Commercial Real Estate Investing From A-Z

In this episode I talk about setting goals for your investing this year. I think 2021 will be a great year for a lot of investors, and you guys have been taking the time to learn as much as you can. 2021 will be a great year to put all of that to work.You can read this entire episode here: https://bit.ly/3b93z3hFirst we need to look back at our 2020 goals, and what got accomplished and what didn't. I accomplished about 50% of my goals, and looking back, the biggest issue I see in not accomplishing the rest of my goals (guess what, it was not Covid!) is that my official accountability buddy and I did not follow up on our calls. And that was both of us, we did not hold each other accountable with our calls and our goals. Another serious part of this is that I did not block part of my day to really look at what is the most important thing that I can do that day, to help me get closer to my goals and take a couple of hours to just do that before getting into emails, before everything else. When we're having this one or two hours for ourselves in the morning, I think it's really important to always include the thought of how can I increase this by 100 times? Some people say 10 times. And I think 100 is even more powerful, it gets you thinking outside of your box, for instance who is my wealthiest friend who would be super interested in investing in real estate? Or what is the property that is going to give me the most return for my time? Not carwashes, I can tell you that!Let's talk about one of the most popular forms of goal setting. And that is called SMART methodology, having Specific, Measurable, Attainable, Relevant and Time-Bound goals. So let me give you one example of one of my goals for this year:Specific: I want to partner up with a friend who is an architect and has a lot of experience in not only remodeling things, but also adding things to spaces, and not only in the single family space, but also in other commercial and multifamily space. So we want to start small, and we want to build this relationship and grow from there. So that is the goal to get into the real value add through development and improvement of a property business.Measurable: What is a measurable number for that? I want to buy and exit 12 properties, or 12 units with this friend in the Bay Area, which is where we live this year, we're going to be buying homes, or multi unit properties. At some point, she will take care of the renovations and the additions. I'll take care of the rest. And then we're going to exit.Attainable: Are 12 units attainable? Yes. She said that she will be comfortable managing even 10 projects at a time. So 12 projects in one year, I think is very doable.Relevant: Is it relevant? Yes. Homes right now are selling like hotcakes. And this is also a great way for us to not only make sure that we work well together, and also for us to be able to see and learn what other areas we can grow exponentially.Time-Bound: The last part of the smart format of goal setting is for your goal to be time bound. So we are already in January. I think it's realistic that we start with one property by February, we'll start to reach out to lenders and real estate agents to help us with the properties, and then fundraise whatever we need for the project and start working with the contractors.2021 will be incredible for real estate investing!Subscribe to our Goal Accountability Group here:www.paypal.me/regoals- Send $20 for Jan OR- Send $200 for the whole year (2 months...

This is our December 2020 Mastermind call. Our guests were Todd Sulzinger (mobile home parks), Victor Menasce (development, various asset classes) and Adriana Finnie (single family investing).You can read this entire interview here: https://bit.ly/3mFeOCsSteffany Boldrini (Self Storage, Car Washes)I have been dealing with a new asset class that I invested in, and that is carwash. I was put through the wringer right away, within nine days of closing, one of the roofs caved due to snow, money has been already been stolen, and within 20 days of closing, and my maintenance guy quit without giving any notice. Thankfully, I was able to hire someone within a day. I'll be doing a couple of episodes on why car washes, what did we do to them within this last month, and how we are managing it from far away. What I can tell right now, is that it's a very hands on asset class with a lot of moving parts.Todd Sulzinger (Mobile Home Parks)One of the biggest things that is still impacting us is our inability to process evictions. I have properties in Georgia and Tennessee that are landlord friendly states, and in Georgia in particular, we had the courts closed in March, they opened back up at the end of July. And we had to start the eviction process on several people. We had several people that after a couple months process before we got a court date, they moved out just before their eviction was filed. Other people were still going through the process, we've got a couple of tenants now that have been in the park for almost a year that haven't paid rent. And we really have our hands tied.Victor Menasce (Development, Various)We've been busy with a number of new projects. And as you probably know, we also get a fair number of requests to consult on new development. For example we're doing a 150 unit apartment building up in Spokane, Washington for our client, we're doing a 60 unit townhouse subdivision just outside of Boise, Idaho, we are doing a boat and RV storage facility up in Austin, Texas. So we decided to formalize the consulting division and officially make it a core part of the business. And that's going to allow us to train the future leadership in the company. We're not going to accept every client by any means, but only those that we would say are intentionally congruent with that which we're already doing.Adriana Finnie (Single Family Homes)We're in single family homes in California, Ohio, Michigan, and Alabama. We started in California, but in the last three years, we decided that the rules are getting a little too dumb and that it's time to get out. So we've done it in a very leisurely way. We keep waiting for somebody to move, and then we put the house on the market. It has worked nicely until this year when nobody wanted to move for any particular reason. The biggest challenge is evictions.Join our facebook group here: www.facebook.com/groups/montecarloreiTodd Sulzinger: www.blueelminvestments.comVictor Menasce: www.victorjm.com<a...

In this part I will cover getting the loan for the portfolio of properties, the LLC formation, hiring, as well as dealing with challenges.You can read this entire episode here: https://bit.ly/341nXipLoanThe first lender that gave us a loan approval initially gave us a loan approval with an extremely unreasonable request, which was to basically tie up cash until we pay out the loan, this gave us no reason to get a loan. What I did when I got that news was that I asked to set up a call right away with the loan agent. We got on a call, I explained everything, not only from the property side, but also from my experience side and how, we have a ton of mentors, how I have access to hundreds of people, and all of that. You really need to show them that you are resourceful, that you are a professional and also a lot of times that you were successful in your previous career. It was a quick call, it was I think, a 15 minute call. After that, the loan officer scheduled a call with the president of the bank, and I told him the exact same thing. I asked them if they had any questions, etc. Shortly after that, we got the approval, that was probably the next day or two.LLCFirst I decided to break it down into two LLC's, one for the car washes and one for the Self Storage. This is purely for liability reasons. And with this decision, we had to change our closing date by about seven to 10 days. Because the lender had to rewrite all of the loan documents, the title company had to rewrite everything and divide into two entities. So that took a little bit longer. Ideally, in the future, you need to make that decision in the beginning, because we also had to sign another offer, breaking it down into two entities, even though when I signed the offer, it was under our name and/or assignee, which means we can assign this to anybody.HiringWe had someone in mind, but that person didn't even return my call when I left him a message, and the real estate agent had to remind him to call me back. So that was the very first red flag for me. And then after that, he showed up late for our very first meeting on site. And that was my second and last red flag. Some of you may know this, but there is a saying that says "hire slow, fire fast". You should take your time in finding the right person for the job, and do a really good job with the interview. And there are great resources out there. One of the books that I love is called "Hired", highlight everything that you can in that book, it is super helpful for hiring. And then on the firing fast side, people do not change. And I have seen that over and over again. And because this guy wasn't returning my very first call after we had agreed on him managing the property, and he was also late for our very first meeting, those were huge red flags for me. I decided not to work with that person.ChallengesNine days after closing on the properties, the roof in one of the car washes caved because of snow. Honestly, I was not scared when he told me that. I said, Okay, this is part of the game. Nine days, whoo. I'm thrown in the wringer. I made a claim with the insurance company right away. And I cannot talk much yet about the insurance because the project has not being completed. But all I can say is that I am very pleased with Nationwide, they really are by your side. This company has been phenomenal with the claim that we made literally nine days after closing. About 20 days later, the main maintenance guy quit. I started searching for staffing agencies in the city, posted an ad on Craigslist, and hired someone the next day. It was a blessing in disguise.Subscribe to

I will be talking about a project that I have been working on for a year and that closed about a month ago.You can read this entire episode here: www.bit.ly/3g9laZdThis property came into my inbox because I have been getting alerts for self storage properties for sale. It was a portfolio of one Self Storage property and three self serve car washes. It took 84 back and forth email messages, plus some phone calls to get all the information that we needed to analyze the property, to agree on a price, and also one year from my first communication with them to the closing.Things to ask for:- Profit and loss statement- Tax returns for the last 2 yrs- Detailed explanations on expenses- What does it entail to manage and operate car washes- Price for rental units on self storage- Phase I report- A list of multiple questions regarding the property, age of roofs, type of floor (asphalt, concrete), type of building, age of buildings, etcDue Diligence period:- Ongoing list of questions and follow up questions- Recommendations for local lenders and credit unions- Recommendations for local real estate attorney to review title and surveys- How much would it cost to add credit card machines to the car washes- Information for all the service providers that they currently use- Finding a local property manager for both sets of propertiesExample of things that you always must follow up on, until it gets 100% completed:- I had to get quotes for putting internet in all of the car washes for not only the credit cards, but also for the cameras that I was going to be installing. And it turned out that for all of the car washes I had to get a different internet provider because not a single one of them could provide service in more than one car wash, they just did not have service in the other properties areas. That probably took three full days worth of work to find the best internet provider for every single location. - I searched for the best provider for the Self Storage Facility that was 1. affordable 2. could take online rentals 3. could take credit card/bank payments. The previous owner did not have a website, and they were sending out paper invoices to all of their renters. So I had to get someone to create a website for us, and also to be able to accept rent, accept credit cards and also have people be able to lease things online. I found this very young startup that fit every single need for the property. And because they were so young, I really had to beg for them to take me as a customer. And that took a lot of following up, I said, Guys, I'm with you, I know it's not going to be perfect, but I really think we can be a very good first few customers. So let's get this going. And we got them to agree to that. - I had to follow up with the guy that agreed to be a property manager and was not even responding to my phone calls.- I had to follow up with the insurance company, I wanted to continue working with the same insurance that was the provider for the previous owner, because it was a good price, plus that insurance provider already had all of the information for the car washes. After three weeks of not getting a quote and also following up with the agent, she tells me whoops, the underwriter thought this was a renewal and send it to the wrong person in the office. And this was one week before closing. So I started Googling for highly rated insurance providers in that whole area and got quotes from everybody that I could get my hands on, We also had to make sure that this provider was real and reliable (there are horror stories about insurance...

How should you fundraise? What are the best practices? Ben Kogut, partner at HJH Investments will share his extensive experience with fundraising for syndications. You can read this entire interview here: https://montecarlorei.com/getting-started-with-real-estate-syndication/ Walk us through your first syndication raise. What did you do? How long did it take for you to raise the funds? What were the results? Lessons learned? It all starts with the deal, making sure that the deal itself is solid. And for me, a good deal looks like predictable cash flow. Generally speaking, that means that we have a high credit tenant with a long term lease, or multiple long term leases, something to that extent. And so making sure that all the numbers, the debt, that we structure our deals where we have a high net worth individual sign on the debt, and that the assets are in an area that we think are going to appreciate. On my first deal that started with my relationships. People that I've known throughout my involvement in real estate for the past 15 plus years, plus people that I know throughout my involvement in the community, I basically just started there by talking to people, Hey, here's the deal. Here's what I like about the deal. Here's what I don't like about the deal. And here's what you may expect by potentially investing in a deal like this. But the best advice I could say if anybody's thinking, Okay, I want to raise money or I'm thinking about one day raising money. Then now is the time to start telling people within your sphere of influence. The people that already know that you're a smart, capable individual, and that you're working on a deal, or you have a deal, Hey, would you be somebody that would be interested in investing with me once I get a deal, and I think a deal will look like this, whatever that is. If you're in triple net properties the way I am, or if you're in multifamily, or all the other different asset classes, which there are many. Now that you're raising all of your funds in less than a month, what are some of the best practices for fundraising for a syndication? 1. Putting together a clear and concise investment deck, to make sure that people understand what it is that that we're trying to accomplish. 2. This is a new addition to my practice, I've been putting together a short video where I just stand in front of the property, and I talk about it. What are we seeing here. Some people really care about what the property looks like. Some people could care less. They don't care where it is. They want to know what are the leases, who are the tenants, what are the terms? What kind of debt do we have? If I am going to put this much money in, how much am I going to get out and when. I'm trying to provide that type of data to a broad range of people. 3. Communicating with with your investors. Right now we have upwards of 180, or close to 200 existing investors amongst our portfolio, that's always the best place to start. 4. Another piece of advice I could give people, that I struggled with at the beginning, but is really good advice that someone gave to me is to be indifferent. To be indifferent to whether or not somebody invests in that deal or on you. Completely indifferent. I really do not care if you invest in this deal or not. It really set me free, it really takes the pressure off. I don't want anybody feel pressured to come into a deal. Ben Kogut www.linkedin.com/in/benkogut www.hjhinvestments.com Subscribe to our newsletter here: https://montecarlorei.com/ --- Support this podcast: <a...

What are the legal aspects of forming your LLC when investing in commercial real estate? We are talking with Garrett Sutton, a corporate attorney, asset protection expert and best selling author who has sold more than 900,000 books to guide entrepreneurs and investors. You can read this entire interview here: https://montecarlorei.com/llc-strategies-to-protect-your-real-estate-assets/ How should a real estate investor organize their LLC’s for best protection? We like having an LLC set up in the state where the property is located. If you buy a property in Oregon, we set up an Oregon LLC to be on title to the Oregon property. And in all 50 states if a tenant sues, or the law where the property is located is going to apply, if we have a number of LLC’s and we want to protect against the outside attack, that tenant suing is the inside attack, they have a claim directly against the LLC that holds the real estate, the outside attack is you get in a car wreck. It has nothing to do with the real estate but your insurance doesn’t cover the claim. And in that case, we like Wyoming and Nevada to own the Oregon LLC. If you have a property in Utah, we’d have an Utah LLC. Let’s dive into all of the documentation that you guys will be sending us after an LLC is formed. We submit the Articles of Organization to the state. It’s a very short form because this one document is a matter of public record. Anybody can look it up and see what’s on it. We don’t want to put too much information on that. Then behind that public document, you’re going to have the Operating Agreement, which is the roadmap for how you’re going to operate the LLC. Who are the members of the LLC? What percentages do they own? When are we going to have meetings? Can we have telephonic meetings? The Certificate of Formation comes back from the state saying, Yes, you’re formed, and the filing. The EIN stands for Employer Identification Number. That’s like a social security number for your business. We also have minutes of the first meeting. The membership certificate is like a stock certificate. How does an investor pays himself with an LLC? If you have real estate, and you’re just holding and receiving income from real estate, and we consider it passive, then the money would flow from the LLC to you as a distribution and you’re going to owe tax on that as well. You’d write a check from the LLC, to you personally and then you would cash that check and put it into your personal bank account. So we’d have money coming into the LLC from rents, let’s say you own a duplex, the rents come into the LLC, you pay all the expenses at the LLC level, and then you make a distribution from the LLC to yourself.&nbsp; What else is important for our audience to know? 1. Every year you have to pay a fee to the state, like we mentioned, Wyoming is $50 a year. 2. You have to have a Registered Agent in the state where you’ve set up the LLC and a state where you’ve qualified to do business, like a Wyoming LLC qualified in California, you’d have to have a Registered Agent in Wyoming and California in that case. 3. You need to have the separate bank account, as we mentioned, you can’t co-mingle funds. 4. You need to do the minutes every year. 5. You need to make sure that on all documentation, you’re using XYZ LLC and you’re signing as manager, not as a personal owner of the property. Garrett Sutton (800) 600-1760 www.corporatedirect.com Join our newsletter here: www.montecarlorei.com...

