Syndication SEC compliance involves various rules and regulations investors must follow. Real estate syndication put simply is a group of investors pooling their money together. They use the capital to purchase and manage real estate that is usually beyond their ability to acquire independently. 

The investors form a legal entity like an LLC to buy and manage the real estate. Investors receive profit in proportion to their investment from the following: 

• Rental income
• Property sale

Watch the Royal Investing video featuring securities attorney Stephen Slawinski who specializes in helping real estate sponsors raise capital and stay compliant with the SEC. 

What Is SEC Compliance?

The U.S. Securities and Exchange Commission (SEC) sets regulations and laws that investors must follow. The laws protect investors from fraud and ensure that publicly traded companies provide accurate financial information. Companies file reports with the SEC to demonstrate their compliance. 

Rules And Regulations For Syndicates Under The SEC

The SEC requires syndications to comply with laws concerning securities selling. Syndications remain compliant by following the regulations controlling private placements found in SEC Regulation D. 

Rules And Regulations

Strict rules control a syndication's organization and property transfer. Additional SEC rules for real estate syndicates include the following: 

• They must fully comply with SEC Regulation D
• 35 or fewer non-accredited investors
• Forbids syndicate referral payments for anyone other than SEC-registered brokers
• Non-accredited investors receive additional disclosures
• Real estate brokers operating a syndicate must understand the difference between securities and non-securities
• Sponsors must provide offering documents  

Syndication: Securities And Non-Securities 

Securities represent financial value and can be traded on a public exchange: stocks, bonds, and options. Non-securities are investments not typically sold on a public exchange, like art and some real estate.

The syndicate's structure determines if your investment is a security or a non-security:

• Limited partnership structures usually receive units classified as securities
• LLC structures may receive non-security units

The significant difference is that securities must follow SEC regulations, while the same rules do not bind non-securities.

SEC Compliance: Registration, Exemptions, And Deal Structures

Four acts affect syndications. We'll discuss each and how to avoid the implications of each act. 

Securities Act Of 1933

Under this law, it's unlawful to sell or offer to sell a security without registering the security with the SEC unless the security is exempt from registration. 

Avoid the implication by:

• Structuring it so it's not a security.
• Ensuring all partners have active roles.

Exemptions under Regulation D, Rule 506(b):

• Raise unlimited capital
• Up to 2,000 accredited investors and 35 non-accredited investors
• Self-certify as accredited or non-accredited
• Cannot advertise

Exemptions under Regulation D, Rule 506(c):

• Raise unlimited capital
• Up to 2,000 accredited investors
• Accredited investors only
• A reasonable attempt at verifying the accreditation status
• Can advertise

Securities And Exchange Act Of 1934

This law makes it illegal to "effectuate" the sale of a security or accept compensation for the sale of a security as an unregistered broker-dealer. 

The implication is difficult to avoid because selling interests to your company or passive investors is probably "effectuating" the sale of a security. 

Exemptions to this rule appear in Rule 3a4-1.

The Investment Company Act Of 1940

This law stipulates that a company "engaged … in the business of … trading securities" must register with the SEC. 

Avoid the implication:

• Avoid trading securities.
• Ownership of real estate is not a security.  
• Section 3(c)(1) exempts a company from registering if it has less than 100 investors.

The Investment Advisor Act of 1940

The law dictates that acting as an investment adviser is unlawful without registering with the SEC. 

Avoid the implication with a direct ownership interest in real estate.

Exemptions:

• Managing less than $150 million in assets OR
• Advising private funds

SEC Compliance: Syndication Structure

JV Structure

Property owned by

• Special Purpose Entity comprised of
  • Capital or Active Partner
  • Sponsor Partner

 The structure might not be a security if each partner has an active role. If it isn't a security, no other security laws apply. 

Basic Deal Structure

Property owned by 

• Syndication Entity (LLC) comprised of
  • Investors
  • Sponsors
• Management Entity (LLC) comprised of
  • Members of Management Entity (Sponsors)

A basic deal structure helps with the acts in the following ways:

• Securities Act of 1933–implicated with an exemption as long as you follow Regulation D
• Securities and Exchange Act of 1934–implicated with an exemption as long as each sponsor has an active role in the business other than fundraising
• Investment Company Act–exempt because you're dealing with real estate, not securities
• Investment Advisor Act–not implicated as sponsors are not advising investors on securities

Watch the video to learn more about the Fund of Funds structure.

