INVEST R A Think Real ty Publ icat ion SPONSORED CONTENT
JEFF PEPPERNEY Real Property Management
LEE ROGERS RealProtect
MARCO SANTARELLI Norada RE Investments
Freaky Fast Home Buyers are Turning Keys in Cincinnati
ROBERT NICKELL Rocket Station
JIM HITT American IRA
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A City with More to Offer than Its Skyline
by Jason Engleman, Freaky Fast Home Buyers & Investments
C incinnati has amazing downtown views, but when I look at Cincy, I see a city full of opportunities waiting for smart investors to capitalize in the real estate mar- ket. In 2020, our company, Freaky Fast Home Buyers and Investments began purchasing homes in the Cincinnati area. When evaluating markets to invest in I look for key indicators that not only show growth, but also serve as circuit breakers for a possible downturn. Here are four reasons why I started investing capital in Cincinnati. ECONOMY Cincinnati currently ranks as the 28th largest econ- omy in the country and the fastest- growing economy in the Midwest according to Cincinnati.com. The city boasts ten Fortune 500 companies and 17 Fortune 1000 companies. With the likes of Proctor & Gamble, Ama- zon, Kroger, Gillette and Macy’s, the job market in Cincy is booming. Prior to the pandemic, unemployment was lower than it had been in decades and wages rising, especially for highly skilled workers. The Cincinnati MSA produced over $141 billion in GDP in 2018, up from $135 billion in 2017. With The University of Cincinnati, four professional sports teams and a lively community of restaurants and bars, there is also a constant flurry of tourist activity.
available for under $100k. The economic growth Cin- cinnati is seeing has put quality homes in high demand — and at higher rent amounts! In fact, over the last five years average rents have grown by about 30 percent according to Zillow’s Rent Index. Freaky Fast regularly buys properties for $70-80k, renovates them to an ARV of $100-120k and gets $1,200 or more in rent—that’s a great and reliable return. APPRECIATION The average home price in Cincinnati is around at $190k (depending on source), which is an 18.8 percent increase since 2019. The average price per sq ft on single-family properties is estimated at $118, a nearly 16 percent increase since last year. The appreciation of these properties isn’t slowing down and is even showing signs of increasing! DEMAND With the 3.5 percent population increase over the last ten years, rising wages, increased tourism and economic growth, the demand for affordable, yet modernized hous- ing is increasing every day. Cincinnati is currently home to over 2.1 million residents in the greater metropolitan area. This demand for great rental homes combined with the abundance of low-cost, pre-rehab properties available has created a dream scenario for the savvy real estate investor. •
CASHFLOW An extraordinary abundance of homes in Cincy are
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California License #0J05796 Norton Agency Insurance, LLC D/B/A Norton Network Insurance Agency LLC in the State of California; Agency License # 0J13180
Real Protection for Your Properties
by Lee Rogers, realprotect
A s the real estate insurance program of Norton Insurance, realprotect is not only comprised of insurance professionals, but is also a real estate firm that has over 200 licensed agents and property managers. realprotect is the expert in insuring real estate investors and understanding the real estate business and what you look for and need in a comprehensive insurance program. You have built a business out of owning and investing in real estate, and realprotect wants to help you protect it. realprotect starts this process by gaining an understanding of your properties, business structure, and operations. Then, realprotect will de- sign an insurance program that helps you meet your coverage and pricing objectives. realprotect promises to work diligently to find the best cover - age at the best price for you – based on your actual needs. realprotect takes risk manage- ment and loss control seriously for every single client. realprotect has
risk management resources to offer you the tools you need to under- stand the risks that you face and has partnered with industry-leading companies to provide you risk con- trol products at discounted rates. At the helm of realprotect is Lee Rogers, President. As an insurance professional that has worked and consulted with different Sin- gle-Family Aggregators, Rogers brings unique value and perspec- tive for investors, fund managers and operations professionals. He and the Aggregation Risk Man- agement Team at realprotect have helped design and implement insurance and risk management strategy that is above and beyond what is being set as an industry standard for insurance structure in Aggregation Portfolios, while keeping costs contained and risk properly manage and transferred. Based in Atlanta, Rogers has unique insight and knowledge of many insurance markets, with direct access to many of the world’s lead-