This is a transcript of our 4th Mastermind Call with a group of experienced investors to understand where each investor is and how they are dealing with the Covid-19 lockdown and its consequences. You can read this entire episode here: https://montecarlorei.com/mastermind-call-what-are-top-investors-doing-during-this-crisis-multiple-asset-classes/ Self Storage and Retail Going into month 7 of the quarantine in San Francisco, some places are being allowed to reopen at limited capacity such as nail salons and hair dressers, still there is no indoor dining allowed, although restaurants may be able to reopen at 25% capacity at the end of the month. A lot of restaurants and boutique gyms have permanently closed. There are a lot of vacant retail space for rent in all areas of the city. As far as housing, new, high end condos that are located near the large company offices are selling for 25% less than a year ago. Apartments for rent are between 15-30% cheaper than this time last year. Mobile Home Park Operator He is seeing that buyers are taking a little bit more time and there seems to be less frenzy about trying to acquire parks. A lot of people are looking, but they’re taking their time to buy. Part of it is that without that sense of a frenzy, people feel like they can take their time, it’s not as critical to get an offer out and to get a park under contract because they think it will still be there a month or two down the road. And that’s combined with some sentiment that people feel like they can wait for a little bit and hope that they might be able to find more motivated sellers over the next three to six months. Multi-Family Investor He is also taking it slow and being patient. He was starting to get a little bit more comfortable with everything around August and started to be a little more aggressive in the acquisition side, mainly looking in the Charlotte market. He thinks that the Charlotte market is really great long term, especially in light of everything going on. He thinks that the diversity of employment there is really good and sees that as a good long term market, but he stepped back a little bit when that CDC moratorium came down. Senior Living / Assisted Living They’ve been dealing with a lot of changes in the visitation front. As far as operationally, they are going to see a lot of interesting deal flow in the assisted living memory care, skilled nursing space. They’re at a demographic trough that’s going to exist for a little while. That’s where the baby boomers don’t need care yet. And their parents and people that are older than them are passing away faster than they’re being replaced. They’re at that point now for the next couple of years, where it’s going to be a little bit of a demographic challenge in this business, and then it will turn pretty sharply. Developer The past month has been definitely unexpected. They’ve a number of projects in Lake Charles, Louisiana, that got hammered by Hurricane Laura and they got to see how well the site would perform under heavy rain conditions and it performed well, including a tropical storm that came through recently. The last month has been dealing with that situation, and it has opened up more opportunities. So overall, it’s actually been good for them. They’re still seeing opportunity for new construction. They’ve three projects that they’re doing. It’s never a straight line, there are always surprises, like lenders doing the bait and switch thing pretty liberally, saying that they’ll give you amazing terms, and the loan committee comes back with this concern. So the interest rate is going up. Apart from that, it’s business as usual. They’re being very careful not to make major long term commitments unless they really see very strong market fundamentals. They’re still bullish in some markets.&nbsp; ---...

Nobody gets anywhere alone, everyone that is successful has gotten there with the help of many, many people. I'll also talk about how you can start your real estate career from zero and get your first deal done. You can read this entire episode here: https://montecarlorei.com/how-to-grow-your-real-estate-network-and-how-to-start-your-investing-career/ How to Grow Your Network: Join Meetups in your area, even if they’re only doing online events, start attending them and getting to know people in your area. Go to as many real estate events and conferences as you can. You want to meet as many people as possible, make a note on their business card of what they focus on, make a note on what you guys talked about, if they have kids or what are their hobbies. When you get home, transfer all your contacts to a spreadsheet, or a contact management app, and send them an email saying that it was great meeting them, and add them on Linkedin. Make a name for yourself, start to be active in any platform such as Linkedin, Biggerpockets, Facebook groups. You want to join real estate groups in any of these platforms. Spend a few minutes everyday commenting on posts, and sharing insights. Check in with your network every few months. This can be done via email, Linkedin, Facebook if you added them there, but the best of all is always a phone call. I’ve created a couple of partnerships simply by checking in on people on a regular basis and seeing how they are doing. How to Get Your Commercial Real Estate Investing Career Started: Become a commercial real estate agent. You can focus on selling or leasing properties. You can start working for a real estate investment firm. I met someone that literally started as a secretary and worked her way up to a partner. Start investing in syndications, this allows you to invest a small amount of money, and at the same time familiarize yourself with the paperwork, terminology, how companies evaluate deals, how they pitch deals, etc. If you know someone that is a successful commercial real estate investor, you can have them be your mentor. Just make sure that you add value to that person, like bringing them deals based on their requirements. Build relationships with commercial agents in the area. Start joining their mailing lists, start asking for OM’s (offering memorandum). This way they will familiarize themselves with your name and you’ll start to learn who may be a good broker to work with. Start playing the Cashflow game by Robert Kiyosaki, it’s a very good game for you to start understanding how real estate investing works and how you can grow your net worth. You can either buy the board game, and invite your fellow real estate friends to play with you, or you can play on their website for free. How to Make Your First Investment if You Have No money: After you find a good property, and have shown to your network that you are learning all you can, invite friends and family to invest with you. If no friends or family are interested in joining you, partner up with someone experienced. If you have a property under contract, you can always give a significant percentage of the deal to that person, just so you can have the deal under your name and you can show your future investors what you have done with that first property. Buy and/or Play the Cashflow game here: <a href="https://www.richdad.com/products/cashflow-the-board-game" rel="noopener noreferrer"...

How are retail investors dealing with everything that is happening? What kinds of things are they looking at repurposing retail spaces for? How are they projecting revenues? Chris Ressa, COO at DLC Management Corporation shares some insights. You can read this entire interview here: https://montecarlorei.com/how-is-retail-performing/ What's going on in the retail space? There are certain places that are on fire and doing really well, and there are certain places that are challenged. Right now the most challenged is the enclosed mall. And we like to say we're in the same industry, but a different business. Most of my tenants today don't have a lot of exposure. They don't operate in a in a mall, we own either grocery anchored or what we would call power centers. A Walmart anchored, a Target anchored center with a TJ Maxx, Home Goods, a McDonald's on a pad in the parking lot. If you think about who the tenants are in those centers, they're very different than in those open air, strip centers. They're very different than the tenants you see in the enclosed mall. The enclosed mall was a destinational, retail fashion oriented shopping venue. That has shifted, it used to be driven by the department stores. the enclosed model is going through a massive transformation, the open air is going through some transformation, but there's a lot of positive transformation. What kinds of things are retail property owners looking at repurposing retail space for? In the pre pandemic, what you were seeing was this buzzword experiential retailing, which was theater and entertainment venues, but they were really going to iconic destinational retail properties, where that's not the everyday retail property in America. The everyday retail property is where someone goes and gets their nails done and picks up their groceries and grabs a slice of pizza and whatnot. And I don't know that there's going to be a huge transformation. I think that there's obviously going to be repurposing, you see a lot of the enclosed mall operators talking about maybe making deals with Amazon distribution, etc. There's going to be some of that mixed use stuff. I don't know that that's at scale. How are you projecting revenues? Are you projecting with additional vacancy in mind? The way we're looking at it is we're trying to assign a probability to the durability of the cash flow stream. When you're investing in retail properties, that's probably a key piece. If you think about any retailer, whomever it is, whether it's Walmart or TJ Maxx, or Starbucks, how successful is this location? How does that location fit into their grander plans? What do you expect will happen when they come up for renewal? Will they stay? Will they leave the market? Will they want to move down the road? How are you managing things through Covid? We had a three pillar approach through the pandemic. We called it the ate's: communicate, accommodate, and mitigate.ommunicate, accommodate, and mitigate. We need to do whatever we could to mitigate the virus, sanitize, clean our properties, and make them safe environments to shop. We needed to accommodate and work with our tenants where we could, and try to cut deals. And then we needed to communicate and continue open lines of communication. If there's anything that's positive that has happened through the pandemic is that we've had opened up the lines of communication with our tenants, our lenders, and everybody from a work from home environment more than they've ever been. Chris Ressa #ressa on Linkedin Retail Retold Podcast Join our facebook group here: <a...

How do you start your career in commercial real estate, what kind of properties should you look for, and how to manage your properties during Covid-19? Eric Wang, a commercial real estate investor shares how he started his commercial real estate investing career and how he is successfully investing as a solopreneur. You can read this entire interview here: https://bit.ly/3lDR4j1 A lot of our listeners can relate to where you are, running your own business. I would love to hear how do you determine a good project to take on, especially in the Bay Area? Obviously today with the Coronavirus and people moving out of the Bay Area, it’s really difficult right now, but I just don’t want to be too forgetful of the history of the Bay Area. In the past 10 years, it was undoubtedly one of the strongest markets in the world. But as far as up until today, which have been my recent projects in the past few years, my approach has very much been influenced by the value investing, the Warren Buffett approach where, I don’t need to swing at every deal, I can just take my time. I don’t have 10, 50, $100 million in equity that I need to get out of the door. I can be patient and wait. Looking back, I ended up allowing a lot of good deals pass by, but the ones that I did pursue, I felt good about. Let’s take one or two examples from beginning to end. How did you analyze a particular commercial project? Why did you decide to take it on, what did you do with it? What were the scary parts? And how did you exit, if you have exited them? One good example is the live work loft project I invested in. It was multiple lofts, essentially multifamily, but it’s non traditional in the sense that these weren’t little apartment boxes. They were artist lofts. And at that time in 2015, Lake Merritt in Oakland was a really booming market. More attention was coming around the lake, it was starting to already get expensive. Just east of that in this quiet neighborhood, there wasn’t yet much attention there. The reason why I was able to get it early on was because there wasn’t as much attention in that neighborhood. And now in recent years, or today, there’s been focus and investment all over the Bay Area and further deep East Oakland. But at that time, it wasn’t that clear. So it’s this path of growth mentality, the location was in the path of growth, outside of Lake Merritt. I acquired that and the goal was to transition these very large units, these lofts from very cheap space used for artists, or for construction people, people who had all different sorts of crafts and hobbies in these spaces, and small businesses as well, to transition that into more lifestyle. We provided some of the basic things, like bike parking, put on a new roof, upgraded the kitchen interior finishes, they were just plywood type finishes. And we got a lot of great tenants. Was it zoned live work already when you purchased it? Yes, it was already zoned that way. And I didn’t need to change anything about the zoning. The major value add there was just upgrading the use, just making it more efficiently used and presentable for the market of people that were moving into the area at that time. And you didn’t do a ton of construction. You did not make these lofts smaller. No, we thought about that, but we saw the demand and we saw the rental pop already just from improvements that we made. So we didn’t feel the need to do that. It was mostly interior renovations and common area improvements and basic building upgrades. And then you rented it out, and then you sold it? Yes, he was another operator. Eric Wang [email protected] www.revprojects.com Subscribe to our newsletter here: www.montecarlorei.com...

How do you decide which opportunities to work on as we find stranded assets? We are continuing our conversation with&nbsp;Victor Menasce, he shares excellent insights into his methodology. You can read this entire interview here: https://bit.ly/327vMRL When you look at a property, what’s your thought process of figuring out how can I add value to this, and create something out of nothing? Whenever I look at a property, I’m always thinking in terms of highest and best use. I’m looking to see what are all of the assets. I’m looking at zoning, I’m looking at what zoning has been approved around it or across the street around the corner to see if there’s any precedent for changing the zoning on that particular property. The zoning is always what is the property right now. It’s not what it could be in the future. So if it was a corner store, it’s zoned commercial for corner stores. But across the street, there’s a 20 story building, chances are good that you might get rezoned for a 20 story building. So you have to look to see what else has been done in the area. One of my favorites is something called conservation easements. There is a tax regulation called IRC 170(h) that allows you to donate a piece of land to conservation in perpetuity. And in exchange for that you get a tax deduction. Not what you paid for it, but for its value according to its highest and best use. Now, remember, this property has to have real wilderness conservation value, you're not going to take a parking lot in Pittsburgh and return it to wilderness ever. It has to be something that has real legitimate conservation value. But imagine it has minerals underneath it, maybe it has oil. What if you could get a tax deduction, you could say, It has a nice lake on it, I'm going to donate this to conservation. It has to be donated to a 501c3 land trust. And then you get a tax deduction for the oil that you never pump. How do you pick which ones to take on? You have to be selective. I'm looking at an opportunity right now, in our market there's a shortage of industrial land. And there's an acute need for contractors, and builders to store building materials. A place where they can put down a half dozen C Can containers and they can store lumber. If they can get a deal on building materials, whether it's siding, or lumber, anything that it's going to be in short supply that they need over the next 8, 10, 12 months, because we're definitely in a supply chain constrained environment. They need that space. I'm in the middle of striking a deal right now with a landowner who has some land, they don't know what to do with it. I'm probably not even going to buy the land, I'll probably end up just leasing it. And then put security fence around it, put down some C Can containers, provide secure access and lease out these spots to different builders as an outdoor storage facility. It doesn't have to be climate controlled, they can drive in with their trucks and trailers and load up. And I'm solving a business problem for a very low startup cost. Do you have a process of how you go about your day? These things come in when they come in and you look at them and try and give a quick no if you can. I don't spend too much time looking at things. If there's too many moving parts, if there's too much risk of it coming together, then we'll pass on it and pass on it very quickly. As far as the other ones, we'll get with the team and we'll see how would we put this together. They literally come in every day of the week. So we have to dispatch them fairly quickly. And some of them have a gestation period. Sometimes they come together in a matter of weeks, and sometimes in months. Victor Menasce [email protected] http://victorjm.com/ --- Support this

What are some ideas of how to think outside the box and negotiate real estate deals during these times? We asked Victor Menasce, host of The Real Estate Espresso Podcast, author of Magnetic Capital, and experienced investor and developer. You can read this entire interview here: https://montecarlorei.com/what-is-a-stranded-asset-how-to-look-for-opportunities-in-stranded-assets/ What is a stranded asset? And then we can jump into some examples of stranded assets. I'd like to make a distinction in defining the stranded asset. Most of the time people are thinking about distressed assets. Now, in a lot of cases, those distressed assets haven't appeared on the market yet, or if they are, it's really just the very beginning. We're in the midst of a moratorium on evictions, a moratorium on foreclosures. But we know there's a backlog at this stage of millions of distressed properties. I read a report last week that showed that 4.5 million homes in the United States are in either in default or in forbearance. And that happened literally in a very short time period. Now, if you think about the entire financial crisis that took five, six years to play out, a total of 10 million distressed properties, we have gotten half of that in just a few months. So the speed with which this market is gone into distress is unprecedented. A lot of money's sitting on the sidelines today just waiting for those distressed assets, whether it's single family homes, hotels, office buildings, retail, there's going to be a ton of distressed assets on the market and all the money will be chasing those distressed assets. Now the stranded asset is an asset that is a perfectly good asset. What makes it stranded is you can't get to it from here. One of the examples that I give is the following, there's a there's a lighthouse in Prince Edward Island called the Baywatch lighthouse. And you can actually book this lighthouse on Airbnb, and you can stay in it on for the weekend. It's in all the tourism brochures and that would be a wonderful income producing asset. Now, if you take that same lighthouse and you put it out in the middle of the Atlantic, and it's a little bit stormy, and it's not very safe to get to, it might be another very good asset from the perspective that it would be great to spend the weekend, that would be a unique experience, but it's stranded because you can't get to it from here, where it's difficult to get to it, it's inaccessible in some way. And that's what distinguishes a stranded asset. Now, we know that there are a lot of restaurants out there that are shutting down, because they've gone through several months now with no revenue, or insufficient revenue. In some cases, the owners are simply tired. I've come across several restaurants just in my own home community, where there's no reason for them to shut down other than the owner is 75 years old, and he doesn't want to go through the energy of restarting again.&nbsp; there are going to be a lot of commercial kitchens for sale, those are maybe distressed assets. Maybe they just shut down because they decided that they're getting out of the business. Those aren't distressed assets. They're just stranded assets. But there's an even more important stranded asset, and that is the relationship between the customer and the menu. You pay them a royalty for every sale, and you deliver their favorite items. Victor Menasce http://victorjm.com/ Subscribe to our newsletter here: http://montecarlorei.com/ ---...

Today we learn what is CMBS, how are the delinquency rates of CMBS loans in each asset class, how does it differ from the 2008 rates, and what can investors do to prepare to take advantage of commercial real estate deals in the future. Jyoti Yadav, CMBS analyst at Trepp shares insights. You can read this entire interview here: https://montecarlorei.com/what-is-cmbs-how-are-delinquency-rates-today-what-can-investors-do-to-take-advantage-of-commercial-real-estate-deals-in-the-future/ What is CMBS? CMBS stands for commercial mortgage backed securities. It's essentially a financing vehicle to provide loans, or financing to commercial real estate property owners. This is not the only option available in the entire universe, CMBS accounts for 15 to 20% of the lending universe. It competes with insurance companies, banks and other financial institutions to provide loans to the commercial real estate industry. What happens in the market is that a bank, let's suppose entity A will provide, let's say, 10 loans to property owners across America, different property types, different geographic locations. That bank, if it has provided, let's say 100 million dollars worth of loans, will pull all of those loans together, that means the monthly mortgage payment that the borrowers are making to lenders. They'll pull all of that together and issue bonds which will be sold to investors. What is the current state of CMBS today? Since COVID, whatever happened before March 2020, was a completely different story. The market was performing in a completely different way. And now after let's say late March, the situation has drastically changed. What is really happening is that there isn't as aggressive lending out there in the commercial real estate space. Lenders are extremely cautious. They want to really analyze the property. Let's suppose I am lending to office space in Houston, Texas. Before this crisis when oil prices were not that low, and the market was doing okay, they would look at the tenant roster, they would see who the tenants are and, most of the time there were no issues. Now in Texas, energy companies have been battered and the credit quality of the tenant has become an issue, you do not know if the current tenant of the property will continue its lease. You do not know if they will continue to make payments and that is really making lenders take a step back and understand who should they lend money to, and all sorts of analysis they need to do. Because of that, we have not really seen a lot of lending for hotels, of course, because hotels have suffered a lot and are still suffering a lot. So, there is a lot of hesitation in lending. And even when there is lending, there's a lot of analysis that's going on, and this also has increased the cost of borrowing for borrowers. How are the different asset classes doing, the different property types performing in the CMBS world? The June delinquency report that we published had a delinquency rate of 10.32%. This means that more than $50 billion worth of loans are behind on their payment, and there is distress in the sector. If we compare it to an earlier crisis, in the last financial crisis, the number was 10.34%. So we are fairly close to the peak that we have ever seen. How long did it take to get to this 10% in 2008 because we are just four or five months into COVID? 10.34%, was in July 2012, the crisis started in 2007/2008, so it took some time for us to reach that number. Fast forward to April 2020, that number was 2.29%. And now in June of 2020, it's at about 10%. So it was a very fast increase. Jyoti Yadav [email protected] --- Support this...

