TM I N FORM . I NS P I R E . E DUCAT E . EMPOWE R .
How to Profit from Real Estate Syndication FUNDAMENTALS Raising Capital for Your Investments STRATEGY
Is AI Next in REI Education? MARKETS & TRENDS
The Disruptive Educator STEVE TRANG AND HIS PLAN TO CREATE 100 MILLIONAIRES
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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 Allen Rodriguez
CONTRIBUTORS Dennis Blitz Tyler Burke Grant Cardone John Chang Francis Chantree Chase Collins Joe Dyton Joe Fairless Ellis Hammond Fred Heigold III Scott Lewis WJ Mencarow Aaron Norris Bruce Petersen Ben Rao Marla Roberds Brian Snider Steve Streetman
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FROM THE EDI TOR- IN-CHI EF
Learn, Grow, Repeat
change of season, much like an anni - versary, brings reflection on where we have been and anticipation of where we’re A
56. And an education issue wouldn’t be complete with - out a quiz, right? You’re in luck because we have fun little quiz for you to test your IQ on IRAs. In addition to offering an
going. As I write this, it is new- ly springtime and the anniver - sary of the pandemic that forever changed the way we do business, com - municate, and learn. And if we have learned anything this past year, it’s how to adapt to ever-changing situations. April is the Education issue of Think Realty Magazine, packed with content on not only where real estate investors like you can go to learn more, but how instructors in the indus - try are changing the learning landscape. Cover story person Steve Trang is a learn- as-you-go type personality who has goals akin to Andrew Carnegie. Read his story and what he’s doing to “disrupt” the industry on page 16. And former schoolteacher Brian Snider shares his real estate success story, which he attributes in part to what he did in the classroom. He is also Think Real - ty’s newest contributor and writes about educating yourself as a wholesaler on page
ever-evolving informational approach to better understanding
real estate markets and trends, Think Real- ty is also transforming benefits for its mem - bers. Our CEO Eddie Wilson is hosting a monthly virtual call called RE-Focus where he teaches valuable information on topics like business operating systems, leadership, communication, investing, and more. If you haven’t registered for RE-Focus yet, it’s not too late! Simply go to thinkrealty.com and click on RE-Focus under the Education tab. In an industry where there is so much to learn, Think Realty stands behind our passionate commitment to be a trusted resource for you. Our mission is to provide products and services focused on serving Real Estate Investors, and we aim to contin - ue to inform, inspire, educate, and empower you on your real estate investing journey. •
Keep Going!
KELLI WHITE, EDITOR-IN-CHIEF
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CONTENTS
INSIDE THIS ISSUE
16
COVER FEATURE
Real Estate Disruptor founder Steve Trang and his plan to create 100 millionaires by Joe Dyton
THE DISRUPTIVE EDUCATOR
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THINK REALTY
STRATEGY 58 Is AI Next in REI Education?
8 News & Events
How virtual environments are helping and hurting real estate instruction by Steve Streetman 60 When the Largest Generation Affects REI How residential real estate investors can ride the ‘Silver Tsunami’ wave by Ben Rao 62 Cardone’s Column: A Beginner’s Blueprint to REI Understanding the rules of the real estate investing game by Grant Cardone 64 Raising Capital for Your Real Estate Investments The five parts to finding money for your deals by Bruce Petersen, a Think Realty Resident Expert
INVESTOR STORIES
11 Contributor Corner
Meet Steve Streetman
12 Success Story:
Former Teacher Turns to Real Estate by Brian Snider
15 Presidents’ Circle
FUNDAMENTALS
24 The Right Real Estate Investment Instructors Red flags of non-trustworthy teachers by W.J. Mencarow 26 Profiting from Real Estate Syndication Imagine a deal where everyone wins by Ellis Hammond
DESIGN POINT 68 Design Within Your Budget
Get a luxury look in your properties for less money by Marla Roberds
MARKETS & TRENDS 72 Health Scare
28 Five Strange Facts About IRAs
See how you score on this IRA quiz by Dennis Blitz
Lost jobs could have lasting consequences by Ingo Winzer 74 Market Spotlight: Raleigh A high-tech hotspot by Fred Heigold III 78 On the Radar: Want Success? Focus on Chocolate Knowing what you bring to the game can help you win by Aaron Norris
35 Commercial Review: A special Think Realty publication for Commercial Real Estate vol. 1
54 Extend Your Capabilities with Property Manager Assistants
This simple way to scale starts with proper training by Chase Collins
MINDSET 82 Style and Class
56 Think Local, Learn Local Educating yourself virtually as a wholesaler by Brian Snider
Knowing the difference in your investment methods and assets by Eddie Wilson
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THINK REALTY
NEWS & EVENTS
Think Realty Honors Nominations Open! E ach year, Think Realty honors leaders in the industry who exemplify the best in real estate investing. Not only have the winners achieved great success in their own right, but they also demonstrate Think Realty’s mission of being trusted resources within the real estate investing industry. Know someone who fits this description? Nominate them today! Winners will be featured in Think Realty Magazine, on social media, and celebrated at a special awards ceremony with Think Realty CEO Eddie Wilson.
