Think-Realty-Magazine-March-April-2017

STEADY COURSE FOR INVESTORS IN CINCINNATI

REGIONAL SPOTLIGHT

MARCH/APRIL 2017

Triumph Times Two KELLY AND CHRIS EDWARDS FORGE A PATH TOGETHER

ONE-TO-ONE: JOE FAIRLESS HIS ‘BEST ADVICE’ ON MOVING TO MULTIFAMILY

PAGE 18

SPECIAL FEATURE WOMEN TO WATCH: 10 WHO ARE MAKING THEIR MARK IN REAL ESTATE

TRENDS & ISSUES AWASH IN CONCERN OVER RISING TIDES STRATEGIES 5 PRIME SPOTS FOR RENTAL INVESTMENT

$5.95U.S. ::$6.95CAN MARCH/APRIL2017

thinkrealty . com | 1

Q & A with Rob Barney

Q: How long have you lived in Dallas/Texas area? A: 25 Years

Q: How many loans have you closed in total? A: Over $100 million since 2001

Q: How many in typical year or month? A: $2 - $3 million per month

Q: How many homes have been transformed in the Texas market due to DHLC services? A: More than 500 homes have been rehabbed by real estate investors using Loans from DHLC.

Q: How many homes have you personally flipped? A: 18

MENTION THIS AD AND RECEIVE A $500 CREDIT* ON YOUR NEXT CLOSING Q: Future goals A: Begin a 501c3 markets non-profit that gives back to the Dallas/Houston market by helping families in times of crisis with housing needs. Q: What do you like best about flipping? A: I have no artistic talent. I can't sing or play a musical instrument or paint. so restoring an old home back to its Glory and making a new home for someone else gives me the artistic outlet that I otherwise wouldn't have. Q: How did you get involved with speaking at local colleges/schools? Why is this important to you? How many sessions have you done/years? A: I've been speaking to real estate investment groups since 2001. I was asked by a good friend of mine who is a teacher at Champions and at Collin County Community College to come in and lecture to her classes about 9 years ago. Typically I speak 1 to 3 times per quarter. So I'd say I have the opportunity to address classes probably 12 - 15 / year. Q: What do you like best about lending services (the importance of the service)? A: Gives me the opportunity to help other people achieve their dreams.

R ob Barney, President of DHLC Investments, Inc. and owner of DHLC Mortgage, LLC, has been involved with real estate and real estate financing since 1998 when he bought his first investment property. Since then Rob has become a Realtor, rehabber, landlord, speaker, mentor and a direct hard money lender. Rob is a frequent guest lecturer at Collin County Community College and Champions School of Real Estate. Rob is also a published author of several real estate investing articles in various print periodicals and online publications.

*$500 will be credited toward your closing costs on the next loan you close with DHLC. This credit cannot be combined with offers.

TABLE OF CONTENTS

INSIDE THIS ISSUE

THE BIG PICTURE 12 Rising Tides Should investors be concerned about increasingly worse king tide flooding? by Robert Springer 38 Start With a Plan Strategic approach will help ensure you’re not stuck with a money pit. by Peter Vekselman 40 Diversification Tips Spread your real estate investments across sever- al sectors to minimize risk. by Leon McKenzie 46 Power of Social Media A picture’s worth a thousand words; social media can be worth thousands of dollars in profit, too. by John and Corinne Tesh 48 Legislative Watch Landlords, and property managers: It’s time to make your voice heard on Capitol Hill. by Brian Wojcik Investor and podcaster offers his ‘best advice’ for moving from single-family to bigger properties. by Robert Springer 54 Best Buys Five cities with factors that position them as prime areas for rental-property investment. by Kathy Fettke 58 Regional Spotlight: Cincinnati Despite an up-and-down 2016, the area’s real estate rental market is on a steady, positive course. by Carole VanSickle Ellis UP CLOSE & PERSONAL 50 One-to-One: Joe Fairless

ON THE COVER TRIUMPH TIMES TWO

SPECIAL REPORT

THE BIG PICTURE

10WOMEN TOWATCH

SHOULD YOU GO SOLO? If self-employed, consider a Solo 401(k).

Look who’s shaping the industry today.

4 | think realty magazine march :: april 2017

NUTS & BOLTS 68 Experience the Magic

You can use VR to your advantage in your investing niche, just as commercial companies have done. by Rami Kalla

78 Taming the Mold Monster Management and mitigation techniques for investors dealing with this nasty organism. by BreAnn Stephenson 82 Understanding Rental Value Your property’s value has a direct impact on how much you can charge. by Michael Jordan 86 Socially Speaking Don’t be one of those real estate investors whose online presence is mediocre—or worse, nonexistent. by Robert Springer BYTHE NUMBERS 91 Healthy, Wise—and Wealthy Developers stand to profit from the impact of health care and education cost reform. by Ingo Winzer 92 A Matter of Choice For flippers, choosing the right lending partner can be the difference between project profit and a loss. by Robert ‘Bobby’ Montagne

Twin brothers KELLY AND CHRIS EDWARDS are building a successful family of companies through perseverance and passion.

by Susan Thomas Springer :: photos by Terrence Jones

INVESTOR PROFILE

NUTS & BOLTS

FINAL THOUGHTS 96 Entrepreneur’s Corner

HIS HAND IS ON THE PULSE Investor ‘feels’ the market direction.

