Real Estate Investors Association of Greater Cincinnati

No matter where you live, winter storms can wreak havoc on property. Taking action before and after storms can reduce the chances of serious damage to homes and lives.

Before the storm

• Outdoor furniture, grills, toys, birdbaths and the like should be stored away. Secure and anchor large objects such as prefab sheds and play structures.
• Trees can look like they’re in good shape, but may be diseased or have other problems that can cause them to fail unexpectedly. Trees stressed by drought or rooted in saturated soil can be more susceptible to problems when storms hit.
• Local ordinances may require that trees be trimmed a minimum distance from driveways, structures and power lines. For safety’s sake, a qualified professional should perform this work.
• Use binoculars to check your roof for missing or damaged shingles. Flying shingles can damage structures, while missing shingles can allow water to leak into the home. Any roofing repairs should be done by licensed professionals to ensure the work is done safely and correctly.

After the storm

• Look for downed or sagging power lines and report them immediately to your utility company. Always assume a downed power line is live, and never approach or touch it.
• Check around for fallen branches or other damage to trees and structures. This is also a good time to re-inspect the roof for storm damage; any repairs should be made as soon as possible to prevent further problems.
• Note any areas where water may have i ... Read More…

There are 3 figures that go hand-in-hand when trying to determine a commercial/apartment property's value. They are; Net Operating Income (NOI), Cap Rate (CR) and Asking Price or Purchase Price (PP). If you know 2 of the figures you can always figure out the third.

I will be talking about the NOI of a property. More specifically, how NOI is calculated as it relates to an apartment building.

We are going to start with a simplified version of how to arrive at the NOI of a property and then expand each category. Basically, the formula is: Income -Expenses (other than debt service) = Net Operating Income.

INCOME:

First thing, I determine the income generated by the property. I start with the Gross Potential Rental Income (GPI) or Scheduled Gross Rental Income (SGI). Both terms are used interchangeably within the industry. The GPI assumes that all apartments (100%) are rented at full market value even if some are actually vacant or discounted.

For our example, I will use a 30 unit apartment building that has all 2 bedroom, 1 bathroom units with market rents of $600 per month each. Therefore, the GPI of this complex as an annual figure will be: 30 units x $600/month = $18,000/month x 12 months = $216,000 per year of Gross Potential Income.

The second step in the equation is to determine the vacancy of the property, both physical and economic. If you have a 30 unit complex and 3 units are vacant, the vacancy is 10% (3/30 = .1 or 10%). I will not be calculating economic vacancy in this ... Read More…

As you can imagine, I meet a LOT of real estate entrepreneurs every year.

And something that I’ve noticed about many of you, including newbies and old pros, is an energy you give off that I can only describe as clenched-upness.

Even folks who are excited, on the surface, about starting or expanding their real estate businesses are often simultaneously radiating a sort of anxiety about the whole thing.

Yes, I understand that what I (and your sellers and buyers and private lenders, by the way) am really feeling is your underlying fear.

Whether it’s a fear that you’re being sold a bill of goods by all the folks (like myself) who tell you that there’s unimaginable money in real estate, or a fear that it works but you can’t do it, or a fear that you WILL succeed and then be judged because you have money and your friends and family don’t, it’s definitely there—at least in most people that I meet.

But there are others, and some of them ARE brand new, who are JUST excited, because (sometimes in the face of all evidence) they seem to have total confidence that, ultimately, everything will work out for them. And guess what? In a MUCH higher percentage of cases than with the hand-wringers, it does.

And no, I’m not going to now exhort you to go out and find, or fake, some confidence. That’s silly, and there’s nothing you can do to get it if you don’t have it OTHER THAN go out and get some deals under your belt.

Instead, I ... Read More…

As a hard money lender, I see a lot of closing statements (aka HUDs) from many title companies. I’ve noticed an annoying trend that is also disturbing.

When lending money to a real estate investor, I send the title company my very detailed and specific lender requirements – one of those being a basic Lender’s Title Insurance policy from a well-rated underwriting company. In most cases, I do not require additional Insurance endorsements, and I never require a closing protection letter.