ing insurance carriers. Rogers has helped develop analytical tools and insurance philosophies that are in line with the true risk exposures that Single-Family Aggregators are fac- ing. He understands that the Aggre- gation Market is unique, and that the insurance industry must be able to adapt to this emerging asset class. Rogers uses his vast experience and innovativeness to focus on building business relationships with prospective clients, marketing products and advising investors on coverage options for their real estate assets – while making sure that his entire team at realprotect provides the same quality experi- ence for each client. Lee Rogers and his team at realprotect work with industry leaders such as lenders, market- places, and property managers and wholesalers to provide them with the protection and service that their hard work deserves. To learn more about realprotect, please visit www.realprotect.com. •
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Thriving in the (Not) “New-Normal”
by Robert Nickell, Rocket Station
To all fellow real estate entrepreneurs: We have all had to make major adjustments recently not only in our professional lives, but personal lives as well. None of us are sure when we will get back to our morning coffee routes or when we will be allowed in the grocery store without a mask. Virtual Masterminds, teammeetings, and family holiday meetups seem to be here to stay. Through all the chaos, one thing is absolutely clear, all the tools needed for a successful transition to this “new normal” are readily available to you. Rocket Station and the majority of our clients have continued to be business as usual through these unprecedented times. Why? Not because of anything new or different, but because we have been helping thousands of companies transition to a
virtual workforce since 2013. Efficiency and productivity have been around long before the pandemic. With a little effort you can have the same, if not more, success than you had before the world closed its borders. I want to share with you a few tips and tricks we use at Rocket Station for an efficient operation and amazing culture with our virtual teams. We manage several hundred teammembers virtually and have helped thousands of small businesses do the same. I am sure you will find value in our free Virtual Masterclass. In our FREE Virtual Staffing Masterclass at rocketstation.com/ masterclass, we dive into several topics including: (1) Setting up your home office for productivity including needed equipment, (2) efficient communication with your virtual staff with the goal of transparency and
alignment, (3) virtual management principles – how to make sure your team is productive, (4) how to build an amazing culture virtually, (5) how to create a personal routine for success and sanity, and (6) I interview clients and experts who share their success stories of transitioning to virtual management. If you are interested in how you can be more productive at a fraction of the traditional labor costs,
check out the free class. I hope you enjoy the free
Masterclass and we want to hear what you think. Please reach out to us with any questions or comments. We are here to help in any way we can. Visit rocketstation.com/masterclass. •
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5 ReasonsWhy Cincinnati’s Housing Market Is Strong
by Marco Santarelli, Norada Real Estate Investments
If you’ve heard of Cincinnati lately, there is a fair chance it is because one of several Cincinnati small home builders popped up in the news or was the star of a tiny house reality show. Whether you want to build tiny homes to provide affordable options on the Cincinnati real estate market or think that tiny homes built here and exported elsewhere will help the local economy is your decision. But, if tiny homes aren’t your investment of choice, here are five reasons to invest in the rental properties in Cincinnati.
drive from Cincinnati. Those investing in the Cincinnati real estate market, especially in the northern suburbs, could tap into this market with affordable single-family homes conveniently located for those commuting to the base. If you are looking for something closer to home, the Blue Ash Air National Guard Station supplies a constant stream of renters.
CINCINNATI REAL ESTATE FORECAST
SHOWS LONG-TERM GROWTH The Cincinnati forecast shows that the housing market is truly expanding for many reasons. The Dayton and Cin- cinnati metro areas are expanding along I-75 and expect- ed to combine into one metro area by 2040. This provides a known area where businesses and eventually people will move, so those who build up or invest in Cincinnati real estate here will have excellent future returns. The Cincinnati forecast also shows that the real estate market certainly isn’t hurt by the Amazon distribution centers popping up in nearby Dayton. It doesn’t matter if the property is in the Cincinnati housing market if it is close to new employers like this.
CINCINNATI’S STRONG JOB MARKET
ATTRACTS MILLENNIALS While not as well-known as other Midwestern cities, in 2016, Cincinnati was rated as one of the best places to live in the U.S. by U.S. News & World Report. The city of Cincinnati is currently growing in the business world and attracting new people interested in growing their careers. If this trend continues to grow, the cost of housing in the Cincinnati area may continue to rise which means it would become a bit more expensive to live in Cincinnati.