SEC Compliance Key Takeaways

Deal structure impacts SEC legal compliance requirements. The SEC has a specific definition for what constitutes security and non-security. When investing in a real estate syndicate, you'll want to:

• Avoid the implications of securities
• Register with the SEC
• Find an exemption to registration 

Ready to learn more about real estate investing? Join Royal Investing for weekly meetings to level up your investing education.

Are you a real estate investor looking to increase your return on investment (ROI)? A 1031 exchange may be the answer. 

A 1031 exchange, a like-kind exchange, is a tax deferment strategy that allows investors to swap out an investment property for another and defer capital gains or losses. Instead of paying taxes on the sale of your property, you can reinvest the proceeds into another property and continue to compound your ROI.

At our Royal Investing Summit, Dan McCabe, Co-founder and President of Exchange Resource Group, shares his 40 years of experience in handling 1031 exchanges and how they work as an investment strategy. 

In this blog post, we'll discuss what a 1031 exchange is, how it works, and what rules you need to follow to take advantage of this powerful tax deferment strategy. 

How Do You Defer Capital Gains Tax With A 1031 Exchange?

When selling an investment property, a 1031 exchange allows you to defer capital gains tax by reinvesting the proceeds into a similar type of property:

• Exchange your investment property for another "like-kind" property.
• The exchange must be completed within 180 days of the sale of the original property.
• You must identify potential replacement properties within 45 days of the sale.
• You must close on the replacement property within 180 days of the sale.
• Any profits from the sale are deferred until you sell or dispose of your new investment property.

What Are The Rules And Regulations For a 1031 Exchange?

A 1031 exchange, a like-kind exchange, is a tax deferment strategy that allows investors to swap one investment property for another and defer capital gains taxes. 

Here are the rules and regulations of a 1031 exchange:

• The replacement property must be of equal or greater value than the sold property.
• The exchanged properties must be of "like-kind," meaning they must be similar in nature or character.
• The purchase price of the Replacement Property must equal or exceed the selling price of the Relinquished Property.
• You must identify a replacement property for the assets sold within 45 days.
• You must conclude the exchange within 180 days.
• You may take some money out to use any way you like, but you will be liable for paying the capital gains tax on that amount.

Imaginative Ways To Use A 1031 Exchange

There are more imaginative ways to use a 1031 exchange than a traditional one.

Reverse 1031 exchanges, Reverse Improvement Exchanges, and Reverse Construction Exchanges are all viable options that can help you maximize your gains while minimizing your taxes.

Reverse 1031 Exchange

A Reverse 1031 Exchange is a tax deferment strategy that allows real estate investors to trade one investment property for another without incurring capital gains. 

Here are important points to consider when looking into a Reverse 1031 Exchange:

• The replacement property must be purchased before the relinquished property is sold.
• The investor can only take actual possession of the replacement property after the relinquished property is sold.
• The exchange must involve like-kind properties, which must be held for investment or business use.
• A qualified intermediary facilitates the exchange.
• There are strict timelines for the exchange to qualify for tax deferment.

Reverse Improvement Exchange

A reverse improvement exchange is an advanced exchange that allows taxpayers to acquire their intended replacement property before selling their current property.

It combines a reverse 1031 exchange and an improvement 1031 exchange. 

Here are some key points about this type of exchange:

• A reverse exchange occurs when the taxpayer wants to acquire the replacement property before closing on the relinquished property.
• The exchange facilitator holds or "parks" title to the new property on behalf of the taxpayer.
• This combined strategy allows improvements to the acquired replacement property.
• Reverse exchanges enable taxpayers to lock up the replacement property before transferring their relinquished property to a buyer.
• Documents must be sent to all appropriate parties for the process to be successful.

Reverse Construction Exchange

A reverse construction exchange is a combined strategy that allows an investor to acquire their replacement property first and improve it before selling the relinquished property. 

It involves the following steps:

• An Exchange Accommodation Titleholder (EAT) holds title to the replacement property on behalf of the exchanger.
• The exchanger then finds a buyer for the relinquished property and closes on the sale.
• The proceeds from this sale are used to pay off any existing debt and fund improvements on the replacement property.
• The EAT transfers the title of the improved replacement property to the exchanger.

Key Takeaways

A 1031 exchange is an excellent tool for real estate investors to defer capital gains tax and free up more capital for investment in the replacement property. It's essential to remember that exchanges must be appropriately structured and adhere to all IRS rules, but when done correctly, they can provide significant tax savings.

For those looking to learn more about 1031 exchanges, Royal Investing Group Mentoring offers resources and guidance on how to take advantage of this powerful tool. Join us and start taking control of your financial future!

