STRATEGY
COACHES CORNER
SHAWN WOEDL
TURNKEY INDICATORS
Residential Real Estate IndicatorsYouMust Know RENTALS ARE “HAVING A MOMENT” AND YOU NEED TO KNOWWHY.
SHAWN WOEDL Leading Risk Management Expert Joins the Team THINK REALTY'S NEWEST COACH:
by Douglas Skipworth
ow is the time to buy residential real estate. I have been in the real estate investing business for more than 20 years, and all the signs are there: • The stock market is near all-time highs • Debt market yields are still histori- cally low • Supply and demand factors in residential rentals strongly favor landlords and other investors As of the middle of 2018, buying rental real estate seems like a wonderful op- portunity to get a solid long-term return with low risk. N
AGOOD BALANCE OF RISKAND REWARD “Residential real estate offers the returns of stocks with the low risks of bonds. It is the best of both worlds,” said Doug Bendt, economic consultant to real estate companies including Roofstock and Investability. Referencing the graphic below, we can draw two important conclusions about rental (or turnkey) real estate in compar- ison to other, more traditional invest- ment offerings: 1. RENTAL PROPERTIES OFFER DIVIDENDS AS WELL AS CASH FLOW. This makes their list of benefits similar to
that of a publicly traded stock offering, which offers growth and dividends. What that means to me today: Based on today’s rent rates, carrying costs, and rising home values, the return side of the rental ownership equation is very attractive. 2. RESIDENTIAL REAL ESTATE IS COM- PARABLE TO BOND INVESTMENTS. Rental yields are not nearly as volatile as the stock market, which clearly exhibits dramatic swings. It is steadier, like bonds. What that means to me today: I do not expect major surprises for real estate returns in the near future because the fundamentals are very favorable for investors regardless of outside factors. WATCH RENTAL DEMAND DRIVERS CAREFULLY Just like we learned in Economics 101, the two main drivers of the risks and rewards of residential real estate investing are supply and demand. These fundamentals will guide you as you SFR RENTAL
al experience in real estate, business, and property management to NREIG’s unique, investor-oriented brand of
for the cheapest policy he could get on the property because his insurer at the time told him it would cover him in an extreme emergency. That coverage, which had to cover all of his losses in a total-loss scenario, was worth a max- imum of $20,000. Neither party un- derstood what the ramifications could be in an ‘emergency’ and they made a terrible financial decision with horrible financial ramifications since the inves- tor had not factored this potential loss into his worst-case-scenario plans.” FAVORITE BOOKS: • The Ranger Way , by Kris Paronto • Relentless , by Tim Grover MENTORS AND ROLE MODELS: “My Dad and my late Uncle Rock, who both taught me the importance of work- ing hard every day to provide for my fam- ily, and TimNorris (CEO of NREIG and a longtime friend and mentor for Woedl), who taught me insurance and helped get me started in this business.” •
TITLE AND AFFILIATIONS: Senior Vice President of National Real Estate Insurance Group (NREIG), former Vice President of CORE Insur- ance Group, former Vice President of the National Condo and Apartment Insurance Group COURSES: • An Introduction to Risk Management • Protecting Yourself and Your Investments • Insuring Your Fix-and-Flip EXPERIENCE: Shawn Woedl has spent nearly 10 years of his professional life in proper- ty insurance after starting out on the other side of the table. “I started out managing health clubs in Ohio,” he recalled. “There is a lot of insurance fine-print in that business!” When he was offered the opportu- nity to begin to work with property owners on insuring their real estate, however, he jumped at the chance and never looked back. Woedl, who spe- cializes in residential and commercial real estate insurance specifically for real estate investors, brings his person-
property insurance. WHY HE’S HERE:
Favorable risk profile for SFR rental equity investment relative to bonds should attract large amounts of c pit l Greater efficiency of SFR rentals . . .
Favorable risk profile for SFR rental equity investment relative to bonds should attract large amounts of capital Greater efficiency of SFR rentals . . .
“Insurance has been great to me, but not everyone can say that. In fact, every day I talk to real estate investors who have suffered immense losses because neither they nor their insurance agents (not NREIG, of course!) really under- stood the unique aspects of insuring investment properties. I travel all over the country educating investors on the types of things they need to know, ask, and demand from their policy provid- ers to help make sure they do not expe- rience unnecessary losses. My mission is to help investors better manage their risk while only paying for coverage they truly need, but part of that involves making sure that protection is the right fit for their business model.” Woedl added one particular case of a now client of NREIG’s that haunts him. While the investor was still a prospective client, he suffered a total loss on an investment property. “It was completely gone,” Woedl recalled. “Unfortunately, the investor had opted
Favorable risk profile for SFR rental equity investment relative to bonds should attract large amounts of capital Greater efficiency of SFR rentals . . . Favorable risk profile for SFR rental equity investment relative to bonds should attract large amounts of capital Greater efficie cy of SFR ren als . . . 10% 12% 14% 16% 18% 20% computed from annual data 1988 - 2016 computed from annual data 1988 - 2016
10% 12% 14% 16% 18% 20%
0% 2% 4% 6% 8%
0% 2% 4% 6% 8%
computed from annual data 1988 - 2016
computed from annual data 1988 - 2016
0% 2% 4% 6% 8% 0% 2% 4% 6 8% 10% 2 14% 16% 18% 20% 10% 12% 14% 16% 18% 20%
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> Continued on :: PG 96
© 2016 Investability, AllRightsReserved
© 2016 Investability, AllRightsReserved
Douglas Skipworth, CPA, CFA is the Co-Founder and Principal Broker at CrestCore Realty in Memphis, TN. CrestCore manages over 2,500 units
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for approximately 500 individual investor clients, of which Douglas and his business partner Dan Butler are the largest. Connect with Douglas at douglas@crestcore.com.
Access Shawn's courses at ThinkRealty.com/Shawn.
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© 2016 Investability, AllRightsReserved
12 | think realty magazine :: august 2018
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© 2016 Investability, All RightsReserved
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