Nominations are open for the 2021 Think Realty Honors through June. Go to thinkrealty.com/honors now and enter your picks!
New for Premium Members! Think Realty is excited to announce a new benefit exclusively for our premium members. Each month, CEO Eddie Wilson will host RE-Focus, a video call in which he shares business tips and captivating content followed by a Q&A session. It’s your chance to have a one-on-one experience with Think Realty’s CEO where you will be inspired and empowered on your REI journey!
8 | think realty magazine :: april 2021
INVESTING STRATEGIES FOR DYNAMIC MARKETS SEP 18-19 BALTIMORE
Experience what the Think Realty Conference has to offer:
Network with top-tier real estate professionals at the Cocktail Reception. Meet 30+ exhibitors offering real estate investment tools, products and services. Attend sessions and specialty workshops on a variety of investment strategies. Access deal-making opportunities with the biggest names in the business.
Register at ThinkRealty.com/Baltimore.
Think sponsorship with Think Realty! Find out more at thinkrealty.com/sponsorship.
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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.
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INVESTOR STORIES
CONTRIBUTOR CORNER
T he Think Realty team met Steve Streetman at our Baltimore event in 2019 where he educated the audience on buying real estate with cryptocurrency. Since then, he has written dozens of informational articles for our readers. A wonderful teacher and writer, we are fortunate to share Steve’s wealth of knowledge with you. Here, he shares why he is passionate about real estate: Meet Steve Streetman Contributor Corner The
are so many ways to improve your returns on your investment. My two favorites are lever - age and cost segregation. Yes, you can buy real estate using mostly other people’s money and make a return on their funds. And cost segrega - tion transforms the whole taxation approach. You get to keep much more of what you make. There are times that I probably make investing too complicated. But there are so many ave - nues to structure deals or add income streams or force appreciation; it is hard to resist adding just one more thing to the mix. I love invest - ing in real estate, even when it’s messy or I hit setbacks (and boy have I hit setbacks over my career). I get to work on interesting problems that improve people’s lives and work with great partners doing it. I’m sure I’ll be investing for the rest of my life.”
When I was first looking into real estate investing, it looked pretty good to me. Real estate was a hard asset that could both appre - ciate and provide cashflow. What’s not to like? But even a little time spent ‘under the hood’ opened a world of additional advantages and interests that has just blown me away. Real estate ties directly to our lives: where we live, where we work, where we shop, where we play. By investing in real estate, we can direct - ly make lives better. If I invest in the stock of a company, it’s just buy and pray. But if I buy an apartment complex, I can improve the property, improve the management, improve the mar - keting, reposition the asset, or even redevelop into something completely different. There are so many facets to real estate investing and so many opportunities to solve problems. I real - ly enjoy figuring out how to solve problems, sometimes in new or creative ways (like using cryptocurrency in real estate deals). And there
—STEVE STREETMAN
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INVESTOR STORIES
LEADERSHIP
Success Story: A School Teacher Turns to Real Estate
by Brian Snider
any teachers could make a list of methods and approaches that they feel make them a stronger teacher in the classroom. I have narrowed my list down to four, and I have found that these things have also translated into helping me be a better business leader for my team. Here’s how years of teaching techniques have translated from instructor to CEO: M
Brian Snider SIMPLE WHOLESALING
#1: The Power ofWhy As a teacher:
#2: AllowOthers to Do the Teaching As a teacher:
My philosophy of teaching math revolved around not how to do things but why we do things. When my students understood why they were doing something it stuck with them more than the steps to a process. When they were able to figure out the why on their own, it resonated with them even more. I made sure to put my students in situations and ask the right questions to allow them to understand why they were solving problems a certain way. As a CEO: When decisions are made, processes change, or new systems are implemented, I think that the most important thing is for the team members to understand why. If they understand the why behind everything, they understand its importance and its effect on the team. When team members are a part of the decision-making process, the why is understood even more and promotes owner - ship by the team members as well.
