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TABLE OF CONTENTS
INSIDE THIS ISSUE
THINKING REALTY 8 Where We’re Thinking Realty
MARKETING 52 The Power of Multi-Channel Marketing for Bold Returns Single-family rental investors can benefit from creative marketing strategies. by Pam Kosanke 60 Beating Your Competition to Bargain Properties As the industry evolves, the rules for lead generation are changing. by Mitch Stephen MARKET BREAKDOWN 83 An Introduction to Note Investing The simplest (but least understood) form of real estate. by Bryan Ellis 88 Regional Spotlight: Detroit, Michigan Now, as always, “The Motor City” market is full of passion and potential. by Carole VanSickle Ellis NUTS & BOLTS 104 Creating Instant Equity in Investment Properties Short sales can be the key to buying low 106 4 Ways to Find Foreclosures There are still plenty of foreclosure deals out there if you know where to look. by Jim Paul 108 3 Simple Secrets to Effective Real Estate Syndication Raising money to do big deals does not have to be complicated. by Monick Halm INVESTOR REVIEW 67 Taking Financial Flight Services to improve, expand & defend your portfolio. and selling high. by Gaylene Lonergan
Exclusive events coverage and sneak peeks.
COACHES CORNER 10 Think Realty Coaches
Get expert insight, course reviews, and meet the newest members of the Think Realty Coaching Team. 16 Don’t Rule Out Your Own Backyard Think Realty Coach Abhi Golhar makes the case for local investing. 18 A Small City Office Can Revolutionize Your Investing Think Realty Coach Pamela J. Goodwin on finding insider insights in unexpected places. THE BIG PICTURE 27 Redefining the “Path of Progress” Wherever Amazon’s HQ2 lands, it’s going to shake things up. by Carole VanSickle Ellis
ON THE COVER
TAMMY PHELPS-KEGLOVICH (pictured above standing in front of Baltimore’s Inner Harbor) and her husband Jim own multiple investments in multiple states on the East Coast. Their successful operation hinges on hard work and heart.
32 OSHA: The Business of Safety How compliant contractors keep your investments safe. by Heather A. Elwing
STRONG COMMUNITY SECURES RETURNS
by Carole VanSickle Ellis :: photos by Zach Miller
SUCCESS MINDSET 38 Don’t Let “That Number” Get the Best of You In racing, as in real estate, obsession with an end date will end your dreams. by Jennifer Jo Cobb UP CLOSE & PERSONAL 45 One-on-One For success to be easy, you have to play a different game. with Shaun McCloskey
NUTS & BOLTS
UP CLOSE & PERSONAL
7 NATURAL ADVERTISING MISTAKES Totally normal errors in judgment that will hurt your bottom line.
SMART-HOME INVESTING These days, every generation wants high-tech homes.
ONE-ON-ONE WITH KAAREN HALL Insider insight from a self-directed account administrator.
THE DELICATE ART OF SEASONAL STAGING
How merry and bright is right?
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FROM THE EDI TOR- IN-CHI EF
PUBLISHER R. Michael Wrenn
Many Happy Returns
PRESIDENT, AFFINITY WORLDWIDE Eddie Wilson | EWilson@AffinityWorldwide.com
EDITOR-IN-CHIEF Carole VanSickle Ellis CEllis@ThinkRealty.com
VICE PRESIDENT OF MEDIA SALES Rodney Halford RHalford@ThinkRealty.com 816-398-4111 x86122
rofessional author of inspirational quotes William Arthur Ward
ties are laid out in detail, explained by Think Realty’s expert contributors, and applied in multiple real-world scenarios to make it as easy as possible to see how they might fit in with your current and future investing strategies. That kind of tactical analysis represents real
has famously compared opportunities to sunrises, noting, “If you wait too long, you miss them.” No one knows this as well as a real estate investor. In all likelihood, no other profession better understands the delicate balance between leaping for opportunities but not lung- ing after every “shiny object” that catches the eye. In this issue of Think Realty Magazine , we’ve ded- icated ourselves to the identification and meticulous evaluation of real estate investing opportunities. As Ward warns us, time is of the essence, so we explored a market that some in other media venues have speculated may be overheating. We believe we’ve uncovered the truth about that particular opportunity. Furthermore, we’ve worked closely with experts leveraging creative strategies in markets of all temperatures in order to generate solid, predictable returns, while clearly exposing the options present in those local markets and beyond. That kind of education represents real opportuni- ty. The kind you can’t afford to miss. Speaking of perfect timing, did you realize that every real estate strategy you already employ holds multiple, creative options that might offer you substantial flexi- bility if your market shifts unexpectedly? Or that subtle adjustments in your existing business practices could increase cash flow, decrease delinquency risks, and even shore up your retirement portfolio? Those opportuni-
CONTENT DIRECTOR CariAnn Steward CSteward@ThinkRealty.com
ASSISTANT EDITOR Heather Elwing