For the first time ever, we recorded our monthly Mastermind Call with several experienced real estate investors across multiple asset classes. Joining us in this month's mastermind were Beth Azor, Victor Menasce, Andrew Lanoie, Todd Sulzinger, Christian Cascone, RK Kliebenstein. Each investor shares what they are currently going through in their specific situation, market, and asset class. Watch the entire recording here: https://youtu.be/-HUUIv1hDmA Read the entire transcript here: https://rb.gy/frif7o Steff Boldrini, Retail, Self Storage San Francisco is a ghost town. Nobody wants to quarantine in four walls with no access to work at a coffee shop or in common areas of their buildings. There are deals in the rental space that are completely unheard of and we would have never imagined they would be happening like one to two months off, and as much as 30% rent decrease. Andrew Lanoie, Mobile Home Parks In general have been down a little bit, not too bad. A lot of parts of our business have have been frozen, we sent our construction company home. And as everyone knows, some of the lending dried up a little bit, some lenders are back, and some stayed the same through all this. We're just figuring out how to get back into acquisition mode, and all of the Capex and all the projects and things that we have in our world for our portfolio. Todd Sulzinger, Mobile Home Parks In our parks, we've had some struggles with collections as well, I have parks in Georgia and Tennessee and we've had more issues with collections in Georgia. It has been a combination of some tenants who were affected by COVID related situations where they lost their jobs due to the pandemic. And in those situations, we reached out to them and said, If you actually were then please fill out this form, and get proof from your employer that your job was affected by the pandemic. In other cases, we've had people really take advantage of the fact that the courts have been closed. Beth Azor, Retail I own six retail shopping centers, we've had a ton of retail bankruptcies from Tuesday Morning, Pier One, Ascena is about to file, 24 Hour Fitness, GNC Gold's Gym, Starbucks will close 400 stores. The national dealmaking will be on hold until 2021 because of the inability to travel, anyone that owns shopping centers looking to fill retail space in the next 6-9months, will be focusing on local and regional players.&nbsp; Victor Menasce, Developer We are making some progress on getting debt for new construction and even some equity as well. It's tougher than it was. We're not doing anything in retail or office, thankfully. But in the multi-family and senior housing asset classes, we are able to find both debt and equity. For the moment, it appears as though rent collections in multi-family are pretty strong. RK Kliebenstein, Self Storage Our industry has always been regarded as recession resilient. Delinquency is now hovering somewhere between 5 and 7%. We look at it as not being devastating, but certainly as being cautionary. When money from the Cares Act runs out that will be a better tell. Christian Cascone, Developer, Multi-Family The market just has gotten too unpredictable at this point. There's capital being injected in the wrong places and we feel like it's causing some problems as far as the free market is essentially dead at this point. We're trying to see if there's going to be some opportunities down the road for high quality assets and great locations in the US, 12-18 months from now. We're seeing opportunity zones get hot again, as people have huge capital gains that they're able to deploy into, Join our newsletter here: www.montecarlorei.com ---

What does it entail to invest in land? Where are the opportunities and how can you monetize land investing? Today we are talking with Ryan Pettitt from Prosperity Aid. You can read this interview here: https://montecarlorei.com/how-to-invest-in-land-and-what-are-the-pros-and-cons-of-land-investing/ Tell us what your experience has been with regards to investing in land. When we first got started we were introduced to some folks in the industry. One Mark Podolski with the Land Geek, and then also to Jack and Jill with Land Academy, understanding the premise behind investing in land and creating a business around it. And this is undeveloped raw land specifically, and looking for those opportunities to resell and generate cash flow from it. Like any investments, you can either do it actively or passively. So we had the passive experience and our goal was to expand into active investing and creating a business structure around it, so that was the first venture into doing that. But we first got started with finding opportunities to buy vacant land below market value, and find an end buyer and continuing to sell it below that market value to be competitive in the marketplace, and ultimately being able to sell it to them as a flip transaction, or creating cash flow by fronting the capital and collecting monthly payments. So that's how we get started with the business. And then there are opportunities within land to expand beyond just the parcel itself, because you can look at ways that you can turn it into a more productive and sustainable piece of property and doing things like a better use with agriculture, potential developments, a lot of people land bank and so there's a lot of different routes that you can go within the land that can be considered an investment, either from an active or passive standpoint. Are there any tax advantages of holding land, as there are with commercial properties? If you talk about land itself, it's actually not an incentivized asset, you can't collect appreciation on it. And the purpose of the land being vacant is that there are no structures on it. So there's nothing that you could utilize from a taxation standpoint. However, as you look into different opportunities to change the use or classification, for example agriculture, you can always make those improvements to the land and create some tax incentives. Right now, there's actually a huge push in the marketplace to continue to focus on agricultural land, farming use because of the need of our surrounding communities and access to those fresh fruits and vegetables. The government is actually providing grants and low interest loans as an incentive to develop those properties and create something that is sustainable. The land itself is not but then you change it into a better use, and then you can realize some tax advantages from that. What are the potential downsides of investing in land? It's not a tax advantage asset on its own. You have to create those opportunities, and especially as we talk about cashflow, that's not something that resonates with a lot of folks that invest in structures. But you can generate that cash flow by holding that property and being able to collect monthly payments.&nbsp; The other thing is that a lot of folks believe that this can be set up very passively from a business perspective. And I'd say that there are a lot of moving parts and there are a lot of intricacies to the business that it takes some time to establish those structures, those processes, and it's definitely a very active business and a lot involved with it. Ryan Pettitt [email protected] Subscribe to our newsletter here: www.montecarlorei.com

How to evaluate a self storage property? What do self storage REITs look for when buying new properties? Kris Benson, Chief Investment Officer for Reliant Investments shares some insights into this recession resistant asset class. You can read this entire interview here: https://montecarlorei.com/how-to-evaluate-a-self-storage-property-what-do-reits-look-for-when-buying-new-properties/ What are some of the things that you look for in a property before making an investment? Where we start is the market and we’re looking at very similar demographics to what you may look for any asset class. Traffic count is a big one, understanding how many cars are going by per day in storage is interesting in that the market is really the one, three, and five mile radius around your facility. That’s the data that really matters. Because people typically are not traveling too much farther than that to come to a storage facility. We don’t have amenities, it’s a garage. There’s not necessarily specific amenities people will travel to like they may for a multi-family property or an apartment. Population growth, job growth, average income, median household value, those are some of the pieces that we’re looking at to understand who the potential tenant may be, and the strength of the market. And then, a big component of it is understanding the competitive set in that particular market as well. Who are the competitors going to be? Are they going to be institutional REITs or is it going to be a mom and pop competitive set? So we try to build a story around each one of the properties we’re purchasing. So it’s a number of different data points that we bring together. What are some of the ways that you add value, or look at adding value in a particular property? On our side it’s different for each property that we are looking at. We don’t go into a particular value add strategy and it’s the same for every property. We’ve sold 36 properties, and the majority of those have been sold to the REIT’s. So we look at each property with a lens of what our exit could be. Sometimes we may go into a facility that’s cash flowing currently, and maybe it’s been operated by a mom and pop owner and they have some additional acreage that they’ve not capitalized on and we may build it do an expansion. We could build an additional 15,000 square feet and get that leased up. Our goal is to try to grow the NOI on that particular property. That can be one value added strategy. What’s interesting about storage is that the marketplace is very fragmented. The REIT’s own about 20 to 25% of the market and the rest is very much fragmented between regional operators like us at Reliant, and operators, like mom and pop shops who have one or two facilities. And usually in those mom and pop operated facilities, there’s a lot of low hanging fruit to glean additional revenues. And so sometimes the value add is building out some ancillary income streams like doing U-Haul truck rentals, or a retail component where we’re selling locks boxes, those types of items where maybe the mom and pop operator just didn’t capitalize on that opportunity. So, we look at each property differently and then as we underwrite we add what that value add is, or business plan may be. When you look at exiting to a REIT, what do they look for in your properties when they are purchasing them? Typically they’re looking for a market presence in an area that they think has upside, that will help them grow their portfolio, where they don't take construction risk. Kris Benson https://www.reliantinvestments.com/ Subscribe to our newsletter here: <a...

Today we are recapping the highlights of a 3 day virtual conference that I attended recently. We'll cover: The state of this crisis and what the outlook is. How you can leverage the 3 loan options from the government and what does each of them mean. Things that you can do today and what you should be thinking about for the future. You can read this entire episode here: https://montecarlorei.com/action-items-to-take-today-for-your-real-estate-investments/ Three loans available: PPP – Originally: you had to use it within 8 weeks from the time you got the loan, you needed to use 75% of it for payroll, and 25% for rent, mortgage, utilities. There were no payroll tax deferral if you took the PPP. Now: you have 24 weeks to use it, and the number is 60/40: 60% must be used for payroll, and 40% for rent, mortgage, utilities. And now you can defer 50% of payroll taxes until December 31st. EIDL – gives you $10,000 per employee. When you apply for this grant, you’re applying for the loan, and the SBA is granting these loans, the maximum amount you can get is $150,000 per company, regardless of the number of employees. If you have a management company and a real estate company, you get $300,000. You have 1 year deferral, so you don’t have to pay the loan for 1 year. This is a 30 year loan, at 3.75% interest. Pay close attention to terms of the loan, and get the opinion of an SBA expert. Main Street loan – it’s backed by the Fed, not an SBA loan. There’s no 500 employee limit, talk to your banker for clarity. All 3 of these loans are bank loans, you have to go to the bank and apply, and the SBA pays the bank back. You can get both PPP and EIDL. If you already got the PPP, you can also get the EIDL. What are the things that you can do today, from looking at your existing properties to how you can negotiate for new properties. And what you should be thinking about for the future. Stay away from auctions that will come up because lots of people are looking for that. Hotels are at 22% occupancy, there will be lots of defaults on hotels. Lots of major hotel operators have reserves until October, they have $700-800 fixed cost per door per month. Example of a deal someone just closed: It was a stadium, that cost about $13M to build, it is not being used currently, and has an income from a cell tower on the property, the income from that is $50,000/year. The seller has been trying to sell for just over $1M, two of the previous offers fell through. They came in and offered $900,000 cash, they sold cell tower right away for $700k at closing ($50k income/month at 7% cap) and now they purchased an entire stadium for $200,000! Action Items To Take For Your Real Estate Investments: As far as your existing properties: trim fat and cut expenses As far as preparing yourself for the future: Look into Captive Insurance – need to learn more about it, but it sound like it’s something that you could do to prevent future problems like this shutdown. Will do a podcast about what it is. Invest in Blue cities in Red states. Look at Industrial – Instacart can pick up from industrial instead of supermarket Become valuable to valuable people. Help people solve complex problems. Now is a great time to build a great team. Ask yourself “How can I?” The state of this crisis and what the outlook is: This is far worse than 2008. The implications of this debt is ultra low interest rates, forever. There will be lots of opportunities in 6, 12, 18 months. Subscribe to our newsletter at the top of the page here: <a...

We continue our conversation with Russell Gray, the co-host of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986. You can read this entire interview here: https://montecarlorei.com/how-can-investors-prepare-to-ride-this-recession-and-what-asset-classes-could-thrive/ How can investors prepare to ride this recession since we are in the early stages, and hopefully there's still some preparation that they can do? There's a thing in business called a SWOT analysis where you do a strengths, weakness, opportunities and threats assessment on whatever you're doing. If I would have done that, in 2008, I would have recognized some of the vulnerabilities that ultimately took me down. So I think that's the first thing you have to do, you have to just look at your portfolio, you have to say, What if interest rates went up? What if rents went down? What if vacancies went up? What if this local market economy changes? You just have to begin to go through and ask yourself, what are some of the things you're hearing, what are some of the possible or probable outcomes of what's going on and how will my portfolio respond to that.&nbsp; And then begin to take corrective action, you're probably going to realize that you've got some things in your portfolio that are marginal, they're not really that strong. You might want to think about getting rid of those. That's what my buddy Kenny McElroy did. Coming into this, he just began to look at his portfolio and say, I'm going take everything that isn't top performing, super strong, great market, great tenant, great management, great property condition, anything that isn't top tier. They're all good, but I'm going to take the bottom few, and I'm going to get rid of them. I'm going to get liquid because I think the market is going to turn and I think there's going to be opportunity. And that's number two, get liquid now. Getting liquid can be selling things and sitting on some cash. It could be borrowing. Well, the borrowing is good if you still have equity and you still have good credit, documentable income and there are loans available for the types of properties that you have. And you can lock those rates and payments in long term. Now is a great time to do that. I think you might be a little bit late to the party. But if you can do it, I would definitely be doing it. Some people say, Why would you want to increase debt in the middle of all of this that's going on? Don't look at it as increasing debt, look at it as increasing liquidity, because the equity is probably going to end up disappearing for a period of time. As prices fall, your debt is not going to fall, your equity gets eaten up. So if you can liquidate that equity and protect it from the market that serves you in a couple of different ways, when in a downturn, when things are tight and things go wrong, it's always good to have some cash. Number two is if credit markets fall apart, which I think is a likely outcome and that doesn't mean they're going to be gone forever, but it'll be like it was in 2008, where things get tight. We're already starting to see some of that. Then being liquid gives you a competitive advantage. The debt coming out of the marketplace is going to cause prices to drop because not as many people can compete because they can't get funding. But if you have cash, then you can take advantage of those lower prices. And when funding comes back, then that puts air back in the pricing and equity happens. And you end up with a boost of equity. You can't have that boost if you aren't able to buy when air is out of the market, and then ride it up. Russell Gray https://realestateguysradio.com/ Join our newsletter here: http://montecarlorei.com/ ---

Today we get insights from Russell Gray, one of the hosts of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986. You can read this entire interview here: https://montecarlorei.com/why-this-downturn-could-be-worse-than-2008-russell-gray-explains/ I would love to hear your thoughts on what you’re seeing is happening right now in commercial real estate. On one side of the commercial real estate ledger, you had retail spaces under tremendous distress because their retail customers, the demographic they served, companies like JC Penney, whose business models were being completely disrupted, these anchor tenants like Sears and Kmart, were just getting wiped out by people ordering online. On the flip side of that, on the industrial side, you saw warehouse and distribution and logistics, just going through the roof. And so there’s always going to be winners and losers in this current environment. You’ve a lot of people changing the way they behave. Companies are finding out that they can have a remote workforce and actually get things done. They may decide, hey, we don’t need all this fancy office space, people would prefer to live at home, or work at home. So maybe we’re going to cut back. I think that if you’re in the office space, you need to really look at the nature of the work that the companies are doing. And does it require physical proximity and collaboration? Or is it something that could be moved to a more diverse workforce, people working at home? You could be vulnerable. Why do you think this will be worse than 2008? COVID-19 hit and now the Fed balance sheet is over 7 trillion. It has nearly doubled just in the four months that we’ve had COVID-19. So on the one hand, you’ve the powers that be the Federal Reserve and the Treasury way in front of the crisis as opposed to 2008 where they were way behind. That’s the good news. The bad news is, this is so much bigger because it isn’t just a small percentage of subprime borrowers that are having a hard time making payments. You have major corporations like Hertz, companies that have been in business for 100 years that are declaring bankruptcy. And the quote in the article that I just read, in fact, I featured it in today’s newsletter is, “No business is structured for zero revenue”. So what we have is a health crisis that turned into an economic crisis, which means that we shut the economy down. It's like having a giant heart attack. And if you can imagine currency, money stopped, like blood stops flowing because the heart stops beating, the economic heartbeat stops beating, the blood stops flowing, then, individual cells, people, and organizations, or organs, they all start to die. And if you don't get the heart started quickly and get the blood flowing quickly, then you get permanent damage. And it remains to be seen if that's going to happen. But when those payments stop being made, then the debt goes bad. And now we're right back where we were at 2008, but much, much bigger. And the problem is everything we did wrong leading into 2008 with the margin and the rehypothecation occasion of the debt in Wall Street, the derivatives are worse today, global debt is worse today than it was in 2008. And the cessation of payments and the defaults and the bad debt out there is much bigger. So just based on that alone, it says that this is probably going to be worse. Russell Gray https://realestateguysradio.com/ Join our newsletter here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

