How to Make Money as a Multifamily Syndicate

You may have heard of making money as a syndicate, but what is it? Well, essentially it’s a group of investors that use their resources in order to make bigger investments that they may not be able to do alone.  Like other investment models, there a lot of ways to make money when setting this up, since every syndication can be different.  Not all will leverage every revenue option, but some might even have their own, and the degree that they can does vary, and it’s up to you whether you want to craft your own or work with the ones listed here. But, ideally the less complicated the better, so keep that in mind when you’re choosing the different options to work in real estate syndication.

First, there are acquisition fees.  This is the successful closing of an asset, and it’s a small amount, like a commission, but it covers the sourcing deals, screening, and then managing from beginning to end.

There is also asset management fee, which is a management fee that’s a percentage of the revenues collected, and it’s a bit different from splitting profits, and generally, the role does oversee the operations such as property management.

You can also get refinance fees, and this involves working on refinancing the commercial property. For long-term types of holds, this is a regular type of occurrence, due to loans that end up maturing or face adjustments every 5-10 years.

The disposition fee is another one, and while few syndicates do buy and hold for the long run since most want an exist in the future.  Assets are regularly recycled in order to maximize the returns, and some syndicates are created for the sole reason of developing and flipping the commercial properties once they’ve been renovated and the performance has been decided.

There are also loan guarantor fees, and while commercial mortgage loans are mostly asset-based loans, there is a guarantor that’s signing off on the loan. These are the more experienced, and the better the credit, the better the loan term, and it essentially helps everyone, and the syndicator will get a risk-based fee for that.

Finally, you’ve got a profit split.  You can offer returns to the preferred ones to the first that you like.  You can put cash into the deal in this case.  It will be split either 70/30 or 90/10 in that case, and it’s essentially what you want to offer the partners will determine the split.

For multifamily properties, sometimes the user of a syndicate will help out in the future, and they are good for investing in properties since it involves less risk and more profit.  That way, you can get the most that you can out of this, and create a better, more rewarding result from this as well, and you should never sell yourself short, but also be competitive and don’t’ give in to greed as well, for you’ll see better returns in this way.

How to Create a Truly Passive Rental Income

Rental properties are an income-crating investment that will help with reaching goals of financial independence. With enough, you can quit your job and spend time with your family, travel, volunteer, or work at a not-super-high-paying job that you like. But, do they create truly passive income?

Well, the answer is not every month.  Sometimes, it can take a while to find the right tenants, and there might be maintenance issues, property emergencies, and also some repairs, and you may get bad tenants, and in that case, it’s definitely not the most passive income.

So how do you maximize the passiveness of your rentals? Well, read on to find out.

First of all, more cash flow means better options.  Your march towards being passive starts before you even get a property.  You must only invest in properties with a stronger cash flow because good cash flow comes with the option of getting a property manager that handles it.  If you advertise vacancies, screen the tenants, sign the leases, get the rent, and handle repairs, and you can get that handled by someone else if you can afford it.  A 1000/month rental that only nets 200 dollars in cash flow won’t cut it, and your entire cash flow would go towards the manager, so you won’t’ have repair costs, accounting costs, vacancies, and the like.

It means a whole lot more if you have your work invested upfront, and a more difficult hunt to get properties with an amazing cash flow. Be sure to calculate the estimated annual repair costs and the capital expenses, the vacancy rates, property management, and accounting fees, and other overlooked costs. If the property has good cash flow, then go for it.

Also, avoid the slums. The low-end housing often means low-end tenants, and they will be difficult, time-sucking, won’t pay rent on time, if at all, and you’ll have to deal with them in court, and they won’t be treating your property right.  Affordable housing might seem like a good idea, but you’ll be branded by others as a “slumlord.” Do you want that?  Nope.  Instead, go towards middle-class housing where you want the rental income passive instead of being a mess.

Finally, screen your previous tenants, and make sure you really screen them. they’re a by-product of leasing tenants who are good, and they pay their rent every month. Finding good ones does mean getting a little extreme, whether it be credit reports, criminal checks, also run eviction history reports, and call up their employer or direct supervisor, to find out what type of people they are.  You should, if they exaggerate their income, not least to them. If they lie about the little stuff, they can’t be trusted with the bigger issues.  Do spend time screening your tenants.