Some of my most impactful days as a teacher were the days that I said the least. Most perceive that a teacher judges how well a student knows a concept by the score received on a test. But I believe that the highest form of comprehen - sion of a concept is shown when someone can demonstrate they can teach that concept to others. Students teach - ing was a regular occurrence in my classroom, not just because I think students can learn through their peers, but because teaching and explanation leads to understanding and comprehension. As a CEO: I am often asked to speak at events or be on a podcast and am expected to lead our team meetings. While those things are important, it is also important to allow my team mem- bers and leaders to have those opportunities as well. What better way to dig into a process than to have one of the team members explain it to others? If I am asked to speak at a meetup on a topic like “how to follow-up with motivated sellers,” one of my acquisition guys will speak with me so they can explain how we do it. The team member will have to think, reflect, and teach through our process, and I will be able to evaluate how things are truly being done.
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#3: Going Deeper, NotWider As a teacher: My goal when teaching was never to just make it through the curriculum by the end of the year. My goal was to see how many pieces of the curriculum I could fit into one lesson. I realized that by going deeper into my lessons and covering as many topics as I could in one lesson the topics became relatable to stu - dents and we hit every topic multiple times a year instead of the day or page it was covered in a book. Sometimes one lesson would take a week or two but would cover topics from five or six units from the curriculum. Many teachers think they just have to race to get through the textbook, which is a wide span of topics covered one time. When I focused on going deeper, I was able to cover the entire curriculum in no time and teach every topic multiple times, which in turn deepened the students’ understanding. As a CEO: In real estate, the question is generally how to get more deals. An obvious answer is to expand your area. I do not think area expan - sion is necessary to get more deals until you are sure that you have gone deep enough in your current market. If your process is work - ing in one area, think about how you can go deeper in just that area working that same process that you already have in place. When we made the decision to minimize our buying radius and just focus on marketing and buy - ers in that particular area, we increased our number of deals by 25 percent.
#4: Using Data to Make Decisions As a teacher:
I tracked data all the time for everything as an educator. I want - ed to make sure that the areas my students knew the least about were covered the deepest. The areas that they were the stron - gest in, I wanted to use them as a base for their other lessons. No, I am not talking about the data from standardized testing, but from formal and informal assessments that I would conduct each day. I would use that data to decide how I would build the lessons to go into a unit, how long we would spend on that unit, and when the students were ready to move on to the next unit. As a CEO: Tracking and analyzing data is crucial for a real estate investor but using that data to guide your decision-making is even more important. Knowing the data that you want to use to make those decisions that will take your business to the next level is the best place to begin. Think about where you want to get to and what is needed to get there. Then, it is just three easy steps:
1. Figure out what numbers need to be tracked; 2. How you are going to track them; and 3. Discuss those numbers on a regular basis.
Some of the examples that we dive deep into data analysis are marketing effectiveness, conversion rates of contracts, and team member efficiency. Using the data to make decisions allows us to be proactive instead of reactive. I also use data analysis to help inform decisions about team members. There are so many personality tests out there now that can be used to know if a person you are hiring has the right profile for the position or if struggling team members are sitting in the right seat. You can also use those assessments to learn how best to communicate with your team members or if a team member is stretching themselves too much to fit a role. A team member is more than just a piece of paper of course, but data can be a tool to help build a stronger team. •
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Where will your network take you?
The top echelon of the real estate investment and private lending industries meet in one place: the Presidents’ Circle. Circle members build deep connections across the REI landscape, learn tomorrow’s trends from leaders driving the industries, and step into the spotlight via Think Realty and the American Association of Private Lenders’ powerful media outlets. Will you be there? aaplonline.com/presidents-circle
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INVESTOR STORIES
PRESIDENTS’ CIRCLE
ACircle of Education MEMBERS WHO INFORM, INSPIRE, EDUCATE AND EMPOWER ONE ANOTHER
he Think Realty and AAPL Presidents’ Circle is a select group of top-per - forming executives and entrepreneurs from both the private lending and real estate investing industries who gather several times a year at exclusive events to network, learn, and encourage each other in a confidential setting. This month, we asked several Presidents’ Circle members this question: T What sources of education have been invaluable for you on your REI journey?