This is our second mastermind call with a group of experienced investors to understand where each investor is, and how they are dealing with the Covid-19 quarantine and its consequences on their properties. We had nearly 200 years of real estate investing experience in the call. You can read this entire episode here: https://montecarlorei.com/multiple-asset-classes-mastermind-what-are-top-investors-doing-during-this-crisis/ Mixed Use, Construction, Senior Housing, Multi-family, Short Term Rental Investor Even though businesses are starting to reopen, that doesn’t mean that we have conquered Covid-19. From the capital perspective, for new construction loans, out of the 15 insurance companies that lend in the real estate space, 13 have stopped altogether. The largest one laid off the entire loan origination staff. They don’t plan to get back to loan originations for a while. Capital for construction is almost non-existent unless it’s with HUD. If you go with a bridge lender it’s expensive: Libor + 9 + floor on Libor rate, which is what was happening in 2008/2009.&nbsp; There is not a lot of appetite for new deals unless they’re deeply distressed, it will take time for deals to start to emerge. People that are trying to do deals now look desperate and lacking in perspective of where the market is really heading. He would be patient. Passive Investor (since 2002) This guest invests in stabilized assets. He said that it takes time for prices to come down, and from his experience, it can take 1-2 yrs for things to hit bottom. He has been sitting on the sidelines until prices drop since late 2016 across all asset classes. He pushed his operators to sell in 17, 18, 19. He thinks that rents will be down, vacancies will go up and cap rates will go up. He is skeptical at looking for things this year, unless it’s very unique. He will be waiting for vacancy levels, market rents, and market prices and will see if cap rates will adjust. Even if the cap rate is better, we don’t know what the NOI will be in one or two years, it may be lower then. He has been hearing that syndicators are getting about 1/3 of the normal responses for deals, another syndicator dropped his minimum investment for the first time ever. He will be on the sidelines regardless of what’s happening to the economy in the short term, but more because the election that is coming up, and how this may have an impact in real estate. Diversified Portfolio Investor Their multi-family properties are performing well (B-class), in April and May they performed better than anticipated. Some of the people that lost their jobs have higher income now with unemployment. Medical office: they reached out to tenants and offered rent relief proactively, about 50% of tenants took them up on it. Their properties are in areas that are now reopening, they will reach out to the tenants in June and find out what is happening and if they need any further assistance. NNN properties: they are performing very well. Some investors still need to place their cash somewhere. Looking forward to understanding where’s the most pain for the most extreme distressed properties. Pricing hasn’t changed yet, price expectations from sellers haven’t come down to meet price expectations from buyers yet. Multi-family Investor and Broker The 2 deals that he was working on during the pandemic actually ended up closing, despite the fact that banks asked for more reserves. The sellers gave concessions, about 8% concession on the price, the seller also put up escrow money and provided insurance on the income over the next 6 mos. Subscribe to our newsletter at the top here: <a...

What are DST's and how are they different from other forms of real estate syndications? Can you 1031 exchange out of a DST? Jason Salmon, Senior Vice President and Managing Director of Real Estate Analytics at Kay Properties and Investments LLC shares some insights with us. You can read this entire interview here: https://montecarlorei.com/what-are-dsts-1031-exchange/ What is a DST and how is it different than syndications and REIT's? Most upfront would be the 1031 eligibility, REIT's are not eligible for 1031 exchange straight away. There's always a way through different channels to eventually get there. But apples to apples, one cannot 1031 exchange directly into a REIT and the DST through what's called revenue ruling 2004-86 is on the books and there's a way for people to 1031 exchange in. Additionally, when that real estate is sold, they have the opportunity to do another 1031 exchange out moving forward. In and of itself, a DST is a syndication, but it's a hybrid because it's a really specialized sort of syndication whereby it is 1031 eligible. And in many cases, syndications of different sorts, whether it be partnerships or LLC's or any which way in that format would not be a 1031 vehicle for fractional, partial ownership. Those entities themselves could do a 1031. But if it's made up of private fractional ownership, it doesn't fly. So from a 1031 exchange standpoint, I think that's the linchpin of everything there. Notwithstanding from a direct cash investment standpoint, they all could work in similar ways, REITs could be public or private. They take on different complexions that way. If it's a syndication in and of itself could be put together, it could be friends and family. Whereas the DST, at least the DST space that we dwell in would have multiple layers of due diligence on various levels, specifically the real estate, the deal itself, and then the asset manager, or the sponsor firm running the deal just to be able to have that deal, see the light of day if it passes that due diligence. It's just a little bit different format. But again, going back to the beginning, I would contend that the 1031 eligible eligibility is the biggest differentiator. I did not know that the accredited investors themselves could not 1031 into another property in a standard syndication. That's very important to know because it has significant tax implications. They could all go together, theoretically, if it was a partnership or an LLC. But as far as being comprised of multiple partial or fractional ownership, that's where it wouldn't pencil. Can you talk about how asset managers don't get any returns? They pass everything to the investors. There is a cost of doing business generally. But in the Delaware Statutory Trust structure on the back end, unlike most syndications, there is no waterfall. Basically, they can't profit share at the back end, there is a disposition fee that is built in. Those have varying degrees. I wouldn't be able to cite it on this call. It would be deal specific, but it's there and it's akin to closing costs. Like anything else. But it wouldn't be like your typical two and twenty model or some kind of promote on the back end, because structurally in the DST they cannot profit share. So if a 100 million dollar deal was sold for one hundred and twenty million dollars after four or five years, if that was a net number, net of closing costs and all the associated closing fees, then the investors would indeed get their pro rata share of those proceeds. That's the bottom line for how DST's are structured. Jason Salmon [email protected] Subscribe to our weekly newsletter here: http://montecarlorei.com/ ---...

What is happening to retail during Covid-19? What is happening to offices? Which REITs could be good investments right now? Which areas are going to thrive, or not, during this crisis? Which asset classes should you keep in mind? Deidre Woollard is a writer and editor for Million Acres with two decades of experience covering all aspects of real estate. You can read this entire interview here: https://montecarlorei.com/which-areas-are-good-to-invest-in-commercial-real-estate-today/ What are you seeing is happening in commercial real estate nowadays? I think there's a lot of things happening right now. Certainly the biggest impact is definitely being felt in commercial across the hospitality and retail with so many closures in different states. We're starting to open up in various areas, but it's all still very tentative. And one of the things I think that everyone is worried about is is a secondary outbreak and another round of closures. What do you think is going to happen to the real estate market, given your thoughts of where the shutdown is going, and if we’re going to have a second outbreak? I certainly think it’s challenging, definitely certain sectors are being affected more than others and some sectors are benefiting a little bit. One of the things that we’re seeing is industrial real estate, there’s an ongoing need for last mile warehousing. Industrial was the top performing sector last year, and it will probably be a relatively strong sector this year. Whereas hospitality and retail are being very heavily affected. The revenue per room in hotels is at historic lows, and it’ll be a slow recovery for some of those sectors. If you had unlimited funds to invest today, when do you think you would deploy that? And in which asset classes would you focus on? One of the interesting things is that everyone is watching the residential real estate market and looking for prices to drop, and it doesn’t seem like that’s going to happen anytime soon, because supply and demand are pretty well matched right now. One of the sectors that we’ve been looking at over Million Acres is multi-family real estate investment trusts, for example. Multi-family was already predicted to have a pretty strong year this year. There’s obviously a lot of demographics that support multi-family continuing to grow. Household formation is on the rise. I feel like multi-family is still going to be strong, especially in those markets where you have a lot of tech employment. Places like Seattle, Charlotte is a good example. Southern states have really seen a lot of people moving in and so you when you have that high population, those are good spots for multi-family. What do you think will happen to the retail sector? It's an interesting sector because there are different parts of retail that will be strong and different parts that will suffer more. Simon Property Group is reopening some of their malls. As they’re doing this, they’re starting to put different rules in place in terms of how many people you can have in the mall, or an individual store, having hand sanitizers available, and things like that. But how much foot traffic can you have in a store? And how much foot traffic do you need in order to pay your rent? Cheesecake Factory stopped paying rent in April. The Gap had stopped paying rent. So the large malls are definitely having difficulty. Deidre Woollard [email protected] Join our facebook group here: https://facebook.com/groups/montecarlorei --- Support this podcast: <a...

Today I am covering what I think is going to happen to the economy, which will inevitably affect real estate prices. You can read this entire episode here: https://montecarlorei.com/is-now-a-good-time-to-buy-commercial-real-estate/ If you are a listener of this podcast, you know that common sense is not common. And up until now I am not seeing a lot of common sense thinking out there. Starting with how the stock market is doing. Stocks are very high given what is happening in the world. On top of that, I don’t see too many people talking about the consequences of how everything is interconnected. And they’re not talking about how, in my opinion, this will trickle down to what I think will be a very bad recession. For all of you who have been taking the time to hone your skills, to learn, to make connections in the real estate world, to build your reputation: congratulations, our time has finally arrived. Why? It pretty much consists of four factors that are all correlated: rents going down, vacancy going up, cap rates going up and lending getting tight – which is exactly what is happening right now, and will continue to happen. So why do I think things will get bad because of the Coronavirus / Covid-19? It’s simple, everything is interconnected, let’s take just one example: if people cannot hold large events for at least one year, that alone is already a huge portion of our economy, so how can that be? It’s simple, it trickles down to everything else. Let’s take some industries that are connected to holding large events: the music industry with concerts, sporting events, conferences, the entire economy of Las Vegas, and every company that depends on holding live events, for example Tony Robbins. Most of the employees that work for these industries, will be let go or furloughed. These employees all have bills to pay, food to buy, they have kids, mortgages, rent, etc. Even with unemployment checks, they won’t be splurging, going to restaurants, or going on trips. And with that, the restaurant business gets hurt, the travel industry, and that is obviously already happening, (Airbnb just got $2 billion dollars in loans at half of their last valuation, and they’re paying 10% in interest on that money!), the clothing industry also goes down, and every industry that is related to disposable income: nail salons, massages, buying new cars, etc. And now all of the employees in these industries get hurt: they are let go, or get furloughed. And these companies not only let go of employees, but they also cut their costs, they won’t be investing much in new technology, in advertising, etc, That trickles down to the tech industry. I get a daily digest of what’s going on in the tech world, and today alone, the digest had the following news: Netflix sales are up, another tech company is cutting the salary of all staff by 25%, another tech company furloughs 600 people, another let go of 13% of its workforce. This is how everything is interconnected. Listen to our How You Can Lose 50% of Your Property Value in One Downturn episode: https://podcasts.apple.com/us/podcast/how-you-can-lose-50-your-property-value-in-one-downturn/id1451874700?i=1000454715311 Join our facebook group discussion here: https://www.facebook.com/groups/montecarlorei Contact us here: <a href="https://montecarlorei.com/contact-us/" rel="noopener noreferrer"...

Commercial loans are what brings your real estate deals to life, and given the fact that the Coronavirus has affected lending significantly, we are keeping a pulse on what is going on, and what the potential impacts will be in real estate. Some topics we are curious about are: How should borrowers prepare for lending as we start to come out of this? What will likely happen in the lending industry over the next 6+ months? How should loan contracts look like moving forward? Billy Brown will help us with some answers. You can read this entire episode here: https://montecarlorei.com/how-is-lending-changing-with-covid-19-and-what-are-the-impacts-in-real-estate-prices/ Has much changed in the lending industry over the last two weeks? Agency debt: if you haven't talked to your agency debt lender, do. Right now they are up and running, but expect delays in that, especially if you're putting contracts or offers in properties right now. Expect at least a 90 day close. And you're going to need escrow for 12 to 18 months of payments and reserves at closing. So your raise is going to be much higher. They're going to scrutinize properties left and right, as far as your rent rolls and payments and all of that are getting scrutinized, with good reason. Bank lenders or depository lenders: right now they are scrambling. They were already low on deposits. And they’re going to get lower. So lending for them is going to be tighter for a couple reasons. One is the fact that you’ve the SBA program which is running through the depository lenders that they’re going to have to facilitate. People don’t understand what’s going on with that process so they don’t know how to even answer questions. The other part of it is the forbearance from the existing loans. Non bank lenders, lenders that actually do the more unique things, Non-QM lenders, hedge fund type of lending where they create loans, balance sheet them, and then sell off the notes to Wall Street. Wall Street doesn’t buy anything right now. How should borrowers prepare for lending as we start to come out of this? It really depends on where you’re at in the process, if you’re in the middle of a purchase, or even a refinance that you’re trying to close the next 30 days. You have to ask yourself a lot of serious questions around your third party risk. Are your tenants going to be able to pay? If they can’t pay, do you have enough reserves to be able to withstand 6, 12, 18 months of lower income. We’ve seen some lenders on good properties, on a refinance, say that they’re going to refinance more properties worth this, we do believe is going to be a shorter recovery. But what we’re going to do is just protect you and us we’re going to ask for payments, we’re going to cash you out, but we’re going to ask for payments to make sure that we’re paid, that you’re paid, as well as CapX and all that. They’re not going to release funds for you to go pay off credit cards, or go buy another property. If you’re in the middle of a purchase, the lender is your friend. Find out what information do we need to have to make sure that the asset I’m buying is still going to be a good asset after this is done. If you’re not a buyer right now, and think that some sales will be going on. What do you need to do to get prepared? The first thing is let’s get your finances in order. Get your loan package already prepared. Organize all your documents, your taxes, W-2’s, 1099’s, pay stubs, bank statements, PFS, all of that into one place where it’s easy to access. Billy Brown www.billybrown.me Join our conversation here: https://facebook.com/groups/montecarlorei --- Support

What is the state of the self storage market in this environment? What should operators prepare for? Where should you look for opportunities? We talked with RK Kliebenstein, President of Coast to Coast Storage, an industry veteran with over 30 yrs of experience. You can read this entire episode here: https://montecarlorei.com/step-by-step-actions-for-self-storage-operators-to-take-during-downturn/ How should the operators prepare for this potential economic hit? For storage managers, your health comes first. I know that that’s going to be an unpopular position with some of the owner operators as employers, that their staff would perhaps not come to work, but I think that we can work from home in many cases, we don’t have to have a lot of contact with the public. But more than anything else, I honestly believe that a self storage manager’s first responsibility Is to themselves, and their family. Going to work in an unnecessary capacity is not a recommendation that I would give them. If it’s safe for them to go to work because they don’t have public contact, and they’re not in high contact with places and objects that have been touched by the public, that’s a consideration, certainly, but I know a lot of offices have just said that they’re not going to have contact with tenants directly. They’re open via chat, email, telephone. For storage owners, it’s a different consideration as we now go into where are you at in the debt cycle. Those stores that are in highly competitive markets, where they themselves or their competitors are in lease up and there are a lot of vacant spaces, and those in the third category, the very high levered owners are going to be the hardest hit by the event and will have to make the toughest decisions. I don’t know that we’re going to see the real effect of this for perhaps 60 or 90 days as loan clauses with MAC clauses in them (Materially Adverse Condition clauses) begin to be in effect from the lenders and then also the consideration of force majeure clauses, which don’t occur in self storage month to month rental agreements, but certainly would occur in finance arrangements and contracts. It will be interesting to see how that all begins to play out and how the Self Storage sector may fare against other asset class type of lending. Keeping in mind, Self Storage has notoriously had the lowest foreclosure rates, regardless of economic conditions of any other asset class. The only one that ever has come really, really close to it are NNN leases and with triple A credit companies, and also, interestingly enough mobile home parks. Loans What I’m seeing in terms of new loans right now is interesting. The CMBS market, securitized loans, for self storage at least, has pretty much collapsed completely. The bond market being unstable, and that being where these loans are sold, until that bond market is firmed up and we know where the pricing is going to be, I would say the CMBS market is likely to be on hold. I’ve even seen them because of the Material Adverse Conditions or MAC clauses commitments that were set to fund over the last 10 to 15 days. We’ve seen a number of different reactions to the current environment but I think the CMBS market is basically collapsed. I think the only viable market right now is the life insurance company market, they seem to still be quoting, and closing loans that were in process. I think that their underwriting has changed a bit. But that market is still a little bit active. When the first reaction to the turn in the economy was to lower the Fed rate, that actually put a lot of lenders in a position to increase the interest rate floors. RK Kliebenstein [email protected] www.askrk.com --- Support this podcast: <a...