Being a good landlord involves doing the right thing, and if you want to create a truly passive income that will help you, this is the way to do it.

The Top Tools to Take Advantage of When it comes to Tax Season in Real Estate

Do you want to take advantage of all the tax savings that are available to investors underneath the new tax reform?  Here, we’ll talk about some tax strategies that you should consider in this current year.

First, look at overlooked deductions. As investors, we are good at deducting our rental related expenses including interest, taxes, and management fees. Many often overlook the legitimate deductions not specific to the property, such as the business related expenses, the business travel costs, meals, education expenses, membership costs, and even the real estate books.  These can help you save huge tax dollars, so don’t’ forget them!

You should also look at the fact that interest deduction was taken away from the related HELOC on primary homes, so if you took out a primary home HELOC and used the money for investments, you can still deduct the interest out, especially against the rental or flip incomes.  You should talk with the tax advisor and make sure that you do track and deduct these expenses. 

Another pitfall that happens underneath this new tax reform is the limit that can be deducted for property taxes and mortgage interest on the main homes. These limitations don’t apply to investments, so if you’re a landlord or a flipper, you can still fully deduct the interest and taxes from the investment properties.

The new tax reform did provide a bonus depreciation in 2019, which means that if you’re an investor that’s buying furniture, appliances, laptops, equipment, or other assets, you can write this off 100% of the costs immediately, rather than just taking depreciation over the years.  Bonus depreciation can be used with or without a legal entity, and it can be used with new or used types of assets. 

There is also the tax free treatment that is new for wholesalers, flippers, real estate brokers, and syndicators, and even real estate agents might be eligible for a 20% tax-free treatment that comes with this new reform, which means that if you have an eligible taxable income that is 100 dollars, the 20 dollars on that is completely tax free, so you only have to pay on the remaining 80 or so.

Finally, look at safe harbor zones.  You may wonder what landlords and investors in the short-term rentals might be different from those doing the BRRRR strategy.  Those do also have the ability to be 20% tax free.  The safe harbor rules are there for them to take advantage of, so definitely check out to see if you qualify for that, and act accordingly.

When it comes to taxes, you definitely want to take advantage of these in the realm of real estate, and look into as well what you’re getting out of each of these. It will make a world of a difference in the overall future of the real estate market that you have, and some other aspects as well too.

Five Ways to Buy a House with Bad Credit

One question commonly asked is if you can get a house with bad credit. While the average score is 669-699 depending on which credit report does get used, the numbers still steadily rise, and a lot of people have less than 600. this means that many are unable to obtain a mortgage, which makes buying a house or any investing a task. So can you? Yes, you can do it, but it’s best if you don’t’ do it right away.

Bad credit happens because of medical bills, or identity theft, or maybe the person lost their job and had to miss payments. The recession in 2007 left millions in this position, but some are caused by stupidity, especially with credit cards. Lots of times, people obsess over luxuries and have caused many people to lose good credit and wind up in bad spots. If you’re in the poor range, you should look to see if it’s a symptom of a bigger issue. If it’s a symptom of selfishness, greed, impatience, or other bad habits, it’s definitely something to watch and look into. If it was suddenly boosted way more with paying off debts, sometimes these same people fall into debt, so you need to look at how you handle money, and if you can’t, investing is probably not for you.

There are loans you can get, with some of the credit scores being about 580 or higher, but you may need to pay a bit more on the downpayment.

If you’re still wanting to do this with bad credit and know how to manage this, first you can try partnerships, which help to fill the void. It helps benefit others in a mutual sense. However, be careful, since the wrong person can ruin you.

Seller financing is another option. This is where the seller finances the property, rather than making you get a loan. They allow you to make monthly payments until it’s paid off, or the terms of the loan ends. Sellers will not ask for a credit score, but it can be used to own the property free and clear, without a mortgage. It’s a win-win for everyone.

You should also look at hard money lenders, which are those that lend money at higher interest rates. They can be high, with less than two year terms, and they charge large fees, but they’re great for flippers that want to get in and out of it, and they don’t look at credit scores.

Private money lenders are another. They are not pros, but rather they want to diversify their loans, and it can be pretty much anyone. You need a relationship though.