DESIGN CONSULTANTS Rivet | www.WeAreRivet.com
opportunity. The kind you can’t afford to ignore. And speaking of contributions, we did not forget during this season of thankfulness to take time to look at the ways that real estate investing contributes to communities and to the lives of investors and those with whom they interact. Whether your passions lie closer to foreclosure investing or feeding the hungry, never forget that real estate investing has been one of the greatest and most reliable of all wealth generation methods for the duration of our country’s history. In this issue, we explore how investors are supporting great pursuits through their real estate and improving their own lives, those of their loved ones, and the wider community in the process. That kind of potential represents real opportunity. The kind that no one can afford to overlook. Returning to William Arthur Ward for just a mo- ment: The great motivator once observed, “When we seek to discover the best in others, we somehow bring out the best in ourselves.” Think Realty is thankful this season and always that part of our passion revolves around a history and prec- edent of discovering the best in you and, by extension, the privilege of improving ourselves as well. •
GRAPHIC DESIGNER Emily Bowers
CONTRIBUTING WRITERS Tim Berry, Aimee Breeden, Bryan Ellis,
FOR ARTICLE REPRINTS :: Contact Jeremy Ellis at Reprint Pros, 949-702-5390. www.reprintpros.com. SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $28.95 in the U.S. Order online at www.ThinkRealty.com or call 816-398-4085. 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 :: ThinkRealtyMagazine isapublicationof AffinityRealEstateMediaLLC.Reproductionoruseofanyeditorial orgraphic,withoutpermission, isprohibited.Wearenotresponsible for thecontentofanypaidadvertisements.Forreprintrights; toob- tainadetailedstatementofourprivacypolicy;and forallsingle-copy requests,addresschangesandothersubscription inquiries: Abhi Golhar, Pamela J. Goodwin, Kaaren Hall, Monick Halm, Jenna Heneghan, Carmen Inman, Pam Kosanke, Gaylene Lonergan, Shaun McCloskey, Jim Paul, BreAnn Stephenson, John Trautman, Mitch Stephen, Ingo Winzer, Julie Ziglar Norman INVESTOR REVIEW: Affintiy Loss Prevention Services, CityVest, Corporate Direct, GreenZone Properties, Preferred Trust, Secure Pay One, Toward Wealth COVER PHOTOGRAPHY Zach Miller
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CAROLE J. VANSICKLE ELLIS, EDITOR-IN-CHIEF
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Congratulations to our Winners!
MARCO SANTARELLI Norada Real Estate Investments MASTER INVESTOR OF THE YEAR
MARCUS PAINTER MC Properties LLC SINGLE-FAMILY INVESTOR OF THE YEAR
DAN BUTLER CrestCore Realty MULTI-FAMILY INVESTOR OF THE YEAR
WhereWe’re Thinking Realty
KEVIN ORTNER Renters Warehouse SERVICE PROVIDER OF THE YEAR
JAN BRITT Jan Britt Interiors EDUCATOR OF THE YEAR
LINDA LIBERATORE Secure Pay One PROPERTY MANAGER OF THE YEAR
EXCLUSIVE EVENTS COVERAGE AND SNEAK PEEKS.
his past October, Think Realty host- ed a National Conference & Expo in Atlanta, Georgia. The theme, “Pathways to Smart Investing,” was ideally suited to the diverse local market. An unparalleled attendance list was particularly noteworthy thanks not only to the many members of Think Realty’s expert coaching team who attended, instructed, and consulted on site, but also to the 2017 Think Realty Honors finalists, former award recipients, T
and members of our panel of independent judges, who turned out en masse for our awards luncheon (see opposite page for a list of finalists and winners). Steve Down of Financially Fit and Kent Davis of Equistream delivered keynote addresses, there were 12 educational breakout sessions, and the local market panel featured not only local investors but also a representative from the Federal Reserve, who was able
to shed insight on local trends as well as national ones. National Real Estate Insurance Group (NREIG)’s traveling expert Shawn Woedl also contributed unique insights to the local market conversation by bringing important geographic considerations and potential risks to light for local investors. Think Realty is looking forward to an exciting and highly educational 2018. See below for future dates and locations. •
CITYLINK REAL ESTATE GROUP Keith Murray & Tyler Weitz 2017 RISING STAR
TAMMY PHELPS-KEGLOVICH Capital City REIA COMMERCIAL INVESTOR OF THE YEAR
BILL GREEN LendingOne PRIVATE LENDER OF THE YEAR
IRVINE, CA JULY 14-15, 2018
DALLAS, TX FEB 24-25, 2018
BALTIMORE, MD APRIL 14-15, 2018
ATLANTA, GA SEPT 22-23, 2018
STEVE DOWN Financially Fit, Even Stevens, The Falls Event Centers R. MICHAEL WRENN HUMANITARIAN OF THE YEAR
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NUTS & BOLTS COACHES CORNER
STRATEGIES: REITs Think Realty Coaches
Think Realty Coaches
Course Reviews: Building a Business Investing in Real Estate and Buying Investment Property A SNEAK PEEK AT THE LATEST THINK REALTY COACHES’ COURSE OFFERINGS.
