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

Creating an Impact

GENE GUARINO’S SOLUTION FOR THOSE FACING HOUSING INSECURITY

Silver Linings in the Cloud of Capital Gains Tax FUNDAMENTALS

STRATEGY Construction Alternatives: Can We Get to Net-Zero Housing?

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Will Moratoriums Kill the Market? MARKETS & TRENDS

2 | think realty magazine :: september 2021

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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 Lorraine Beato Clint Coons Joe Dyton Ellis Hammond Richard Hart Jeremy Kloter Bruce McNeilage Taylor Miller Matthew Paletz Gary Pinkerton

HEY! LET’S BE FRIENDS! GET SOCIAL. STAY CONNECTED.

Brian Snider Eddie Speed Steve Streetman Shawn Tiberio Michele Van der Veen

Eddie Wilson Ingo Winzer

Like, Follow & Share for the Latest Real Estate News, Trends and Insights from Think Realty

COVER PHOTO James Lloyd

Are you following Think Realty on social media? Things move pretty fast in real estate. Don’t miss out on the latest trends, tips, insights and news from your trusted resource for all things real estate investing! Follow. Like. Love. Share. Comment. You can do it all with Think Realty’s social media channels. Join the conversations in Think Realty social communities and connect with like-minded members who range from first-time to seasoned investors. Check out all of our social media channels and connect with us - and other investors - today!

SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $39.99 in the U.S. Order online at www.ThinkRealty.com or call 816-398-4130. 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 :: Think Realty Magazine is a publication of Affinity Real Estate Media LLC. Reproduction or use of any editorial or graphic, without permission, is prohibited. We are not responsible for the content of any paid advertisements. For reprint rights; to ob- tain a detailed statement of our privacy policy; and for all single-copy requests, address changes and other subscription inquiries:

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4 | think realty magazine :: september 2021

FROM THE EDI TOR- IN-CHI EF

Your #1 Resource

about him in our Contributor Corner on page 12. Our cover person is no stranger to being resourceful. You’ve heard how resourcefulness often comes from necessity—well, that is exactly

y nature, most real estate investors are resourceful.

After all, you must be resourceful to find deals and financing and to learn investment strategies and best business practices along the way. But

like most life tools, it needs to be sharpened often, especially in this time of constant change. The theme of this issue is resources and sustainability—how investors can use resources to build a sustainable business. So, I guess you could say this month’s theme is also the mission of Think Realty! Each day, our team strives to share invaluable resourc- es with the intent to help you grow your investments and scale your business. And, of course, this wouldn’t be possible without our knowledgeable contributors! This month’s featured writer, Shawn Tiberio, says Think Realty Magazine “is packed with gold. Anyone who gets this magazine and doesn’t look at it is simply missing out.” Tiberio shares gold-medal marketing strategies each month, so be sure to check out his Digital Marketing Resources article on page 54 and learn more

the catalyst that launched Gene Guarino’s Residential Assisted Living Academy. He experienced a need firsthand, and then created a solution. See what he is doing to “impact” the housing insecurity crisis on page 14. Another resource Think Realty brings you is our Resident Experts. These individuals are experts in their respective real estate fields and have signed on to bring you videos, articles, online courses, and more. From Gary Pinker- ton’s Infinite Banking article on page 64 to Greg Slaughter’s property management videos on thinkrealty.com, these people know what they are talking about when it comes to real estate! Think Realty is here to be your #1 real estate investing resource by sharing strate- gies and connections that can bring you sus- tained investing success. •

Keep Going!

KELLI WHITE, EDITOR-IN-CHIEF

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CONTENTS

INSIDE THIS ISSUE

COVER FEATURE

IMPACT Housing Group Founder and RAL Academy President Gene Guarino and his team are showing others how to create Shared Housing for Seniors and other communities facing housing insecurity. by Joe Dyton

CREATING AN IMPACT

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THINK REALTY 8 News & Events

68 Net-Zero Housing

A new project poised to take a bite out of climate change by Bruce McNeilage

INVESTOR STORIES 12 Contributor Corner Meet Shawn Tiberio FUNDAMENTALS 22 Creating a Stress-free Rental Portfolio

70 Benefits of Land Trusts

Separating fact from fiction on this centuries-old tool by Clint Coons

72 Title Companies and Your Wholesaling Business How the title industry delivers with investor-friendly service by Brian Snider

Effective property management operations by Jeremy Kloter 26 5 Limiting Beliefs That Stop Investors from Scaling Breaking hindrances so you aren’t held back by Ellis Hammond 28 Foreign Owners of U.S. Real Property How the IRS is further targeting foreign investors by Richard Hart