Finally, consider wholesaling, which is finding deals, putting them under a contract, then flipping to a higher amount, without using their own money. But, it is a job, and it’s hard.

It is possible to finance a place without credit, but it definitely is not the ideal path for you.

Tips to Succeed as a New Landlord

Becoming a landlord allows you to have a steady stream of income and it does take time to be successful. So, if you’re not investing and doing the work, you’re going to have issues. Another big thing is being a good landlord, which means maintaining and repairing the place itself, finding tenants you can trust, and handling any issues or complaints that come up or hiring someone else.

Investing in real estate does have the payoff, and about 36% of Americans are headed by renters, and the number has increased. The rental rates have increased, so it’s a worthwhile investment, but you need to make sure you do it right.

The first thing you need to do is find tenants that are trustworthy, since these are people living and maintaining the property, ensuring that the renting is to your satisfaction for the long term. You need to look for more than just a full application and someone who is friendly, and you should do a background check, credit report, and the rental history of the place. Any tenant that is unwilling to complete this is a red flag. You should make sure to follow the fair credit reporting act and make sure to adhere to written tenant screening criteria policy to ensure that the process is fair and straight, and to ensure that you don’t forget any crucial steps within this process.

Next, understand the rental and housing laws, and stay informed about this. You should know the fair housing act for anti-discrimination of renters, and the implications at all levels. Citing and housing laws are likely to set the standard. You can hire a property manager to help you understand, or your local landlord association.

Next schedule property inspections. Do this from time to time to keep issues from becoming a bigger problem, even before the tenant reports this. Some of the best tenants that are there have never been homeowners, but you should schedule both move-in and move-out inspections during a turnover, and make note of damages that should be addressed. One of the reasons people are worried to go into land lording is expenses, but doing these frequently helps.

As always, make sure to follow through on late fees. If the tenant slips, you should follow through and understand that the policies are strict, and help ensure they won’t make the mistake in the future.

Finally, protect yourself. You should make sure that you verify the insurance to cover the landlord situations before you move, and you have the appropriate amount of insurance, liability insurance, or whatever you need.

Having these five tips in place will make you the best landlord that you can be, and you can protect yourself from negligence and damage that might happen on your property. By working on this, you can encourage benefits that will protect the possessions, but also any issues that come from this, and you’ll be able to keep on top of whatever’s needed.

Why You Should Invest over Stocks

If you’re investing and need some options, you may wonder if real estate is better than stocks. The answer is yes, and there are a few reasons for that. Here, we’ll talk about the different reasons for that. There are a couple of really big parts of this that put investing over other types of options.

First, you have a lot more control over the investment. When it comes to the stock market, you could be as informed as possible, and there is still a lot that’s not super controllable. For example, with home investing, you may realize that the activities are pretty straightforward, including finding the deals, rehabbing different properties and locating tenants that are good. Along with that, if you’re able to execute actions that can benefit how the investment does make money, you’ll have way more control. In contrast, the stock market involves putting money in and then choosing what to do with it. But, the market does ebb and flow. There are times where your investment will make you a ton of money, and other times where it does otherwise. So, if you don’t like to play with uncontrolled variables, then this is the better option.

Then, there is the fact that passive investors may have collateral. Having this in the form of owning a property, or even a chunk of property does help. This also applies to if you’re in the lending business. What that means is, you have collateral in the form of a loan. If you’re smart with this, you can control the investment of this, unlike within stocks where you don’t have control over this, and if you lose this, you lose collateral completely.

The biggest advantage, however, is that it is much easier, to begin with. When it comes to stocks, you can do day trading, options trading, or the like. While that might not seem like a lot, her is a lot that needs to be done in order to fully understand and tackle options trading. It’s a huge subject and not something that you should take lightly. In that case, it’s easier for people t use investing in real estate, since it’s much easier to handle. You’ll be able to, with this, create a better, more understanding situation, and in turn, you can create an investment that will help, and one that makes a world of a difference in the future.

so yes, if you take the time to work on investments, you’ll get results. You’ll be able to, with all of this, create the investment that you want to work on, and the one that you can trust. It makes a big impact on the overall state of your ability to handle a lot of the different aspects of life, and it’s important to understand why you should consider options trading as not an easy subject, and home investment and rentals much easier to handle as a beginner and veteran investor too.