CINCINNATI HAS A MASSIVE STUDENT
POPULATION THAT RENTS The University of Cincinnati provides a large student body (more than 40,000) that lives on and off-campus. Union Institute and University host more than a thousand students, while the Christ College of Nursing has almost a thousand students. Cincinnati State Technical College has around a thousand students. Cincinnati Christian University has almost a thousand students. Xavier Uni- versity educates over six thousand students. This means there are many opportunities in the Cincinnati real estate market for those who want to cater to students.
CINCINNATI REAL ESTATE MARKET
IS LANDLORD FRIENDLY Ohio is more landlord-friendly than several oth- er Midwestern states. There’s no maximum security deposit. There’s no statute stating how much notice you must give before increasing rent. There is no law stating that a tenant must be allowed to make repairs and deduct said cost from the rent. You can evict a tenant three days after they’ve failed to pay the rent, and the lease can be terminated three days after notice that they’ve violated the lease. There’s no statute saying the landlord has to hold onto the abandoned property for weeks waiting for the tenant to get it. The Cincinnati housing market is one of the best in the area for real estate investors. •
THE MILITARY MARKET BOOSTS
CINCINNATI RENTALS Wright-Patterson Air Force Base is about an hour’s
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The Five Most Important Factors When Choosing Your Self-Directed IRA Company
by Jim Hitt, American IRA
Y ou’re convinced. You know a Self-Directed IRA is a powerful way to build wealth, using its pro- tections to help you get the most out of investments like real estate. But there’s a catch: you can’t move for- ward unless you have a Self-Direct- ed IRA administration firm in your corner. And you’re not sure which one to pick. How can you tell which Self-Directed IRA company has the experience and know-how to make life easier for you? We’ve put togeth- er a list of the Five most important factors to help you decide. FACTOR#1: TEAMKNOWLEDGE Simply put, a Self-Directed IRA company should know things. A lot of things. You’re working with a Self-Directed IRA company, after all, for a long- term commitment. Shouldn’t you be concerned about who it is that will help educate you? You’d be surprised. Many Self-Di- rected IRA companies have leader- ship and speakers with very limited experience in the asset classes they’re teaching you about. For ex- ample, let’s say you signed up with a Self-Directed IRA company because you wanted to invest in real estate. What if you work with a Self-Directed IRA company whose team knows very little about this asset class?
Do you want to learn from someone who’s reading out of a manual? American IRA’s team is comprised of investors who bring value to you from a place of personal experience. Our ownership AND employees are comprised of individuals who have created a 7-figure net worth by in - vesting in real estate.
checkbook if you use their service, while others will not allow check- book control if you’re going to work with them. But isn’t a Self-Directed IRA all about the freedom to call your own shots? American IRA realizes that every client has different goals and needs. For that reason we employ a hybrid approach to checkbook control. For clients that want to utilize a retire- ment account owned LLC, they can do so. For clients that do not want that structure, it is not mandatory. This gives all clients the tools that allow them to optimize their self-di- rected investments. FACTOR #3: FIRM CONTINUITY—ANDALONG- TERMRELATIONSHIP If you were going to propose to get married and knew there was a chance it would only last a year, would you re-think it? That’s often how it works with Self-Directed IRA administration firms. You’re happy to sign up with one if you know you can work with them for years and even decades. But if you knew that the firm doesn’t have a strong history of continuity, you might rethink things. You may think it a bit strange that we compare a Self-Directed IRA
FACTOR #2: LLCSAND CHECKBOOK CONTROL
LLCs like Single Member LLCs al- low the Self-Directed IRA to put a lot of power in your hands. In essence, a “Checkbook IRA,” as its called, can function much like a personal in- vestment account—with the obvious caveats and regulations of a retire- ment account. With Checkbook Control, an IRA/401(k) is a member of an LLC, which allows the investor to directly transact for their investment. There’s no going through middlemen here. They don’t have to check with their Self-Directed provider for paper- work, or for the flow of money for the account. It’s as simple as writing a check. Is there a catch? Of course. You have to set it up properly. Your Self-Directed IRA adminis- tration firm should allow you to do this. You’ll find that some compa - nies mandate that you have to use a
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and a long-term understanding built on that communication. • Knowledge and experience within the team to offer the proper education. FACTOR #4: THE KIND OF SELF-DIRECTED “PROVIDER” YOUWANT There are Self-Directed Providers that are reliant on third parties to stay in business. And if there is a new policy by the custodian, it can mean that this arrangement can be shut down. This is a scary situation. You got into Self-Directed IRAs because you wanted more independence. You didn’t want to cultivate dependence on a third party. Your Self-Directed IRA adminis- tration firm should be fully integrat- ed , meaning it doesn’t rely on third parties to get its work done. FACTOR #5: FEES Simply put: how much does it cost? Even if you have a great Self-Di- rected IRA firm to work with, exorbi -
