Liz Faircloth, The Real Estate InvestHER
Step 1: Map out where you want to go: Determine your short-term (1 year) and long-term (3 and 5 year) goals. Define an overall vision.
Step 2: Take a personal inventory: Spend half a day figuring out everything you bring to the table from a credit (asset and liabilities), time, experience, skills, personality, and leadership perspective.
Step 3. Determine WHO you need to meet your goals and vision: Based on your business model, figure out the major roles you need to fill. Based on what you bring to the table, determine which roles you will fill and which roles you need a team member to fill
Step 4. Find people to gain alignment and diversity: The biggest mistake when building a team is lack of alignment (values, goals, expectations, entrepreneurial spirit) and lack of diversity (personality, risk, tolerance, skill set, experience). Leverage personality assessments to identify hires who complement your skills and gaps, and who are in complete alignment with your value.
John Change, Marcus and Millichap
Vaccines are the key to the economic recovery: The amount of money in money market mutual funds and saving deposits are very high. There is the potential for $4.5 trillion to enter the economy once things are “back to normal” after the roll-out of the COVID vaccine.
Job growth and COVID: A record number of jobs were lost as 10 years worth of job growth were wiped out – 22M jobs. About half those jobs have come back. Hotels and restaurants were hit the worst and have yet to recover.
Retail and COVID: Retail was a mixed bag. It took a hit at the onset of the pandemic, hit a high after economic stimulus and has started dropping again. Restaurants, bars, electronic, and apparel sales were hit the hardest while home repairs and internet sales are at an all-time high.
Huge GDP growth forecasts: GDP is forecasted to grow between 5% and as high as 7.5% in 2021, which would be a 30+ year high.
Top myths of the pandemic
2021 Trends
Jillian Helman, RealtyMogul
Lesson #1. Play defense before an economic crisis, not during a crisis: Three things to do during economic expansion to prepare for economic recessions: underwrite well and don’t do deals that don’t met your underwriting criteria; have a strong property management team in place; have open conversations with your lenders to ensure they will pick up your call during a recession.
Lesson #2. The proforma is always wrong: When creating your proforma for a new opportunity, have a minimum contingency budget of at least 10%, scale back the number of units you expect to renovate and lease, assume an exit cap rate that is 1% greater than cap rate at purchase, and increase vacancy and bad debt to stress test.
Lesson #3. Take a breath and be deliberate: Jillian’s top priorities are the health and safety of residents and team, keeping occupancy up, and shoring up cash reserves. This involved taking a deep breathe and deliberating to determine how to best focus on these priorities. She decided to halt renovations, rent increases, and all nonessential repairs.
Lesson #4. Don’t be afraid to innovate: For example, Jillian began using virtual, self-guided tours.
Lesson #5. Do experiments and test the market: In the example above where Jillian experimented with virtual tours, the conversion rate was higher than in-person tours with a leasing agent. Since the experiment works, she doubled down.
Lesson #6. Be a stellar communicator: Provide detailed monthly updates to investors, communicate what you are proactively doing, and be available and receptive to investors.
Lesson #7. Take a position: During COVID, this started by overcoming fear. Then, Jillian took an offensive position, assumed the world wasn’t ending, that the world would recover, and that data supported that investing still made sense.
What makes her afraid?
Where does she see opportunity?
Trevor McGregor, Trevor McGregor International
Your mind is like a fertile garden. Whatever you plant, the soil will return, and your thoughts are the seeds. Plant positive powerful thoughts. To avoid too many weeks growing, you must stand guard at the door of your mind.
The two things that happen during the prime years of your life: The prime years of your life are between 25 to 65 years old. This is when you have the most opportunity as well as when the most regrets are formed.
TFEMAR: a thought turns into a feeling; feeling into an emotion; emotion into motivation; motivation to take an action; the action has a result. Therefore, your thoughts equals your results.
The 4S Success Formula: To be successful, you need to be in the right state, have the right story, the right strategy, and the right stands. Your state is your physiology, focus, and language. Your story is your identity – you are either a victim or a victor. Your strategy should be based on a character trait integration – what would so-and-so successful person do?
Brad Sumrok, Apartment Investor Mastery
2020 performance highlights
Jobs and population growth are the top two economic factors that make multifamily tick: Migration growth is important but the market must also be landlord and business friendly
Brad Sumrok cost process for double digit returns
How to select the right target market
2021 Forecast
In one year from now, if you waited, you will regret it.