What is Leverage

Leverage is a really cool concept to use with your investments, and it’s an important concept that can be used to help change your business. Understanding where your cash flow comes in is quite important, so understanding this is definitely a big part of leverage.

There are three key pieces of data to consider here. First, you’ve got the cap rate of investment, which is 10% generally.  Then, you want to look at the loan constant, which is the ratio in finance to signify the relationship between the loan and loan payments. Before calculators and computers, this was a constant that was used to determine the monthly payments for was used to take the total loan payments and dividing it by the principal balance on there.  You should from here use this to determine leverage.

Leverage is used to indicate the return that you’re getting or losing out on on the capital that you’re borrowing for the loan. Leverage is defined as your cap rate minus the loan constant.

With this, you can essentially determine the cash flow of any situation, and if you need this for learning about any property or loan, this is something that you should consider learning.

So let’s take for example that you want to get a property with no loan, and you can use the cap rate to determine the NOI, which is the same as the cash flow if there is no loan. Which is essentially the price times the cap, if you’re getting a property for say 900,000 dollars, and the cap rate is 10$, then the NOI is going to be 90 grand essentially.

But what if you don’t realize that the cap rate applies to any cash you contribute, even if it’s not the full, the same rules apply.  Essentially, what this means is that if you put down say 500 grand on a property, not the full 900, and you then use the cap rate, then you’ll get the 50,000 on that as the cash flow.

Leverage also applies to borrowed funds, and they are either working for you or against you. When borrowed, it’s called positive leverage if it generates extra cash. With positive, borrowing money increases returns, whereas when it doesn’t create cash flow, it’s negative leverage, and decreases returns. So how do you know? Well, you can calculate the leverage value at this point. =if the value is positive, you’ll get positive leverage, if it’s negative, you’ve got leverage.

The cap rate tells you how much it’s earning, the loan constant tells you how much borrowed funds are, and how much it’s generating for the lender.  If the cap rate is higher than the loan constant, the lender isn’t taking all the returns, and essentially, the extra is what you get from this.  you’ll notice this, so you want to make sure that you look at the leverage of this before you begin. it’s important and can determine a lot of loan values.

Dumb mistakes Buy and hold Investors Make

Professional long-term investors do tend to make the occasional mistake, but there are some errors that are bigger than others, and you should learn from your mistakes. You may have never made mistakes so far, but here are the three dumbest mistakes you can make as a buy and hold investor.

First, you’ve got overpaying, which is essentially a big emphasis on this. You flip or wholesale, or are successful, you’ll want to get great deals that make a lot of profit.

But, even if you’re a long term investor, you shouldn’t pay more than you should, since it means paying high mortgage rates, and it can cause serious danger to the cash flow. Do take the time to learn the best ways to buy low, and get the best deals, and by imitating the clever tactics, you’ll find yourself creating some equity on the investment.

Next, one of the biggest mistakes to make is purchasing a rental property with minimal or negative cash flow based on their hopes that the property will appreciate. This is a very risky move, since the market tends to fluctuate quickly, and it’s impossible to predict, so you shouldn’t purchase a property without any profit to it.  You should get something below market value to add to the value, and you should get a property that has a positive cash flow since it allows you to improve and bring in income since you can see it grow as well. You should make sure that if you are investing for cash flow you don’t worry about the value of the home, but instead, you should look at the cash flow and see whether the property is selling or not. Real estate investing happens over a long period of time, so you shouldn’t immediately take losses if you notice them.

The final, and biggest one is not treating landlording as a business.

This may seem like a surprise to some, but it is a business, and in order to keep your assets performing at the highest level, you need to maintain the upkeep of the property, the tenant relations, and the finances, so while a majority think that it is totally passive, it’s not.  You may think that it’s just handshakes, emotion choices, and loose regulations, you need to remember that this is indeed a business, and you should treat it as such if you want to get some great results from this.

So what this means for you, is that if you don’t want to make mistakes, keep all of these in mind. Now, you’ve got to remember that nobody is perfect. Not a single soul can sit here and say that they are perfect in this, but the thing is, you’re not going to really get anywhere with this if you’re just treating it passive, and instead, you need to be smart with your decisions and make fitting ones that you can utilize and create for a brighter, better future.