With over 200 years of combined real estate investing experience in one call, we hosted a mastermind call with several highly experienced investors, and multiple asset classes. They are investors in retail, office, industrial, mobile home park, multi-family. Below are the takeaways. You can read the entire call script here: https://montecarlorei.com/steps-to-take-during-a-crisis-all-asset-classes-top-investors-mastermind/ Timing Lots of people have a wait and see attitude. Others are taking a hands on approach and reaching out to tenants in advance. It's in times like this, that fortunes get made. That's exactly what Warren Buffett does. He has a ton of cash available for situations like this. George Ross, who has been working with Trump for several years said that now it's a great time to buy, all you need is courage. Retail Reality is starting to sink in as tenants don't pay rent, some tenants are saying they won't pay rent for at least 4 months. Some investors are saying that the most realistic datapoint will actually be on May 1st. We are working through lots of loan reworks as well as lease amendments are being negotiated. We're interpreting the CARES Act that was recently passed, updating all of our tenants on what they can apply for through the SBA and really trying to dial in on the loan forgiveness for April and May. So that has been a huge initiative of ours. We've a lot of legal documents and collaborating with other like minded folks across the country to figure out best practices. We were under contract in a deal, thank God, our money didn't go hard. We got in front of this guy a few weeks, we asked for an extension. But we are seeing some slowdown in CMBS and that was one of the vehicles that we were going to use, which required us to pivot a little bit and rethink this. Trammell Crow executives were sending memos to one another and the&nbsp;same message was sent over and over again from some of the best guys in the business: not getting over leveraged, staying lean and focused, hiring the right people, and just really doubling down on the fundamentals of the business. Developer&nbsp; I did survive the 2009 crisis, and was heavy in real estate when that happened and watched a number of people get wiped out. This is very different, it's not the same at all. But this is interesting times. I'm not a typical value add guy. I've worked in all spaces, I'm hearing from people all over the country in all different types of properties in different classes and with different challenges and different issues right now. And the one common theme is it's too early to tell really anything, we just don't know. It depends on how far and how deep this goes. We do know that the capital markets are a little tight right now, and the rules are changing daily with that, in terms of what they're asking for and covenants and reserves. And they're getting down now to where they're underwriting specific assets and specific markets by the street and block on refinances, and especially cash out refinance, and acquisitions. So the credit markets are getting very interesting. Senior Housing, Hospitality, Multi-Family (Developer and Operator) We are in an environment where the rules have changed and we don't know what they are. Until we know what the new rules are, it's going to be very difficult to play the game. Oftentimes you see people trying to play a new game by the old rules. And if they do, they'll get crushed. It really is like no other game. We're trying to do something that's unprecedented. Join the conversation here: https://www.facebook.com/groups/montecarlorei What are you doing to prepare for what's ahead? ---

What is happening with lending during these times? We are having a timely conversation with John Pascal, Managing Director of Paramount Capital Advisors a highly experienced professional that has been through a few downturns and has some timely advice. You can read the entire interview here: https://montecarlorei.com/state-of-commercial-loans-during-the-coronavirus-what-are-the-available-options/ As of today, and we know that things can change tomorrow for the better or worse, what is happening in the lending world? In a nutshell, it’s ugly. In general, from the bank’s perspective as it relates to some of the real estate types that are more sensitive to economic issues such as hotels, and retail to a lesser extent, they’re basically pressing the pause button. With respect to hotels, what you’re seeing is a lot of hotels are closing. Last week, hotels were maybe doing a little bit of revenue, and now they’ve basically closed. So you have a really unique situation where lenders really just don’t know how to evaluate new opportunities. Because the big question is, how quickly will come out of this, and what the environment will look like, over the next 3 to 12 months, as it relates to the hospitality. As it relates to retail, you have a situation where restaurants and larger retailers, who had issues, or some credit issues before, what are they going to look like over the next year? If you’re a grocery retail center, you certainly have a higher likelihood of getting financing because obviously grocers are one of the businesses that are really flourishing in this environment. In terms of creative solutions, if people find deals at this point in time, what are some creative lending solutions that you might recommend people looking for, or negotiating? Depending on the product type, I’d say, hotel is very difficult. If you’re buying a hotel or refinancing a hotel, I think the best option is through an SBA program, probably 7(a) because banks can securitize a good portion of the loan and get it off their balance sheet. As it relates to other product types, there are dead funds out there that are lending today. They’re being obviously more thoughtful about what they’ll lend on and looking for existing cash flow a good sponsorship, etc. But those debt funds will tend to be a little bit more expensive, maybe in the 7-10% range, non recourse. So those options are still available, those are typically floating rate. So there are lenders out there that are still lending, looking to take advantage of the lack of conventional capital market today. What are your thoughts on what you think will happen in the next six months to a year? I think that the economy will bounce back. It's just a question of time, for how long it takes to get back there. I think you're going to see V shaped recovery and I think it may take three to six months to get there. And I'm not suggesting it's going to be a full recovery. But I think you're going to see businesses ramp back up fairly quickly. I think there certainly is going to be casualties. And I think there's certainly going to be caution on the part of businesses, small businesses, etc, to ramp back up. But I do think you'll see a pretty significant recovery. The government is going to keep rates low for a while. John Pascal www.paramountcapitaladvisors.com [email protected] (312) 767-3320 To join our facebook group and share/learn some tips, go to: https://facebook.com/groups/montecarlorei ---...

The black swan has arrived in our economy, the Coronavirus has taken an unprecedented, unanticipated curve in our economy. What will the impacts be in the commercial real estate market? We talked with experienced real estate investors that have been through a few economic downturns to get their perspective on what we should do during this time. We spoke with George Ross, he has done more real estate deals in New York City than virtually anyone else alive today. We also noted thoughts from other notable investors like Neal Bawa and Kathy Fettke. You can read this entire episode here: https://montecarlorei.com/how-will-the-coronavirus-impact-the-real-estate-market/ What are specific steps that we can take to prepare ourselves? If we currently own commercial properties, should we start talking to banks, or any other ideas? No, wait. Banks will talk to you, because they don’t know what to do either. Imagine, for example, that a bank has so many millions of dollars in mortgages in houses and all the people stopped paying. Now, what does the bank do? Well, they’re not going to be solvent. This is money that they anticipated coming in. And they don’t have it. So what do you do? The banks don’t know what to do. That’s where they come to the government and say, hey, here’s my problem. I don’t know what the end result is, but I do feel that, and I feel very strongly about it, that ultimately the government will come in and step in and help the banks if they have a need. They’ll pump a tremendous amount of money in. And we’re talking about trillions if necessary. We only know it’s necessary once the effect has become critical. It’s not a big problem if somebody misses a payment for a month on a mortgage. What happens if they miss it for a year? Now you’re talking about an entirely different situation. What happens if they never have the money to repay it? Do you also think we should wait if we think now is the right time to buy real estate? Where are you going to get the money? If you went out to buy a piece of property, you’ll want to get a bank loan. They’re going to be very hesitant because they’re not going to want to make loans. They should, they have plenty of money. But they don’t want to make loans. I don’t know the answer to it. But if you had some money sitting there, or you can raise the money yourself from savings, or from refinancing debt that you have, and you have excess money – that’s your down payment. So don’t put up a lot of cash. Just put a down payment, take an option to buy. I wouldn’t go haywire. But if a deal comes up that you think is really good, you’ll get unbelievable negotiating position because they’ll panic. And those who panic just overreact. I can see overreaction in certain instances, but I can’t see overreaction when it comes to real estate. It has a long history with ups and downs. If the seller is very nervous and wants to do the deal, you’ll get some fantastic deals. You’ll be able to buy property with no cash. But you will have some kind of agreement to pay with something down. People will want to get out of it because it’s not money making. the money that I was anticipating, therefore, they don’t like that and they say let that be somebody else’s headache. Somebody buys and says, okay, I’ll take the headache. But they’re not going to pay cash dollars upfront because they have the headache. Somehow they’re going to have to solve that problem. But would it be a good time? Absolutely. To join Victor Menasce’s mastermind go to: http://www.victorjm.com/mastermind-series/ To join our newsletter go to: https://montecarlorei.com/ and subscribe at the top of the page ---...

What makes investing in commercial real estate attractive in the United States, how to get over paralysis by analysis and how to find a great business partner? We are interviewing Reed Goossens, author of Investing in the US, the Ultimate Guide to US Real Estate. You can read this entire interview here: https://montecarlorei.com/how-to-overcome-paralysis-by-analysis-in-your-real-estate-investments/ Let’s talk about paralysis by analysis. What would you recommend people doing? How much do you recommend people learning in order for them to buy their first property? Analysis paralysis is needed. And I think I’d rather be at the analysis paralysis stage than not doing anything other than jumping in too soon. You always have to start with education, education, education, education. And even today with 1,800 units in multi-family, I’m still learning, and continue to learn. It’s really important, if you are getting into this game, to understand how to underwrite deals, because that is the most important thing. If you don’t know what a deal looks like, you won’t know how to act. You don’t know how to go get it under contract. Understanding the numbers behind a particular commercial is really, really important. Understanding how the income is generated, how revenue is generated from a property, whether it be from a multifamily, or a hotel, a warehouse, self-storage, whatever it might be, you need to understand how the top line is created and how do you increase that top line. The second thing you need to understand is what expenses do each individual assets in the commercial “sector”. Multifamily has different expenses than a hotel, and the hotel has different expenses than a self-storage facility. So you need to understand line by line what those expenses are. You need to understand how to read a P&amp;L statement. Once you know how to read a profit loss statement, you want to understand how to generate revenue and reduce expenses, or maintain expenses at a reasonable rate. That’s how you learn how to increase the net operating income and thus the cash flow and thus the overall value of the asset. If you don’t know how to do that, then you need to start there. If you do know how to do that and you’re trying to get out of your own way for analysis paralysis, you have to surround yourself with people who are doing it, because analysis paralysis just means that you are too scared. You haven’t seen or experienced enough things or people around you to order to be confident to go do it. So the analogy I like is, if you’ve ever been jumping off a diving platform at a pool and it might an intimidating diving platform, it’s fun, it’s scary, but, your friend does it first and then you’re like, oh, he did it, I can do it. It’s the same thing with analysis paralysis. If you’re not surrounding herself with people who are actually doing commercial real estate deals, then you’re not going to have the confidence to go and do it yourself. But what it does mean is if you are surrounding yourself with people who are doing commercial real estate deals, maybe you can learn from them. Maybe they can be a mentor of yours to give you credibility, to give you the confidence to go out and be an operator. The analysis paralysis can be overcome by understanding numbers, understanding how to find deals and surrounding yourself with the right people in order to be successful, in order to use their credibility or to ride on their coattails towards helping you become a successful operator. If that’s what you want to be. Reed Goossens reedgoossens.com [email protected] --- Support this podcast: <a

What happens as soon as you get in contract to purchase a property? What are some of the things that you need to keep in mind? What do you need to do and how do you need to organize yourself? You can read this entire episode here: https://montecarlorei.com/things-to-do-when-youre-in-contract-to-purchase-a-commercial-property/ The first step is to have something really simple, like a word document where you will have all of the information on the property in this document. My document has: - The contact info for the real estate agents. - The timeline for the deal. - The link to the property listing. - How many days I have until closing. - A link to all of the documents for the due diligence. - All of the information from the lenders that I have so far and that I have contacted. - A list of potential property managers for this property. - My to do list for the next week. - Things that the real estate agent owes me in terms of documents. - A list of things that are outstanding that I need to take care of in terms of hiring people, or asking for recommendations for lawyers. - A list of "surprises" that you find out during the due diligence process. Week 1 - Reach out to a couple of lenders and finalize a loan application. - Look for a few more lenders that are local to the area, as well as about three national banks. - Break down the finances for the lender, and this is going to be breaking down what you're going to do to the property to increase value. For example, we can increase rents on the property by about five to 10 percent (this is self-storage). We can also decrease vacancy. This is going to have to be completely broken down into an excel sheet, by unit. - Pick a shortlist of inspectors for this property that are local and that can deliver the inspection within a few days of having it done. - Review a copy of the existing management contract. - Find a lawyer that is local and familiar with that states laws. - Find a copy of the state's lease which is a standard lease for that state. - Get all the documentation for that income and expenses for the last two years for this property. And this will also be for the lender. - Look for potential new property managers, if that is our plan. Week 2 - Have the lawyer review the management contract and make any adjustments for the actual lease contract for the units. - Finalize the profit and loss statement and our projected vacancy for that first year. - Finalize how we're going to structure the payment for a potential contractor that will work on renting the vacant units. - Finalize the loan packages for the banks. - Call the remainder lenders that are on our list that we found on the first week. - Look for an insurance company, and we might just continue using the same insurance company that is insuring the property to make things easier. So we need to get their contact information. Week 3 - Make sure that we get the final inspection reports from the inspectors. - Start narrowing down the list of lenders that will move forward with this property. Week 4 This week is currently open for the items that will come up during weeks 1, 2 and 3. We're going to be dealing with whatever we uncover, or still need at that time. Week 5 - Finalize things with the lender and we will be looking at the miscellaneous things that we need to get done after we close on the property. - Find phone centers that are familiar with taking calls for self-storage properties. Subscribe to our newsletter here: https://montecarlorei.com/ --- Support this podcast: <a...

When you're ready to sell your commercial property, it is a wise idea to hire a professional photographer. What should you look for when hiring a professional commercial real estate photographer? What are some technologies that could be useful in marketing your properties visually? We are interviewing Brian Balduf, CEO and co-founder of VHT Studios, a visual marketing company with over 1,000 photographers and videographers, focused in real estate. You can read this episode here: https://montecarlorei.com/top-tips-for-hiring-a-commercial-real-estate-photographer/ What are some tips for screening a good photographer and videographer that has focused in commercial real estate? I would say the most important thing in screening or choosing a partner or provider for photography or video is look at their experience. Anybody could push a button on a camera and take a picture. But that's not the point here. The point is you want to impact, make an impression, create a perception and sell or rent the property. So you're really looking for a return on your investment. The best way to do that is to see what they've done before that's similar. Not just their work, not just photographs of weddings, or puppies, or things like that. Show me what you've done with properties that are similar to mine. Whether it's a hotel, a retail location, or a manufacturing location. I want to see it. You also want to work with that photographer on what are you trying to convey? What are you trying to present to potential buyers and renters? What's the story of this property? What are the highlights or features of this property that should be focused on and make sure that they understand that. That they're not just coming through and taking pictures to take pictures. You want to show it in its best light, make great first impressions and appeal to certain audiences. Third, I would say, is understanding your licenses and rights to use those photographs. The way it works in the United States is the producer or creator of the visual assets or the intellectual property owns it and owns all the rights. Unless they give rights to you, and you always want that in writing so it's very clear. Here's what I can and can't do with these photographs. It's a very big topic in the industry today because I think a lot of people assume that once they have the photographs I can do anything I want, but that's not necessarily true. The license could be restricted to just print, just brochures in magazines, or it could be restricted to just the Internet. If it's not in writing, you really don't have it. You need to ask for it and have that agreement. So I think those are three important things in screening a photographer: the quality of their work experience, their ability to understand your story and your audience, and getting those licenses in writing. How do photographers charge for commercial properties? Is it per square foot? Per room? How does that work? That’s a good question. Generally, it’s per photograph. So you’ll have a rate for the artist, photographer, a pilot to come out to the property. Think of that as a session fee. So you pay them to come out and shoot everything that’s applicable. Everything that makes sense. And then on the back end, you proof those photographs and get to choose the ones that you want to license. And it’s just a per photograph license fee. So it’s a combination of those two. The range could go anywhere from a couple hundred to a couple of thousand dollars depending on the size of the property. How many photographs are being taken and the mix of services. Brian Balduf https://vht.com/ --- Support...