REVVING UP YOUR WEBSITE

Make it an ingrained habit to exercise for a healthier business and personal life. by Ben Rao

How to get more traffic and leads.

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PUBLISHER R. Michael Wrenn

PRESIDENT, AFFINITY ENTERPRISE GROUP Eddie Wilson | EWilson@AffinityEG.com

EDITOR-IN-CHIEF Linda Wienandt LWienandt@ThinkRealty.com VICE PRESIDENT OF MEDIA SALES Rodney Halford RHalford@ThinkRealty.com 816-398-6122

SENIOR STAFF WRITER James Hart

EDITORIAL ASSISTANT Heather Elwing-Dixon

DESIGN CONSULTANTS Rivet | www.WeAreRivet.com

GRAPHIC DESIGNER Emily Bowers

PRODUCTION & TRAFFIC MANAGER Carolyn Addington

SHOW OFF YOUR STREET SMARTS

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 for six issues in the U.S. Order online at www. ThinkRealty.com or call 816-398-4130. Provide your full name, address and telephone number. DISCLAIMER :: Think Realty Magazine , its owners, contractors, distributors and their respective representatives do not provide tax, accounting, investment or legal advice and make no guarantee as to the effectiveness or success of any investment or tax strategies discussed herein. Please consult your own independent adviser as to any questions you have or decision you are contemplating. ABOUT THIS MAGAZINE :: ThinkRealtyMagazine isapublicationof AffinityRealEstateMediaLLC.Reproductionoruseofanyeditorial orgraphic,withoutpermission, isprohibited.Wearenotresponsible for thecontentofanypaidadvertisements.Forreprintrights; toob- tainadetailedstatementofourprivacypolicy;and forallsingle-copy requests,addresschangesandothersubscription inquiries: CONTRIBUTING WRITERS Teresa Bitler, Tyler Carter, Carole VanSickle Ellis, Dawn Erling, Kathy Fettke, Carter Froelich, Abhi Golhar, Kevin Guz, Danny Johnson, Michael Jordan, Rami Kalla, Leon McKenzie, Robert “Bobby” Montagne, Kevin Ortner, Ben Rao, Eddie Speed, Robert Springer, Susan Thomas Springer, BreAnn Stephenson, John & Corinne Tesh, Peter Vekselman, Michael Waxman, Ingo Winzer, Shawn Woedl and Brian Wojcik COVER PHOTOGRAPHY Terrence Jones

WHAT'S NEW AT THINKREALTY.COM

Your insights could be featured in Think Realty Magazine!

Each month Think Realty poses a real estate investment question for our members and users on ThinkRealty.com. We gather responses and feature answers in our print and online editions of Think Realty Magazine. It’s a great way to share your knowledge to help other investors (and maybe pick up some tips for yourself too!). Visit ThinkRealty.com/Street-Smart to see this month’s question and simply compete the form to share your answer.

ThinkRealty.com - Where savvy real estate investors (like you) find resources for success.

6 | think realty magazine march :: april 2017

FROM THE EDI TOR- IN-CHI EF

Help us put the spotlight on investing’s innovators

elebrating extraordinary people doing extraordinary things for the

who are worthy of our attention but whose stories we have not yet uncovered. That’s where you, our readers, come in. Beginning March 15, you will have the opportunity to go to our website, www. ThinkRealty.com, and nominate individuals and companies for the 2017Think Realty Honors. The winners will be recognized at our national conference and expo in Atlanta on Oct. 14, 2017. Through our online form, you can nominate a deserv- ing individual or company in the following categories:

good of the real estate investing industry is one of Think Realty Magazine’s great hon- ors and foundational responsibilities. We do that each and every issue with our cover story, as well as through articles and special features that focus on innovations and other noteworthy achievements by those who buy and sell investment prop- erties or who provide resources to investors. In this issue, for example, we focus on “Women to Watch” – individuals who, to quote contributing writer Carole VanSickle Ellis, “not only have a long and often-sto- ried history in the sector, but who are actively molding the way that real estate investing is evolving today.” Our special 10-page report (beginning on Page 24) spotlights 10 professionals whose work – or should we say, passion – in real estate touches many different ar- eas, from education to funding to statistics to corporate housing, and others in between. These individuals’ gen- der is irrelevant to their abilities and success, but such a grouping is appropriate – for now, anyway – because they continue to be too often overlooked. Also, to give them and other women both recognition and encouragement, Think Realty’s upcoming confer- ence and expo in Dallas on April 29, 2017, will feature a “Women in Real Estate” panel. You can find more infor- mation about that at thinkrealty.com/events/dallas/. But our coverage and special events like the Dallas conference only scratch the surface. There are many, many people – of all ages, genders, ethnicities and interest areas –

• Single-Family Investing • Multifamily Investing • Commercial Investing • Private Lending • Education • Emerging Leader/Rising Star

• Michael W. Wrenn Humanitarian Of The Year An additional award winner – Master Investor of the Year – will be chosen from among those who have been featured as Master Investor in the maga- zine in the prior 12-month period (May-June 2016 to the current issue). Nominations will be accepted through May 15th. Then a committee of industry leaders will meet to evaluate the nominees and select the 2017 winners based on a set of pre-determined criteria. Go to www.thinkrealty.com beginning March 15 to make your nominations. We look forward to your rec- ommendations and to meeting even more of the many dynamic people who are moving our industry forward. •