How to Prepare for Rental Property closings

Real estate investors don’t talk enough about what you need to do in order to be prepared for closings on rentals. Some go smoothly, others awfully. There are a few things that you’ll want to be prepared for, and here, we’ll discuss that.

First, you should have the titles and legal instances of this all put together. If you know that there is a lien that hasn’t been touched on or talked about, this can be a huge issue for you. There are times when people don’t look at title companies, and instead, they just continue, find an old lien, and then they’re hit, and if you don’t have insurance, this is a problem. So get all of your legal eggs into a basket, and you’ll be much better off.

Then there are tenants.  Tenants are a big part of this, for they can make or break the situation. If you have good tenants, you should be fine, but if you have no tenants, you may end up bringing any old person, in, and in turn, that can end up creating a big issue for you in the future. If you’re looking to fix that mess, then you should definitely have it done before you close.

Know your loans. If you’re not ready for this, you’ll be in hot water. You should look at the mortgage payment, what it entails, and anything regarding that. Having an idea on your loans will allow for you to have a better, more rewarding instance.

Finally, look at your insurance.  Insurance is another big part, and if you don’t have insurance on the home, you don’t have renter’s insurance for tenants or the like, this is a huge issue.  You should have this all in place, because not having that there can mean curtains for your business. This is how people get into legal trouble when getting into closing, and it’s how you’ll end up having to pay a lot out of pocket.

So, if you’re someone who is trying their best to ensure that they get everything sorted out before you close, then it’s best that you sit down, and you make a checklist on this, especially before you buy your rentals. By doing this, you’ll be able to easily create a better atmosphere for renting out your properties, and in turn, you’ll be able to sort this out quite easily. it’s quite easy, and you’ll be much better off.

Working on this is integral, and you need to, with every step of the way, ensure that you have this in place. There are far too many times people have done this, and you’ll be able to, with this, create a better, more rewarding scenario for your business, and in turn, create a wonderful result from it as well. Do this, and you’ll be able to create a better and happier rental situation for yourself, and for others that you have as well for you too.

The One Simple Habit Wealthy People Have

In order to be successful in investing, you need to do the right actions, since one wrong move could put you back years, and rack up the costs. There are two ways of learning what works and what doesn’t. In order to do anything great, chances are others have done it, and they might make the same mistakes you will, and the biggest thing about successful people is they will tell you how they did it, including writing books, blogging, and speeches.

Reading is the secret to success, and if you’re going into investing, the difference between wealthy and successful inventors and otherwise is that they read books, they’ll give you more knowledge. If you read two books a month, you’ll read 24 books a year. If every single book denotes 10 years of the author’s knowledge, you’ll get 240 years of that. In 4 years, over 1000, and if you want, there are free books.

88% of wealthy people read for 30 minutes minimally a day, and 63% of the wealthy do audiobooks. 85% of the wealthy people read a self-improvement book or two of the day.

But how can you make reading possible. Well, you can always put a chapter book in the bathroom to read. Trust me, those few minutes can be used for something else.

Car reading is possible too. This is usually done in the form of audiobooks, and the cool thing is, you can get a ton of different audiobooks that are available, and they can be done during your work commute.

Making time before you go to work is another great thing. If you do it in the morning, it can get you more refreshed and restored, and you can spend the rest f the day mulling over and trying to better understand what you learn.

Really, even between appointments, getting reading done is very important, and you’ll be able to, with this, create a better and more rewarding experience for you. After all, do you spend a lot of time perusing social media instead of doing something productive? We are all guilty of it, and if you’re looking to really improve yourself, and get a better experience out of your investments, sometimes hearing an expert will help you. Lots of investors spend their day reading. In fact, Warren Buffet, one of the richest men in the world, actually spends about 80% of his day reading. In our digital age, we tend to brush off reading as something that you usually will do later and brush off. But reading can help you create a better and more rewarding experience for you, and in turn, you’ll be able to have a better, more wonderful experience. If you’re looking to truly get ready, and to make it so that you’re able to be better than you were yesterday, you need to start reading. It’s simple to begin with, but it does take a little bit to begin.