Investing in real estate can be challenging. It's a harsh industry, especially when it comes to securing capital. Connecting private lenders with borrowers may be a solution for real estate investors. 

Private lenders aren't for everyone. But, in certain circumstances, they may be right for you. Chris Naugle, Founder and Owner of The Private Money Club, explains in a Royal Investing Virtual Summit how his company and other private money lenders connect with borrowers and provide them the capital and solutions they need. 

What Are Private Lenders?

Private money loans, more commonly known as private money, are loans offered by a private organization or even a wealthy individual to another person or company. These individuals and organizations providing such financial help are called private money lenders.

Private lenders allow you to secure funds outside traditional banking or lending qualifications. However, due to relaxed regulations, these loans can be risky for both parties, so due diligence is required. 

Who Can Be A Private Lender?

Since a private lender is anyone who has money to give you that isn't a bank, a private lender can be any of the following: 

• Accredited investors
• Family or friends
• Hard money lenders

If you're looking to buy a property, attend to much-needed renovations, or prep a home for reselling- private lenders might be the perfect fit.

How Do Private Lenders Evaluate Borrowers?

Guaranteeing a solid return on investment is of the utmost importance - and that means mitigating any risk involved. Before providing capital to potential borrowers, they analyze various factors such as:

• Creditworthiness
• Repayment capability

A Borrower's Choice: Private Lenders vs. Banks

Why would you choose a private lender over a bank? 

Banks and credit unions typically don't lend to rehab projects or other investments for flippers - the property must be in good standing to receive conventional financing. That might kill a lot of deals for you. Private lenders are usually more than willing to fund these activities.

Advantages

In most cases, private lenders have lower borrower requirements than a bank. For instance, you may enjoy the following:

• Relaxed credit score requirements
• Flexibility with terms and rates
• Ability to negotiate 

There are also some drawbacks when you work with a private lender that you should know. 

Disadvantages

With a traditional lender, you can secure a 30-year mortgage. Private lenders are flexible but usually want their money back sooner than 30 years. 

Another issue is that you may have to pay a higher interest rate than what you'd find at a bank.  

Before taking out a loan, it is essential to vet the source of funds and ensure that those funds are legitimate. Typically, these lenders comprise several individual investors who expect a return on their investment; thus, verifying that your loan won't abruptly collapse is critical for borrowers.

How Do Borrowers Connect With Private Lenders?

Understanding the kind of private lender you seek is integral to beginning your search. Finding the right person may be time-consuming. But don't worry - there are a few approaches out there that can help you connect with a private lender. 

Use your network

Establishing connections through networking is a reliable method for locating private lenders. Use it to find accredited investors, individuals, and financial institutions who can provide your funds.

Look for places you can grow your network:

• Real estate seminars you can attend
• Club or association for real estate developers in your area
• Real estate events

If you're open to seeking out private individuals, your search options become almost infinite.

Google private lenders

If you're searching for private lenders near you, it's as easy as Googling them. Additionally, dedicated sites such as Private Lender Link can help to locate the right lender for your needs quickly.

Keep in mind, however, that lenders obtained through these searches will most likely receive more offers than lenders found organically. 

What If I Want To Be A Private Lender?

Private lending may be a solid strategy if you're interested in earning passive income. As opposed to investing directly in real estate or business ventures, which require purchasing property and managing the day-to-day operations of a company, private lending allows you to reap the rewards without any of these hassles.

You'll need the required capital to become the bank for borrowers to turn active income into passive income.

Key Takeaways

Connecting private lenders with buyers is a people business. As a real estate investor, you must massage your network to find a private lender. You'll see distinct advantages of working with a private money lender. 

Some of those include: 

• Relaxed credit score requirements
• Flexibility with terms and rates
• Ability to negotiate 

There are drawbacks, so you must do due diligence when looking for a private lender. 

Do you want to know more about connecting with private lenders or learn how you can become a private lender? Sign up for our FREE Royal Investing Group Mentoring, where we cover all types of real estate investing topics. 

The internet has revolutionized business, especially for real estate investors. Web presence, SEO, and Google Ads are handy and powerful digital marketing tools that you must use to stay relevant in an increasingly competitive field. 

Dr. Adam Gower builds best-in-class digital marketing platforms for real estate developers interested in online syndicated deals. He stopped by and shared his expertise on generating leads through your web presence, optimizing your homepage, and how SEO and Google Ads can generate business. 

What Is Online Real Estate Syndication?