LINDA WIENANDT, EDITOR-IN-CHIEF

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NEWS BRIEFS

NATIONAL UPDATES

households, but opting to rent instead of buy. Trulia chief economist Ralph McLaughlin said that the dynam- ics of declining homeownership actually could be a good sign for the economy and even the housing market in the long term since new household formation likely “reflects growing confidence of those who were most likely impacted by the foreclosure crisis.” NAR chief economist Lawrence Yun observed that there are more opportunities for Millennials to purchase starter homes than waiting to purchase “dream homes.” “Maybe they need to lower their expectations of what that first home should be or settle for a smaller home in a different neighborhood,” Yun said. This suggestion may not necessarily be an acceptable alter- native for a generation willing to move to advance profession- ally and that has a distinct affinity for urban living, but as more Millennials have children and those children approach school age, this preference may change. The National Association of Home Builders (NAHB) reports that developers, at least, are not banking on an ongoing pas- sion for apartment living. The association’s economist, Robert Dietz, is predicting “little growth in multifamily construction this year, with renewed emphasis on single-family homes.” Whether those homes become rentals or owner-occupied remains to be seen. •

ARE MILLENIALS MISSING OUT BY CONTINUING TO RENT?

As more and more Millennials opt to wait to purchase their first home, analysts say that they are also delaying access to the “most impactful contributor to consumer wealth since the great financial crisis.” Brad Friedlander, managing partner at Angel Oak Capital Advisors, noted that the growing wealth gap be- tween homeowners and renters is “largely due to home equity.” Individuals who delay purchasing a home and beginning to accumulate equity could affect their finances “for years to come,” speculated the National Association of Realtors (NAR). According to the Federal Reserve, U.S. homeowners cap- tured more than $12.7 trillion in home equity by the end of the second quarter of last year. This is the highest amount of equity amassed since the end of 2006.

By comparison, renters are also dealing with record-high amounts of money, but that money is flowing out of their bank accounts via rents that are 20 percent higher than they were six years ago. Economists warn that the failure of younger Ameri- cans to take on home ownership is leading them to fall behind finan- cial benchmarks that older genera- tions have met. Although obtaining financing for a home is certainly a significant road- block for many younger would-be homeowners, the bigger issue may be simply that the Millennial generation has opted to delay – or perhaps opted out entirely – of owning homes due to

SOURCE :: Carole VanSickle Ellis

PEOPLE IN THE NEWS RODNEY HALFORD is THINK REALTY’S new Vice President of Media Sales. Halford has decades of experience in advertising—in print, broadcast and online—particularly in B2B sales. Most recently he was senior account executive for KMBC/ KCWE-TV in Kansas City, Mis- souri. Prior to that, Halford worked for Time Warner Cable Media, Com- cast, The New York Times Regional Media

different lifestyle preferences that lead them to seek out com- munity-based living and more flexible options for establishing their households. Also, many reports indicate that Millennials often prefer to wait to purchase a home until they can afford a permanent one rather than opting to purchase a “starter home” that might be sold in five or 10 years. Despite programs intended to bring new buyers into the marketplace, homeownership is still at its lowest in more than four decades. At the midpoint of 2016, fewer than 63 percent of Americans owned their own homes, down from 63.5 percent the previous quarter. Economists speculated that the decline in homeownership could be due in part to an increase in household formation as a result of Millen- nials leaving their parents’ homes and forming their own

Group and Asheville (N.C.) Citizen-Times. He can be reached at 816-298-6122 or 816-985-7726 or by emailing rhalford@thinkrealty.com.

MICHAEL CIABURRI , principal at WORTH AVENUE CAPITAL , recently was featured in a story in The Greenwich

8 | think realty magazine march :: april 2017

Times’ business section that detailed the struggle small business owners realize when attempting to find funding for their business. In the article, Ciaburri explains how Worth Avenue Capital helps find funding for these businesses and why private lending has become a more useful financing option for the small business community. • CORPORATE HOUSING SURVEY REVEALS INDUSTRYTRENDS Results are out from an annual survey of corporate housing professionals, showing trends in pricing, amenities, renter behavior and more. The survey, by Corporate Housing by Owner, is now in its eighth year of gathering and analyzing feedback from hundreds of independent corporate real estate prop- erty owners and managers nationwide. “Our survey is open to anyone who owned or managed a furnished, monthly residential rental in 2016 … it isn’t just for CHBO users,” according to Kimberly Smith, co-founder of Corpo- rateHousingbyOwner.com, the first- of-its-kind online portal connecting furnished rentals and the traveling pub- lic. “Our goal is to get the best snapshot of the independent corporate housing segment, so you can learn from relevant trends and achieve greater success.” Among the trends observed in 2016: • The majority of respondents (60 percent) reported they are landlords for investment purposes. Those who say they’re landlords because they can’t sell reached an all-time low of 3 percent. • Healthcare travel jumped to 34 percent (up 10 percent over 2015). If there are significant changes to the national healthcare laws, there likely will be future volatility in the need to travel for

healthcare services, benefiting those whose rental property is located near healthcare facilities or wellness centers. • More cities have put regulations in place that affect non-primary residences and short-term rental properties. While this has been going on in some cities for a while (such as San Francisco, Chicago and New York), other cities with tight housing markets (such as Denver) have put new rules in place. Corporate housing providers need to stay up-to-speed on their city’s requirements—some of which may be brand new. survey, nearly 50 percent of property owners included phones with their rentals. Today that number is only 22 percent. In recent years, there also has been an increase in those offering Wi-Fi and streaming entertainment services, such as Netflix, to make their properties more appealing. • For the fifth consecutive year, more than nine out of 10 respon- dents reported their properties are profitable or breakeven. In 2016, 74 percent of respondents said they had profitable rentals—up from 67 percent in 2015. • 60 percent of respondents said they’ve been furnished landlords for four years or less—a continuation of the trend of new investors entering the real estate investment market. 2016 marked the third consecutive year that new landlords (landlords “for one year”) increased. • Amenities are changing with the times. In the early years of the