In his first podcast interview ever, Robert Steele, author of 300 Ways to Buy, Sell or Exchange Real Estate, shares some of his top tips for buying, selling and exchanging commercial real estate. You can read this entire interview here: https://montecarlorei.com/300-ways-to-buy-sell-or-exchange-real-estate/ Let's go over the first two strategies of your book, which you mention are the most important ones to get The first one is called "Unpriced". The pricing is only in the eyes of the beholder. I encourage people to list their property unpriced - any price agreeable to the seller. They can give a range, $1,000,000 - $1,250,000 or $750,000 - $1,500,000. It's a range, perhaps, but the basic thing is unpriced. The person owning the real estate is trying to accomplish something. Now, if it's cashflow, you want a return of some sort, how much do you want? What is the target that you need to accomplish? Now, when they get into numbers, they get into cap rate sheets and things like that. In a pure exchanging, the cap rates go away. And it's what the person is trying to accomplish. I'll take you to number two in the book, which is called Creation of Wealth. You have a home, you have equity, and you'd like to buy another house, let's say, to rent it. So you have choices that you either have the cash in the bank or you could refinance your house or you could borrow a second on your house. The second would give you cash and you could go buy another house with it, or a duplex. By the same token, you could create a second on the house. That's the creation of wealth. Very simply, you could put a note in a trust deed, or computer and type out a note for fifty thousand dollars secured by a trust deed on your house in which you would trade that trust deed to somebody else that had another house that would take your trust deed so you could use a trust deed that you created without using any cash. Simply it's a piece of paper secured by the equity in your home. It's recorded against your title. It's a piece of paper and the piece of paper says I'll make certain payments on it at a certain interest rate. What you're doing is you're using part of your equity in order to buy another property, which you're not going through a bank, you're creating it yourself. In this economy, what are some of the strategies that you recommend us keeping in mind? I'd keep in mind the crypto currency, you could have a tremendous amount of wealth tied up in that cryptocurrency. If you go out of that crypto currency, you're going to be taxed. But if you deal with people in the exchange field that are knowledgeable in exchange rules, they can help you because they can take a million dollars worth of your cryptocurrency and then you don't go out of title. You keep it because that's the goose laying the golden eggs. You want to keep that. You can use that as security to buy some real estate. A knowledgeable broker could say, we'll take a million dollars worth of your cryptocurrency, use it as security and wrap it in what's called a blanket mortgage over the crypto currency and the real estate. So you're able to use it as though it's a million dollar down payment without going out of title. Now, the person on the other side has the security of that million dollars. You have to perform on your payments and your obligations, or you would lose it. The currency could be used as the source of security for your down payment into to three or four million dollars worth of real estate without going out of title. Robert Steele (760) 522-5362 [email protected] https://www.amazon.com/Steele-Ways-Sell-Exchange-Estate/dp/098951904X --- Support this

What are some key things you must do when doing community engagement for your real estate project? Ilana Lipsett details 4 steps that are a must for every development, in any community. You can read this episode here: https://montecarlorei.com/4-steps-for-community-engagement-for-your-development/ When you get a community engagement project, what is the first thing that you do? I have a four step process that I like to lay out when I’m starting a project. The first is, get curious, show up and listen. And before the showing up and listening, it’s important to observe, ask questions and listen. People are the experts of their own experience, and that’s your job as a community engagement practitioner to deeply and empathetically understand what their experience is. So in order to show up, you have to ask who is already here, who has been here before, who’s showing up at your meetings at city hall, who’s responding to requests to meet and who’s not. And so a big part of that is showing up everywhere. Get to know local businesses, shop there, spend time there. You’ll start to meet regulars and hear stories, go to neighborhood meetings, go to town halls, go to gatherings. Before you start knocking on doors, it’s important to build those relationships by showing up in public and meeting people. And through that, you can evaluate if you need to be invited and go with a local leader who can introduce you to their neighbors or who can introduce you at a community meeting. Having buy in from the local leadership is really important. Having an established relationship before you do that. And so by showing that you want to be part of the community, by going to local events to block parties, to coffee shops, to bars, to whatever it is, it shows people that you are there and that you’re committed. And a key part of that is to not offer solutions yet. You’re still in this curiosity phase and getting a sense of who is here. What’s the history of the area? What has already happened? What already exists here that builds or holds community, whether those are events or meetings or parks. I feel like this may seem like an obvious thing to say, but you’d be surprised at how many post-mortems I’ve heard where developers say, oh, the biggest lesson learned was that we needed to talk to people and include them in the process. If the community has so much input and part of it is against what the developer was looking for, what happens? Part of it comes down to being honest and transparent about what you are and what you’re not, and what you can do and what you won’t do. When you do community engagement, one of the challenging components of it is that you aren’t necessarily going to get input that will be conducive to what you’re trying to do or you won’t necessarily get input that’s helpful or you’ll get input that is challenging your core beliefs or your vision or your mission. Part of it is not necessarily incorporating all of those pieces of the input that you’re getting, but it’s understanding how to best respond to them and how to best respond to the community. Transparency and communication is one of the most important things in addressing that. Having your community engagement process in place allows you to build relationships with your neighbors, with the community, with community leaders, so that when they do ask the hard questions or if somebody does come in with an objection, you’re able to respond to them in a way in which you are showing them respect, that you’ve listened to them and they’re showing you respect that they’ll understand and accept your answer. Ilana Lipsett [email protected] www.iftf.org ---...

Learn how to find, analyze and learn more about micro markets for your real estate investments. Victor Menasce has been investing in real estate for the last nine years in both Canada and the United States, and has done all kinds of commercial projects. You can read this entire episode here: https://montecarlorei.com/how-to-find-and-analyze-a-market-for-your-real-estate-investments/ What are some market conditions that people should be looking for in real estate? I’m not actually a real estate person per se. I really think of myself more as a business person. When you talk to real estate people, they tend to get wrapped around the axle talking about things like comparable sales and things like that. And that’s useful, but it’s not the whole picture. I’m a much bigger believer in the fundamentals of the very simple law of supply and demand. If you’ve an excess of supply and a shortage of demand, you can predict what’s going to happen. Prices are going to fall if you have a shortage of supply and an excess of demand. And those conditions are going to persist. You have a really robust market from the point of view of an investor or developer, because there’s going to always be upward pressure on prices, upward pressure on rent, upward pressure on valuations. And that’s what I look for. I want to find markets, and when I say markets, I really mean micro markets. Micro markets where those conditions persist, they exist. They’re not artificial. They’re going to be there for a long time for some good reason. How do you come across these locations, typically? Is it someone that just mentions it to you, or you come across an article? It’s almost always through a conversation where someone will say something and we’ll say, that’s intriguing, and then look into it a little bit deeper and see if there’s really something there. Not only to see if those market conditions are there, but who else is in the market? Is it a market where it’s a closed market and there’s only two or three players? Or is it one that is open to other folks coming into the market and adding some capacity. We talk to a lot of investors every day, and I think most listeners of your show would agree that today, there’s more money chasing deals than there are in fact opportunities, at least at a decent price. And because there’s so much money chasing deals, prices are getting bid up into the stratosphere. Prices are getting bid up to levels that frankly don’t make sense. And my calculator works the same this year as it did two years ago, as it did four years ago. And it’s funny how for some investors the math changes, and it shouldn’t. When you are assessing a particular property, how do you approach it from it being a fit for the monetary goals of the project? Our focus is on things that are recession resistant, recession proof. I don’t want to be subject to the vagaries of a market cycle. For that reason, I won’t go into retail, for example, if I have a vacancy in a retail strip mall, that location could be vacant for a year or two if I’m waiting for that perfect tenant who’s looking for exactly that square footage. And then of course, you’ve got to do tenant improvements, you’ve got to do a build out. So you really are looking for that needle in a haystack type of perfect fit. One way is to find them. The second way is to manufacture them out of thin air, to create them. Victor Menasce victorjm.com Magnetic Capital – How To Raise All The Money You Need For ANY Worthy Venture...

In this episode we learn how to move from residential investing to commercial / mixed use investing. Hanna Azar has been an investor since 2012 and currently manages a family portfolio of approximately 91 units, of which he co-owns 50. You can read this episode here: https://montecarlorei.com/how-to-go-from-residential-investing-to-commercial-properties/ What was your first deal like, and how did you transition to value add properties? Luckily for me I was in college in 2008 during the recession, and decided to buy a single family home in Palo Alto. I was a senior in college, I was 20, 21 years old, and that was my first investment in real estate. I bought it mainly for cashflow purposes when I underwrote the deal and I thought of appreciation as a bonus. But I quickly realized that appreciation in real estate is really what drives most of the value and most of the investment. And that's where I started shifting gears. I read a book by Manny Khoshbin, who is also a value investor developer, called How to Build Your Hundred Million Dollar Real Estate Portfolio. It definitely changed my mindset of what real estate is, what you can do with it, and how you should focus your investments and time. What drove you to move from residential properties into mixed use? I basically got the idea from the book, a lot of it just looking at the market, looking at where people were moving in the city and knowing that the scalability will eventually be the best strategy in the long run. Do you have any particular tips for people that are getting into real estate or that are beginners? What should they be doing and looking at? I think everyone's path in real estate is definitely different. I would say, all else being equal, I would start small, get your hands dirty, assess risks as much as you can before jumping into a deal. Go to meetups, listen to podcasts like yours as well, and try digging deep as much as you can before pulling the trigger. I would read as many books as possible look into ways that you could add value and find a niche. And I think that's sort of what we created in San Francisco with the properties that we've been buying, which most of them are in the Mission District. So we kind of felt like we have local knowledge. We know the buildings better, we know ways of adding value that works for our business model. I would say just try adding value, locate niches as much as possible, and try to force appreciation as much as you can, which is something I hope I illustrated. You should never wait to buy real estate, and just hope something will go up and buying it at risky prices. I would say look for properties, try to force appreciation through some kind of value add mechanism which in commercial real estate is obviously increasing NOI and look for scalability as much as possible. There are a lot of inefficiencies in real estate, which is the reason why I like it so much. There's all kinds of information gaps. There are ways that you can locate a seller before it hits the market. The pricing on the real estate is not efficient as well like the stock market, a broker might price something high on because he is out of the area, or he might price it too low, and it might be during the holiday season like it is now and not too many buyers show up because they're traveling. If you dig deeper, you'll definitely be able to find the inefficiencies. How to Build Your $100M Real Estate Portfolio: https://tinyurl.com/rgtyvmg Confessions of a Real Estate Entrepreneur: https://tinyurl.com/ufp73vv Hanna Azar [email protected]...

How to find the best retail leasing agents for your vacant space? What questions should you be asking them? Beth Azor has over thirty years of experience in leasing, managing, developing, redeveloping and teaching commercial real estate leasing agents all over the country. You can read this interview here: https://montecarlorei.com/how-to-find-a-great-retail-leasing-agent/ What makes for a great retail leasing broker? Someone that's not afraid to ask the tough questions. How much is it going to cost for you to open your business? For example, the daycare said $80/sf. And I said, OK, the building is ten thousand square feet. That's eight hundred thousand dollars. Then it's asking the second tough question, do you have the eight hundred thousand. As anyone in real estate, our time is our commodity. We need to maximize that to the best of our ability. So not being afraid to ask the tough questions. Also following up. Once in a blue moon, I'll help a friend who wants to open a location and I'll call a bunch of landlords or shopping center owners trying to find space. And it blows my mind how many people do not return phone calls. So: not being afraid to ask the tough questions, asking a lot of questions, because telling and selling and asking is, and then following up. I think those are the two most important qualities. Is there a specific set of questions that are important for us to ask them? Yes, asking them for a copy of their deal sheet for the last 12 months, or 18 months and then asking them which of those deals were new tenants versus renewal tenants? And then for all of those new tenants, how did you find them? Was it a call in off of the sign? Was it a cooperating broker? Was it a cold call? Was it a prospect, or was it a social media post? So really drilling down on how they found the prospect, because that is going to give you a clear path and understanding as to how they're going to lease your property. Are they just going to put up a sign and expect calls to come in? Or are they going to be extremely proactive in getting the business? Those are truly the most important questions. And then you have to feel good and have an instinctual feel that you can work with this person. And I would also ask that person for other clients that they work for that you can call and get a reference. Are they proactive? Do they call back? How are the negotiations? Do they negotiate on my behalf? Or are they always calling me and saying, well, we should give this guy an extra month's free or some tenant improvement money. Are they a true owners rep? Or do they want to be working on behalf of the tenant? Those would be the questions that I would ask a retail leasing broker that I might be considering hiring. What should a landlord keep in mind in order to be their tenants favorite landlord? Keeping the property clean, keeping it well lit, a very well lit and safe and secure shopping center is very important. I think my tenants like me, but if I don’t get the rent on the second of the month, they get a late fee. Now I’ve trained them. Being consistent is very important because you shouldn’t play favorites and give one tenant one thing and another tenant not the same thing. And certainly listening to your clients, for example mobile to go in the retail world is huge. You have to be reading up on that and thinking, how can I do something differently? How can I help my customers get more sales? www.bethazor.com https://www.linkedin.com/groups/8851653/ https://www.youtube.com/channel/UCswCXcTept82Ob6WmsCCtxw ---

In this analysis, I will be using a real property that I came across. It is a self-storage portfolio in Missouri. They had four properties and an additional property was in a strip mall, so they were leasing it. This property was interesting because it was in one of our target markets. You can read this entire episode here: https://montecarlorei.com/how-to-analyze-a-commercial-property/ We asked for the offering memorandum, sometimes the OM is readily available on the website that you find the property, sometimes you just need to sign a non-disclosure agreement before getting it. The first thing we do when analyzing a property is taking all of the financial analysis numbers and putting into a spreadsheet. That’s all of the existing income, and all of the expenses on the Excel spreadsheet. Everything is broken down as it shows in the OM. Some of the expenses for this particular property are: online advertising expenses, bank charges, employee benefits, insurance, here is a line item for the leased property that is on the trip center, payroll expenses, management fees, security expenses, telephone expenses, repair expenses, general and admin, utilities and the most important one, property taxes. Property taxes are the expenses that can kill deals for inexperienced investors. Why? Because the real estate agent is going to put the existing property taxes on their analysis. And typically you are buying the property for a higher price than what the seller bought it for. And so property taxes can double and sometimes triple as it is in this example. And if you don’t realize that until the last minute, or even until after you purchased the property, that can be a huge problem. So in this example, the real estate agent put the existing property taxes, and for a 3 million dollar property, these taxes were $20,000 per year. I asked the real estate agent, what do you estimate the property taxes will be at the $3 million purchase price? And the real estate agent answered $61,000. That is three times what they had in their financial analysis. This is something that you really need to be watching out for, for these type of deals, and also for other asset classes. As we have talked about before in the retail world, even though your tenants will pay for that tax, you really want to be considering if they can afford to pay for these additional taxes. And in the retail example, a lot of times they may have in their lease that the only increase in tax that they’re willing to pay is an additional 10 percent per year, for example. And 10 percent per year isn’t going to cut it if your property taxes are being tripled. Contact me here: https://montecarlorei.com/contact-us/ Subscribe to our newsletter on top of our website. --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Devin Lewis is a California Licensed Architect that has spent the last 10 years working with real estate developers determining the highest and best use for properties across the country, and around the world. You can read this interview here: https://tinyurl.com/uj4bqos What are entitlements? Entitlements, in a simplified explanation is what you, as an owner, are promising the city that you or someone that purchases your entitled design will build and it ultimately determines the value of the property. An entitled design is thought out enough to where the city can understand what will be built, what’s propose, what taxes it will receive from any of its operations. And the entitlements are based off of what architects consider a schematic design. So the design of the building will, after entitlements, develop significantly. And development for an architect means something different than development for a real estate developer. But the project will architecturally develop after the project becomes entitled with engineering systems. In order to entitle a project, you need a good idea of the square footage, the functions and what you have planned for that piece of property. What are some of the best pieces of advice that you can share with us in trying to get a smooth entitlement process as fast as possible in a very difficult city? As a property owner developing a piece of property, I think the most important thing is to strive to have an understanding of the process. As an owner, you could experience a great deal of frustration if you’re not aware that an architect is your agent and the architect really is there to help you facilitate the process and that process In most cities it looks like this. You’ll get a schematic design, go to the planning department, set up a meeting and you’ll work with different departments like the police department, the fire department, traffic, public works, sometimes the trash management services for the city to really make sure that at a high level, your project will fit in to the city’s fabric, the city’s functions, and the way the city will tie in to what you’re proposing. You’ll work with a staff member and you’ll present to the planning department. The planning department will actually grant you entitlements. If it’s a large project, it’ll be presented to the city council. When the staff member feels that it’s ready, they will recommend the project for approval. During this process, the architect is folding in the requirements and desires of many different parties. The city is going to bring its requirements and you’re going to meet with community members in community meetings, folding in their desires. Can they give an estimate of more or less how long it would take to get all the approvals from a particular city? We put together a timeline schedule for each project. Entitlement is a difficult thing to quantify in terms of time, especially in San Francisco, because the neighbors have such huge influence over what becomes approved. And it's a great thing that the neighbors have say in the character of their city. One of the main drivers for the amount of time that a project will take is CEQA, The California Environmental Quality Act which requires an environmental impact report for large projects. It's tough to say how long a project will take to get planning commission approval because the neighbors can form large, powerful groups and create lawsuits that actually will stall projects for a number of reasons such as traffic in their neighborhood, the density, and type of use that is being proposed. Devin Lewis [email protected] https://www.linkedin.com/in/devinjameslewis/ --- Support this...