DESIGN POINT 74 Resources for Renovations

Three long-time resources still relevant for rehabs by Michele Van der Veen

30 Eco-friendly Resources for Renovating Rehabbing while reducing environmental impact by Lorraine Beato 35 Investor Review

MARKETS & TRENDS 76 Believe It or Not Meaningful market comparisons for long-term demand by Ingo Winzer

52 Decision Time

Finding silver linings in the cloud of capital gains tax by Eddie Speed

78 Will Moratoriums Kill the Market? How short-term rent moratoriums could wreak havoc on the rental market for years to come by Matthew Paletz 80 4 Steps for Vetting a General Contractor Navigating new development projects begins with the builders by Taylor Miller MINDSET 82 Write Now Why every successful real estate investor should consider writing a book by Eddie Wilson

54 Digital Marketing Resources

What investors must focus on in 2021 and beyond by Shawn Tiberio

STRATEGY 60 Alternative Construction Methods Reduce Emissions Can we get to “net-zero” housing? by Steve Streetman 64 Alternative Financing for Buy & Hold Real Estate Investors

Part two of a series on the mindset of infinite banking by Gary Pinkerton

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THINK REALTY

NEWS & EVENTS

Meet the Finalists! Think Realty honors the leaders and change-makers of real estate who represent the best the industry has to offer. These individuals are nominated by their peers, like you, and the winners are determined by voting via public ballot.

SINGLE-FAMILY INVESTOR

Brian Snider Simple Wholesaling

Frank Cava Cava Companies

Jared Irby Irby Home Buyers

MULTIFAMILY INVESTOR

Jorge Abreu Elevate

Ali Khirbeet 180 Property Development

Robert Martinez Rockstar Capital

REAL ESTATE INVESTMENT SERVICES

Andy Abas Carlyle Capital

Kori Covrigaru PlanOmatic

William (Bill) Horan Realty Exchange Corporation

Austin McCurdy Sharper Personnel

Christina Trembly Preferred Trust Company

Damon Riehl Investment Property Loan Exchange, LLC

Marco Santarelli Norada

Real Estate Investments

LINDA’S LEGACY: INDURSTY IMPACT AWARD Carrie Cook Ignite Funding

Monick Halm Real Estate Investor Goddesses

Quincy Long Quest Trust Company

Angel Solis Carlyle Capital

We will announce winners - by popular vote - at the Think Realty Conference & Expo - Baltimore on September 18. Winners in each category will be publicized in Think Realty Magazine, interviewed on the Think Realty Podcast, and able to attend the 2021 Presidents’ Circle Meeting in Baltimore.

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INVESTING STRATEGIES FOR DYNAMIC MARKETS SEP 18-19 BALTIMORE

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Think sponsorship with Think Realty! Find out more at thinkrealty.com/sponsorship.

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INDUSTRY PROFILE

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INVESTOR RESOURCES

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INVESTOR STORIES

CONTRIBUTOR CORNER

The Contributor Corner

Marine Corps veteran and Ironman distance triathlete, Shawn Tiberio, now applies his determination to entrepreneurship. He is co-owner of Top Results Consulting where his mindset-matters approach to business helps entrepreneurs succeed and scale. For Think Realty readers, he writes primarily on marketing tactics that help investors’ businesses grow, and he also offers a free master class teaching how to target the right prospects for your business. We are thankful to Shawn’s expertise and dedication to serving others. Here’s what he had to say about his passion for marketing and more: Meet Shawn Tiberio A: Real estate is a passion of mine; I truly enjoy helping other real estate investors innovate the way they market their business to find the best off-market deals possible. Too many are saying the same old same old, wondering why their marketing doesn’t convert. Through writing for Think Realty, if I can help one investor be different, get a lead, and make a deal happen, it is worth it. A: Call it an obsession. Real estate marketing is no different from any other industry. Sellers have no clue who you are, they are just looking for answers on how to deal with the situation they are in. It is our job as marketers to “date” them. We need to treat them just like we first met them. You wouldn’t meet someone and two seconds later ask them to marry you, would you? Then why do so many real estate marketers ask for the deal before asking for the first date? I am on a mission to change the way investors market their business.

Q: Why do you like writing for Think Realty?

Q: Why are you passionate about real estate marketing?

A: As a contributor, I actually spend time looking at the magazine to see what other contributors have shared. It is packed with gold. Anyone who gets this magazine and doesn’t look at it is simply missing out. I have learned there are some incredible individuals that are part of this community. Take advantage of it.

Q: What is something you have learned from contributing to TR magazine?