Karlton Dennis, Karla Dennis and Associates
The two kinds of tax payers you don’t want to be
Four simple steps to following the tax code
Most common tax nuances
How the wealthy stay in the 0% to 15% tax bracket: organization and a strategic tax plan.
Travis Watts, Ashcroft Capital
What is financial freedom? When your passive income exceeds your lifestyle expenses.
What is the right investment criteria? There is no right or wrong investment criteria. What matters are your goals and your risk tolerance.
Difference between passive and active investing
John Burns, Burns Real Estate Consulting
High demand:
Low supply:
High demand + low supply = 2021 housing boom: John says we are clearly in an upcycle.
Hunter Thompson, Asym Capital
Traditional real estate partnership: Capital partner and operating partner form management LLC that purchases real estate
Co-GP model: multiple capital partners and operating partner form management LLC that purchases RE – SEC doesn’t like, especially with increasing number of capital partners
SPV/Fund of Funds:
Why would anyone invest through an SPV instead of investing directly with an operator?
Preferential treatment of SPVs
Defining your culture: Start with your why. why do you do what you do? Why do you go to work in the morning? Then, transcribe your why into a one or two sentence mission statement to inspire you and your team to show up.
Next is to know where you are going and what the end state looks like. This is your vision – what does success look like to you.
Third is to define your values. These are the behaviors you want to see in your organization.
Last is to avoid the say-do gap. Be care that you don’t say one thing and do another, because then your culture isn’t believable.
Developing your plan: Understand what you are going before you do it, but set a time limit. A good rule of thumb is to understand and education yourself for 90 days, develop a plan for 90 days, then go out and take action.
A good strategic plan includes three goals, three to five objectives, and multiple key results over a three year period.
Assemble your team: First, understand your strengths and weaknesses. This is best accomplished by asking your friends, and especially your spouse. Then, find people who fulfill your weaknesses.
When hiring people, focus on their character more than their competencies. You can teach competencies but you cannot teach character. Then, focus on experience but understand their track record to ensure they were successful because of skill and not luck.
Monick Halm, Real Estate Investor Goddess
What is industrial real estate: all land and buildings which accommodate industrial activities
Why consider industrial real estate
What is the current state of the market for industrial real estate:
Lance Pederson, Verivest
Having a fund is a more efficient way to capitalize.
Being an operator is like owning a trucking company and having to own a refinery create your own fuel.
Institutional capital is the equivalent of owning a job
There’s a reason why you’re seeing sponsors with 30+ year track records raising capital on crowdfunding websites because the cost of capital is much cheaper
Create Class A and Class B shares to attract HNWI, SPVs, institutional investors, etc.
Institutional readiness checklist
If you focus on building your HNWI base, the rest well come.
Joe Fairless, Ashcroft Capital
Protect against biggest liability you’re currently not paying enough attention to: For 99% of syndicators, compliance. Most securities attorneys are really good at answering the questions you ask, but your are still at risk when you aren’t asking the right questions. The solution is to hire a an in-house compliance team member and acquire the proper insurance.
Bring the best out of your team: create a single KPI for each team member or a one sentence description of what their roles is so they know exactly what is expected of them and to motivate them to exceed their KPI for a bonus.
Enjoy better deal flow, deliver better returns, and create more sanity: create a fund instead of single asset purchases. It increases deal flow because you can be more flexible with the types of assets you target. It generates better returns because you can commingle capital within a fund, so there is less ideal capital.
Get better results on your thought leadership platform and in your commercial real estate business: Once your thought leadership platform matures, transition it to other people. They can focus on growing the brand and you can focus on growing the investing business.
The success paradox: The more successful you become in business, the less likely you will receive constructive criticism from your team members. The solution is to find three people in your circle who will provide you with honest feedback. Also, identify an event that didn’t go according to plan and think about how you were responsible for it taking place.
Hunter Thompson, Asym Capital; Neal Bawa, Grocapitus Investments; John Chang, Marcus and Millichap; Ryan Smith, Elevation Capital Group
Winner – Interest rates will not be higher in 24 months
Losers – Interest rates will be higher in 24 months
Robert Calhoun, CoStar
The spring leasing season wasn’t lost: It was just pushed back later into the year. We lost 61k units in demand between March and June 2020 and gained 69k units in demand between July to November.
Demand in the suburbs are strong while multifamily continues to underperform in downtown areas
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.