Greenleaf Property Management is now in four markets and manages a large portfolio of properties. But it started as a few small investment properties purchased by Josh Friedensohn and his business partner. After Friedensohn graduated college, he pursued a career in the engineering field, but he wanted to achieve more than salary stability. Friedensohn wanted financial freedom and real estate served as a means to get there. 

Building a Sustainable Career in Real Estate

Friedensohn had to settle for a part-time effort during the first five years. But as he made friends and sought out new opportunities, Friedensohn’s career trajectory changed directions. Today, Friedensohn’s portfolio is roughly around $200M and he is doing this full time. Greenleaf is vertically integrated so they renovate and operate everything that they own. Their portfolio includes multi-family, mobile homes, offices, and triple net leases.

In real estate, you don’t need an education or a degree. All you need is grit and hustle. And Josh Friedensohn’s team generally work harder, longer, and more consistently than a lot of their competitors. That is one of the main drivers of their success. Greenleaf is systematic and process-driven which helped them play the long game. But their high level of foresight is also what landed them in multi-family. When single-family rentals depreciate, your cashflow is wiped out for years to come. But multi-family means there many doors sharing the cost. Multi-family rentals became the most viable longterm option for Greenleaf, and that is what their business model is built around to this day.

Why You Should Follow Population Trends

Mobile homes are another part of their strategy, and they work to buy up as many small mobile home parks in high-density areas that they can. They aggregate the mobile home parks up with management efficiencies, then exit with that scale. But Friedensohn’s business model is replicable by other management companies throughout the country and there is a lot to learn from it. Their primary markets were chosen by following population trends that impact economic trends. There are other great markets right now, but you should consider whether you can get to your properties and back in a reasonable timeframe or not.

Perseverance and determination are major factors in the success of a real estate investor. But timing also plays a major part. For example, Everyone gets frustrated with their job 3-4 years in, but Friedensohn just happened to experience that frustration amidst an economic recession. There is a degree of luck involved in getting on your feet as an investor, but the relentless work ethic and grit make sure that you are prepared when those lucky opportunities present themselves.

Josh Friedensohn built a $200M portfolio with 110 full-time employees and over 330 investors. By focusing on a niche, developing a strategy specifically for that market, and following through with grit and determination, you won’t even need luck on your side. For more episodes of the Real Estate Investing for Professional Men and Women podcast, featuring other informative guests from across the business world who can help you create wealth, please visit me at  www.myinvestmentservices.com/podcast/.

Never Lose Money in Real Estate

My goal for Real Estate Investing for Professional Men and Women is to help professionals from all walks of life make and keep more money and grow their wealth. That’s why I bring in guests from all sorts of backgrounds who have great knowledge and incredible strategies that can help you do just that. Sometimes my guests will be real estate experts, and sometimes they will specialize in other areas of investing, finance or the business world, but they will always have some remarkable wisdom that you can implement in your own life to further your financial growth.

For this episode of Real Estate Investing for Professional Men and Women, I sat down for a conversation with real estate investor Paul Morris. Paul is an award-winning entrepreneur, trainer, author, and business consultant who has developed a system to ensure that he never loses money on his investments. Using his strategies, he has been able to grow a remarkable portfolio, safely and strategically.

As a business professional looking to invest your hard-earned money, I know that real estate can be a powerful vehicle to grow your wealth. But, and this is important, you have to invest your money the right way if you hope to use it as a wealth creation tool. Minimizing risks and creating opportunities is critical, and Paul Morris is an excellent example of the power of smart investing in real estate.

Smart Investing

As Paul explained to me during our discussion, he uses three rules that guide his investing and help him minimize risk and maximize gains. His three rules are: buy where you know, value add, and cash flow. By sticking to locations you are personally familiar with, you have “insider knowledge” into the neighborhoods that can help you avoid hidden problems. Adding value means making upgrades to a property to make it more attractive than competing properties in the same budget range, such as adding security lighting, making it clean and safe, and ensuring that everything is working properly. The goal isn’t to turn the “worst house in the best neighborhood” into a show home. Instead, the goal is to make your property more attractive to people who are looking to get into the neighborhood but are priced out by more expensive properties.

The final rule is cash flow, in other words taking steps to ensure that your property begins renting as soon as possible to start bringing in income and paying for itself. Paul slightly under-prices his properties compared to the going rate of a neighborhood, to ensure that his properties fill almost immediately. Remember, you don’t start recouping your expenses on a property until you can fill it; a vacant property is only costing you money. 