12 | think realty magazine :: september 2021

Where will your network take you?

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COVER STORY

GENE GUARINO

Creating an IMPACT

Gene Guarino’s solution for those facing housing insecurity

BY JOE DYTON PHOTOS BY: JAMES LLOYD

EIGHT YEARS AGO, Gene Guari- no contributed another example of the popular phrase necessity is the mother of invention . Guarino created RAL (Residen - tial Assisted Living) Academy when his own mother needed help. It all became very real for Guarino when one night his mother fell out of bed and cracked her rib trying to get back into it. Guarino and his family looked for care for their mother, but nothing they found felt like the right place. All they could find were “Big Box” facilities with nameless, face - less staff and hundreds of residents being warehoused. That’s when Guarino took matters into his own hands. “I vowed to create the solution; an actual home that I’d be proud to have my own mother in,” he said. Guarino’s epiphany came at an ideal time. It was about 10 years ago when the real estate market had dipped, opening a door for him to

purchase bigger properties at lower prices than usual. While others were fixing and flipping, Guarino was pur - chasing large houses to use as group homes for seniors. With those purchases, RAL Acad - emy was born. Guarino and his team take single-family homes and convert them into assisted living homes for seniors. Guarino initially did this pro- cess on his own, but began to show others how to do it, too. The compa- ny has expanded to where it has 30 team members who train thousands of people a year in person and online from all across the United States. “Our students have opened up homes all over the country, taking care of seniors and it’s been a won- derful journey,” Guarino said. The RAL Academy shows its stu - dents everything they need to know in order to start, own or operate their own residential assisted living homes. This includes showing the best loca- tions to do so, what type of real estate

to use and how to build a team so the investor does not have to actively work in the business. The RAL Acad - emy also teaches its students how to operate these homes successfully and profitably, and how to scale their business to multiple homes they call a “3 Pack” and beyond. Some of their students are now scaling their busi- nesses all across the country with an eye to selling them all as a package to hedge funds. Additionally, the RAL Academy shares multiple opportunities to get involved depending on how hands on or hands off an investor and entre- preneurial student wants to be. Peo- ple who prefer to just write a check can do so. They can invest in a syn- dication and receive 8 to 16 percent returns. Those who take the joint venture partner route will have some ownership or interest in the actual business. This investment method could yield returns between 10 and 20 percent, according to Guarino.

14 | think realty magazine :: september 2021

IFYOU’RE OFFCOURSE,

RECALIBRATE ANDREFOCUS ONWHEREYOU AREGOING.”

GENE GUARINO

thinkrealty . com | 15

The Baby Boomer generation has been the driving force for theworld’s economy for the last 70 years. Right now, they’re just entering senior housing, whichmeans an explosion of need for assisted living.”

ment is up to the investor. Most investors and business owners that RAL Academy trains are hands off and they hire managers and a team to run the day-to-day operations. One of the biggest pieces of advice Guarino shares with RAL investors is to learn as much as they can before they begin and then get support from knowledgeable people that are actually in the industry. Too often he’s seen people make incorrect assumptions about how the industry works. For example, investors think they’re in good shape if they simply purchase a large house near a hos- pital. Guarino says that being near a hospital is not even in the top 10 items to look for. “Location is important—being across the street from a hospital is unimportant,” Guarino said. “If the resident needs to go to the hospi- tal every day, they should be in a nursing home, not an assisted living home. So, there are many things that people need to learn.” Guarino also advises that students decide what part they want to play in their business early on. People who just want to “be the money” should invest in a fund or a syndi- cation type of investment so they can be hands off. The key to their investment is having a good operator on the team—someone who knows what they’re doing, is trustworthy and is going to do a good overall job. Savvy real estate investors find their tenants before they purchase a prop- erty and the RAL Academy shows them how to do that as a part of their training curriculum. “If you simply want to own the property and be a real estate investor and not be involved in the business at all, there is a success formula to doing that right—too many people try to do it backwards,” Guarino said. “They buy a house, fix it up and then

GENE GUARINO

“If you just own the real estate, which a lot of people get in this industry to do, you can typically lease it for up to twice the fair market rent,” he said. “If that house nor- mally rents for $2,500 a month, you can now lease it for $5,000 a month because the tenant is a business, and they have the income and cash- flow to pay that higher rent. The tenants aren’t the seniors living in the home. The tenant is the com- pany that owns and operates the RAL business. They’re not focused on the real estate as an investment,

they are focused on the cashflow of owning and operating the business. They’re using the real estate as a place to do their business. They want a five-year lease with renewals and they will take care of the mainte- nance as well. That is the Holy Grail for many landlords today especially when you can actually cashflow a bigger and nicer property.” The third option is for investors to actually own the real estate and operate the business. This doesn’t mean the investor is at the RAL home every day. The level of involve-