In fact, part of my title order says: “Do not add endorsements unless specifically requested. Do not issue a closing protection letter.” Yet, several title companies still try to include them. Sometimes, many of them.

Like this one, from an actual preliminary HUD:

• Closing/Settlement Fee to [xxxxxxx]  Title & Escrow Co. $295.00
• Courier/Shipping & Handling to [xxxxxxx]  Title & Escrow Co., $25.00
• Search & Exam to [xxxxxxx]  Title & Escrow Co.  $100.00
• Binder Fee to [xxxxxxx]  Title & Escrow Co.  $50.00
• Wire Fee to [xxxxxxx] Title & Escrow Co.  $50.00
• Lender’s Title Insurance (REISSUE RATE) to [xxxxxxx]  Title & Escrow Co.  $125.00

• OH ALTA Endorsement (Survey) to [xxxxxxx] Title & Escrow Co. $100.00
• OH ALTA Endorsement (Environmental Protection Lien) [xxxxxxx] Title & Escrow Co. $50.00
• OH ALTA Endorsement (Restrictions, Mineral) to [xxxxxxx ... Read More…

Let’s face it: making deals complicates our lives.  

When we first become involved in real estate, buying a property can be very anxiety-provoking: I mean, really, even though we’ve done all our due diligence and run the numbers 15 different ways and talked to our favorite mentor about it and it STILL looks like a great deal, how do we ever REALLY know? And this leads to self-esteem problems, as we’re constantly second-guessing ourselves and berating ourselves over our lack of confidence. 

And even for seasoned investors, taking on a new deal is stressful—an accepted offer means that we have to find a buyer, or start a rehab, or put an ad in the paper to get a tenant. Plus, there’s the additional bookkeeping when the checks roll in, and, of course, the taxes to pay on the profit at the end of the year… 

Since stress and anxiety lead to psychological and medical conditions, including high blood pressure, overeating, bad hair days, fear of success, and a whole host of others, making deals should obviously be avoided at any cost. So, I think it’s important, for the sake of our own health and well-being, that we all learn how to NOT to get trapped into making a deal. Here are some suggestions: 

1. Make Sure You Know EVERYTHING Before You Do ANYTHING. You can avoid making deals for years on end simply by repeating the mantra, “I don’t know enough yet.” You’ll get the fun of attend ... Read More…

There are 3 figures that go hand-in-hand when trying to determine a commercial/apartment property's value. They are; Net Operating Income (NOI), Cap Rate (CR) and Asking Price or Purchase Price (PP). If you know 2 of the figures you can always figure out the third.

Here I'll be talking about the Cap Rate of a property. More specifically, how the Cap Rate works in conjunction with the Net Operating Income (NOI).

Let’s get started. First off, Cap Rate is short for Capitalization Rate. In short, Cap Rate is, “The process of converting anticipated future income into present value” according to the American Heritage Dictionary. It’s also your rate of return if you bought your property using all cash.

Here’s an example: If I purchase an Apartment Complex for $1M and it generates a Net Operating Income at the end of 1 year in the amount of $100K, then my Cap Rate is 10%. The formula for Cap Rate is:

CR = NOI / PP

Cap Rate (CR) = Net Operating Income (NOI) divided by the Purchase Price (PP) of the complex. Therefore, if we plug in these numbers: $100,000 / $1,000,000 = .1 or 10%. If this same complex generated $90K in NOI, its Cap Rate would be $90K / $1M = .09 or 9%. Lower income, lower Cap Rate, but the Purchase Price stayed the same.

Knowing the Cap Rate allows us to accomplish several things. First, it allows us to determine the value of the property. Second, it allows us to compare our complex to other similar complexes in the same geographical area ... Read More…

We all love control.

I have a six-year-old daughter who constantly pushes the boundaries of her world. Whether it’s brushing her teeth or buckling her car seat, she loves to feel in control.

Isn’t this the case with you, too?

Imagine you're right about to take out the garbage unprompted... and then your spouse tells you to take it out before you even get a chance to. Now you're dropping the trash bag on the floor and telling your spouse to do it because now it is no longer your idea... it’s theirs. 