Think Realty coach Linda Liberatore in the studio explaining the finer points of buy-and-hold strategy.
Taking Your Investing Seriously
THINK REALTY’S COACHING TEAM HELPS YOU BUILD CREDIBILITY, CREATIVITY.
his month, Ben Rao debuts his first two courses. Rao, who is nicknamed “The Entrepreneur,” teaches real estate investors how to build a business and shares various paths to the purchase of an investment property. T
Think Realty coaches provide valuable education through video courses accessible on the Think Realty website. Each course typically contains between six and 12 lessons that are easily digestible and implementable.
by Carmen Inman
f you want to be successful in real estate, you need to complete spe- cific steps to be taken seriously. That’s my takeaway from our coaching corner this month. And, by the way, how great will it be for us to get this type of information more frequently now that T hink Realty Magazine is a monthly publication? This month, we are excited to introduce Linda Liberatore as the newest member to our coaching team! Linda brings extensive knowledge to the buy-and-hold investing space. Linda has taken a problemmany investors have and provided solutions through systems meticulously scaled to size. Anyone managing multiple properties will benefit from this coaching coursework. I love to see a plan come together, and with Linda’s advice investors can put short- and long-term plans into action. While some investors may dream of taking their in- vestment business to the next phase, Linda provides the guidance to make that a reality with the proper tools.
I’m particularly fond of the messages in our coaching content this issue. Ben Rao’s informative course on establishing your investment business and brand is guidance everyone needs if they want to dip their toe in the investment pond. The benefit that a well-branded, properly structured business entity provides seri- ous investors is invaluable and necessary for a sound foundation in the industry. Abhi Golhar shared tips for invest- ing in a local market. I think a lot of investors can get behind the idea of local market investment as it lends well to building a sense of community, increas- ing property values close to home, and potentially generating more tax dollars for public school funding where your children or grandchildren attend. How- ever, Abhi reminds us that if we want to be serious about local deal profitability we can’t make our investing decisions with our heart. I love his combination of practicality and passion.
Finally, Pamela J. Goodwin’s Econom- ic Development Corporation advice is right on track for anyone wanting to get serious in the commercial space, or perhaps those already investing commercially. Her tips can also give you an advantage over your competition if you prefer residential investing as well. Here’s a little hint of what’s in store: In- timidated by the idea of walking into an EDC director’s office? She’s got four go- to questions laid right out for you! My guess is: If you’re serious enough to take this step, you’re pretty serious about your investment path, and that makes me proud of our coaching students and the team that supports them. •
mation by disclosing tools, services and companies that can help you succeed with your real estate investing business. COURSE: Buying Your Investment Property (4 episodes) In an all-encompassing look at buying a property, Rao kicks things off with creative ways to structure deals. He touts that finding money should not be something you worry about. Investors also learn to leverage traditional funding, with Rao’s own profitable experiences leading the conversation. He goes on to remind us the importance of property valuation, and imparts his ideas on inventive means to go about it. The course wraps with a discussion regarding the security of your assets. Keeping with the pattern of new twists on old things found throughout this course, Rao gives a fresh take on insurance and security. •
COURSE: Building a Business Investing in Real Estate (5 episodes) Everything you build requires a foundation, including your business. Rao walks us through his secrets to suc- cess, and says you need to “begin with the end in mind.” He shows investors how to determine strategy based on their goals, and identifies the key questions each investor needs to answer. Then, Rao dives into legal structure and accounting. His know-how and brutal honesty about past missteps offer insight to even the most seasoned investors. Once Rao gets through the fundamentals in the first two courses, he dives into your brand. Rao reminds investors that brand tells everyone else who you are as a business, and shares the tactics that have strengthened his own business and brand. We move on from there to learn how to use your brand in networking. Rao closes out this course full of golden nuggets of infor-
Carmen Inman is Director of Member Services for Think Realty. She may be reached at firstname.lastname@example.org.