16 | think realty magazine :: september 2021

say, ‘Now let me find somebody who wants to operate the business in this location.’ No, find the tenant first and then ask them, ‘Where do you want me to buy a house?’ Then I’ll buy the house in the area they want and fix it up because I’m going to lease it to them for five years at twice the mar - ket rent. When you do it right, you’re both going to be happy.” People who choose to own and operate a RAL business, may be more involved than a passive investor at times. Their level of involvement is completely up them and their man- agement style. On the plus side, they will likely make more money and they will own a “saleable” asset, the RAL business itself. The secret that many people don’t understand is, they are creating a business that has tremen- dous value. That business can be sold separately from the real estate. Many times, the value of the busi- ness is close to the value of the real estate itself. An investor can sell the business and then lease the property to the business owner at twice the market rent for years. “When you own and operate the RAL business you can make your $10,000 to $15,000 or more per month from a single-family home as the owner of the business,” Guarino said. “And your real estate invest- ment and appreciation is on top of that. When you are a hands-off inves- tor typically there’s a lower return. When you are involved hands on, it can be a much higher return but you are earning that additional return with your time and involvement.” Currently, the RAL Academy student base is about a 50-50 split among people who want to own and operate the RAL business and those who are looking for a good real estate investment, according to Gua- rino. Initially real estate investors were the ones who expressed inter-

est to Guarino about this opportunity. They liked the idea of purchasing a house that could create such signifi - cant cashflow. “The numbers are really good when you explain to people that, according to Genworth financial, a Long-Term Care Insurance company, the average person in assisted living pays $4,300 per person per month,

Guarino said. “You might have 10 people in a home and the net profit might be $10,000 to $12,000 per month from a single-family home. You can go even higher than that with bigger homes in better areas. “People get involved in the RAL Industry for all kinds of reasons. Some people would say, ‘I have a parent who needs help’ or, ‘My

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“It was a lot of money for a couple of kids in the mid-eighties,” Guarino said. Along the way, Guarino and his brother did fix and flips and buy and holds. They also purchased and renovated a nearby church and they expanded their music school and recording studio. Their music school eventually reached 300 students and the studio grew into a signifi - cant business too. They invested in themselves and hired a business consultant who showed them how they could triple their business. To the shock of the business consultant, once they received the news, they decided to close the school and sell the property. “We got into (music) because we wanted to be rock stars on the stage,” Guarino said. “But here we were teaching eight-year-olds how to play the drums. Getting into real estate was more by accident, but I’ve done it since I was 18. The key to the experience with our business con- sultant was to have the end in mind and stay focused. If you’re off course, recalibrate and refocus on where you are going.” MORE THANANURSING HOME Guarino has been involved in the senior housing market for nearly a decade, and he’s already seen a number of industry changes. One of those changes is the perception of assisted living itself. In the past, assisted living was only associated with big buildings, maybe a convert- ed hospital that has 200-plus people in it. The RAL Academy has helped disrupt the industry and shake up that connotation. “We’ve named (Residential Assist - ed Living AKA, RAL) and claimed it. It’s called 20 different things across the country,” Guarino said. “The

mom or dad was in a facility, and it was not a good experience. I want to be part of the solution.’ Or they don’t want to pay $5,000 a month for two or three years to take care of their mother or father. Instead, they realize they can open a RAL home, and their loved one can move in, live there for free while they are making a lot of money. All while they are gaining equity in the property, they are operating their business in. They can own and control better real estate in better areas while they capture higher appreciation.” Networking became one of the best business resources Guarino came across over his four decades of being an entrepreneur. Joining mastermind groups and networking with people who are at higher levels, has been more helpful and educa- tional for him than any book, app, or software program. “That has been the biggest game changer because it’s important to surround yourself with great peo- ple with great minds,” Guarino said.

“And people that are encouraging you to grow and move forward. The RAL industry itself, we’re creating it—even though it existed on a mom- and-pop level for years it’s not some- thing that was well defined. We’re shaping it right now; we’re disrupting the industry,” he said. “We really want this to be better than it was, and we can make money along the way.” AREAL ESTATE LIFE Guarino’s qualifications to teach real estate investing began when he was just a teenager. He was a pro - fessional musician at the time and he and his older brother opened a music school. The building they rent- ed was not in the best condition and the landlord was “difficult” to say the least. Ultimately, they had a deci- sion to make—move or shut down the school. They chose the former and purchased a nearby building for $28,500, which they sold five years later for a $90,000 profit. Gene was just 18 years old when he bought his first property.