“To create the foundation, I read a lot of books but the ones that stand out are the Rich Dad series as that really helped cement the mindset shift that is needed, and I can’t forget about their cashflow games. I played those hundreds of times, and then played it in real life. I have attended a lot of seminars—some were quite good, and others were not. I discovered there are those that actu - ally do the business and train and then there are those that just train and have a sales fest. One must do due diligence and hopefully find the right events. However, the biggest impact on my de - velopment overall in this industry was, and still is, networking. I highly recom - mend everyone go to their local REIA, meetup groups and real estate gather- ings like Think Realty’s. Of course, the teachings will be beneficial, but the real benefit is the people you meet who are already in the business. Their knowl- edge, experience, and connections can move someone’s business faster than you can imagine. You can read all the books you want, attend all the semi- nars you want, but in my opinion, the exponential learning and growth comes from networking. I would not be where I am today without it!”” GREG SLAUGHTER www.GregSlaughter.com
“The greatest education I receive, whether for business or recreation, is by jumping into it. Learning by doing has blessed me with increas - ing success; however, it has not been without challenges. I have become all too familiar with the adage, ‘Good judgment comes from experience. Experience comes from bad judgment.” Jumping into things without experience has cost me millions and chronic physical pain from injuries. Maturity has guided me to seek advice from those with Experience and Good Judgment, often found in great books by Na- poleon Hill, Charles Haanel, and Dr. Joe Dispenza.” AARON CHAPMAN SecurityNational MortgageHomebuyers
“The best form of education that I continue to come back to are books—both print and au- dio. I think of them as ‘lessons in a box.’ There is much to be gained from good books on real estate, finance, econom - ics, and investing in general. My secondary source is pod - casts, although they didn’t exist back when I started investing. I listen to them from time to time just to keep up with what’s happening today and any new trends that may be coming.” MARCO SANTARELLI Norada Real Estate Investments
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COVER STORY
STEVE TRANG
Real Estate Disruptor founder Steve Trang and his plan to create 100 millionaires THE DISRUPTIVE EDUCATOR
BY JOE DYTON PHOTOS COURTESY OF LEO BLAZE
T hose familiar with the best-selling book Rich Dad Poor Dad know it is an exploration into person - al finance, investing and making money work for people rather than the other way around. Steve Trang read it and came out with a different inter - pretation—he should become a Realtor. “I look back now and it’s kind of funny,” Trang said. “As you get older, you get wiser. That kid, 27-year-old Steve was an idiot. He read Rich Dad Poor Dad to learn about passive income and from there became a Realtor. That’s not what the book was about.” Trang might have taken the wrong lesson from the book at the time, but his initial misstep has paid off for him in a big way. He’s now fully immersed in the real estate industry in several different sectors. Trang owns the Stunning Home Realty brokerage, offers real estate coaching and mentoring services, created the OfferFast Homes mobile app to help wholesalers more easily and quickly promote their properties, and hosts Real Estate Disruptors, one of the top podcasts in the nation today.
That’s not bad for someone who was at first just looking to earn a solid income and thought real estate was the way to do so. “I think like a lot of other people in the real estate investor space, you read Rich Dad Poor Dad and think, ‘Oh, this W2 thing is not what I was supposed to do, it’s not what I was designed for,’” Trang said. So instead, Trang started an investment club with some friends, and they attempted to buy properties. Unfortu- nately, this was in 2007 when banks had stopped lend- ing. Trang’s fortunes eventually changed when he met a real estate broker. He wondered why he, with a Master’s Degree in Engineering, was making $70,000 a year while this broker who, “just kind of hangs around with people all day” was earning six figures. “I thought, ‘wait a minute, what am I doing here?’” Trang said. “I asked him what it would take to learn what he did. He told me to get my real estate license and he’d teach me everything he knew. I got my license in two and a half weeks.”
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“I BELIEVE ANYBODYCAN BETRAINEDTO SELL.”
STEVE TRANG STUNNING HOMES REALTY
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Getting into coaching helped moved Trang away from real estate “jobs.” He also got a better understanding of marketing and sales, the importance of having a buyer’s agent and listing agent as well as how to find sellers. “I also learned about how to find distressed sellers,” he said. “And once I got better at finding distressed sellers, I got into the flipping side of the business versus just being a Realtor. It was around the same time I opened up my own brokerage.” Gaining this knowledge wasn’t enough for Trang, how- ever. He wanted to share what he learned with others so they could thrive, too. His inspiration to coach came from a story he’d heard about Andrew Carnegie, who at one point was the wealthiest person in the United States. Car- negie was once asked why 18 millionaires were working at his company. He replied that they weren’t millionaires until they started working for him. “That made me say, ‘OK, it’s great that I am trying to become independent and chase my dreams and this and that, but I’ve got to help along the way,’” Trang said. “It was always an inspiration. I opened a brokerage in 2013 and one of the mission statements was to create 18 mil - lionaires, to be an Andrew Carnegie.” If you check out Trang’s website, you’ll notice that mil - lionaire target has grown a bit from 18—his legacy is now to create 100 millionaires. His goal changed after he cre - ated the Real Estate Disruptors podcast, where he inter - views some of the most prominent figures in the industry about topics like wholesaling, house flipping, investing, and more. “Since starting the podcast, I figured if we’re going to have a national stage, 18 millionaires is going to be a joke. Let’s make it 100,” Trang said. “Which is why that has always been the mission of this podcast.” The Real Estate Disruptors podcast started as a brand - ing tool. Trang was advised to create a blog, write a book, or start a podcast. After the first two didn’t work out, he hoped the third time would be the charm. Fortunately for Trang it was. The show has gained nearly one million views on YouTube since its premiere. Unlike a lot of podcasts, Real Estate Disruptors found success early on in its run. The initial success happened for a couple of reasons. First, Trang didn’t waste much time launching it. He got the podcast advice on a Satur - day, announced the following Wednesday on Facebook that he was starting a podcast and one week later he was recording his first episode on Facebook Live. “That’s me in a nutshell,” Trang said. “I’m a really fast mover. I won’t have all the answers. What I’ll do is screw things up and then fix them along the way.”