UPCOMING EVENTS

MARCH 2 Pitbull’s 42nd National Hard Money Conference Scottsdale, Arizona https://pitbullconference.com/ march-2017-scottsdale-2/ 858-736-7788

MARCH 7 Sixth Annual InterFace Net Lease West Los Angeles, California http://www.cvent.com/events/2017- interface-net-lease-west/

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APRIL 5-6 Global Investor Forum

Los Angeles, California (Omni Hotel) https://www.perenews.com/global-in- vestor-los-angeles/ 646-619-8132

APRIL 23-25 Activate 2017 Newport Beach, California http://geracicon.com/activate/ 949-298-8050 APRIL 29 Think Realty National Conference & Expo Dallas, Texas www.thinkrealty.com/events/dallas 816-398-4130

For more information or to ob- tain a copy of the survey results, contact CHBO at 877-333-2426 or Support@myCHBO.com. •

thinkrealty . com | 9

THE BIG PICTURE

NEWS FROM ABROAD

Foreign Affairs CHINESE INVESTORS HIT THE ACCELERATOR AS TRUMP PRESIDENCY PROGRESSES.

tion, saidWilson. “I heard the questions, ‘How do we diversify in the U.S.?’ and ‘How can I diversify my risk by buying into a fund that may be managing 200 or 300 prop- erties versus buying 10 of them myself?’ repeatedly,” he noted. Wilson added that investor interest in the EB-5 Immigrant Investor Program (EB5 vi- sas) has diminished substantially in the last 12 months. But he emphasized that there is not necessarily a diminished interest in entering the United States. Rather, it could be that most investors who were going to utilize the program have already done so. With Chinese real estate investors more interested than ever in U.S. real estate on increasingly diverse levels of the industry, Wilson believes that the time is right for U.S. real estate investment industry leaders to approach AEG’s Chinese network directly. “There’s a massive amount of capital avail- able to the sophisticated real estate investor looking for it outside of the U.S. today. If the right credible real estate investment op- portunity is presented, Chinese buyers and investors move quickly. They buy [the right investments] immediately,” he said. AEG will host an event on-site at its Shanghai location later this year in order to introduce such American investors to Chinese investors, Wilson added, noting that anyone interested in attending the event should reach out to AEG directly. “I’ll give you an example of how quickly these investors move,” Wilson said. “On my trip, there was a developer with me who had about eight properties available in Los Angeles for about $600,000 each. He was selling them on-site at our loca- tion for full asking price, and investors were snapping them up.” •

by Carole VanSickle Ellis

hen Donald Trump was elected 45th president of the United States, a number of real estate investors drew a huge sigh of trepidation along with the many other protestors of one of the country’s most divisive and controversial elections. While most U.S. real estate investors believed that, all personal preferences aside, having a real estate billionaire in the White House would be pretty good for business, those who work within the lucrative sector of the market catering specifically to wealthy Chinese investors had reason to be concerned. Throughout much of his campaign, the president had loudly voiced plans to impose high tariffs on Chinese imports and act aggressively to bring manufacturing currently taking place in China back to the United States. China’s government and many of its political and business leaders countered what many in both countries perceived to be “attacks” by Trump by issuing ordinances against large-scale investing in U.S. real estate and levying unusually high fines on infractions in China associated with U.S. goods (for example, in an anti-dumping case aimed at a U.S. chemical used in live- stock feed in January 2016). Fortunately for those real estate inves- tors, although the turbulence surrounding the Trump administration and China may just be beginning, wealthy Chinese indi- viduals and companies are more interest- ed than ever at putting their funds in U.S. real estate and even appear to believe that President Trump will be a positive factor for their investments. Eddie Wilson, president of Affinity Enterprise Group (AEG), recently visited W

the physical location of the Chinese division of Affinity Investments in Shanghai and reported that in reality, Chinese investors are more interested than ever in investing in U.S. real estate. Wilson said those inves- tors believe the current U.S. president will bolster the U.S. economy in unprecedented ways, which they expect to be very good for their returns on investment. “They feel like his economic prow- ess will far surpass that of our former government leadership,” Wilson observed. Contrary to the negative sentiments about the Trump administration that he had expected, Wilson said, “these investors are looking forward to new opportunities in our real estate market.” Wilson cited one corporate CEO in the Chinese insurance industry specifically who told him, “In the end, we hold a lot of debt for the U.S. and our economy is only going to be as strong as the U.S. economy. We’re expecting Donald Trump to take the U.S. economy to a completely different level, which is very exciting for us and makes us want to invest as deeply as we can.” That CEO represents about $80 million in investment money targeted at the U.S. for 2017 alone, Wilson said. Wilson also noted that the types of investments in which Chinese investors are interested are expanding and evolving as they become more deeply involved in the U.S. housing market. Typically, these inves- tors have been cash buyers seeking to own assets in their entirety, which is one reason they have dominated and driven the ultra- high-end sectors in gateway cities like New York City and Los Angeles. Now, however, they are beginning to consider diversifica-

Carole VanSickle Ellis serves as vice president of research and analysis at the Self-Directed Investor Society, helping investors “declare independence from Wall Street.” Contact her at editor@bryanellis.com or visit sdiradio.com.