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The residential assisted living model of a single- family home is more known and accepted today than ever before.”

GENE GUARINO

at that time, ‘No new residents can come in, and if you are here you have to stay isolated in your rooms,’” he said. “What a horrible situation and what a terrible business model. The problem was you have 200- plus elderly people together in a large community and it’s the perfect environment for spreading the virus amongst them.” The RAL Academy meanwhile focuses on homes with six to 20 people living in them. It’s easier to keep people safe and they don’t have to be isolated in their rooms all day. Visitation was more complicated, but at least it was possible. People moved out of the larger communities with hundreds of people into our RAL homes across the country. “There was a watershed article written in June 2020 that stated, ‘smaller is safer’ and that was the beginning of this tide change—peo- ple were now understanding what I had been saying for years. Homes in residential settings with less people just makes sense,” Guarino said. “Even the big box players are asking how they can get their 200 beds into

was down 47 percent. That figure was in part because there was an assumption that the pandemic would crush the senior housing industry and that particular housing market would be finished, according to Guarino. “The reality is the ‘Big Box’ facil - ities, with 100, 200 or 300 beds said

residential assisted living model of a single-family home is more known and accepted today than ever before.” The COVID-19 pandemic has also caused reconsiderations in the oper- ation of the senior housing industry. Guarino recalled seeing a statistic in April 2020 that said senior housing

thinkrealty . com | 19

does arise, trained caregivers are available to assist 24/7. “If you remember ‘The Golden Girls’ from the 1980s, and you think of nursing homes with doctors, nurses and gurneys, we’re right in between (the two),” Guarino said. THE FUTURE OFTHE SENIOR HOUSINGMARKET No real estate venture is 100 per- cent risk-free, but residential assist- ed living might be the closest thing to it. People will continue to age, and many will require assistance on a daily basis, meaning there will be a growing and ongoing need for RAL Academy’s services.

small pods of 16 so they can isolate them if needed. It’s become clear- er by the day that we’re in the right place at the right time.” The caregiver-to-resident ratio is one of the biggest differences between the RAL Academy model and traditional, “big box” senior care facil- ities. The larger facilities might have one caregiver for every 15 to 20 resi- dents, whereas a RAL home will typi - cally have one caregiver per five or six residents. Another major difference is RAL homes are just that—a home, not a hotel, according to Guarino. “(A large facility) is eye candy for you and me; we’re brothers, we love Mom and want to bring her some- place, so we’re going to put her there

because we think she wants the movie theater, bowling alley and the gardens,” he said. “What she really wants is to be safe and comfortable, loved and taken care of. She also wants (to be with) a group of peers her own age—eight or 10 people she can get along with, not 200 people, because that’s not how she was brought up. She was brought up in a home not a hotel.” Residential Assisted Living homes do not provide medical care. That lack of “nursing” also separates them from the standard nursing home. They are truly residences; a place for seniors who can’t be home alone or take care of themselves completely anymore. If an incident

20 | think realty magazine :: september 2021

“The (senior housing market) isn’t only sustainable, but it’s grow- ing exponentially over the next 20 years,” Guarino said. “I’ve been say- ing for years that the ‘Silver Tsuna- mi’ of Seniors is coming. The Baby Boomers aren’t in assisted living yet, but they’re coming, they’re 10, 15 years out. But right now, the front edge of the Baby Boomers are now just starting to enter assisted living. The Baby Boomer generation has been the driving force for the world’s economy for the last 70 years. Right now, they’re just entering senior housing, which means an explosion of need for assisted living.” In some ways, Guarino and the family are just getting started as well. The RAL Academy is just one piece of The IMPACT Housing Group. For the past three decades, real estate, business, and education have become Guarino’s forté. He’s done more buy and holds than fix and flips over the years, but his acquisitions are wide-ranging from single-family homes, multi-unit properties and some commercial real estate. Today, Guarino and his IMPACT Housing Group put his real estate expertise to work to not only help seniors, but their new companies also include groups that are experiencing housing insecurity beyond just senior housing. The IMPACT Housing Group launched the Majestic Residences RAL Franchise in 2020 as well as The Shared Housing Academy (SHA). The SHA is more of a straightforward real estate investment focused on providing real estate investors an opportunity to get two or three times the typical gross rent. The homes are used as group homes for people facing housing insecurity because of many reasons including justice involvement, recovery homes for addictions, veterans, foster kids that age out of the system, and more.

