Real Estate Investors Association of Greater Cincinnati

Securing the debt financing to purchase investment real estate has been fairly easy over the last decade as we have been in a long period of plentiful capital and historically low interest rates. It seems you could find lenders in every direction, ready to lend on a good investment property but as recently as a year ago, we started to see a shift. Interest rates had been climbing for a year or so, and newer, inexperienced investors started defaulting. The credit markets and private capital providers alike started pumping the breaks. So how do we as RE Investors, secure the debt financing to invest in today’s environment?

First, you have to start with a “good deal”. You would be shocked at the number of times, potential borrowers fill out an application for a loan on a property that has no chance at profitability. If you are a newer investor, educate yourself on what makes a deal a “Good Deal”. Attend your local REIA meetups, shadow a successful investor, JV with someone more experienced, hire a coach to teach you. Don’t just grab a contract and assume it will be profitable for you. When you present a “bad deal” to a potential lender, you immediately lose credibility. Let’s face it. No one wants their money to be used on your practice.

Next, you need to have your ducks in a row. What I mean by that is, you need to have the project planned out and your personal and business finances in order. Look, I was broke when I sta ... Read More…

“You’re making too much money.”

That’s what echoed in Missouri native Ryan Haywood’s ears after his boss decided to slash his commissions—a “sales haircut,” as it’s bitterly known in the industry.

He didn’t realize it at the time, but this setback was about to unveil a path that would lead his family toward the future that Ryan and his wife Megan had dreamt about.

Ryan’s story is not just a testament to his determination to build his wealth on his own terms. This story is about his strategic, practical approach to building a truly successful real estate company in the face of uncertainty, full of solid insights that every investor should hear.

Ryan’s Journey From Sales to Real Estate

Ryan knew something had to change; he just hadn’t yet realized what that change would be. Shortly after receiving this news, Megan and Ryan had their third child. This meant Ryan was on paternity leave and suddenly had extra time on his hands. He wasn’t sure what his next steps would be—all he knew was that he couldn’t go back to the toxic workplace at his current 9 to 5 job.

It was during this time that Ryan’s wife Megan stumbled across a 30-day wholesaling challenge on Instagram and brought it up to Ryan. They had dabbled in real estate investing years prior with a couple of rentals. 

Initial Steps and Challenges

After pushing past his initial reluctance, Ryan went full steam ahe ... Read More…

Real estate investment, whether in residential or commercial properties, is a multifaceted endeavor that demands careful planning, strategic foresight, and a keen understanding of market dynamics. Among the myriad of professionals that investors may engage, architects play a crucial role in ensuring the success and profitability of these investments. This article elucidates when and why real estate investors should consider architectural services, highlighting their benefits and the scenarios in which their expertise becomes indispensable.

1. Property Acquisition and Due Diligence

Before acquiring a property, investors must conduct thorough due diligence to assess its potential and feasibility. Architects can provide invaluable insights during this phase by evaluating the structural integrity of existing buildings, identifying design flaws, and estimating the cost of necessary renovations or upgrades. Their assessment can reveal potential issues that might not be apparent to the untrained eye, such as compliance with zoning laws, building codes, and accessibility standards.

2. Maximizing Space and Functionality

In both residential and commercial properties, efficient use of space is paramount. Architects excel at optimizing floor plans to enhance functionality and aesthetic appeal. For residential investments, this might involve redesigning interiors to create open-concept living areas, adding extensions, or converting basements and attics into livable spaces. In comm ... Read More…

As I go to various states pursuing distressed property acquisitions, I am finding an uptick in the number of sellers willing to sell their off-market properties. These include probate situations, tired landlords, elderly moving to assisted living, vacants, bankruptcies, and pre-foreclosures. The problem is sellers still have the impression their homes are worth more than they are. They remember their neighbors getting multiple offers and selling above the norm, but that has changed somewhat. I live in a high-demand area, and houses can sit on the market for 30 days before they go under contract. It can be even longer around other parts of the nation that I visit. Although most of the country is still seeing lower-than-normal inventory, The higher interest rates and the uncertainty of government affairs have an effect.

The reason I say proceed but with caution, is because if you are going to rehab a property, the rehab costs are outrageous. The cost of materials has come down a little from the pandemic but they are still high and I think they are here to stay. Businesses know that people are willing to pay and consumers are spending like crazy. On the other hand, contractors are charging much higher labor costs. Sheetrockers, framers, painters, plumbers, electricians, and HVAC is much higher today. I was rehabbing houses all through the pandemic years and I am rehabbing a house right now and the costs are much higher than a year ago. We have used the same plumber, electrici ... Read More…

Many investors like buying rental properties to make passive income. Passive income is money you earn without having to work for it every day. Owning rental homes or apartments means you can collect rent payments each month without doing much active work.

Take the story of Jim and Cindy, for example. A few years ago, Jim inherited a small two-family home from his grandparents. At first, they weren't sure what to do with it. But after fixing it up, they decided to rent out both units. To their surprise, the rent covered the mortgage payments with some left over. They had stumbled into passive income!

Motivated by this experience, Jim and Cindy used their savings to purchase another rental property a year later. As the properties started building equity over time, they began exploring ways to diversify their investments and revenue streams.

If you already own a few rental properties like Jim and Cindy, you wonder - should I buy more properties, or try making passive income in other ways too? There are several options to consider beyond just more real estate.

Buying more rental properties has advantages. You already understand how it works. The more properties you have, the cheaper it can be per property for things like repairs and property managers. Real estate also tends to go up in value over time, protecting you from inflation. 

However, it's usually smart to "diversify" your investments across different asset classes, too. That way, in times when real ... Read More…

Mobile homes represent a unique yet often overlooked asset class that continues to yield attractive returns. The lack of mainstream discussion leads to confusion about how to effectively invest in mobile homes. This article demystifies the process, outlining the three primary investment types: mobile home parks, mobile homes on rented land, and mobile homes with land.