Opening New Doors

One truly valuable piece of advice Paul shared during our discussion is his simple but powerful script: “what would it take to earn the right?” As Paul explained it, people have a hard time saying no to a request when you frame it this way. Paul shared the story of asking to study with a mentor by saying “what would it take to earn the right to study with you for twenty minutes?”

By doing this, and by ensuring that the other party knows he’s fully prepared and isn’t wasting their time, Paul is able to create new opportunities for himself. Phrasing a request in this way shows that you are aware that the other person’s time is valuable and that you want to earn the experience of working with them, and it truly is a great way to frame a request.

Paul Morris is an expert at creating opportunities for himself. As he explained, growing wealth isn’t his goal, but the freedom wealth creates that allows him to do what he wants is what motivates him. That is a concept that should resonate with many of the Real Estate Investing for Professional Men and Women podcast listeners. I hope you are able to take Paul’s ideas and strategies and implement them in your own investments. If you would like to learn more about Paul Morris, you can find him on Instagram @paulmarkmorris or email him at paul@forward1.com.  And for more episodes of the Real Estate Investing for Professional Men and Women podcast, featuring other informative guests from across the business world who can help you create wealth, please visit me at  www.myinvestmentservices.com/podcast/.

The Wonderful World of Assisted Living

Real estate investing is rewarding for a number of reasons. Financial freedom, wealth-building capabilities, and flexibility are all awesome, but what about helping others? Many of us enter the industry for that exact reason, and Jared Addis is a fine example of this. A veteran of the Marine Corps, Jared now owns Serenity Senior Living, a Type B Assisted Living Facility, with his wife, Kate. Assisted living is an incredible area of real estate with great potential for growth and the reward of helping one of society’s greatest treasures: the elderly.

Since this is such a unique area, investors may not have a great understanding of where to start. According to Jared, it’s best to check with local regulatory bodies to determine which homes on the market might qualify for the standards for becoming an assisted living facility. Oftentimes there will be several real estate investors in your area who specialize in selling licensed assisted living facilities. Checking with them can be a great resource.

In terms of neighborhoods, it’s best to seek out areas that look and feel authentically residential. Older folks don’t want to live in an institution; they want a home. Look for nice neighborhoods where a house with a two- or three-car garage could be converted relatively easily. States like Florida and Texas are good targets. Texas allows a maximum occupancy of 16, while most states generally only allow 10 to 12. There aren’t any magic answers; using common sense is the best way to find neighborhoods that will be ideal for assisted living. 

Making a Home

Like I said before, the most important part of assisted living facilities is how much they feel like home. This means your residents should be able to do things like garden, cook meals, take strolls outside, interact with each other, play the piano, or even swim in a pool. Jared’s “avatar”, or ideal resident, is one who wants all of these things and has the personality to make that happiness happen for other residents. 

Timing in any real estate market is significant, and with the special considerations involved in assisted living, things are a bit different. Some people might acquire a ton of properties at once and get to work on all of them after negotiating the best deals. Jared, on the other hand, sees every investment in assisted living as a long play. He spends very little time negotiating so he can get to work making buildings into homes right away. By putting all their love and energy into the homes they buy, Jared and Kate can attract the best residents.

This attraction can’t happen without marketing as we all know. For Jared, this means doing renovations to attract attention. He piques people’s interest via Facebook (old people use it too!), Chambers of Commerce, flyers, and word of mouth. Throw a big party for the grand opening of the facility and invite potential prospects. They’ll begin to spread the word, and before long, you’ll have a bustling new facility full of excited, grateful tenants. You’ll be making a profit and, on top of all that, you’ll be making a difference. That’s a slam dunk!

Structuring Deals 

Matt Faircloth is the President of the DeRosa Group, a real estate investing group he co-founded with his wife, Liz. Matt has been investing in real estate in 2005 when he quit his job as a traveling sales rep. Since then, he’s done all kinds of deals, from single-family rentals to multi-family units to fix-and-flips and more. He’s learned a lot about financing his deals through private capital and even wrote a book on the subject called “Raising Private Capital”. 