Online real estate syndication is a process of pooling money from individual investors to purchase and manage income-producing real estate. Private investors can participate in the deal by buying shares in the entity that owns the property, typically organized as a limited liability company (LLC) or limited partnership. The entity will manage the investment, collect rent, pay expenses, and distribute profits to the investors based on their ownership percentage.

The syndication structure allows real estate owners to raise capital from multiple sources without giving up complete property control. It also allows individual investors to diversify their portfolios by investing in professionally managed real estate assets with high potential returns.

Why Does Digital Marketing Matter To Real Estate Investors? 

Digital marketing starts with your online presence. Crafting a professional online presence through your website presents more than just an opportunity to publicize your brand and gain trustworthiness. It also gives potential investors easy access to discover what you offer - all from the comfort of their homes.

A marketing funnel is a visual representation of the customer journey, from first contact with you all the way through to purchase. It comprises distinct stages, each representing a step in the process. You can use different tactics and strategies at each stage in the funnel to draw customers further down until they reach the conversion.

Quality content that addresses a customer’s pain points can effectively draw customers through the funnel. Content should not just focus on selling but on educating and providing solutions to your potential investors. High-quality, informative content will draw people in and eventually lead them to become investors.

How Does SEO Impact A Real Estate Investor?

SEO stands for Search Engine Optimization, which is optimizing a website to increase its visibility and traffic from search engines. 

By using a combination of on-page and off-page optimization techniques, such as: 

• keyword research
• link building
• content optimization

Keyword Research

Keyword research is the process of finding and analyzing keywords that are relevant to your business or industry. 

This process involves conducting keyword searches using tools such as Google Adwords, Keyword Planner, and other keyword analysis tools to identify popular search terms related to your business.

Link Building

Link building is acquiring links from other websites to your website. The links help search engines understand that your website is reputable and authoritative in its industry, resulting in higher rankings on search engine result pages.

Build links through:

• guest blogging
• directory submissions
• press releases
• social media shares.

Content Optimization

Content optimization is the process of optimizing existing content for search engines. Optimizing ensures that content has relevant keywords, is well-structured, and is optimized for search engine crawlers and readers. 

Content optimization also ensures the website is easy to navigate and provides a good user experience. Additionally, you should regularly update content with new and relevant information to keep readers engaged and boost visibility. 

SEO helps websites rank higher in search results. This increased visibility brings more potential customers to the website, increasing revenue.

Real estate investors can benefit from SEO by improving their visibility in search engine results and reaching more potential customers. 

Real estate investors can increase their website traffic and target specific audiences by optimizing their websites for relevant keywords related to their industry. Link-building and content marketing strategies can also help real estate investors build authority among potential partners. 

Why Are Google Ads Important To Digital Marketing?

Google Ads is a paid advertising platform that enables businesses to create and display product or service ads on search engine result pages. With Google Ads, companies can have their ad appear at the top of search results when customers search for relevant keywords, allowing them to reach more potential customers. The ads are an effective way to drive more traffic and leads to your website. 

Google Ads is an essential tool for real estate investors because it allows them to reach a wider audience and drive more qualified leads. 

With Google Ads, investors can target potential buyers with relevant keywords, allowing them to capture the attention of motivated partners likely to convert. 

Digital Marketing Key Takeaways

The internet has revolutionized how real estate investors reach potential buyers, tenants, and sellers. It has changed the game by:

• making it easier to spread the word about a property or portfolio quickly and efficiently
• allowing for more targeted campaigns to reach a particular audience
• narrowing down searches and finding better deals

Web presence, SEO best practices, and using Google Ads are potent weapons in your marketing arsenal. The people leveraging those tools are the most effective in an ever-changing real estate investing landscape. 

Do you want to learn more about best practices for real estate investors? Yes! Join our Royal Investing Group Mentoring to unlock the secrets to success from real estate investors like yourself.

Deal vetting in real estate is essential to any potential investor's due diligence. The process ensures that the investment decision follows sound economic principles and an understanding of its risks. 

It can also help uncover hidden issues or opportunities to negotiate better terms.

By taking time to vet a real estate deal carefully, investors can make sure they make informed choices to protect their financial interests. It also helps to ensure that any purchase aligns with their long-term objectives.

What Is Deal Vetting?

The process of vetting a real estate deal involves an in-depth analysis of the property, its current condition, and any potential red flags. 

This due diligence includes assessing factors such as:

• Location
• Zoning laws
• Market values
• Demographics

It also involves researching the seller's history and scrutinizing financial statements to ensure everything is accurate.