10 | think realty magazine march :: april 2017

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thinkrealty . com | 11

THE BIG PICTURE

TRENDS & ISSUES

Rising Tides KING TIDE FLOODING HAPPENS EVERY YEAR. BUT IT’S GETTING WORSE. HOW CONCERNED SHOULD INVESTORS BE?

by Robert Springer

ccording to Climate Central, Florida has more than 3.5 million people at risk of coastal flooding due to rising sea levels. That number is expect- ed to rise to 4.6 million by 2050. While South Florida is the poster child for coastal flooding due to global warming, it’s not the only American city expe- riencing the unwelcome phenomena. Boston, Charleston and San Francisco are just a few of many United States cit- ies to experience so called “king tides,” or the highest tides of the year. King or perigean tide flooding occurs once or twice a year, and is caused by the alignment of the increased gravitation- al pull of the sun and the moon when they’re closest to the Earth. King tide flooding is a natural occurrence but its effects are exacerbated by global warm- ing induced sea level rise. A few inches make a big difference when it comes to tidal flooding. The flooding tends to be worst in South Florida in September. “It’s just part of astronomy. It’s not mag- ic; it’s going to happen every year. Global warming heats up the oceans, causing the thermal expansion of the oceans and also melting glaciers, which adds water to the oceans and raises the sea level even fur- ther,” says Albert Slap, president of Coast Risk Consulting, a Florida-based compa- ny that offers detailed online assessments of a property’s flood risk. And while coastal flooding due to sea level rise is also a social and political problem, real estate investors inter-

ested in coastal properties need to be informed about its impacts or risk being swamped by dwindling property values.

SOME BUYERS CONCERNED; BUILDERS, NOT SO MUCH Despite the national publicity that king tide flooding in South Florida has generated, local Realtors say most buy- ers don’t seem overly concerned. “I hav- en’t seen contracts get cancelled because of them, but there have occasionally been buyers that decide not to come,” says Nancy Corey, branch manager for the Miami Beach Office of Coldwell Banker Residential Real Estate. “The buyers in our market are discre- tionary buyers, and they tend to be smart and well educated, so they will make a decision based on what it is that they want, based on the data that becomes available for them, or sometimes they just want the property. It’s not like any- one is not aware of it, but it may not be a factor of concern for them,” Corey says. Part of Miami Beach buyers’ lack of concern may come from the city’s robust response to the flooding. The island city has spent more than $400 million to elevate roads and install pumps. “There may be a level of com- fort with these buyers knowing that the city is responding to the situation and not acting like it doesn’t exist,” Corey says. “The one on Alton Road, which took a while to complete, used to be a

pond and you can drive through it now, so what they’re doing so far is working.” Builders are very bullish on South Florida real estate. Multimillion-dollar spec homes are being built in Miami Beach, which is pretty much ground zero for seeing the effects of king tide flooding. “Right now on the market on

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FOREWARNED IS FOREARMED: WHAT

North Bay Road there are two houses side by side, one asking $25 million and one asking $34 million; another one down the street asking $35 million. Those are spec homes,” says Jill Hertz- berg, a Miami Beach Realtor and, along with Jill Eber, half of “The Jills,” sellers of luxury Miami Beach real estate.

familiar with which areas typically flood, potential investors from thousands of miles away may not, says Slap. Equating it to a termite inspection, Slap says that smart investors can obtain a detailed analysis of a property’s flood risk for $149. Such an assessment could give out-of-state investors peace of mind.

INVESTORS NEED TO KNOW If it’s not already, experts say that a new part of a coast investor’s due diligence will be to investigate a property’s suscep- tibility to king tide flooding, now and in the future. While local investors may be

thinkrealty . com | 13

THE BIG PICTURE

TRENDS & ISSUES

“It’s the buyers that may be transferring from a Midwestern city to a South Florida location that really don’t necessarily know what king tides are, or how the streets may be flooded in their area,” he says. Larger, commercial investors are interested in more than just whether the property will flood, according to Slap. “They’re interested in a lot of different things—ingress and egress of workers, employees who will be coming to a shopping center, an office building, a FedEx depot, or Hertz rental car—so the larger commercial developers need to cast their eye wider than just the four corners of a property,” he says. A property that doesn’t flood will be less valuable if most of the surrounding businesses do flood many days a year

and are therefore harder to access. Slap’s software can also provide potential tidal flood impacts on adjacent properties. An investor’s level of concern with sea level rise flooding is intimately connect- ed with his or her investing timeline. A rehabber, for example, knows that he can sell his house quickly in a hot market so the fact that the property may flood 20 times in a year in 2050 isn’t a concern. Buy-and-hold investors, on the other