EARLY FORAY INTO THE REAL ESTATEWORLD Trang gave his two-weeks’ notice at his prior job after he earned his real estate license. He quickly learned how difficult a Realtor’s job can be. Trang went from having one boss to several as every buyer and seller, as well as his broker, had essentially become his boss. The Realtor journey led to a lot of credit card debt and even a face-off with foreclosure. “The ‘D’ word was dropped a couple of times because that’s what happens in financial distress when you’re married,” Trang said. Trang avoided divorce as his real estate career saw more success after he began to work with Chase, Wells Fargo, Bank of America and Fannie Mae as a listing agent for those banks. As 2010 approached, Trang knew he’d even - tually have to pivot. Not only was the foreclosure era wind - ing down, he also did not find traditional real estate very fulfilling. He had two choices—find a new real estate-relat - ed path or return to a prior employer. THE QUESTTO CREATE 100MILLIONAIRES About three years after Trang entered the real estate world, he decided to re-educate himself. He reached out to some of the top agents and investors in his market and said he needed to get into coaching or do something other than what he was doing. He was referred to Craig Proctor’s Real Estate Coaching and Seminars, which he signed up for and changed the way he saw the industry. “That is when I learned the difference between a busi - ness owner and paid employee, which a Realtor is,” Trang said. “A wholesaler is also a high-paying job.”
Steve Trang on computer.
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If I were still in engineering, I wouldn’t be
“I describe being an entrepreneur like this—if you were to build a dam, you’d get the survey architect, do the math, this and that. Whereas I say, ‘See you there tomorrow.’ I’m going to show up with a bunch of rocks, and we’re going to get started. Where the holes are, we’ll find more rocks to plug them. That’s how I run everything.” The second key to the podcast’s success was Trang took big swings when it came to booking guests right away. Sometimes podcasts will try to build an audience and go after big name guests once they are established. Doing the opposite allowed Trang’s podcast to become well known much faster. “I was intentionally finding people with a big microphone to come on the show,” he said. “I want to say it’s the content, but if we are talking about why it grew, it’s because reading as many books. I would not be spending as much on personal development.” —STEVE TRANG
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ably listen to every episode and become a millionaire, it would just take that person five to seven years to do so. If someone wanted to reach that pinnacle faster however, the Disruptors’ coaching and mentoring programs are full of workshops that are designed to help people achieve wealth through real estate. Students will learn the skills necessary to work in the field including sales, landing investors, data management, business operations, whole - saling, and more.
we found people with reach. I am told all the time that we have the best content. I think it’s pretty good, but [the pod - cast] grew because we put influencers on the show.”
TEACHING THE TRICKS OFTHE TRADE The Real Estate Disruptors podcast is just one of the tools Trang is using to create 100 millionaires. Even though by Trang’s own admission, someone could prob -
Steve Trang in studio.