administration firm to a relationship. But here’s the thing: relationships do matter. Isn’t it frustrating to con- stantly have to reinvent the wheel when your vendor is constantly hiring new employees? It’s like hitting the “reset” button over and over again. There’s no sense of long-term prog- ress. And with retirement investing, long-term progress is the name of the game. When you constantly hit “Reset” because of new relationships, it means that you have to start over again. You have to communicate old ideas again. And you may be working with people who now don’t under- stand the investments you make. Or they might not know the way you prefer to communicate. Look for a Self-Directed IRA admin- istration firm that emphasizes the following: • A strong senior staff, many of whom should have experience at the firm for 8-10+ years. • Real relationships with clients,
tant fees negate the good work you do. Many Self-Directed IRA admin- istration firms charge annual asset fees. This means that your annual fee for an account with 4 properties will be far higher than an account holding 1 asset. Do they charge a higher annual fee as the account balance grows? If so, then your fees grow with your wealth. American IRA charges an annu- al maximum fee of $285 per year, which means that the percentage of the fee relative to your account goes down as you grow wealthier. Your annual fee will not change with an increase in the value of the account or number of assets, and that’s the way it should be. These factors all matter when you choose a Self-Directed IRA admin- istration firm. If you want one that meets all of the criteria here, learn more about what makes American IRA different. Give us a call at 866- 7500-IRA to find out how you can work with us and achieve a stronger retirement nest egg. •
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The Top Five Reasons Every Real Estate Investor Needs a Self-Directed IRA
by Jim Hitt, American IRA
I f you invest in real estate, why aren’t you protecting those invest- ments? Sure, you might own an LLC to protect yourself—but if you want to take it to the next level, a Self-Di- rected IRA is a “must” for any real estate investor. A Self-Directed IRA means that you’ll have access to tax protections and unique ways to save money even while you exercise much of the same freedom you’ll have as a personal investor. Here are the top five reasons every real estate investor needs a Self-Di- rected IRA: Expertise. An experienced real estate investor has expertise in one area. So why should they force themselves to invest in multiple areas? Using a Self-Directed IRA for real estate investing means an investor can use their skills and experience for creating a diversi- fied portfolio of real estate hold - ings. They don’t have to emphasize stocks and bonds if they don’t want to. They’re able to build a retirement portfolio that’s on their terms—and plays to their strengths.
Tax Efficiency. Every dollar saved goes towards building a better re- tirement portfolio. Consider that if you sell a property in your person- al name or LLC, you will typically have a considerable tax burden to go along with it. Tax efficiency is the name of the game for any real estate investor who wants to maximize their chances of retiring with a considerable nest egg in their name. Cash flow. Why don’t more retire- ment investors talk about the im- portance of cash flow? If you achieve enough of it, you have financial inde - pendence. If you don’t…well, you’re still looking. A high yield mutual fund or an individual stock may be in the realm of a 3-5% dividend yield—and that’s assuming good returns and that the company doesn’t slash its dividend. In real estate, it’s very common to see 10% cash flow when purchasing good rent-generating properties. Diversification. Do we really benefit from stock market diversification? What is diversification, anyway, if the stock market goes down and your well-diversified stocks no longer
perform? Over the last few months, we’ve seen how COVID-19 can change everything about the stock market overnight. True diversifica - tion means having multiple asset classes generating cash flow to help boost the quality and quantity of a retirement account. And without cash flow, stocks don’t perform as well when there are unforeseen risks. You know, like an unexpected pandemic. Wealth-building. “Buy land” is some of the oldest financial advice on earth. You know why? Because it often works. Many investors create multi-million dollar portfolios with real estate when compared with the stock market, so much so that it’s often said that real estate results in more millionaires than with any other asset class. There are lots of reasons to use a Self-Directed IRA for any investor who focuses on real estate. But it’s not only about tax protection. It’s about leveraging one’s experience and skills in a unique asset class to maximize your chances of retiring with a solid, cash flow-generating nest egg. •
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The real difference in using Real Property Management—optimizing your ROI.