they fail to disclose that a property is subject to natural hazards, while Cali- fornia, Pennsylvania and Washington require the disclosure of past flooding or susceptibility to future flooding. In a blog post, South Florida law firm Hackleman, Olive & Judd says that both sellers and buyers should consult a real estate attorney to assess what sellers need to disclose and make sure that buyers ask the right questions before investing in a property. effects from king tide flooding are desirable places to invest and live, like South Florida. “South Florida is attractive to foreigners, it’s attractive to the domestic clients from the U.S. and especial- ly the Northeast,” says Corey. “We get a lot of people from California because the pricing is—as crazy as some of the pricing may appear to people that live here—on a global scale we’re not that expensive compared to maybe a property in Brazil, France and certainly California, New York or Aspen.” Slap says it’s important for investors to start “talking about those issues in- stead of burying your head in the sand.” Only then will they know if king tide flooding could turn their promising investment into a nightmare. The lifestyle that coastal living offers ensures that people will want to live there, so it appears that rising sea levels and increased king tide flooding are just one more challenge that investors need to face in search of appreciation and positive cash flow. • Many of the places that are experiencing deleterious

hand, need to know the risk to their property and surrounding properties, Slap says. “Indi- vidual homeowners need to know the difference that this stuff ’s happening every year, and it’s going to get worse and worse every year,” he says. “You’re going to have this weeks at a time. Some areas, like the Florida Keys, already have it weeks at a time.”

Investors who are interested in prom- ising coastal real estate markets don’t need to ignore them entirely, according to Slap. Instead, they need to be strate- gic about where they put their money. “Perhaps a smart way for the larger investor, or even really a flipper, is to think, ‘How close can I get to the action (meaning the market action) without getting my feet wet?’ “That’s maybe a little bit of a funny way to phrase it, but when you look at the slides of king tide flooding in Hollywood and Fort Lauderdale, and Charleston, and Annapolis, and Savan- nah—these are hot markets. There’s nothing wrong with these markets.”

RESOURCES

CLIMATE CENTRAL www.climatecentral.org 877 425-4724

COASTAL RISK CONSULTING www.coastalriskconsulting.com 844 732-7473

COLDWELL BANKER MIAMI BEACH LINCOLN BUILDING OFFICE www.coldwellbankerhomes. com/fl/miami-beach/office/ miami-beach-lincoln-building/ oid_913/ 305 672-6300

CAVEAT EMPTOR: TO DISCLOSE OR NOT TO DISCLOSE

THE JILLS www.thejills.com 305 672-6300

States regulate whether homeowners or Realtors need to disclose king tide related property damage. According to The New York Times, Florida Realtors face no penalties for noncompliance if

Robert Springer is a regular freelance contributor to Think Realty Magazine. Contact him at rtspringer@gmail.com.

14 | think realty magazine march :: april 2017

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FEATURED STORY

Master Investor

Twin brothers Kelly and Chris Edwards are building a successful family of companies through perseverance and passion. BYSUSANTHOMAS SPRINGER PHOTOS BY TERRENCE JONES ONE STEP AT A TIME

18 | think realty magazine march :: april 2017

WE DON’TWANTTO SUGARCOAT ITAT ALL. ITWASVERY DIFFICULT. WE WORKED OUR TAILS OFF,” ... THEREWERE DAYSWHEREWE WERE LIKE, ‘WHOA, HAVEWE MADEA BAD DECISION?’” CHRIS EDWARDS CO-FOUNDER & MANAGING PRINCIPAL , THE EDWARDS COMPANIES

thinkrealty . com | 19

FEATURED STORY

Master Investor

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ALMOST 15 YEARS AGO, identi- cal twin brothers Kelly and Chris Edwards found a historic house in Ra- leigh, North Carolina, that their real estate agent advised them not to buy. But they borrowed $5,000 from Dad and bought it anyway. The slanted floors were only the beginning of the repairs that kept them busy after work and on weekends. Six months later, they repaid their loan. Then they bought a second property—a four- plex, also in bad shape. Today they still own both rental properties. “There’s so much risk involved, but you just have to put one foot in the boat and one on the dock and shove off to get some momentum,” says Kel- ly Edwards, co-founder and managing principal of The Edwards Companies. In the beginning, the Edwardses only knew “how to swing a ham- mer” but didn’t mind getting their hands dirty and figured they could learn how to renovate on their own or hire contractors. Their school-of- hard-knocks education continued as they gained knowledge on selecting reliable contractors from a sea of not-so-great ones. Now they own four real-estate-related companies. EDUCATING THE EDWARDSES The brothers credit their MBAs and banking experience with giving them the expertise to analyze financial statements and make solid decisions. When one professor said employees can no longer depend on companies to provide until retirement, they vowed to be self-employed. After banking, they moved on to construc- tion jobs and contemplated when to take the leap. The economic down- turn forced the answer when Chris was laid off. “We went from thinking, ‘This is a great long-term buy’ as far our net worth is concerned, to ‘We need to make money now,’” says Chris, also co-founder and managing principal of The Edwards Companies.

Kelly and Chris Edwards started their investing journey in Raleigh, North Carolina.