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the subject will be answered on his channel. “Now you have no excuse to not be successful,” he said. “Instead of answering questions one by one, I’m just going to link to the video I recorded on YouTube. It’s right there.” Trang’s hope is that the millionaires he helps create will go on to inspire another class of millionaires. That hope appears to be taking form; Trang has had multiple podcast listeners eventually become so successful that they end up being guests. One listener in particular was $350,000 in debt but signed up for Trang’s course and found his way out of that hole. “It’s ironic because I wouldn’t take him on a as student now because he had not done a deal at that time. But he came on, I coached and mentored him, and he paid off all of his debt.” Real Estate Disruptors is also going to gamify the learning process. Students can register on the compa - ny site and pledge to become one of the millionaires. As they progress, they can attain different certificates like “Closed my first deal”, “Closed 10 deals”, “Made $100,000 in a year” and eventually, “Made $100,000 in a month.” When a student reaches millionaire status, Real Estate Disruptors will give them an engraved plaque that reads, “Certified Millionaire.” “In 2007, I’d say, ‘coaching is stupid,’ because I thought I knew everything; I was smarter than everybody, right?” Trang said. “But what I’ll say now is there’s no better return on investment than investing in yourself. Everyone says that, but it is true. You can’t buy more time, but you can definitely reduce the amount of time it takes for you to get somewhere. If you want to (become a millionaire) in two to three years, you have to invest in coaching.” FAMILYMATTERS Trang’s students aren’t the only people in his life who he’s looking to help build rich futures. He also has three daughters and is working to create three great citizens and contributing members of society. “I want to be the best father and husband I can be,” Trang said. “That goes back to working less than 40 hours a week. I think the coolest thing about getting into real estate isn’t the money—and money’s great—but it’s the things I’ve had to learn. If I were still in engineering, I wouldn’t be reading as many books. I would not be spend- ing as much on personal development.” “So the coolest thing is learning about all of this and teaching it to my kids—they’re going to have such an unfair advantage. The things I’m learning, people pay me thousands of dollars for and I teach it to my kids. I’ve got
“I am told all the time that we have the best content. I think it’s pretty good, but the podcast grew
becausewe put influencers on the show.” —STEVE TRANG
“Since 20 people are talking to the same homeown - er, how do you win?” Trang said. “I teach how to separate yourself from everybody else. We’re not selling a service or widget; we are selling us—the human being. That’s what we’re trained on—how do you sell YOU? I don’t care if you’re an engineer, I believe anybody can be trained to sell.” Even those who aren’t born salespeople can succeed in this course, which includes 12 modules and weekly group calls. Trang equated learning sales to learning to speak a new language—it’s much easier to do when you’re immersed in the process until it becomes second nature. Working on it here and there won’t help once the person has to put the language to work out in the field. “We have the course, but we also have someone that wants hands-on coaching,” Trang said. “It’s a weekly group call—it helps everybody. I firmly believe that’s what it takes. That’s what I did when I learned it; I was meeting with my instructor three times a week.” For those interested in wholesaling, Real Estate Dis - ruptors is offering a free course in 2021 that will be avail - able on YouTube. All the questions Trang’s been asked on
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“I’m intentional withmy time; work-life balance is not lip service, it’s intentional.” —STEVE TRANG
three closers growing up, three people who are going to understand business.” Some might say Trang has the best of both worlds—a strong work ethic and the desire to always be there for his family. Both are perhaps born from his own childhood. He came to the U.S. as an immigrant with his parents who often worked 60 to 80 hours a week. Trang would often stay up until midnight in elementary school so he could see his mom when she’d get home around 12:30 in the morning. Now, Trang takes his children to school every morning, stays off his devices as much as he can during
the evening, and doesn’t work on the weekends—a life - style created from a successful real estate career. “With all I’ve got going on, I also own a brokerage with over 100 agents and almost one percent market share in Phoenix and I own a title company,” Trang said. “I do all of these things and my goal is to do them in less than 40 hours a week. I’m intentional with my time; work-life balance is not lip service, it’s intentional. One of the rea - sons I’m so passionate about what I do is because while we’re trying to create financial wealth, it’s so the financial wealth leads to time freedom.” •
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thinkrealty . com | 23
FUNDAMENTALS
EDUCATION
The Right Real Estate Investment Instructors
RED FLAGS OF NON-TRUSTWORTHY TEACHERS
by W.J. Mencarow
insurance bills to pay, all with no income from the properties. It also means they are $2 million in debt.
“Good judgment is the result of experience. Experience is the result of bad judgment.” —MARK TWAIN
Wealth displayed. Luxury cars, boats, homes, etc. are almost always props.
ow do you know which real estate investment teachers
HEREARE SOME RED FLAGS: Promises or statements about making a lot of money quickly with little effort using their techniques. If that is true, why aren’t they doing that full-time instead of selling seminars? Making serious money in real estate takes time, education, and work. Infomercials. No legitimate teach - er would be caught dead doing an infomercial. Testimonials that sound too good to be true because they probably are. Some “gurus” hire actors for this. If they are true, they tell only part of the story. “I bought 20 houses with no money down and they are worth $2 million!” sounds great to a beginner until you realize it means they have 20 houses with negative cashflow (they have to dip into their savings to pay the mortgage every month), 20 roofs, 20 air condition - ers, 20 furnaces, etc. to maintain and replace, and 20 property tax and
H
Free seminars are the timeshare sales pitch without the compli - mentary hotel room. They exist for only one purpose: To beat on you until you pay for the “real” seminar. You might learn a few things, but the upselling never stops. You are told you need to “graduate” to the next level, which is the more expensive seminar, and you need “mentoring” (see below). You can guess what hap - pens at the one after that, and the one after that. If you pay for a sem- inar and during it you are told you need to buy another seminar, men- toring, graduate to the “next level,” etc., you are being fleeced. “Coaching,” “mentoring,” “boot camp,” and similar words can be red flags. A “coach” or “mentor” is often a minimum wage employee reading from a script and working out of a cubicle. I know one seminar company that charges $50,000 for this!
to trust? After several decades of “Mark Twain” experience, I have learned some things to look for that could save you a lot of money and heartaches. The litmus test is this: They must have earned the right to teach. That right is earned by years of success in real estate, not in selling seminars. Don’t bother to ask them how long they have been investing. If they are con artists, they will lie (that’s why they are called con artists). Instead, ask them for the addresses of the properties they consider their success stories and the entities they used, then look them up. That information is not private, it is public record. If they refuse to tell you, move on. Do an internet search for their name and their company name(s) with words such as “fraud,” “ripoff,” “scam,” etc. If what you find makes you even slightly uncomfortable, cross them off your list.