Mobile Home Parks
A mobile home park may consist of two or more units on a single parcel. Owners might possess just the land or both the land and the homes. Operating a mobile home park often requires inspections and special licenses. Ownership models vary: owning both the homes and the land is akin to running a flat apartment complex with comprehensive responsibilities, whereas owning just the land reduces maintenance duties, as tenants manage their own units. Given the right management approach, both scenarios can be highly profitable.

Investors should consider seller financing to mitigate sellers' potential tax impacts from cash sales. For bank financing, community banks are usually more amenable to negotiating terms. However, the increasing acquisition of larger parks by hedge funds has intensified competition, potentially squeezing returns.

Mobile Home on Rented Land
In this scenario, you own the mobile home but not the land it sits on, treating the home as personal property (often governed by DMV regulations). The landowner charges a lot rent and may impose rules such as age restrictions or subletting ... Read More…

I get this question a lot, especially, during or just after a presentation showing an apartment complex illustrating a ‘cash on cash’ return in excess of 20%.

If you went to a Commercial Broker and told them you were looking for properties with a 20% COCR, they’d do one of two things;

1. They would buy the property themselves if they ever found one with a 20% COCR
2. They’d hang up on you because they’d think your expectations are unrealistic.

You probably won’t find an Apartment complex advertised with a 20% COCR. However, you can increase your chances of finding some great deals by doing a few things differently.

First off, there’s no big secret in ‘finding’ Apartment complexes for sale. Start by using the same vehicles most investors use. For instance, you can search through Loopnet.com or go to any of the major or regional Commercial Brokerage web sites such as Marcus & Millichap (MarcusMillichap.com), CB Richard Ellis (CBRE.com) or Sperry Van Ness (SVN.com) just to name a few.

Another way to find Apartments for sale is to ask Property Managers or Commercial Financiers that work in the area you’re looking to purchase in. Often times, they know owners who are looking for another property and have to sell their first one to move on or they know someone who’s just ready to retire.

But WHERE to find deals is really the tip of the iceberg. Like many things in real estate, the real key is about RELATIO ... Read More…

I was having a discussion this week with leaders of 12 real estate associations about why:

1. “Small investor sentiment” is way down right now. Surveys are showing that nearly half of small rental owners and rehabbers think that this is a bad time to acquire properties, find deals, invest etc.
   
   
2. But at the same time, REIAGC members are finding, buying, holding, and flipping deals that are PROFITABLE ones, even when viewed in the light of a possible downturn

When I’m hearing one thing but seeing another, I get curious. So I asked this mastermind of 30 or so very experienced, long-term investors what THEY thought the difference was. See if you agree.

Most small investors, like 99%+, have a single end-to-end strategy for ‘doing” real estate that looks like this:

1. Find deals “On MLS”
2. Finance them with conventional, DSCR, or Hard Money loans
3. (a) Rent them at market OR

   (b) Rehab them and sell on the open market OR

   (c) Assign the contract to another investor in a wholesale transaction

In the current market, with low inventory, high demand, stagnant rents, and high interest rates/real estate taxes/insurance (relative to what they were 3 years ago), THIS STRATEGY IS GOING TO BREAK DOWN IN STEPS 1 or 2.

Finding a deal, whether for rental, wholesale, or retail, on the open market that ‘pencils out’ is like finding an amoeba on a needle in a haystack.

And current interest rates are a big reaso ... Read More…

Many investors like buying rental properties to make passive income. Passive income is money you earn without having to work for it every day. Owning rental homes or apartments means you can collect rent payments each month without doing much active work.

Take the story of Jim and Cindy, for example. A few years ago, Jim inherited a small two-family home from his grandparents. At first, they weren't sure what to do with it. But after fixing it up, they decided to rent out both units. To their surprise, the rent covered the mortgage payments with some left over. They had stumbled into passive income! 

Motivated by this experience, Jim and Cindy used their savings to purchase another rental property a year later. As the properties started building equity over time, they began exploring ways to diversify their investments and revenue streams.

If you already own a few rental properties like Jim and Cindy, you wonder - should I buy more properties or try making passive income in other ways too? There are several options to consider beyond just more real estate.

Buying more rental properties means you already understand how it works. The more properties you have, the cheaper it can be per property for things like repairs and property managers. Real estate also tends to go up in value over time, protecting you from inflation.

However, it's usually smart to "diversify" your investments across different asset allocations. That way, if one investment doesn't do we ... Read More…

What is Cross Collateralization?
Cross collateralization is the act of using multiple assets to secure one loan.

Who Qualifies for Cross Collateralization Deals?
Investment property owners with high equity in an investment property or own a piece of investment real estate free and clear (no debt).

Why Do Real Estate Investors Use Cross Collateral?
Cross-collateralization loans allow real estate investors to utilize equity in their real estate investment properties without having to refinance their long-term debt or take out long-term debt altogether.

How Do Real Estate Investors Use Cross Collateral?
Cross collateral is most commonly used in lieu of a down payment to give real estate investors 100% financing on new acquisitions (fix-and-flips or buy-and-holds). 

Does my property need to be owned free and clear to be used as cross collateral?
No! If you have high equity in your existing real estate property and there is a low balance first mortgage, you can use equity in that property as a form of down payment for a hard money loan. This allows you to significantly reduce your down payment or obtain 100% financing. 

How Are Cross Collateralization Loans Repaid?
Two ways. The first is through the sale of one of the properties collateralized against the loan. It is a very common use case that borrowers (clients) will use equity in another property they own to get 100% financing on a fix and flip. Once the fix and flip is complete, our loan is paid off at the sale of the ... Read More…