“We knew that if we wanted to do this for a career, we had to diversify our portfolio.” The downturn was a challenging time to start a real estate investment business, not made any easier when the Edwardses saw employed friends wearing three-piece suits and driv- ing BMWs while the brothers drove beaters. So they stuck to their strate- gy, mainly buying properties to hold with a few flips thrown in, while “not participating in the downturn of the economy” because they didn’t plan to sell and they didn’t plan to give up. “We don’t want to sugarcoat it at all. It was very difficult. We worked our tails off,” says Chris. “There were days

where we were like, ‘Whoa, have we made a bad decision?’” They hadn’t. Both their net worth and income continued to grow. Today their four businesses employ 10 peo- ple and have contributed to restor- ing historic neighborhoods around Raleigh. As the brothers like to say, they like making “old stuff old again.” Also, a renovation television show highlighting their interest in historic homes is in the works.

FINDING AMENTOR Years ago, the brothers spotted a successful investor and sought him out. They approached him at a

thinkrealty . com | 21

FEATURED STORY

Master Investor

meeting, introduced themselves and took him out for dinner. That led to a productive mentorship. “Now we have him on speed dial. We call him and talk every few weeks,” says Kelly. The brothers are happy to return the favor and help others who want to try the real estate investment busi- ness. But they see many people hesi- tant to begin, so they were glad to see one real estate agent acquaintance buy a property through owner financing. “That’s one of the key secrets to get- ting started in this business—you’ve got to get creative with your financial frame,” says Chris. “Unless mom and dad are just giving you a million bucks to go buy a rental property, the banks aren’t

Edwards Capital Partners is the invest- ment arm, where they offer a consis- tent 9 percent return secured by real estate. Their fourth business is Orange Elephant Painting and Restoration, which the brothers call “the painting company we could never find.” Orange Elephant will soon go na- tional. In 2018, the Edwardses plan to launch the business across the United States as a franchise, based on experi- ence they’ve gained through volume. “We’re now handling the renovations for a national hedge fund that buys property, about 25 a month, and we’ll have two to three weeks to do a $20,000- $30,000 renovation, and so our company, Orange Elephant Property Maintenance, is handling that piece. It’s just kind of a neat tie-in to how we started, looking for

always keen on lending it,” says Kelly, who adds they’ve found success buy- ing from retiring landlords. The brothers advise that all you can do is ask to buy a property and hear one of three possible answers: “Yes,” “No” or Hell, no.” GROWING THEIR BUSINESSES The Edwardses continue buying in- vestment property; they have 51 units and flipped four in 2016. In addition, they added their father’s business to their portfolio in 2012 with the purchase of an agency now in four lo- cations. It provides cash flow, a steady customer base and a quality staff, which allows the brothers to continue to grow their rental property business.

The brothers say they “like making old stuff old again.”

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PERSONNEL FILE MASTER INVESTORS: Kelly & Chris Edwards, co-founders and managing principals of The Edwards Companies

WEB: TheEdwardsCompanies.com

HOMETOWN: Raleigh, NC

EDUCATION: B.A.s in political science from University of North Carolina at Chapel Hill, MBAs from East Carolina University FIRST PROPERTY: Bought a dilapidated house in 2002—against their real estate agent’s advice— which they still own. OWNERS OF FOUR BUSINESSES: The Edwards Companies, Edwards Capital Partners, Orange Elephant Painting and Restoration, Edwards Insurance Partners INSPIRING BOOKS: Start: Punch Fear in the Face, Escape Average, Do Work That Matters by Jon Acuff “Regardless of your age or station in life, it all comes down to one simple truth: you just have to start.” The Millionaire Next Door by Thomas J. Stanley and William D. Danko “Whatever your income, always live below your means.” FUN PURCHASE: Matching 2016 Chevy Tahoes in Iridescent Pearl Tricoat

Just get started, the brothers advise, or “five years passes you by.”

contractors and burning through them. Now we are the contractors,” says Kelly. This move brings them full circle when it comes to construction. They started renovating without much knowledge of repairs, and today they run a construction company. It fits their philosophy and the advice they give to other investors: Be confident that you can figure out what you don’t know. “You may not know the next 10 steps. You may not know the next five. But you can figure out that first step,” says Chris. “So, you’ve got to get started. Otherwise, five years passes you by.” From the Orange Elephant website, homeowners and landlords can get quotes and schedule work. “As a landlord, who would you rath- er handle your property maintenance, turnovers or painting?” asks Chris. The Edwardses’ experience renovat- ing property and hiring contractors

drove them to build a reliable, con- venient restoration company. They understand how valuable it will be for landlords to go on the Orange Ele- phant website and fill in any needs— such as “replace five switch plates and paint three rooms” —and instantly get a price and set a date. The future also includes the broth- ers’ television debut. While various Hollywood production companies had their ideas about the show’s theme, the brothers are sticking with their Southern roots and highlighting their brand of revitalizing old proper- ties in downtown Raleigh. “It’s like anything—be true to yourself and who you are,” says Kelly. •

Susan Thomas Springer is a regular freelance contributor to Think Realty Magazine. Contact her at susan@susantspringer.com.

thinkrealty . com | 23

SPECIAL FEATURE

WOMEN TO WATCH

THINK REALTY SPOTLIGHTS JUST A FEW OF THE MANY DESERVING WOMEN WHO ARE SHAPING THE REAL ESTATE INVESTING INDUSTRY TODAY.