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Not admitting theirmistakes or dismissing them as minor and claiming they were smart enough to make them profitable. Every legiti - mate teacher should cite their mis - takes and the lessons they learned. Nobody is bulletproof. Sometimes you learn more from your mistakes than from your successes. Selling to students. No ethical person would sell what they teach to their students. Would you trust someone who told you that if you pay them, they will teach you how to buy something at the lowest price and then try to sell it to you?
only to those who have paid them thousands of dollars (see above about selling to students). These lists have been picked-over multiple times. It’s bottom of the barrel stuff that nobody wants. I know of at least one case where the “investment” didn’t even exist! The student discov - ered that after he had paid tens of thousands to the seminar promoter. Advocating nothing or little down. When you buy this way, your only hope of making money is appreciation, which may or may not happen, and you don’t see it until you sell. Real estate values are cyclical, and you don’t want to be caught in the undertow without having equity and deep pockets. Little or nothing down means negative cashflow and
raiding your savings or borrowing for major maintenance (see above under testimonials). Borrowing digs you even deeper in the hole. High lever - age often leads to foreclosure and even bankruptcy.
Special discount today only. I don’t have to tell Think Realty read - ers why that is a red flag. •
For other red flags, read John T. Reed’s “Real Estate B.S. Artist Detection Checklist” at www.JohnTReed.com.
W. J. Mencarow is a real estate investor (including farmland) with over 35 years of experience. He offers a free e-course on real estate note investing at www.
Offering a “secret” inventory of properties and/or notes available
PaperSourceOnline.com
thinkrealty . com | 25
FUNDAMENTALS
SYNDICATION
Profiting from Real Estate Syndication
IMAGINE A DEAL WHERE EVERYONE WINS
by Ellis Hammond
real estate syndication is essentially referring to the partnership between an expert, or team of experts,
A
The hold period for a typical investment is 5-10 years. During this period, investors can take advantage of all the benefits of owning real estate. The investor experi - ences strong cashflow, most of which is tax- free due to the depreciation expenses most often being higher than the income. At the time of sale, investors have the option, via the sponsor, to roll all the capital gains into the next project tax-free! This is called a 1031 exchange and it is an incredible way to build wealth without the burden of paying taxes on that sum. Your liability as an investor is limited to the capital you put into the deal, thereby remov - ing many of the fears that often coincide with smaller real estate ownership. As a passive investor or limited partner in a syndication deal, you also have the benefit of leveraging both debt and other people’s money. In pooling your money alongside others, you experience the benefits of economies of scale, larger tax incentives, lower capital risk, oftentimes better financing, and third-party property management. A hun - dred thousand dollars won’t get you very far on your own, but leveraged alongside 50 other investors and money from the bank (also called debt) can pave the way to some really sweet deals! ISREALESTATE SYNDICATIONRIGHTFORYOU? In any investment, there must be an allocation of time, capital, or both. The syndication vehicle can make a great choice for busy professionals, high-income earners, or retirees looking for a passive approach to real estate investing. This group of folks typically has the capital
and a group of investors who collaborate to acquire larger assets that otherwise could not be attained on one’s own. The first is the sponsor(s) (the experts) who source the deal. In a real estate syndication, the sponsors are responsible for all the heavy lifting such as building relationships with brokers, underwriting and negotiating deals, picking the right property manager, paperwork, pooling resources for purchase, and so on. The investors are simply responsible for bringing mon - ey to the deal (equity). Generally, the investors fund 80-95 percent of the equity needed for the deal. One of the cool things about real estate syndication is that both the sponsor(s) and the real estate investors are able to make significant profits. Here is a breakdown: The Sponsor • An acquisition fee at time of closing (2-3 percent of the purchase price) • A yearly management fee • A percentage of the rental income and equity from appreciation The Investor • Majority share in rental income. Many sponsors will also offer a preferred return to the investors in the range of 5-10 percent. • Majority share in equity from appreciation at time of sale (65-75 percent)
26 | think realty magazine :: april 2021
to invest but not willing or not motivated to spend the time sourcing and managing deals on their own. Most investments into private real estate syndications start at $50,000-$100,000. For those who are in a season where they have more time than capital to allocate, real estate syndication is a great vehicle to accelerate the wealth-building process. Unlike purchasing a stock, we can leverage our invest - ment dollars 3-to-1 when purchasing real estate (in most cases). For example, on a million-dollar real estate purchase, the bank will allow us to conservatively borrow 70 percent of the purchase price. That means we can buy that property for only $300,000. Imagine your returns if you raised the other needed $300,000 from family and friends… that would be consid - ered an infinite return! This active approach to real estate syndication, however, will take a significant amount of energy and time and I warn young investors all the time of trying to approach this business as a “side hustle.” With less inventory of affordable homes on the market, now is a great time to start investing in rental real estate in America. •
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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FUNDAMENTALS
IRAs
Five Strange Facts About IRAs
Take this short quiz to learn five facts about Individual Retirement Accounts. 1 John was 55, working and in good health. Each February, John would make a contribution for the previous year to his Roth IRA. However, tragedy struck. John was killed in an auto accident in late January. His heirs, knowing John had worked the previous year would have been eligible to make the contribution and intended to make the contribution, went ahead and made the annual contribution to his account with funds from John’s bank account.