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NUTS & BOLTS COACHES CORNER
STRATEGIES: REITs Think Realty Coaches
like and don’t like, trends that might indicate it’s time to sell for a profit, indi- cators that can give you a heads-up that the market is about to turn, even ‘selling’ points that will attract better tenants at every price point. “The changes and evolution that are happening in artificial intelligence, ma- chine learning, database management, and analysis are so exciting. By keeping good records and handling your real estate data responsibly and productive- ly, you are creating the best reference resource available for your personal portfolio. My background in project management IT has always made that shine out to me, and it’s my passion to help other investors see their own data for its true worth.” WHY SHE’S HERE: “I’m not afraid of hard work, but anyone with rental properties will tell you that managing rentals, collecting rents, handling maintenance, and all the other moving pieces can be very, very hard. You make that process easier and you look for opportunities by network- ing and always looking for ways that you can reach people who need your services or who may provide a way for you to improve your own services. “I’m so passionate about helping other people, and when I realized that I could combine real estate with that passion, I really felt like I had found my place. The marriage between improving a situation for a landlord, empowering them to run their business and their in- vestments more profitably and with less stress, and establishing and improving systems is perfect for me. When I see an investor benefiting from the improve- ments I helped make or even keeping a property they thought they were going to lose because they changed their sys- tems, that is what I love.” BACKGROUND CHECK: When Linda Liberatore left her
management position in the banking industry to raise her children, she knew she would need to be creative in order to support her family and still have time to spend with her kids. “I began working for small businesses, two of which were real estate com- panies, who had a need to bring in what we referred to informally as the ‘technology dimension’ for their businesses,” she recalled. “This meant I handled their data, their proper- ty management software, such as it was back then, and I analyzed and sometimes trained other employees to be more effective at handling clients’ property investment portfolios.” In the early 2000s, she became involved in a web startup technology payment system at her daughter’s school and even- tually helped launch that now-highly suc- cessful company, which recently sold for more than a reported $190 million. “I was always looking for the next challenge,” she explained. Over time, Liberatore built a business of hundreds of landlord clients for whom she streamlines processes, maximizes efficiency and cashflow, and advises when they encounter financially threatening issues that Liberatore can help resolve with creative thinking and insight. Liberatore’s background in banking, project management, and software train- ing courses perfectly fit her new goals of helping investors systematize the diverse, highly complex world of rental proper- ties. “Those banking systems were very complicated,” she said. “If you do book- keeping in one state and then you move to a different state they probably use a completely different system: different software, different categories, everything is different. When you are a national company, you need somebody to analyze the whole business everywhere it oper- ates to see how it’s working, and a lot of businesses do not have that. She went on to explain that her DIY landlords need this type of analysis for their portfolios, but that there is
TITLE AND AFFILIATIONS: Founder & President of Secure Pay One Inc., Think Realty 2017 Property Manager of the Year, Board Member of Affordable Housing Corporation of Lake County, Mentor at the Fresh Start Business Incubator, President of the Lake County Property Inves- tors Association, Illinois Certified Technical Trainer, Brio Data Analyst, Chicago Housing Authority Instructor, volunteer educator in Chicago-area high schools and continuing education programs, and author of Daily Inspi- rations to Achieve Your Real Estate Investment Goals and My Landlord Helper: Keys to Managing Your Real Estate Investments, Achieving Explo- sive Growth, and Saving Money. THINK REALTY COURSES: Course 1: Buy and Hold Strategies Course 2: Knowing Your Lease EXPERIENCE: Linda’s clients and Think Realty students rely on her for everything from website consulting and design to tenant relations, and Liberatore is one of the most prominent and unique landlord re- sources available in an ocean of faceless, automated tenant-management software options. Liberatore’s clients are what she refers to as “do-it-yourself ” or “DIY landlords,” meaning that they directly manage their own properties and invest- ment portfolios. Her specialty is refining and honing that management process to maximize cash flow and efficiency. ON DATA, SYSTEMS AND ANALYSIS: “Today’s technology should be thrilling to the DIY real estate investor, especially if they are in the business of buying and holding rental properties. So many investors treat their software and data management systems like a chore, but really you are building a virtual gold- mine of practical, profitable information about your investments: what residents
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Think Realty Coaches
Panel in Print: How Creative Thinking Changes Your Perspective
“IF I’M SO GOOD AT THE ENFORCING YOUR LEASING RULES THAT YOUR BUILDING IS COMPLETELY VACANT, I’VE DONE MY JOB IN ONE SENSE BUT I’VE BEEN VERY DISLOYAL TO YOUR ACTUAL GOALS AS A LANDLORD. IF THAT BUILDING IS EMPTY, I’VE FAILED COMPLETELY!”
information, they frequently can take things to a different level and work with their hearts as well as their heads. “For example, I spoke with an investor last week who has a tenant who is falling behind on rent due an injury that is keeping her
that day that she had already reached out to several organizations and ap- peared to be establishing a solution. “This is a perfect of example of keeping your heart and your head in the game for the best situation for everyone and everything, including your bottom line, involved in a nega- tive rental situation.” LINDA LIBERATORE ON “LOYALTY” “At the end of the day, a good real estate investor is loyal. That’s not something most landlords think of themselves as being. In fact, most of them often feel badly when they simply follow up on rent or ask for it, much less file an eviction or delin- quency notice. They are, though: loyal to their businesses, families, and to all the people that their investing sup- ports, including charities, contractors, employees, and all the other people that get paid directly or indirectly as a result of those rentals. “People confuse being efficient, which maximizes cash flow in a rental situation, with being heartless, but if you do things right you help people stay in residence and you keep your building occupied. “Being loyal means paying at- tention, looking for solutions that actually help everyone involved, and keeping your investing interests at the forefront so that you can continue to support your family, your communi- ty, and your residents. The best way to do this is to get a very clear view of how your investing systems and strategies work so that you can always watch for problems and get ahead of them with good solutions.” •
eal estate investors tend to be among the most innovative
an integral role in individual investors’ financial success by exposing new op- portunities in competitive markets. In this month’s Panel in Print, Think
Realty Coaches talk about innovative methods and concepts that give them an edge in their favorite markets. •
strategists in business, and that’s a good thing. Creative real estate strategy plays
LINDA LIBERATORE: Maintaining Control Without “Losing It” “A client with a portfolio of rental properties in Georgia lives in California. She is constantly expanding that portfolio and monitoring its performance, which is typical of landlords who may try turnkey investing and find they do not care for the lack of direct interaction with their properties. She systematized the maintenance needs of those properties so that they are all on the same basic schedule for, say, furnace cleaning, and then she has a team in Atlanta that she trusts to handle that process and notify her of any red flags in her units. “She’s able to keep a very close eye on her investments this way even though she is not located on the same coast. She has time to think about where and in what she wants to invest next while still maintaining that direct control that she values.”