Dave Zook, an experienced real estate investor and syndicator will talk about the tax benefits of investing in real estate, as well as self storage, and a different kind of investment: ATMs. He has acquired more than $100 million worth of real estate since 2010. Dave has been actively investing in multi-family apartments, self storage, and ATMs. You can read the entire interview here: https://montecarlorei.com/can-you-avoid-paying-taxes-legally-with-real-estate/ When you understood that you could have a lot of tax benefits to real estate, what happened? What pushed me over the edge was that around the year 2011, I made my quarterly tax payments. I was getting the feeling that we might have a tax issue, but it wasn't totally prepared for what was coming. I got the call on April the 13th from my CPA saying that we took all the deductibles, you paid your quarterly payments, and you still owe $373,422. So I paid around half a million dollars in taxes that year. Prior to that time, I was having a lot of fun. I was busy. I was putting a lot of time and energy into the business, but it didn't feel like work. It was so much fun. But when I had to pay almost half my earnings back to the government, it wasn't so much fun anymore. After that, I realized during my research that multi-family apartments can be a really good tax shelter. I bought several hundred units of multi-family apartments and I've been tax free ever since. I haven't paid federal tax in a lot of years now. You are not alone in the real estate world, which is great. So let's talk about taxes. What are some of the great real estate tax benefits that people may not know about? The Trump tax law change that came through in late 2017, early 2018. There are some things there that really sweetened the real estate game for investors, and it now enables investors to take bonus depreciation on new or used equipment. Combine that with some leverage. Combine that with some cost segregation studies. It's a ridiculous amount of relief that you can get from investing in multi-family apartments. Can you avoid taxes forever? Or are the people who will potentially inherit some of these properties end up having to pay these taxes? That's a good question. I get that question a lot. There's a lot of people out there that think like I used to, that when you make a lot of money, you've to pay a lot of taxes.&nbsp; The next question is, well, you've to pay the tax sometime, so might as well pony up and pay it now rather than later. And those two questions are almost the same. Yes, if you don't know what you're doing, then you have to pay a lot of taxes when you make a lot of money. If you don't know what you're doing, you also have to pay the tax sometimes. So you're only just playing the deferral game. If you don't know what you're doing, you're going to have to pay at some time. But if you're strategic, and you have a plan and you've good team members around you, you can make a lot of money and you can pay no tax, ever. As a syndicator, you actually are fundraising for a very interesting class which is ATM machines. Can you share with us how you came across that as an opportunity, and why did you decide to fundraise outside of real estate? ATMs is a form of real estate. It doesn't sound like it. &nbsp;You're investing in an ATM location, and instead of having a building sitting on that real estate or instead of having thousands of square feet, you're getting a location agreement that 3 foot by 3 foot. So it is a real estate play, but you're extracting value from that 3 foot by 3 foot space Dave Zook [email protected] www.therealassetinvestor.com --- Support this podcast: <a...

In the light of setting goals for the New Year, improving our personal lives, as well as our professional lives, we're going to talk about a course called the Landmark Forum that has had a huge impact in my life, as well as my friend Bronson Hill's life. Bronson has been investing in real estate since 2006 and is an active general partner in over 700 multi-family units. Link to available courses throughout the world: https://www.landmarkworldwide.com/searchResults?prgid=7&amp;pgid=117&amp;crid=840&amp;ctid=-1&amp;sdt=-1&amp;ofr=true You can read this entire interview here: https://bit.ly/35DoNkb Why did you decide to take Landmark after we were having a conversation at an event earlier this year? I'd heard about Landmark from several people and they all were very successful people. Then I heard your endorsement when you said, hey, you have to take it, it's just going to change your life. I was like, OK, I guess I have to take it now. I guess it's going to change my life. That's what got me to sign up. I really didn't have much by way of expectations. I just kind of just went in with an open mind and the results of it were pretty profound. It really lived up to that endorsement that you gave that it really has substantially changed my life in the areas of communication, becoming more authentic, particularly in areas where I've been inauthentic with people, correcting some of those things, and really opening up all different types of new possibilities for business, and for relationships. Just pretty much in every way in so many aspects of my life. I have not found a personal development event that is better than this event. One of the distinctions that is near and dear to my heart was when they told us to, "Give up being right, even though we think we might be right." I was thinking what do you mean? If I'm right, I'm right. What do you mean give up being right? And I vividly remember when someone close to me said something, and I was doing my homework of giving up being right. So I was going to react to what that person said. And I chose to zip it. And it turned out that that person was saying something completely different than what I thought he was saying. So that has been super helpful as well. What other distinctions are now part of your life? Being right is an issue for a lot of people and of me, I've always right, but everybody else isn't. It's something that we all think that we're right. It can be hard to let go. And I felt like this gives a real, authentic way. And I keep using that word authentic. I think there's a lot of ways we can move forward, but we really lose connection with people or we don't really live out of a place of integrity with ourselves. And this program really gives the opportunity to walk in a way that feels more authentic, where you can actually be closer to people. And I've experienced that. I think when we can let go of having to be right, and this will give you tools on how to do that. Landmark Forum classes available can be found here: https://www.landmarkworldwide.com/searchResults?prgid=7&amp;pgid=117&amp;crid=840&amp;ctid=-1&amp;sdt=-1&amp;ofr=true Let us know if you end up taking it: https://www.linkedin.com/in/steffbold/ Bronson Hill www,growingcashflow.com/ --- Support this podcast: <a...

In this episode we will learn how to find out about the political environment of a city that you’re looking at purchasing, &nbsp;How to deal with bank problems? How to prepare and ride the next downturn? We are interviewing Michael Flight, an expert retail real estate entrepreneur who has been active in commercial real estate over the past 34 years. Michael has handled more than $500 million worth of real estate transactions. You can read this entire interview here: https://montecarlorei.com/how-to-deal-with-politics-problems-in-real-estate-investing/ How would someone go about understanding the political environment of a particular city? The best thing to do is, when you have it under contract, to call up either the building department or the Economic Development Department and say “We’re interested in buying this. And here are some of the things that we’re looking to do. So what’s it going to take?” Your local retail brokers or commercial property managers will also know how difficult the city is to deal with. Then the other really good way to get a handle on how cities are is to speak with individual tenants, or you’ll hear about it. Because we deal with properties nationwide, there are nationwide brokers. For example, the guy that represented Pet Supplies Plus does Pet Supplies Plus and a number of other national tenants across the country. So I can just call him and say, we’re looking at this area and I see you guys did a store down here, how was it for you? And he’ll say, oh, it’s fantastic. Or “I’m just going to tell you, won’t be able to get any signage out there and everything. You’ll be pulling teeth. And then they’ll come out just randomly and inspect you and then create all kinds of other problems which we’ve had in the past.” How do you sleep at night during hard times? I had some real issues with the downturn of 2008. On one of them was that we had a very conservative loan and I had started to renew the loan with the bank a year in advance, And all of a sudden, everybody that I was working with was gone from the bank. The last guy who was let go, calls me up and says that they’re not going to renew my loan. So then this new woman comes in and she says, you need to pay this right away and we’re going to come after you and blah, blah, blah. And they sent the default notice to my house and my wife opens it up and asks if we are going to lose our house. I said, no, we’re not going to lose our house. I called her up because I had done workouts before and I knew how to go about this. I said, look, I’ll move my loan in an orderly fashion over to this other bank. In the meantime, you’re going to extend my loan. And she said no, we’re not going to do that. And I answered, no, you need to listen. You’re going to extend my loan because if you don’t extend my loan, I gave her the name of my foreclosure attorney who was helping me out with some other things. And this guy actually argued about foreclosures all the way up to the Illinois Supreme Court. I said, “We will tie you up for four years, you won’t get any money, so we could do it the easy way, or we could do it the difficult way. I’m going to be out of here in six months. You can rest assured that if you touch any of my deposit accounts in the meantime and freeze anything, I will sue you, and I will throw all these other properties into foreclosure, too. Michael Flight www.concordiarealty.com/contact Want to become Steff's mentee? Tell me more about you here: https://montecarlorei.com/contact-us/ --- Support this podcast: <a...

In this episode we will learn the story of how a successful retail real estate investor got into real estate, what was his first deal like, what has been the best deal of his career, and we’ll also touch a little bit about a not so talked about topic: how to deal with political risks in the city that you invest in. We are interviewing Michael Flight, an expert retail real estate entrepreneur who has been active in commercial real estate over the past 34 years. Michael has handled more than $500 million worth of real estate transactions. You can read this entire interview here: https://montecarlorei.com/how-to-go-from-0-to-500m-in-retail-real-estate-investments/ Tell us bout your best deal. There are a few best deals. There's one that we're still working on. We started managing it in nineteen ninety and we've redeveloped it three times now. We've expanded or renewed most of the tenants in the shopping center. It's a 300,000 square foot shopping center in suburban Chicago. We've actually torn down and rebuilt forty five percent of the shopping center. We took a Walgreens that was doing phenomenal volume and moved them to an aisle parcel that was just vacant, a parking lot. Over the years, the managing partner that became partners with us on a few different projects that we've done, that's just been a great project for us to expose us to a lot of things, not only with that, but geotechnical problems with soil stability. I'm fairly certain that most of the environmental problems are corrected, but every time we stuck a shovel in the dirt over there a new underground storage tank would come up. The other exciting thing was that it was in two major motion pictures. Wayne's World, and Wanted with Morgan Freeman and Angelina Jolie. They blew up one of the stores that we were replacing anyway since they were going out of business. You briefly mentioned that the city wanted you to have a different tenant, can you elaborate there? We have run into that in a number of different municipalities all over the country. It really depends on how strict their zoning laws are. It really depends on the individual city. That's why if you're buying a shopping center, you're going to have to live with whatever is the political system in there. Even if it's in a good state like Texas, it could be a difficult city. You need to know about that in advance. Now, we've had situations where we were doing a facade renovation on our property in Connecticut, next to New Haven. Most of the guys that were on the zoning board, probably three of them, also taught in the Architectural Department of Yale University. They all thought that they knew way better than the property owner what was needed for the shopping center. We went in with plans and they actually redesigned a large majority of the plans. And that's how much control they have over most of the time with the facade renovation. It doesn't require a zoning permit and you would just go in for a building permit. But some of these municipalities have very strict zoning code, signage code, design code. They're into the minute details. Another thing that triggers some things is if the municipality has traffic planners. So if you decide to change any part of the parking lot, they will tell you that you need to do this and that in the parking lot. You just need to be aware of some of the things that go into it. Slightly different than owning apartment buildings. They're more visible and so cities take a more active interest in it, and a lot of times they generate sales taxes, so cities take a larger interest in it as well. They're kind of your partner, but without putting any money into it. Michael Flight www.concordiarealty.com/contact --- Support this...

Today we’re learning what are the top things to watch out for when investing in hotels. We’re interviewing Jerome Yuan, CIO of ASAP Holdings. He has assisted with acquisitions and dispositions of over 33 hotels in the past 9 years. You can read this entire interview here: https://montecarlorei.com/top-3-things-to-know-about-investing-in-hotels/ Why should investors invest in hotels, especially nowadays? I heard that where the economy might end up going, it might be a bit risky. But let's let's see what you have to say on that. They say the hotels are probably the most sensitive to economic cycles. They're probably the first to get any type of effect, but they're also the first to rebound out of any type of recession as well. For us, investing in hotels is both a real estate play and also an operational play. We believe that hotels are like 50% real estate and 50% operations. Location matters a lot too, just like any other commercial real estate deal. But then you also have, depending on the hotel, 50 to 100 employees there that you have to take care of. You have guests checking in and out on a daily basis. The operational side is really where you can make a difference and improve the cash flow of the property. And we believe that improving hotels are are the fastest and easiest way to improve cash flows in commercial real estate just because of the daily transactions that you have with customers and hotel guests. What is a typical management fee? The property manager usually takes a 2.5-3% percent fee off of the of the gross income. It's pretty reasonable. What are some of the top things that investors should keep in mind and watch out for when investing in hotels? 1. Investors should really look at the brand of the hotel, or if there is a brand, and if you're buying a boutique hotel or independent, those hotels rely on the location. If it's a beachfront property, you won't have any problems. But if you have an unbranded hotel in a suburban area where it's mainly business travelers, you're going to need to be careful and make sure that the brand is the right brand for the hotel. 2. The other thing is really the renovation costs after purchasing the hotel. Every brand requires the new owner to renovate it. They call it a property improvement plan that's issued by the brand. You've to make sure that you cost out every item and avoid any cost overruns because that just eats into your return on your investment. I think those two main things are the bread and butter of what to invest in for hotels. 3. Location. As long as you're in a good location, you might not need a brand. But some brands are stronger than others, so a Marriott would be stronger than a Four Points or something like that. So that's very important. Do you look at Airbnb laws in that particular city? We don't focus on that too much. The way we invest in hotels, they're mainly business travel hotels. We'll have hotels in the suburbs, or near office parks, and things like that. We don't really compete with Airbnb, at least we don't think we do as much. They definitely do affect hotels stay, I do believe that, but the business traveler is there for one night, two nights, and then they're out of the hotel most of the day at business meetings. If we were to start transitioning our investment to resort, luxury, or tourist type of hotels, then we would definitely be looking more at how the local Airbnb laws are changing. Jerome Yuan www.asapholdings.com Subscribe to our newsletter here: https://montecarlorei.com/...

In this episode we will learn the pros and cons of investing in a few asset classes: retail, office, self storage, and mobile home parks. We are interviewing Jeremy Roll, a passive real estate investor since 2002. Read this entire interview here: https://montecarlorei.com/passive-investing-retail-vs-office-vs-self-storage-vs-mobile-home-parks/ What are some pros and cons of the following asset classes: retail, mobile home parks, self-storage and office? Retail What I don’t like about retail going forward is what’s going on in the next 10 years, as far as predictability. Some of the challenges that I see, some of them are continuing and some will be in the future include: are people going to continue to go stores or are they actually going to migrate online even more and more? And if the answer is online more or more, what does that mean for the retailers? Mobile Home Parks I love mobile home parks. And the reason why I say that is because if you do your research, you’ll find that it probably has the lowest turnover ratio in terms of tenancy of any asset class I can think of. I believe the national average turnover ratio is about 9%, which is very low. There are certain apartment classes that have 40 to 60% turnover, depending on the type of building and location. I love mobile home parks because of that. And I love the fact that they’re serving lower income people, and that I see a need for lower income housing and affordable housing for a very long time going forward. So there is that predictability that I was talking about. There is predictability of demand. Predictability in lack of turnover in terms of cash flow. And, if you buy the right profile, which is very important, where most of the tenants are owner occupied and not renter occupied. You’re probably going to have more predictability in terms of having less problems. Self Storage That’s another asset class that I really like. When you think about how the US is changing from a demographic profile, we’re aging over the next 10 years. We have a lot of people moving, and projected to move to Florida and to Texas to retire. What I love about self-storage is that when people retire, they typically downsize. And I see that there will be a need for self storage as a result when these people move, or even if they’re living there and they downsize. In certain locations, I think they can be great. One of the challenges with self-storage is that it’s very low cost to build and it can be built relatively quickly. The barriers to entry are low. If you’re going to invest in self-storage, the supply and demand factors in the market you’re looking at at the time are critical, because you may have a competitor pop up in a year or two that you weren’t expecting. &nbsp; Office I have multiple office investments right now as well. But I have the same challenge with office that I have with retail, for a couple reasons. And we didn’t get into one aspect of retail that’s a little bit of a predictability challenge, which is the same in office, which is tenant improvements. When you have a tenant that leaves, typically there’s some money to be spent to turn the unit around and make it ready for the next tenant. In retail, it can be quite substantial if they’re changing the entire use. Let’s say you have a record store that’s being turned into a restaurant. There’s a lot of money that has to go into that. And often you’re sharing that cost with the tenant upfront. The same thing goes with office. Between the tenant improvement requirements that may come up if you have tenants leave unexpectedly, that may come out of cash flow or reserves. Jeremy Roll [email protected] --- Support this podcast: <a...