SEE YOU HOW SCORE ON THIS IRA QUIZ
by Dennis Blitz
QUESTION Was the contributionAllowed or Declined?
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2 Peter was in the military. As such, he had Service Member’s Group Life Insurance. On the application, Peter named his sister as beneficiary should anything happen to him. Peter became ill and died of natural causes unrelated to his military duty. QUESTION Must his sister accept the policy benefits, or could she elect to transfer the death benefit amount directly to a Roth IRAaccount? 3 Person “A” and Person “B” have a been married for 15 years. They had grown apart and decided a divorce was the right thing for them. “A” was a diligent saver and has built a nice sized Traditional IRA. “B” was never a saver and has no interest in the IRA plus “B” is in need of money now to help finance a new home. “A” & “B” have agreed to split everything 50-50%, so “A” already knows that “B” will be getting half the val - ue of “A’s” IRA account. QUESTION Would you tell “A” to take a distribution of half the IRAand give it to “B” so that “B” canmove onwith their life? 4 You recently inherited a Traditional IRA that belonged to your mother. You were the sole beneficiary. You have a lot of experience with IRAs and you know this inherited IRA is yours to do with as you see fit until the time it must be liquidated. (Ten years from the date of the death of its original owner). QUESTION Which of these things can you dowith the inherited IRAyou just received? A. Liquidate the holding and withdraw all the funds immediately. B. Transfer the IRA from the brokerage house to a Self-Directed IRA company to allow you to make investments outside the stock market. C. Change some or all the investments it holds to better grow the value of the IRA. D. Convert the Traditional IRA to a Roth IRA to improve the tax treatment at the time of liquidation.
5 In times of increasing Income Tax rates, people want to have as much as possible in a Roth account. The earning made in a Roth account can be Income Tax Free when you attain the age of 59½ and if you have owned a Roth IRA for no less than five years. QUESTION Which account type can accept the most Roth money? A. Roth IRA B. The Roth portion of a Solo 401(k). C. Both
KEY
#1 Declined. Contributions may not be made to the account of a person who is deceased. #2 His sister may transfer the policy proceeds to her Roth IRA—no strings attached, even if she had already maxed out that year’s contribution. This benefit applies to all branches of the military including the Reserves. If she did not have a Roth IRA, she could open one. #3 Sorry, even though “A” is trying to do a nice thing for “B”, “A” is better off doing nothing. If “A” takes a distribution from the IRA to give funds to “B”, “A” will be hit with income tax on the value of the distribution from the IRA. Plus, a 10 percent early distri - bution penalty if “A” is under the age of 59½. However, if “A” waits until the Court orders the transfer of value from the IRA to “B” there will be no income tax or tax penalty as “A” is taking action as ordered by the Court. #4 You can do A, B, and C. You cannot convert the Traditional IRA to a Roth IRA to improve the tax treatment at the time of liquidation. You may not change the tax character of an inherited IRA. #5 You would think they would be the same; however, they are not. A Roth IRA may accept an unlimited amount of money in assets from a Traditional IRA, SEP IRA, Defined Contribution Employer 401(k) Plan, Defined Contribution Solo 401(k). 401(k) Plans may not accept incoming Roth funds from any qualified account.
Dennis Blitz is a recognized authority on Self Directed IRA and Solo 401(k)s. He is an author, national speaker, and President of IRA Club. Today IRA Club has thousands of members successfully investing their IRA and Solo 401(k) money in: Real Estate, Making Hard Money Loans, Private Placements, Agricultural Land, Life Settlements, Pre IPO-Stocks, and more.
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