Think-Realty-Year-End-2017

NUTS & BOLTS COACHES CORNER

STRATEGIES: REITs Panel in Print

Panel in Print: The Many Faces of Buy-and-Hold Investing

PAMELA J. GOODWIN As a real estate developer, part of the daily process involves keeping up with the latest projects going on in your area and around the world, including going on site tours of new development projects, learning from real estate managers handling different types of properties and concepts, and constantly expanding your knowl- edge base about the best locations to own these types of properties, whether you plan to hold them short- or long-term. HERE’S AN EXAMPLE: I am part of a women’s commercial real estate group in Texas called Deals in Heels. All of our members specialize in retail and restaurant commercial real estate. We meet once a month and recently had a speaker come in who owns sev- eral innovative restaurant concepts throughout the country. He talked about how

hen it comes to the strategy conventionally referred to as “buy- and-hold,” most real estate investors tend to think of building and maintaining a cash-flowing rental portfolio. However, there are many other options involved in long-term real estate, including vacation W

rentals, commercial property investments, and community building on every level from your block to your entire municipal area. Long-term real estate investments can not only build up your assets when you are ready to cash in on the time you invested in holding a property; it can

create benefits for your shorter-term deals and your other investing strategies as well. Three of Think Realty’s expert coach- es described their personal take on the less conventional side of buy-and-hold or long-term real estate for this month’s Panel in Print.

he found his new idea by traveling to Amsterdam and saw how popular food halls were in different countries. We had the opportunity to be among the first to tour one of his latest projects before opening: a new dining experience in a new development featuring a three-level food hall where each level has a different concept and experience. The lowest level has more than 30 unique food and beverage stalls, while the second level is home to a craft brewing company and the top level is designated for entertainment and live performances as well as being available for private events. If the first food hall is a success he plans to open these venues up all over the country, and we toured one of the first ones! That tour helped update me on the market. It means I now have the knowledge to say to a client who might be representing some of the big department stores that are closing all over the country, “I know just the person who would want to buy this space from you.” Not only can I act as a broker, but I can also invest in those types of properties myself if I see an opportunity in the right area and enjoy the profits that come with leasing that space long-term to one of these “food halls” that are becoming popular all over the world.

ABHI GOLHAR Ultimately, I think that long-term real estate investing is often lost in the shuffle because people get so focused on building their hustling empires of real estate flipping that they forget about the real point of real estate: to be a steady wealth generator. Sure, I love the big numbers that come with flips, but what I really love is adding to my portfolio day after day, year after year, and knowing that I’m do- ing good for the community, offering good folks a place to live when they other- wise wouldn’t be able to buy a home, and I’m building serious wealth as well. I’m building a legacy for my family and the community in which I invest. I say, when you look at long-term real estate investing, you want to do two things: create the impact that you want on the world and become more financially sufficient. The best way to do that is to build your portfolio with real estate assets that last such as single-family rentals and multi-family apartment complexes.

BEN RAO I’ve been investing in real estate for more than ten years and I own about four dozen properties and assorted commercial buildings. I have always believed in the buy-and-hold strategy. It is just so important to me to add value to a property before letting it go again. I have never bought a property and then turned around and sold it to someone else without doing something to it first or at least owning it for a peri- od of time. I’m definitely about improving and repurposing.

HERE’S AN EXAMPLE: Last fall, we purchased a run-down property for about $50,000 in a neighborhood of Atlanta called Summer- hill. We invested an additional $15,000 for a variety of permits, etc. Then, we sold it to a builder whose ex- pressed intention was to Airbnb the property and hold it indefinitely. He estimated that it would cost him about $180,000 to get that property where he wanted it to be, and that when he did it would be worth about $425,000. Needless to say, he was willing to pay an amount that meant he got a good deal and we made a healthy profit. I would argue in that both parties made a long-term investment. Our buyer bought that property because he believed it would be worth a lot more than it was at time of purchase when he was done with it and because he expected to generate a good income by owning it a long time. We made a tidy short-term profit, but we also invested in a colleague who is building up our area and now knows that we are a good firm to work with and that we’re really out to educate as well as put money in our pocketbooks. And guess what we did with the profit from that deal? We purchased long-term assets to add to our portfolio.

Furthermore, really effective investors do not just invest in buy-and-hold prop- erties, but they also invest in their brand. That’s also a long-term investment. When you invest in a property that you improve, hold, and manage well for a long time you put your business in a framework that people can understand. They see that you’re a real estate investor who is serious about your success and the success of your community. The more people recognize what you are doing, the more you build brand momentum and the more your phone starts to ring. People bring deals specifically to you because they know you’re in real estate and you’ll do something good with the opportunity.

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