The IMPACT Housing Group is a family-run business that Guarino and his four children are leading. Guarino has also created the RAL Charitable Foundation that’s he’s been personally been funding and is now looking for outside donors. The foundation is designed to help seniors and will focus on providing music and art for them in an effort to help improve their mental state. “It’s amazing how people can just snap right out of dementia when a certain song plays,” Guarino said. They formed the RAL National Association in 2018 and they have over 20,000 members at this time. The RAL Academy’s National Conven - tion also continues to gain momen-

tum. The RAL NAT CON first started with 250 attendees in its first year in 2016 and they are anticipating over 800 people in person this year at the fifth annual RAL National Convention. “I always tell people that you’re going to get involved in senior housing one way or another,” he said. “Either through the real estate, the business or you or a family member is going to be lying in a bed, writing a check to some- body who does. Right now, you have a choice, so make it a good one.” •

To learn more about the RAL Academy, The RAL National Association and the Shared Housing Academy, visit their websites at: www. RALAcademy.com, RALNA.org, www.SharedHousingAcademy.com •

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FUNDAMENTALS

PROPERTY MANAGEMENT

Creating a Stress-Free Rental Portfolio

SOFTWARE The use of technology helps create more time through automations, record keeping, task management and com- pleting entire processes within one platform. We utilize AppFolio for around 80 percent of daily tasks. We recent- ly started using Monday.com to track a few projects and timelines. This has allowed us to scale without having to add extra labor. Tenants do their applications through here, rent payments, maintenance requests, etc. We also can text and email through the system directly to create a funnel for communication between tenants and team members. We would likely be capped at about a fourth of our size if we did not have a great software to work with. Find one that works for you, in a price range you agree with, and learn it well. They often say the best software, is the one you will actually use. COMMUNICATION TOOLS For communications to tenants, we generally use the texting function within our software or email. For docu- mentation purposes we prefer to have as much written communication as possible. We have a live, outsourced person that answers calls into the company and docu- ments the messages while passing them along to the team member and use CallRail to create numbers as a pass through for outgoing calls. For internal team communications, we use HelpScout, which allows us to manage emails within one platform so if someone goes

EFFECTIVE PROPERTY MANAGEMENT OPERATIONS

by Jeremy Kloter

s investors, we enjoy the thought of reaping the benefits of passive income, thus many of us look to

rental properties when considering our options. Utiliz- ing leverage to acquire properties can allow us to enter the market with a relatively low capital output. Although, there is a difference between passive income and being actively engaged in those activities. Whether you are self-managing your rental properties, or you have hired a company to manage them for you, here are a few tips that have allowed us to run an effec- tive company. Knowing how your management company operates can give you clearer expectations and context when dealing with them.

22 | think realty magazine :: september 2021

is fluid with the move-in process, so use a management software that can do both to consolidate information and speed up the leasing process. MAINTENANCE One of the biggest challenges we can face is oversee- ing, coordinating, and maintaining the level of mainte- nance required to properly fulfill the properties. From emergency calls to routine maintenance, there is a con- stant flow of work needing to be done. Renovations and unit turnovers are another piece to the puzzle, so using the right network of vendors and maintenance person- nel is important. Thinking through the workflow of a new maintenance request all the way to work completed can be a big task requiring multiple touch points with team members and vendors. The easier it is for your vendors to track their assigned tasks the better, along with friend- ly follow ups that can be automated or done through software. We generally pay our vendors weekly, so they are paid timely and keep our work as a high priority. One may consider outsourcing or bringing the maintenance division to some extent in-house. There can be pros and cons to both, but either way this piece takes up a lot of managements time. VIRTUAL ASSISTANTS/REMOTE TEAM MEMBERS There has been a constant need for affordable labor especially with the rise in minimum wage and currently the unemployment has caused some disruption to the labor market. We utilize team members that are remote both within and outside the United States. This gives us flexibility and most of the time we can train someone just was well for a much lower cost than people here in the United States. Freelancers, virtual assistants, and other third-party companies can allow property managers to have a lot of leverage and higher customer service for operations. VAs can also be a great option for small busi- nesses who need help but cannot afford what the labor market is demanding for stateside personnel. •

on vacation or is unavailable then others can interact with the mailboxes. We also like to use Voxer as a walk- ie-talkie style app that allows for texting, videos, voice notes among the team so we know to respond depend- ing on urgency. LEASING When it comes to leasing there are those who allow self-showings, where tenants utilize a system to let themselves view the properties with lockboxes that allow for custom codes for set time periods. Others may still do showings where a representative from the compa- ny tours the unit explaining the benefits, features, and amenities of the property. It may be wise to use both, although right now we are showing properties in-per- son. This technology has been helpful through the COVID environment allowing tenants to show themselves into the properties without contact with another individual. The best way to get activity from your marketing efforts is focusing on the online platforms. As real estate agents and brokers we have access to the listing service where most properties are bought, sold, and leased. We also utilize platforms like Zillow, Trulia, HotPads, etc. to ensure we are getting as much activity as possible. Aside from the lead generation is the automatic follow up with potential renters and making sure a system is in place to show them promptly to try and convert the unit. We rec- ommend using a platform that can run applications and