out of work. The landlord does not want to evict her, but she has already missed a payment and she is not likely to suddenly come up with a double payment in her current situation. We have to find a solution so that proper- ty does not stop cash-flowing but we also do not want to upset the tenant. She’s having a tough time already, and, furthermore, angry tenants may destroy property after they leave. “Fortunately, there are a number of charitable organizations who help people in this resident’s exact situa- tion, but they have to have an evic- tion notice to prove that the issue is a real one. Knowing this, I called the resident, touched base on the rent situation, then delivered the news about the local charities (which I have listed for her, of course) and told her in a kind, hopeful way that I would deliver her legal notice that she has fallen behind on rent along with the list of charities. “She understood it was a necessity for her landlord and for her to keep the process moving, and I heard later
a singular lack of this type of service for a landlord who wishes to continue managing their own properties rather than hiring a full-service property management company. “A lot of them try to use software that is designed for institutional real estate investment companies, but that is not to scale for the landlord with 5 to 50 or even several hundred properties,” Libera- tore explained. They try to make these management systems intended to handle 3,000 properties handle 30, and while all the information is there it’s a huge financial drain and the system just is not the right scale. You’re trying to run your personal investment port- folio with a software beast.” Liberatore founded Secure Pay One in 2010 to formally offer her consult- ing services to clients. Most of her business comes from landlords han- dling between five and a few hundred properties who are hoping to imple- ment solutions to help them deal with “slow-pay residents” who clog cash flow and prevent business expansion. LINDA LIBERATORE ON “PUTTING YOUR HEART IN THE RIGHT PLACE” “One of the biggest issues that DIY landlords face is that they find themselves handling their residents with their hearts instead of their heads. In reality, if they have all the
BEN RAO: Beyond Just Fixing and Flipping “It’s great when you run into an opportunity to do a deal that can be structured or repurposed to really create massive value. “For example, maybe your community lacks an entrepreneurial incubator. These facilities provide co-working and event space to support local entrepreneurs; they support the local small-business community. I found a great commercial space to convert in my community, an old Post Office. Not only will I end up getting funding from the city and probably a tax abatement when I’m done, but I’m repurposing space that was not getting used, adding serious value to the property, and preserving a piece of our local history.
SONIA BOOKER: Seeing the Full Potential “When most people invest in real estate, they think in terms of their short-term goals. They say, ‘I’m doing this to put my child through college.’” Really, they need to be thinking in terms of big-picture goals: What kind of income-generating property do I need to obtain in order to ac- complish my specific purpose? If what you want is to put a child through college, how much does that mean you’ll need each year in real estate-related income? What happens to that income after the child graduates? There’s a much bigger story than just paying tuition for four years! “Once an investor gets really clear about their real estate goals, they can identify the strategies and potential deals that will perfectly fit their needs and focus just in those areas. When that hap- pens, you become more motivated and you are really problem-solving for yourself and making a difference in the financial future of your family.”
COACHING PROGRAM Linda Liberatore’s first course, Buy-and-Hold Strategy, is available at thinkrealty.com/investor-education/coaches .