How about when it comes to your money? Do you want to feel in control of your cash?

Every human has some emotional tie to money. It’s frustrating and stressful when it feels like your money goes in one door only to go right out that same door the next day. How about those gas prices, huh? Or, as a real estate investor, what about those interest rates? Completely out of your control.

Let me ask you this: when you jumped into real estate or entrepreneurship, did you say to yourself, “The money part will just work itself out as long as I keep bringing money in?” Maybe you’re doing great, or maybe you’re feeling stuck in the grind, living deal-to-deal, and wondering where all your cash is going.

In this guide, I am going to leave you with a manageable amount of complicated financial mumbo-jumbo. 

As a fellow real estate investor and business owner who helps entrepreneurs become more profitable, I'll show you real ... Read More…

Whether you are a brand-new investor or have been buying real estate for decades, it’s important to stay flexible while focusing on your overall goals.

Why flexible? Because the market is constantly changing. When the market changes, new strategies/opportunities come to the forefront. Of course, if you have been in this game for a while, you know nothing is new. Old strategies are just being recycled with a new flair. Remember bell bottoms and paisley patterns from the 70s? They are back, baby! 

So what is happening now? Affordability is the rallying cry. Gen Z and Millenials move into their own “pad,” as Airbnb, VRBO, and short-term rentals become increasingly popular, the housing supply is undoubtedly tighter. Prices are rising and sometimes out of reach. 

It’s just supply and demand. As demand increases, supply decreases, and prices for rent and purchasing go up. This is good news for builders and re-developers, especially in urban areas where older stock can be renovated and reconstructed to meet the needs of young people who enjoy the amenities of downtown living.

However, it will take a few years for supply to meet demand. In the meantime, what does a buyer do? 

This is where condos or other shared housing neighborhoods could be the right solution for both homebuyers and investors.

Hear me out.

Since owners don’t own the land, condos are much more affordable than single-family houses. Owners don’t have ... Read More…

There are so many questions about investing in the current self-storage market. Should I surge forward with all the deals that are being presented to me right now while the interest rates are low? Should I sit on my cash and wait for the looming recession to get worse? Will there be better deals as we get to the deepest parts of the recession? Or, should I invest in a new development project because of the great opportunities there are to get cheap money? 

Growth stocks and stock and bond funds are at the top of the list of possible long-term investments. However, your savings account, checking account or a money market account are at the top of the list for short term investments. 

There are many places to put your money that are great opportunities for solid investments. In terms of the stock market, we had a little dip at the beginning of Covid-19, but the stock market immediately rebounded and so a lot of people headed back to the stock market. And since then, wars, Inflation, an election, along with many other factors have caused people to pull their money out of the stock market and they are just sitting on the sidelines looking for a safe place to put that money. 

We also find ourselves in a time where there are a lot of people who have lost their jobs or who have been downsized. Many of these people are sitting on 401k money that they can now convert into a self-directed IRA because they are no longer working for an employer. There is more money th ... Read More…

I deal with a lot of investors. Everyone who knows me know they can just send a text, email or just call. I get so many investors asking me for a small loan just to finish a rehab they started.

I’m told or receive an email that says something like this. Hey Rob, I got this rehab I need to finish. I just need $15k, $20k etc just to finish.

There are two reasons I really hate these calls/texts/emails.

1. I often can’t help them because they owe too much on their property
2. I can help them but they don’t want to pay the cost, especially if they have a loan already on the property. We need to be in first position, and they don’t want to refinance their whole project.

Whether you are new at this or very experienced, the best way to approach your deal is to have some cushion. When you open a house, you don’t know what you might have missed when assessed your project. You need to have a cushion. You need to have a little room in there just in case you need it. I tell everyone I speak to, text, or email to ensure you have a little room, embellish your budget a little, or add a contingency line. We want you to succeed. If a deal is tight, you are in danger of losing money on the deal. Prices are coming down; be vigilant. We would love to be your partner today and 1000s of projects later.

We can help you with your fix-and-flips, fix-and-holds, buy-and-holds, refinance, new construction, unsecured credit, and more.