by Carole VanSickle Ellis

BACK IN 2011, TRULIA conducted a state-by-state analysis of female activ- ity in real estate, and it concluded that women literally painted the country pink insofar as every single state had “more women than men in the business of buy-

ing and selling homes for a living.” In that study, it became very evident that women were a rising force in the real estate sector, but with a very big caveat: Trulia’s study only considered real estate agents and only factored in women

listing properties and making sales. Not to diminish the gender-specific accom- plishments of female agents who were, in large part, listing more and selling more and higher than their male counter- parts, according to the study, but Trulia’s

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research left a gaping hole when it came to looking at the larger role of women in the real estate industry. Since that time, more companies have started evaluating women’s roles in the industry in terms of their visibility, in commercial real estate in particular. But all of these analyses leave something to be desired: a comprehensive look at the real estate sector and the women shaping it. To address this oversight, Think Realty has assembled a list of 10 women active throughout all sectors of the real estate industry. These are women who not only have a long and often-sto- ried history in the sector, but who are actively molding the way that real estate

investing is evolving today. They wom- en come from a range of educational and demographic backgrounds. Some headed for the real estate sector with laser precision, while others made their way there indirectly. Of course, there are multitudes more who deserve recognition for their efforts. We will be supplementing our list with additional names in upcoming issues. And we welcome our readers’ suggestions on women to spotlight, as well. You may email Editor-in-Chief Linda Wienandt at lwienandt@think- realty.com. Please provide a contact phone number or email along with your suggestion.

thinkrealty . com | 25

SPECIAL FEATURE

WOMEN TO WATCH

SONIA BOOKER Sonia Booker Enterprises Atlanta, Georgia

founder of H.J. Russell and Company, he was already a successful real estate investor and doing transactions unlike anything that I was doing. To get started, you really need to show that you have skin in the game and are willing to get your hands dirty.” Note: Booker spent nearly 11 years working directly with Russell in all areas of his business, including handling all areas of marketing, sales and operations. PROUDEST MOMENT: “I would have to say when this lady came up to me a few years ago and said ‘You know, you’re a pioneer. Watching you out in the market has made it OK for women to be real estate investors.’ “It makes me proud to know that I’ve had a little something to do with changing how women view real estate. To say that it’s OK, that we’re different, that we operate differently, and that we’re not only agents but that we operate on other levels as well.” A WORD FOR WOMEN IN REAL ESTATE: “Women are about information. We tell our girlfriends, our sister, our mama, our cousins. We look at things from the perspec- tive of how that information is going to make an impact in our lives, not just in our investments. I have found it to be true that if you teach a man [to invest], you teach a man. [When] you teach a woman, you teach the world, because we are sharers.” •

PLACE IN THE INDUSTRY: When Sonia Booker started investing more than two decades ago, “I did it all,” she says. That doesn’t seem to have

changed much. The self-described wealth-builder and thought leader not only buys and rehabs single-family properties to sell and rent, she also has an extensive commercial property portfo- lio, manages a private-equity fund that acquires multifamily and commercial buildings and is a prolific author and public speaker with her own radio show, the “Sonia Booker Show.” “Early in my investing career, I would just buy properties and live in them. That was my model,” she recalled. Upon completing the renovation, she would move out and either sell or rent the property. “I think I had moved 20 times before I got married,” she laughed. Booker would host information sessions in her living room on Wednesday nights during which she taught others, mainly wom- en, how to successfully get involved in real estate investing. Over time, she converted the information sessions to a short pamphlet that she sold for a few dollars or handed out for free, and out of that, her speaking and writing career was born. Through it all, however, she kept a firm grasp on her real estate roots. “I still eat and breathe real estate,” she said, noting that for her, “real estate is this kind of great wealth equalizer” because, at the end of the day, “we all have the same kind of leverage when it comes to real estate in that if you get the [requisite] knowledge [to invest], you can be successful.” WHAT’S AHEAD IN 2017: “I would say sharing my message more is the thing that I’m most excited about in 2017,” Booker said. “I’m creating a wealth-building movement that changes the way that people think about building wealth. The only way to understand it is to define it for yourself. For a lot of people—and especially for women—wealth doesn’t just mean money. It means generation- al wealth and leaving a legacy.” CRUCIAL “KEY” TO SUCCESS IN THE INDUSTRY: “Always take a self-assessment before you start investing and understand your resources. How much do you have to invest? How much are you willing to invest? What’s your credit? “When you go into relationships or you’re trying to gain access to someone’s time or resources, you have to be able to say what you will bring. Be very honest about what you bring and what you are trying to gain. “When I approached my mentor, the late Herman Russell,

CARRIE COOK Preferred Trust Company, Ignite Funding Las Vegas, Nevada

PLACE IN THE INDUSTRY: When Carrie Cook says success in real estate in general is earned, she

knows what she’s talking about. “I do not have an Ivy League edu- cation. In fact, I didn’t go to college until 10 years after I graduated high school,” she explained, adding that the mentor who suggest- ed she do so was, at the time, the head of the Democratic Party in Nevada and running government relations for a Fortune 500 company. “I thought to myself, ‘She’s pushing this for a reason,’” she recalled, adding that her degree from the somewhat uncon- ventional University of Phoenix taught her to work in a group setting. “It takes a group of individuals to accomplish what I’m accomplishing [in real estate], period,” she said. “This is the result of a teamwork environment. “This” is a small word to describe the extremely big things that Cook is doing these days. She is the CEO of Preferred Trust Company, a self-directed IRA custodian, and the presi-

26 | think realty magazine march :: april 2017

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