Jeremy Kloter, A Marine Corps Veteran turned Broker, was raised in the Tampa Bay Area. Jeremy is the Founder of Out Fast Property Management, a top Tampa Bay property management company that manages residential properties and apartment complexes. His other business ventures include being the Co-Founder in a real estate investment fund (506B, Reg. D), a real estate brokerage, and a property management company.

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INVESTOR RESOURCES

LENDERS

Workarounds and Exceptions WhenWorking with a Lender

PART 2: OUTLINING SOME OPTIONS TO KEEP IN MIND

by Nate Zielinski, RCN Capital

hen applying for a loan in hopes of securing a real estate

At RCN Capital, the only difference for Full Boat Interest would be that we charge interest on the full loan amount, both the initial advance and the renovation funds held in escrow. Also, there would also be a two per- cent increase to the interest rate of the loan. In a normal fix and flip loan scenario, interest is only charged on outstanding funds, not the renova- tion holdback. If the investor has faith in the property they want to invest in, and the interest rate increase is some- thing they are okay with, then this exception could be a very valuable one for investors to know about. If this exception strategy is used in the fix-and-flip loan program, the inter - est rate increase isn’t as harsh if an investor can complete the flip in 4-6 months since there are no prepay- ment penalties on that specific loan program at RCN Capital. LETTER OF EXPLANATION (LOX) When it comes to asking your lender for an exception or a work- around, a letter of explanation (LOX) can be a big help. Prepare and sub- mit a letter of explanation for any non-standard transactions when you submit required documents. Lenders are likely to ask for one when there are extremely large deposits, previ- ously allowed exceptions on current outstanding loans, or unusual back-

ground check flags. Letters of expla - nation are always a plus to submit for a drastically reduced purchase price as well. This can also be used for prop- erties where the purchase price is below our minimum property value requirements, but the as-is value exceeds our minimum requirements. This is more common with auction purchases or foreclosure properties, but a letter of explanation shows initiative to a lender and providing background information makes life for the lender much easier. Once they see an investor submitting an LOX on a consistent basis, they are more likely to work with them and go the extra mile to make an exception for the investor. Also, as a reminder, a letter of explanation (LOX) does not need to be an official document. Just type up an explanation using Word or a simi- lar program and submit it along with your other documents. DOES THE PROPERTY FIT NEIGHBORHOOD? (WHITE ELEPHANTSANDUNICORNS) This workaround is more of smart practice that borrowers should employ in a number of different scenarios. Whether it is a purchase and rehab, buying a potential rental or starting a ground up construction project,

investment property, there are always lender guidelines to keep in mind. These guidelines are crucial as they allow lenders to set a base- line of expectations for borrowers to meet when starting the applica- tion process. However, it can often be a smart decision to ask if a lender is able to offer or willing to discuss exceptions or workarounds for certain scenar- ios. If the lender shows extra effort and wants to come up with solutions to try and do business with an inves- tor, it is a great sign that you are speaking to the right one. Here is the second installment of workarounds and exceptions to keep in mind that RCN Capital offers and ones that another lender may as well. INITIALADVANCE BELOW MINIMUMREQUIREMENT FOR FIX & FLIPS This exception is crucial for investors to know about if the property value is at or slightly above $50k for 1-2-unit properties as there may be an issue with the initial advance on a purchase being below the minimum requirement of $50k for the program. This is an area where we are still able to lend on the property, but RCN would require full boat interest.