Using the right professional property management firm can help you earn more, not less. As the largest single-family residence management franchise in North America REAL Property Management has more than 30 years of experience doing just that for clients. There are many ways REAL Property Management can help maximize your investment and even help you with ways to monitor financial goals for your real estate. That’s the Real Difference.
Visit www.realpropertymgt.com to learn how Real Property Management can put our experience to work for you, giving you real commitment, real ROI and real peace of mind.
Each office is independently owned and operated. © 2020 Property Management Business Solutions, LLC.
Real Property Management is the trusted leader in reliable, cost-effective management of residential properties. With local expertise, highly-trained and responsive teams, independently owned and operated Real Property Management franchisees collectively manage tens of thousands of properties for individuals, investors, and institutions throughout North America.
Comprehensive Marketing and Advertising For each day a property is vacant, that’s
Online Reporting Owners maintain control of their property and keep tabs from afar using their own online account, with easy access to updates on property activity, including vacancies, leasing, maintenance, property evaluations and financial reports. Cost-Effective, Reliable Maintenance Relationships with preferred vendors result in discounted equipment and services. Maintenance staff is available 24/7 to handle emergencies and to make sure maintenance is timely, cost-effective and done in a professional manner. Timely Rent Collection Nothing affects cash flow more than late or missing rent payments. In addition to offering incentives for paying rent on time, our collection processes are professional but tough, and we are extremely diligent in collecting rent through a systematic, timely process. Strict and Compliant Evictions Even with careful placement there is occasionally a tenant who needs to be evicted. Our offices are knowledgeable in state and local landlord and tenant laws. If rents are not paid on time, we strive to minimize costs by following the legal steps quickly and efficiently to get the property leased again.
money lost. Professional management costs are easily offset by shorter vacancy. Our advanced planning and heavy advertising gets vacancies filled fast.
Thorough Tenant Screening and Selection
Placing the wrong tenant can quickly cost you more than professional management fees. We make every effort to find tenants who will pay rent on time and take care of the property with the use of criminal, credit, and employment checks. Full-Service Leasing In addition to advertising properties and screening tenants, our full-service leasing process also includes rent-ready guidance, market rent analysis, professional showings, move-in property assessments, and professional tenant education at lease signing. Routine Property Evaluations Regular assessments of both the inside and outside of your rental property ensure tenant compliance with the lease and identifies maintenance needs to preserve your property.
Renting to Family Members
THINK TWICE ON CALLING YOUR FAMILY TENANTS
by Jeff Pepperney, Real Property Management
If you own rental properties, you may be tempted to rent them out to family members. On the surface, it may seem like a good idea. Your family members need a place to live, and chances are, you like the idea of helping them out. But there are two key problems to consider before doing so: the potential of strained relationships, and possibly losing out on important tax benefits * . Each of these problems may result in long-term consequences for you and your investments. When you rent your properties to family, you could be putting your relationship with them on the line. It is natural to want to help people you care about, and it might seem like a benefit that you already know the person you’re renting to so well. But even if your relationship with your family members is strong, problems could arise that could risk harming it. When your family members rent from you, they may have higher expectations than other renters,
asking more of your time and attention. They may also expect you to upgrade or replace items before you are ready, give them discounts or waive screening fees. If you are unable to meet those expectations, your relationship with your family members could rapidly deteriorate. It’s also important to consider the effect that renting to family members could have on your taxes. The IRS has specific guidelines about using rental properties for personal use. These guidelines provide information about the effects of using property you own for personal reasons for more than 14 days in a year. Even if your family members pay rent, you’ll want to consult your local advisors to ensure you are charging them fair market value for the home and your rental property does not get reclassified as personal use. Unlike income properties, the IRS does not allow you to deduct all expenses for personal-use properties. If you decide to let family members stay in
your rental, even if you are charging them a minimal rent, you will want to make sure you don’t end up losing valuable tax deductions. Given the potential risks that come with renting to family, it’s an idea you’ll want to lend careful thought and consideration. In most cases, your best course of action is to keep your personal relationships and your investing business separate. One of the best ways to do so is to hire a professional property management company like Real Property Management. We can help you find quality tenants for your rental properties. In this way, we will help you keep your investment properties safe for years to come. • *Real Property Management is not a financial, tax or legal advisor. This Content is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. All content is information of a general nature and does not address the circumstances of any particular individual or entity.
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