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NUTS & BOLTS COACHES CORNER
STRATEGIES: REITs Think Realty Coaches
know? I was there! And as things keep heating up, my backyard expands. There’s a lot of op- timism in the air, optimism that could become “too much” and if you’re not here, you might miss it. Fortunately, I am here, and I can tell you that I’m looking south, and I’m looking east, and I’m seeing opportunity that investors elsewhere in the country are not going to see unless they have someone work- ing here for them as well. Now, I will make one exception to my rule about backyard investing for virtual wholesalers. That business is entirely unique and you can move a property from anywhere. It’s amazing. But that’s a completely different animal because you’re not keeping the properties. For me, if you’re buying and really investing in assets, do so in your own backyard. Of course, there are markets where you simply cannot argue that there are not better opportunities elsewhere, and if you are a turnkey investor, for exam- ple, then sure, you’re going to want to take your money and put it with an asset where it’s really going to perform. Even then, though, you are putting that asset in the charge of someone who has their feet firmly planted in that local market. Why do you think every major turnkey provider out there now has some sort of market report that they issue on their markets? It’s because their investors want to feel like they know the area where their properties are located. They are trying to sort of “superimpose” themselves into being local. Being local is the key, and if you cannot actually be local, find someone who is that you can trust and let them monitor and maintain your investments for you in that market. •
HOW TO HANDLE A HOT MARKET NO MATTER WHERE YOU LIVE W hen markets heat up, emotions rise and people make mistakes. The biggest mistake you can make in nearly all cases is overpaying for a property because you think that it will appreciate while you’re renovating or rehabbing and it will be worth it in the end. Well, I have bad news. If you do this, sooner or later, you are going to lose. Eventually the
will enable you to sell no matter what is going on the market if you really, really have to. 2. IF ALL YOUR FRIENDS ARE BUYING IN THE SAME NEIGHBORHOOD, GET NEW FRIENDS. Okay, you don’t really have to get new friends, but you do have to expand your horizons a bit. You don’t want to be an investor lemming, and your buddies are probably creating bidding wars anyway. Go find the next diamond in the rough and let them follow you. 3. PLAN FOR THE WORST. When a market is hot, things can change fast. Planning for the worst-case scenario will help you accurately evaluate potential deals and insure that you are well-equipped to react fast if your hot market starts moving in the wrong direction. We forget just how good investing local can be. That memory loss: That is what’s actually bad. For me, my favorite real estate market is actually my own backyard. I live in Atlanta; I love Atlanta real estate, and I can tell you with confidence that my market is super, super hot right now because I live here and I have a finger on the pulse of this market’s activity. This past Super Tuesday, there must have been a couple hundred people at the Fulton County Courthouse bidding for properties, for example. How do I
all live in the same basic area) and we know she’s having a rough time and she ends up living in our property for free for 18 months. We just have to buy that decrepit, blighted old house because we’ve “al- ways loved it,” and then we find we also just have to spend a fortune we didn’t plan on to fix it up. You get the idea. Well, all of that is well and good, but here’s the thing that happens when we all start agreeing with each other that investing in our own backyard is bad: Fed will raise interest rates and affordability will decrease. Fewer people will be buying, and unless you are just lucky, you will get caught in the downturn. So here’s how to handle a hot market no matter where you live: 1. LOOK YOURSELF IN THE MIRROR AND REPEAT AFTER ME: “In a hot market, the total cost of my project will not be more than 60-65 percent of ARV.” Now say it 10 more times. Believe it. Absorb it. Buying at a price point like that
Don’t Rule Out Your Own Backyard THINK REALTY COACH ABHI GOLHAR MAKES THE CASE FOR LOCAL INVESTING.
by Abhi Golhar
e’ve all heard the saying “Live where you want, invest where it makes sense.” There is a lot of wisdom in that saying, most of which is based around the fact that as humans, we make a lot of mistakes. We mean well, and we do a lot of good stuff, but we also make a W
lot of mistakes along the way. One of those mistakes is letting real estate get tangled up in our emotions. Where is that most likely to happen? At home, of course! In the communities that you love, the neighborhoods you’ve been watching grow, with the folks in
all those local investing groups that you want to impress the most. We get all emotionally tied up in whether we have the prettiest rehab and we forget the bottom line. We get all teary over that tenant that we ran into at the store (because we
Abhi Golhar is a Think Realty coach, real estate developer, media host, and national speaker. You can view his Think Realty coaching courses at https://thinkrealty.com/coaches/abhi-golhar.
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NUTS & BOLTS COACHES CORNER
STRATEGIES: REITs Think Realty Coaches
How a Small City Office Can Revolutionize Your Real Estate Investing THINK REALTY COACH PAMELA J. GOODWIN REVEALS HOW AN OFTEN-OVERLOOKED DEPARTMENT HOLDS BIG INSIDER INSIGHTS, FUNDING & MORE.