24 | think realty magazine :: september 2021

having a property fit-in with the rest of the neighborhood is a recipe for success. Properties that do not fit in their respective neighborhood can be referred to as “white ele- phants” or “unicorns” and they are something you want to avoid in the real estate investment space. Sometimes renovation plans can be very ambitious to create the best and most modern property that fits the investor’s standards. However, if the rehab plans pro - duce a property that ends up being valued much higher than its sur- rounding neighbors, the shiny new renovations can make the property undesirable instead. Even if it is a beautiful property, if it sticks out too much in appearance and espe- cially in price, you can expect the property to stay on the market for a longer period of time and the price will eventually have to be lowered. In this scenario, the investor stands

to lose money because after all that work, they will not get the expect- ed purchase price due to property being so different than the ones in the surrounding areas. EXISTINGAPPRAISALS Having an existing appraisal is an exception that RCN Capital and other lenders can make and if it is accepted by your lender this exception is a great way to save time and money. At RCN Capital, if the appraisal is performed 120 days before the date of closing, then RCN can accept the appraisal. It must be a third-party appraisal and come from a verified source that RCN can trust, but we will take a look at it and hopefully be able to accept it. Ordering another appraisal may take anywhere from 2-4 weeks and on average cost an extra $500-$1500. If you have an appraisal already com- pleted do not hesitate to send it in.

Even if we cannot use it, it would not hurt to have multiple valuations of the property. Exceptions and workaround are crucial to know about the real estate investment property industry. Asking your lender about them and becom- ing more knowledgeable on what certain lenders can offer is a huge advantage for investors. With part 1 and 2 of Workarounds and Excep - tions now available, you should be well-versed on how to gain even the slightest edge to make a deal work. •

Nate Zielinski, Junior Business Development Coordinator, joined RCN Capital in 2020. He adds his ambition, communication skills, teamwork, and public speaking ability to RCN’s

Business Development team. Nate’s goal will be to recruit new, long-lasting business relationships with brokers and borrowers as well as maintain the strong relationships RCN Capital already has in place. Nate’s prior work experience includes sales, advertisement, copywriting, and social media. Nate graduated from the University of Connecticut in 2015 with a Journalism degree.

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FUNDAMENTALS

SCALING

5 Limiting Beliefs That Stop Investors from Scaling

BREAKING HINDRANCES SO YOU AREN’T HELD BACK

by Ellis Hammond

ut simply, a limiting belief is a thought pattern that is holding you back from moving forward in some

them, they will cause some serious damage. So how do you overcome these limiting beliefs? While there is no exact formula, you can generally work toward overcoming your mental limits by doing these three things. Accept the possibility that some of your beliefs may be wrong. Once you remove the rigidity of these thought pat- terns, you can begin to re-shape them. Figure out how each of these beliefs is serving you. There is a reason you’re holding onto that thought pat- tern. Maybe it once served you, but no longer does so. You need to figure out how these beliefs are serving you and what you can gain from changing them. Replace these thoughts with alternatives. Below are five common limiting beliefs that keep you from becoming a successful CEO. It’s time to tackle those limiting beliefs one by one.

aspect of your life or work. Limiting beliefs are powerful hindrances in your mind, and unless you identify and inten- tionally change them, they will continue holding you back. If you want to take your real estate business to the next level, you need to start with changing your old thought patterns. Sure, you’ve gotten this far, and your mentality has served you well. But the same mindset that got you this far, will only get you this far. Last season’s mindset is not going to work for the season ahead. Let’s imagine you’re renovating a house. If you really want this house to last, you have to start where it matters most: the foundation. We’ve all seen the HGTV shows. Weak spots in the foundation will eventually lead to problems with the structure of the home. These weaknesses need to be addressed and repaired before anything else can happen. It’s the same in business leadership. If you’re looking to upgrade to CEO status, you have to go back and look for weaknesses in your own foundation: your mind. Limiting beliefs are those weaknesses in your foundation, and unless you first identify them and address

LIMITING BELIEF 1 I need to execute everything perfectly.

Excellence is a process. It’s part of the reason we have so many versions of the iPhone on the market. Excellence

26 | think realty magazine :: september 2021

allows for improvement while already improving the lives of buyers and users. Remember, successful CEOs do not aim for perfec - tion, they aim for excellence. LIMITING BELIEF 2 I must be involved in EVERYDETAIL of my company. If you’re going to be the CEO of your business, you need to behave like one. CEOs cast vision and inspire their team members to make it happen. They do not micromanage or get bogged down with the details.

LIMITING BELIEF 3 My job is to delegate. Remember this: managers delegate, CEOs cast vision.

LIMITING BELIEF 4 I am just selling a product or service.

You didn’t go into real estate because you were pas - sionate about the product or service itself. You got into this business because you are passionate about the lifestyle that comes with what you are selling, and you believe that others should have access to that lifestyle.

LIMITING BELIEF 5 I don’t have enough support.

If you’ve gotten to where you are now alone, it’s time you found your people. Truly successful CEOs surround themselves with people who work and grow with them, who challenge them to be better and to hold them accountable. If you try to level up to CEO status by your - self, your journey will not only be miserable, it will be short-lived. •

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.

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