One thing that Matt has learned over the years is how to structure a deal. Matt has done things as simple as private loans for fix-and-flips where the lender essentially acts as the bank for the investor and is protected by the same documents that a bank is. Secondly, Matt has also done private equity agreements, where a loan from the bank allows him to purchase a property and sell shares of the property to investors much like buying stock in Microsoft or another company. 

A third option Matt has used is a hybrid option called a joint venture. With this option, Matt has had an investor loan money to help his company build and sell properties. Along with that loan came interest and a percentage of the profit (much like a share) back to the investor. Deals like that can be very lucrative, and as Matt puts it, “There doesn’t need to be one flavor of ice cream.” He has even worked with commodities brokers on Wall Street to invest using a closed-end mutual fund to build property portfolios. The possibilities are endless!

Shifting Strategies

If there’s one thing we all know about real estate, it’s that the market is far from static. Recessions like the one in 2008 can hit and shake things up pretty substantially. It can be pretty intimidating to dive into unpredictable waters and take the investing leap. Luckily, Matt and I are here to offer some guidance in this regard and hopefully calm some fears you might have.

First, investing in different states. While the strategies may differ, the fundamentals are the same. Some markets may require more resources and capital to do big deals, so Matt advises us to recognize what is in need in that specific city or state before investing. Fix-and-flips might be really great in one market, while another is good for mid-size multi-family properties. Pick a strategy for each market and stick with it. If you try to wear too many hats, you might get overwhelmed. I personally prefer smaller markets for lower taxes and less regulation, but your mileage may vary.

Adaptability is key when the market hits a downturn. Matt stresses the importance of remaining an active participant in the real estate market and investing based on where it’s at versus where you hope it’s going. To that end, Matt did a lot of short-sale deals while the recession was in full swing. You can learn some pretty cool new things when you realize that certain deals are the best option. Just remember that you cannot control the market; you can only participate in it. If you remain adaptable, you’ll be able to handle whatever comes your way. 

Opportunity in Adversity

Ask any real estate investor and they’ll tell you: the recession was a crazy time for the market. It was an uphill battle for everybody in the real estate game, and one of my latest podcast guests, Aaron Amuchastegui, knows that better than anybody. 

Aaron is one of the principals at Homerock LLC and the President of AMA Construct Inc., a real estate consulting company focused on distressed assets. He learned the game by grinding during the recession, making offers on REOs, foreclosures, and a variety of other types of properties. As his offers got consistently rejected, Aaron didn’t give up. His luck turned at a sketchy auction where the auctioneer propped his laptop up on a trash can lid. He and his team bought a property, sold it, and made some money off it. They were off to the races.

Aaron’s story speaks to how timeframes affect the real estate market. As recessions and market corrections come and go, the ability to buy and sell houses can fluctuate pretty wildly. The key to Aaron’s success has been using his resources, like the Internet, to be consistently and persistently looking for the deals he wants. Aaron looks across a variety of counties and states, bidding on properties where foreclosure happened very quickly and searching for auctions that a lot of people might not know about. By staying on top of things, Aaron has been able to acquire properties in a number of states.

Auction Strategies

From his numerous experiences buying and selling at auctions, Aaron has devised a step-by-step process to maximize chances of success and narrow his focus. Your first step is to locate your lists. FLS Online and Realtytrac are good places to start. Search for foreclosure auctions in your county or state and you’ll be on the right track. Next, narrow down your mindset. Once you’ve established what kinds of properties you’re looking for, you can cut down your search results from 40 or so to 10 or 15.

After finding houses that fit your mindset, it’s time to drive by them. From doing this, you can further narrow the list down to the ones you really want to target. Occupied properties come with all sorts of hassles and sad stories; avoid these and stick with vacant homes if you can. Now that your houses are selected, conduct your CMAs, build your pro formas, and determine how much each house is going to cost and how much you’re looking to make.  Finally, when all that’s done, it’s time to attend the auctions for the properties you want and start fishing for them.

When you go to bid, have an idea of the most you’re willing to pay for that property. Be sure to start your bidding significantly lower than that, but don’t lowball the auctioneer too hard. Increase your offers in as small of increments as you can manage ($100 to $1,000 is good) until you can coax the auctioneer into a comfortable price. Do whatever you can to avoid going over your maximum price, and try to get as significantly under that as possible. You may go to ten auctions and pay your full price for eight of them, but if you’re under on the other two, you’re ahead of the game. Aaron is a student of the auction process, and these strategies have worked very well for him. Godspeed as you make them work for you too!