We will learn what do passive investors look for in an operator as well as in a deal. We are interviewing Jeremy Roll, a passive real estate investor since 2002. Read this entire interview here: https://montecarlorei.com/5-things-passive-investors-look-for-in-a-syndication-operator-and-the-deal-itself/ You are a full time passive investor. That means that you are investing in other people’s deals. How do you evaluate an operator before investing with them? Great question. I want to stress the fact that the operator to me is even more important than the opportunity. I would say that’s number one. Number two is the actual opportunity itself. And I want to be clear, too, that the actual opportunity you’re investing in is very critical, clearly. But who you’re making a bet on when you invest passively is absolutely critical. And the reason is because typically when you’re investing passively in the way that I do it, I invest in what’s called syndications, and what that means is that they’re pulling a number of investors together, it could be several investors into an LLC and we’re typically buying a property. When you do that as an investor, you’re considered a limited partner, or in the LLC or the actual entity you’re investing in. 1. The first thing that I look for is an operator who is conservative, who is looking to under-promise and over-deliver and have longer term relationships with investors. I try to avoid operators who are aggressive with their assumptions and their projections to make the numbers look really good so that they can attract investors based on the projected returns, but that may or may not perform to projections. 2.&nbsp;From there, I ask a lot of questions. It’s very common for me to ask 150 to 200 questions about an opportunity. Some of those questions are going to be purposefully designed and asked. I don’t necessarily care about what the answer is, but more how they answer it and reading between the lines. If someone’s answering me in certain ways and saying “Well, we believe this property is going to do X and Y, but we we use this assumption which is much more conservative because we want to make sure we were conservative for investors. We think it’s going to over perform, but we want to set the right expectations.” That type of an answer to me is very valuable, it tells me their mindset. 3. I do background checks every time on all of the key managers and the opportunity. 4. I don’t usually invest with someone unless I met them in person at least once. And that’s because I am a very firm believer in doing a gut check after doing all your due diligence. Are you 100 percent sure you want invest with someone or there’s this 5 percent question mark, you don’t even know why, but your gut is telling you that it’s not a perfect scenario and maybe you should pass. That’s a very important thing. And I feel like meeting in person is an important part of that process. I know it’s very hard for some passive investors to do, but it’s part of my formula. 5. If you look at the legal documents, which are very important, sometimes they may tell you a little bit if this operator is looking to make this a win win structure for investors, whether it’s preferred return, profit splits. I could tell you some examples of some rules where it’s very obvious that they’re not trying to make anything in favor of investors. They’re working at it to maximize the situation for themselves. When I see an operator not trying to get a balance between the investors and themselves as far as profits, I’m just not aligned with the operator properly from a philosophical perspective. Jeremy Roll [email protected] --- Support

Today we are interviewing an incredible woman, Heather Self, a multi-millionaire real estate investor that literally came from nothing. I am incredibly humbled to interview her, she was a single mother of FOUR when she started her journey into real estate investing. You can read this entire interview here: https://montecarlorei.com/how-a-single-mother-of-four-went-from-food-stamps-to-millionaire-real-estate-investor/ I am so excited that you are here to share with our audience how you started from zero, or maybe negative, why don't we get started with how you got into real estate?&nbsp; To make a long story short, otherwise we'll be here for three weeks, I'll start by saying that I got married directly out of high school. My first husband and I had our daughter and, shortly after that, I found out that my husband was using drugs. I then decided that my kids are not going to be raised like this, that this is not the lifestyle and things that I want them to know and be privy to. At the same time I also got an eviction notice on my apartment door. Keep in mind that I'm 18 years old at the time. My car was repossessed, and found out that my husband had robbed my boss at the time. I ended up losing that job too. Within a 48 hour period I had lost my job, my car, my apartment, and found out that my husband was on drugs and I was pregnant with my second child. Now I look at my calendar, and if it looks crazy for 48 hours, I don't worry about it. If I can handle all of that in 48 hours, I can do anything. Luckily, I had a wonderful, supportive family. And they told me to move back in.&nbsp; I was able to take that time and rebuild myself and figure out what I wanted out of life. And since I was pregnant, it was really difficult finding a job, and I was in the middle of all this turmoil, so what do you do? I got to the point where I didn't see any other way out but to receive welfare benefits, I had to get on food stamps, and they started offering some classes with the Welfare Reform Act. These were called Fresh Start classes in order to receive the benefit of $185 per month. The positive with that, though, is that they were offering these classes. I couldn't work at the time, so what better way to take time off and go get a different perspective. Maybe get a paradigm shift. I needed to get out of that because I knew that's not how I wanted to raise my family. Did you need a downpayment for that? You do need a down payment. You have to have very reasonable credit, which is also something that I was working to fix. I had already made up my mindset that I don't want to be that person that depends on somebody else for my independence, or for my children's future, or what I'm going be able to offer. That was the first time that I said "This is my responsibility and my responsibility alone to get out here and make this happen". You have to have a job for a good amount of time. You have to have decent credit. You have to have a down payment and you make mortgage payments. It's not a free house. That's a big common misconception. It is something that you have to qualify for, and very few people qualify for that. In the summer of 2001, we started building and we moved in shortly after. Going through that process you start to see that all these choices that I felt were kind of stripped away, I now had control over. And that's what that program is able to do. And that's why I'm a contributor and a donor to it now. It's very important to my life's work and what I want to do. Heather Self www.heatherself.com [email protected] --- Support this podcast: <a...

In today's episode I go over how you can potentially lose 50% of the value of your property in one economic downturn. You could potentially lose less, you could potentially lose more, the point of this episode is to share with you the key points that make property values go down in a downturn. You can read this entire episode here: https://montecarlorei.com/how-you-can-lose-50-of-your-property-value-in-one-downturn-the-quadruple-whammy/ Let’s take an example of a commercial retail property that you purchased for 10 million dollars at a 5% cap rate. This means that that property is currently making $500,000 in NOI. Let’s say, for example, that this property has 25,000 square feet. You have now have a 10 million dollar property making $500,000 NOI. 1. In this great economy, the rents are higher. Let’s say you were getting $20 per square foot per year across the board on all of your 25,000 sf of property. 2. Your property is 100% leased. 3. The interest rates are low. When property prices are rising, that means that interest rates are decreasing and more people can buy more property. When interest rates are higher, you do not qualify for as big of a loan as when interest rates are low because you have a specific dollar amount to pay every month. 4. And that brings us full circle. When interest rates are low, you can buy more property. More people are buying properties and naturally cap rates compress, they get smaller and smaller. So that’s what brings us to the 5% cap rate that you bought this property for. Quadruple Whammy Gone Wrong – Economic Downturn Let’s say something pops in the economy. Here is what is going to happen to all these four bullet points that I just described. 1. Your rents are going to go down. Instead of leasing for $20 per square foot per year, let’s say that about 25% of the property is now renting at $16 per square foot per year because some leases are going to be long term. Therefore, 75% of your tenants are still going to be on the $20 per square foot per year lease. Now, we dropped to $16 per square foot per year just because people cannot afford the $20, and your neighbors are also charging $16/sf so you cannot charge more. The total net operating income on that property is now $475,000. Again, this is if you are 100% leased. 2. Vacancies are higher. You are going to get some vacancies in that property, and is going to take longer to get them filled. Let’s be conservative and have a 15% vacancy rate at that $475,000 that you are now making because you’re charging a little bit less rent. You’re now making $403,000 in NOI. Now that your property just lost almost $100,000 in that operating income, unfortunately everyone is selling, because nobody can afford their mortgage, because they bought at a super high price, and they don’t have enough rent income to pay for the mortgage. 3. Interest rates are up, and buyers can afford less “property”. 4. Cap rates are higher because it’s a buyer’s market. Let’s say that from a 5% cap rate, the market is now selling properties at an 8% cap rate. So that $403,000 net operating income divided by an 8% cap brings the value of your property to $5,037,500. You just lost five million dollars of property value. Let’s just let that sink in for a bit. Another important side of this coin is the potential lost income of not making an investment. Let’s say that you found a great deal back in 2016 that was bringing you 20% cash on cash return. At a $1,000,000 cash investment, you’d have lost $600,000 so far in three years (we’re currently in 2019)&nbsp; if you had not made the investment at that time. Subscribe to our newsletter here: https://montecarlorei.com/ --- Support this podcast: <a...

In this episode we learn about mobile home parks: why are they a good asset class to invest in, how do you go about analyzing a mobile home park, how do you get rent comps when there are no parks near you, and how to find these deals? We are interviewing Todd Sulzinger, founder of Blue Elm Investments. You can read this interview here: https://montecarlorei.com/how-to-invest-in-mobile-home-parks/ Why mobile home parks? I had always been intrigued by mobile homes, for one the returns are better than most other real estate assets. They’re very recession resistant. There’s definitely concerns now with what’s going to be happening in the economy in the future. And the mobile home park business is very resistant through any kind of recession movements in the economy. If you own your own mobile home, then you can often rent the pads themselves. In the markets that I look in, you get between one hundred and fifty and three hundred fifty dollars a month. If you don’t own your own home, but you’re renting a mobile home from a park owner like myself, you might be able to rent it for between $450 to $750-800 dollars. If somebody is looking for a place to live, that’s potentially less than an apartment or a single family home, then mobile home parks are one of the best choices they have. How do you go about finding deals in a market that is shrinking like the mobile home park market? My primary source has been through brokers. There are a few brokers out there that specialize in the mobile home park space, as well as other commercial brokers who periodically get listings for parks. I recently closed on a park in Georgia, and I found that one through a broker who specializes in mobile home parks. The mobile home park consultants that I work with have quite a bit of deal flow that crosses their desk. So I see a fair amount through them as well that have the potential to purchase. And recently I’ve also started to see more activity on the partnering front where I’ve seen quite a few other people putting deals together who are looking for people to partner with. They may have a park under contract and they’re looking for people to partner with to put deals together, and sometimes things come across my desk from that angle as well. How do you analyze a mobile home park? It’s a multi-step process. When I’m looking at potential acquisitions and bringing them through my funnel, I’ve a simple spreadsheet that I have created where when something looks like it might work. I plug it into the spreadsheet and take a look at the numbers to get a quick sense of whether it’s even worth pursuing further.&nbsp; If it looks like it is, I have a more detailed model that I put numbers into. You look at the amount of income that it’s generating. You then look at the last 12 months of income statement. What is the history of vacancies? What have the operating expenses been? Go through the due diligence process of visiting the park and seeing if there are any other infrastructure issues that might need to be taken care of. From there you take a look at the net operating income and the purchase price to see if this is something that will make sense for your investors. Can there be enough safety, in return and potential upside, that it’ll be attractive for me to bring to my investor group? Todd Sulzinger [email protected] www.blueelminvestments.com Subscribe to our newsletter: http://montecarlorei.com --- Support this podcast: <a...

Today we cover self storage lending, how long should you stabilize a property before refinancing, and the best kept secret is out: who is the best commercial lender in the world? We are interviewing Billy Brown, the Vice President of Business Development for Alternative Capital Solutions. You can read this full interview here: https://montecarlorei.com/loans-the-good-the-bad-and-the-ugly-self-storage-and-what-is-the-absolute-best-commercial-lender-part-2/ Self Storage Loans Did you know that SBA will lend on self storage? SBA has a lot of options for self storage if it's the right size. Even for ground up investments. What would be a typical loan size? Probably over a million. If you're going to do anything ground up on the self-storage, it's going to be over a million because the price of steel right now and the price of land. But you can get up to four years interest only. This is one where you come in and do some fun stuff where you go build it, lease it up, let it season a few years. Then once you have a couple of years tax returns, the property becomes more valuable because the NOI goes up and then you can do a cash out refinance. For how long should we stabilize the property until we do the refinance? I would start on the front end because sometimes I can even help you give me some tips on negotiating the financing because I love seller financing. The triplex we bought, as well as the office complex that we're buying is under land contract, also called seller financing. You can do some fun stuff with the seller financing. There are many strategies when you have seller financing, for the triplex that we bought, I negotiated a low interest rate of 4% and I negotiated 90 days before my first payment. And you'll justify by saying "I want to give you your price, but my term, and my terms are this: lower interest rate, 90 days before my first payment because I have to stabilize the property. I've to get tenants in there, I've to put a lot of money into this I don't have more money into it for somebody to back out. And I want a longer loan with a couple extensions built in. And they did it for me. You can also negotiate a limited recourse or non recourse. How long was the loan for? It really just depends on the terms that you’re negotiating. If you get decent terms, why would you want refinance? Most sellers want an in and out in six to twelve months. As a lender, we want to see 12 months of financials from the owner. The story also helps, and we can help with that as well. Many sellers, especially the mom and pop deals on self-storage, or multifamily, or smaller multifamily don’t have very good financials. They mix their personal expenses in with the deal, therefore, they can’t get the prices they want. So you can come in and say “I’ll give you your price, but under my terms”. But because you don’t have proper bookkeeping, I need at least a year, 18 months, two years, to go run the property professionally so I can go get a proper loan. I usually start at two years and negotiate down to one if needed. Typically you can get a decent lending after one year. Who is the absolute best commercial lender in the market? The seller. Why would a commercial lender like myself, and an investor, want to tell you “Go get seller financing”? Here’s a little secret: commercial lenders are much better at refinances than they are at purchases. Billy Brown www.billybrown.me www.altcapsolutions.com Subscribe to our newsletter here: http://montecarlorei.com ---...

Today we are learning what are the pros and cons of each asset class and their loans. In this post we are covering office, retail, and warehouses. You will also learn some strategies for selling your property, as well as how long you should account for getting a commercial loan. We are interviewing Billy Brown, the Vice President of Business Development for Alternative Capital Solutions. You can read this interview here: https://montecarlorei.com/commercial-lending-the-good-the-bad-and-the-ugly-office-retail-warehouse-part-1/ Let's go over three or four different types of loan options and the pros and cons of each one of them, it's important to know what the cons are so that all the investors can decide what is best for them and their business plan when they're purchasing a property. The first one is if you have a bunch of rentals, four, five, six of them, they've Fannie Mae, Freddie Mac lending on them and they're getting a little frustrated with how more difficult is becoming to go get that sixth or seventh one. And they're about to be what we call "Fannie and Freddie out". They may see that the cash flows are good. There's some equity in there that's lazy, and they want to access that. And there's a way to go do that. It's called cross-collateralization. What we then do is we take that into one loan and we can go up to 75% of the appraised value. And if it's big enough, then we can do what's called "non recourse lending". If it's not big enough, then we can go recourse lending. How many years are there for prepayment penalties, are they for the entirety of the loan? No, it's not like multifamily, the prepayments are usually limited to the first three or five years. Usually the first two are pretty heavy in the 5% range, and then it drops down significantly after that. So by year three or four, you're down to 1 or 2%. Office and Retail Loans This one is one of those asset classes that's under the radar and most people shy away from it, because the lending isn't as great as the multi-family world. And that's because the tenant determines what type of lending you can do, as well as the size of the loan. And the size of the loan matters, a $500,000 loan is actually harder to go get than a $5M loan. That's a little flip on the the idea of starting small and moving up. It's actually easier to get the bigger stuff. On the office, your tenants and the length of the lease will determine what type of loan you can get. Warehousing Loans Warehouses are the next best tenant because they typically stick around once they put in their $100,000-$200,000 equipment and they bolt it to the floor. Most of time they don't leave. They'll sign leases and they just keep on staying there because these guys like to work their hands, they're typically not business people so much and they just don't want to move. It's a pain in the rear to go get these things off the ground, bolted, and go find another place, especially warehouses. You can bundle the office, warehouse and retail, in general, in the same bucket as far as your lending options. Because it's all determined by the strength of the tenant. For newer investors, they're going to be a lot more conservative, and have a lower loan to value, versus the NNN larger corporate tenants. If you get a good deal, it's all on the buy. The lending becomes much easier. Billy Brown www.billybrown.me www.altcapsolutions.com Subscribe to our newsletter here: http://montecarlorei.com --- Support this podcast: <a...