by Carole VanSickle Ellis
omewhere in the heart of nearly every city’s capitol building is a cluster of offices with a relatively dis- creet set of letters: EDC. In larger metro areas, those offices may actually have their own floor, while in smaller ones there may be only one or two rooms or even a shared cubicle on an open floor. No matter where you find those letters, however, when you see them you can go ahead and pat yourself on the back. “EDC” means you’ve struck gold. Actually, EDC stands for “Economic Development Corporation,” and some- times may read “EDD” for Economic Development Department, depending on the municipality. The important thing for real estate investors to under- stand, though, is that the best source of insider information about that particu- lar market, the city’s economic develop- ment director, sets up shop behind that desk each morning. “EDCs have a wealth of information about their cities,” explained Pamela J. Goodwin, owner of boutique commer- cial real estate firm Goodwin Commer- cial and Think Realty’s own commercial real estate coach. “From providing you with a large aerial map to laying out demographics for the entire area to delivering information about properties owned by the city itself, these individ- uals should be your first stop when you get ready to invest in any area.” S
Goodwin uses the valuable informa- tion that local EDCs provide her about retailers, restaurants, and businesses they are hoping to bring into the com- munity to identify good commercial deal opportunities. Residential investors can also benefit from this type of highly specific information about residents in the areas in which they already own or are planning to buy. “They’ll even help you list proper- ties if you have them available in that community,” Goodwin noted. Center representatives often attend local real estate conferences and will hand out lists of available properties to attendees, many of whom, like Goodwin, are on the prowl for opportunity. “I recently attended a real estate con- ference where most of the booths were actually local EDCs throughout the Dal- las metroplex, and they were all handing out available properties that owners or brokers were selling,” she said. HOW TO GET INSIDE THE OFFICE While it might sound intimidating to waltz right into a city official’s office, sit down, and ask for the world, Goodwin insists they really don’t mind and make a practice of encouraging investors to meet with them. “They know where their city needs to grow, and real estate investors are often a source of answers,” she said. “A lot of them have done surveys on
what they need in terms of real estate and development, and sometimes you will even find out if you have a certain type of property for sale, they’re actually looking to acquire that type of land for a government building or school.” Of course, it is definitely polite to make an appointment before just show- ing up. You want them to remember you because of the opportunity you repre- sent, not your unannounced arrival. Goodwin notes one of the best ways to be remembered is with a profitable deal: “One of my primary investing strategies involves building relationships with the EDCs in my Texas markets. One EDC director remembered me, and when he moved to a new city recently he contacted me because their city owned more than 100 acres on a main interstate and they wanted to sell. I now have that listing for the city.” GETTING STARTED IN A GROUP If the idea of going straight to the EDC director’s office is too much for you, you can always go to a local real estate conference. EDCs provide lots of great information for both commercial and residential investors, but they tend to congregate especially at commercial real estate conferences and expos, where they can make sure that active com- mercial investors and other industry members are aware of the needs of their specific communities.
4 GO-TO QUESTIONS FOR YOUR ECONOMIC DEVELOPMENT CENTER DIRECTOR I f you find you are at a loss for words once you get in the door at the EDC, consider asking one of these common questions to get the ball rolling:
1. What are the latest retail developments in the city?
2. What are the top 10 retailers you want in the city?
EDCs often have information on special grants and funding for different types of projects, including real estate development and community revitalization, which may be relevant to investors flipping or renting their properties. Some EDCs even have scholarships and grants for real estate investors and entrepreneurs. “Just go to those booths and talk to them,” said Goodwin. “They’ll have lots of information on their city right there. Once you meet them at that type of event, you should always follow up with them afterward.” She emphasized the follow-up does not have to have a specific outcome, but that it is import-
ant to meet the EDC director a second time to learn a little more about the area and also cement yourself in their mind so when an opportunity arises, they think of you and reach out. Check out the sidebar for four of Goodwin’s go-to questions when she meets an economic development director for the first time. “It’s really all about building relation- ships with that person. They’re very nice, and their goal is to help you bring new economic growth to their community, so it’s a win-win situation,” Goodwin said. •
3. Do you have an aerial map of the city?
4. What properties and
buildings are currently for sale in the city? Follow up: Would you
consider using our company for marketing/listing those properties?
Note: Goodwin’s extended commentary on this list and
Pamela J. Goodwin is the founder of Goodwin Commercial, a boutique com- mercial real estate and consulting firm, and a Think Realty Coach. Learn more about her at https://thinkrealty.com/
more suggested questions were recently published on Forbes.com.
18 | think realty magazine :: december 2017
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Tammy Phelps-Keglovich sees opportunity everywhere, even in the toughest investments.
SECURES THE INVESTMENT CARVING OUT COMMUNITY
Tammy and Jim Phelps-Keglovich are Playing the Long Game and Winning.
BYCAROLEVANSICKLE ELLIS PHOTOS BY ZACH MILLER
LOOKING BACK, NEITHER OFUS WOULD CHANGE ANYTHING BECAUSE WITHOUTALL THE LEARNING MOMENTS ON THIS JOURNEY, WEWOULDN’T BE WHEREWEARE RIGHTNOW.”
