODE OF ETHICS To be an AAPL member, members must promise to:
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Thriving in the (Not) “New-Normal”
by Robert Nickell, Rocket Station
To all fellow real estate entrepreneurs: We have all had to make major adjustments recently not only in our professional lives, but personal lives as well. None of us are sure when we will get back to our morning coffee routes or when we will be allowed in the grocery store without a mask. Virtual Masterminds, teammeetings, and family holiday meetups seem to be here to stay. Through all the chaos, one thing is absolutely clear, all the tools needed for a successful transition to this “new normal” are readily available to you. Rocket Station and the majority of our clients have continued to be business as usual through these unprecedented times. Why? Not because of anything new or different, but because we have been helping thousands of companies transition to a
virtual workforce since 2013. Efficiency and productivity have been around long before the pandemic. With a little effort you can have the same, if not more, success than you had before the world closed its borders. I want to share with you a few tips and tricks we use at Rocket Station for an efficient operation and amazing culture with our virtual teams. We manage several hundred teammembers virtually and have helped thousands of small businesses do the same. I am sure you will find value in our free Virtual Masterclass. In our FREE Virtual Staffing Masterclass at rocketstation.com/ masterclass, we dive into several topics including: (1) Setting up your home office for productivity including needed equipment, (2) efficient communication with your virtual staff with the goal of transparency and
alignment, (3) virtual management principles – how to make sure your team is productive, (4) how to build an amazing culture virtually, (5) how to create a personal routine for success and sanity, and (6) I interview clients and experts who share their success stories of transitioning to virtual management. If you are interested in how you can be more productive at a fraction of the traditional labor costs,
check out the free class. I hope you enjoy the free
Masterclass and we want to hear what you think. Please reach out to us with any questions or comments. We are here to help in any way we can. Visit rocketstation.com/masterclass. •
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Give and Gain Through Mentorship
WHAT YOU CAN LEARN BY BEING AN REI MENTOR
by Jeff Pepperney, Real Property Management
A s a successful rental property investor, you have accumulated a wealth of knowledge and experience. While sharing that knowledge is a great way to help others, becoming a real estate investing mentor holds great benefits for you, too. As a mentor, you can add to your knowledge in new and exciting ways, as well as keep your investing skills sharp. In what follows, we’ll take a closer look at what mentoring can offer real estate investors in all stages of your career. Although you may view mentoring as only benefiting the mentee, it can help you as an experienced professional to continue to build on your success. For example, you would need up-to-date knowledge about many aspects of the single- family rental property market. Staying current on these aspects will help keep your investing from becoming stagnant, as well as strengthen your leadership skills. Furthermore, when you teach a less- experienced investor a new skill, you help solidify what you know and keep
your skills sharp. You may also discover that mentorship results in tangible benefits for your investing process. As a mentor, you will be seen as a leader and an achiever in the real estate rental industry. As you demonstrate your willingness to help others, you may find that others develop a new level of respect for you. You may find that others are more willing to assist you and to share new opportunities with you. Finally, becoming a mentor could change not only your mentee’s life, but also your own. When you challenge your mentee to learn and operate at a higher level, you help them gain confidence and spur their professional growth. You may also discover a wealth of new experiences and challenges of your own, some that you couldn’t have guessed would come your way. In the process of helping others accomplish their goals, you may discover new ways to arrange your own life and work processes. It might seem counterproductive to take a less experienced investor
in and help them learn how to do what you do. Other investors are your competition, after all. However, by creating strong beneficial relationships with mentees, you could discover that you now have someone more likely to share investment deals and opportunities with you, thereby increasing the number of potential investment properties to consider. Knowing your system and standards, there’s even a good chance that those deals will have already been carefully researched to your satisfaction. You can do a lot to encourage this cooperation by sharing surplus opportunities with your mentee, as well. By becoming a rental property investing mentor, it is possible to gain far more than you ever thought possible. While you teach, you continue to learn, and to keep yourself at the very top of your game while giving others a hand up. There are very few true win-win situations in real estate investing. Mentoring others is definitely one you shouldn’t pass by. •
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