TAMMYPHELPS-KEGLOVICH FOUNDER, CCREIA
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ily real estate due, in large part, to the allure of regular, monthly cash flow without the deeply personal involve- ment that many investors find is part of single-family residential real estate investing, particularly when it comes to fix-and-flip investing. The two started investing in multi- unit projects including apartment buildings, mobile home communities, and even an assisted living care home on the National Historic Registry, after Jim was injured in 2003 while working on a large single-family flip. “Jim wasn’t able to finish the project. It literally came to a halt,” recalled Tammy. “We ended up doing something everyone tells you not to do: taking out a mort-
gage on our personal residence to hire someone to finish the job. But I’m grateful it happened because we learned so much and created such a beautiful home for the family that rented it in 2007 with the option to purchase and still lives there today.” One of the things that the two learned was although they could not stand to forgo their personal involvement in their investing, they needed to change the type of investments they were making in order to maximize the returns on the immense personal stakes they believe are essential to creating a profitable and productive multifamily community. “We wanted to have cash flow coming in even if we were not physically work-
ing on a property,” said Tammy. “And we put in a lot of physical work, a lot of time into our properties early on so that we can achieve that,” Jim added. “What you build today affects your tomorrow, especially in multi-unit invest- ing. This type of investing is about build- ing wealth for your future, and that means repositioning, stabilizing, and building up that community today so that it is a solid part of your future and your residents’ future,” Tammy concluded. MOONWALKS, BARBEQUE, AND A SERIOUS SWEET TOOTH While Jim is handling the construc- said Tammy proudly. She noted that another student recently purchased a duplex and is already cash-flowing “al- most $600 a month positive” is ready to convert the property to a triplex thanks to cCREIA training and support. “It’s the support that is critical,” Tammy said. “We honor our members. We support them. We feature their hard work in our monthly newsletters, we interview them so other members can learn, and we look at each other’s proj- ects from the standpoint of ‘the good, the bad, and the ugly’ so that we all learn. “We support each other, learn from each other’s challenges, and celebrate each other’s successes. It’s all about making a difference in each other’s lives and helping each other create financial freedom, wealth, and independence.” cCREIA meets on the fourth Wednes- day of each month at the Hampton Inn Alexandria in Alexandria, Virginia.
When Tammy and Jim rehab a property, it’s not simply a matter of tearing out floors and walls. Tammy says her “60,000-foot view” helps her see physical issues in a building and places where the community structure is weak as well.
the construction work, that’s what I do. I’ve been doing it now for 26 years, and I knew exactly what I was doing when it came to making that home a great place to live.” The Phelps-Kegloviches bring a whole lot of heart supported with strong, stable bones of practical investment strategy to each of their multifamily investment projects. “When we buy a property, we pour all of our knowledge, talents, creativity, and resources into it. We don’t just fix it up to the best of our ability and make it a nice, clean, safe place to live. We also get involved in the development personally and work hard to make that real estate investment an active part of the surrounding community,” explained Tammy. “It is vitally important to us that we put literal strong bones into each building to make it a good place to live and figurative strong bones into it to make it a home, not just a house. We believe it is important to create a place for it in the local community.” Jim added, “We tend to spend more in terms of both time and money up front than some investors, but when you
build something correctly from the very beginning, the right way with quality, integrity, and care, then the long-term costs of maintenance and repairs are going to be very minimal.” This mindset pays off literally, the two say, in the form of very low ongoing maintenance costs in their investment properties, as well as in low tenant turnover and sky- high appreciation in their projects over time. “We force appreciation by build- ing community within the community,” they explained. “Our total expenses are lower than most at 28 percent monthly on our apart- ment building in Baltimore, Maryland, for example, compared to the area average of 45-50 percent,” said Tammy, noting that one of their Baltimore investments that they purchased just a few years ago for $375,000 now appraises at $2.6 million. A HANDS-ON APPROACH TO A TRADITIONALLY HANDS-OFF BUSINESS Like most real estate investors, the Phelps-Kegloviches got into multifam-
WHEN TAMMY PHELPS- KEGLOVICH AND HER HUSBAND, Jim, talk about their first deal together, it is clear from the start that the pair of multifamily investors have a unique way of tackling their real estate projects. “We made a lot of mistakes starting out,” said Tammy with typical, forth- right honesty. “We had no idea what we were doing! We just bought a property to fix-and-flip like we’d heard in the seminars I attended. We made that property one that we could be proud of, though, and we put everything we had into it. It took some creativity, determi- nation, and sacrifice, but looking back, neither of us would change anything be- cause without all the learning moments on this journey, we wouldn’t be where we are right now.” At this point, Jim, a commercial project superintendent who was man- aging several such projects when he and Tammy first met, chimed in with a firm tone reflecting decades of experience in construction, “When she says we didn’t know what we were doing, she means in terms of investing. When it comes to
ALL IN THE FAMILY: CAPITAL CITY REIA’S ROLE IN PHELPS-KEGLOVICHES’ SUCCESS
T ammy Phelps-Keglovich may seem like a bit of a “softie” when you first meet her, but she has a backbone of steel when it comes to her dedication to building community. At Capital City Real Estate Investors
apart a deal for a member who may be struggling, and multiple mastermind sessions that showcase successful deals and how the investor who handled them made them happen. We make a real difference in our inves- tors’ lives.”
Association (cCREIA), she runs her meetings with one goal in mind: building up her mem- bers personally so that their professional lives will benefit from that growth. “We are all growing
cCREIA, like Tammy, is primarily focused on community and family. Attendance at most of the association’s events is free unless,
as Tammy describes it, “We do something big, like rent a bus so we can tour properties,” and most trainings and educational events have a heavy focus on readily and easily implementable strategy. “Two of my brand-new investors, both 24 years old, just put a 29-unit apartment building under contract,”
together and my members are learning real estate and doing deals,” she said proudly.
“Our community grows by 30-50 per- cent each year. In 2017, we more than doubled in size! We feature hand-se- lected and vetted educators, regularly occurring ‘hot seats’ where we pick
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