Ultimately, the goal of vetting a real estate deal is to identify potential risks or opportunities associated with the purchase. By doing so, investors can ensure they get the best possible deal and avoid surprises down the road.

Importance Of Knowing the Local Market

When vetting a real estate deal, it is essential to understand the local market. Deal vetting includes researching the area's economic trends and demographic makeup to understand the potential future value. 

Additionally, understanding the nuances of local zoning laws and regulations can give insight into what kinds of projects are allowed in the area.

Significance Of An Area's Economic Trends

Researching an area's economic trends involves looking at factors such as:

• Employment rates: To pay rent, tenants need to have a job. Are there enough employment opportunities near your rental that they can commute to? Is a big employer moving into the area?
• Local housing prices: Always be weary of overpriced rental properties; to circumvent that, do your research on similar houses in the area; look at comparative market analyses (comps).
• Rental pool: Your pool of potential renters must likely pay rent in full and on-time.
• Rental market: Evaluate your potential rental market. If you're thinking of becoming a landlord, it's essential to research and find out whether there is a demand for affordable housing in your area. There are plenty of rental properties on the market, so you'll need to make yours stand out by offering lower rates than other landlords to attract high-quality tenants.
• Neighborhood: How well do current residents care for their homes and properties? Is there a lot of trash left, or does the house need repair and maintenance? If you want to rent out a property, it is essential to maintain a clean and safe environment. If the neighborhood appears in decline, it will become increasingly difficult to find good tenants willing or able to pay rent on time.

You can find this information in government reports or other published resources. It is important to note that trends tend to move in cycles, so it is important to analyze potential future value over a more extended period.

By researching an area's economic trends, investors can better understand the potential future value and compare it to the asking price. This due diligence helps ensure the deal is reasonable and worth pursuing.

How Do I Recognize A Good Deal?

The vetting process can help identify a good deal. As previously mentioned, due diligence should include researching the area and analyzing potential future value.

It is also important to thoroughly inspect the property for signs of structural damage or other issues that could affect its value. Additionally, investors should review contracts closely and negotiate better terms.

Deal Analysis

It is also essential to consider the cost-benefit of a real estate deal. This means looking at the potential return on investment (ROI) and weighing it against the risks involved. 

Factors such as market volatility, tenant turnover, legal fees, and property maintenance can all affect an ROI.

• Cost of property: You need to find out how much a property is worth by looking up "comps" or recently sold similar properties nearby. After analyzing the similarity of other properties, consider how you value the property based on the condition. Use that data to make an offer price accordingly.
• Mortgage: Most rental property owners will find that their monthly mortgage is the most considerable cost, usually containing PITI (principal, interest, taxes, and insurance). Always ensure that your projected monthly rental income is higher than the amount of PITI. You'll need to account for repairs, a vacancy allowance, and other typical costs associated with having a renter.
• Upgrades for rent-readiness: To make your rental more appealing to tenants, look at similar rentals in the area and see what they offer. You may not need additional features like granite countertops to attract tenants willing to pay market rent.
• Rent: You need to know what your gross annual rent will likely be. If the property has been rented before, find out how much the previous tenant paid monthly. Also, research the current market rental rate for this type of property in this particular location.

Deal Vetting Key Takeaways

Real estate investing carries risk different from other investments, so extra care is needed.

The importance of due diligence in real estate investing, specifically rental properties, should not be underestimated. The objective is to have a positive cash flow each month and own a property that will rise in value over time.

One unfortunate decision or mismanaged rental property could cost you instead of contributing to your wealth. By doing proper research upfront, you increase the chances of achieving your goals significantly.

If you want help vetting a real estate deal, join Royal Investing for free group mentoring. Our experienced team can provide invaluable advice and guidance to help you make the best investment decision.

Virtual assistants are a necessity for real estate investors. 

You wear a lot of hats. On any given day, you might find yourself generating leads, securing financing, chasing down deals, dealing with tenants and toilets, and more. That many responsibilities can stretch you thin. 

Sound like you? If so, you're in luck.

Today, we'll talk about how leveraging a virtual assistant enables you to delegate burdensome tasks, spend your time on more profitable endeavors, and scale your business accordingly. 

Why Should I Use A Virtual Assistant?

A virtual assistant has the potential to help you scale your real estate investing business. They will allow you to do more deals more efficiently, save on expenses, and reduce your workload.

A virtual assistant enables you to pass on some of the toils while improving the efficiency of the processes that make your business operate. The key is to have a dedicated, trained virtual assistant who understands the different nuances that accompany your specific industry. 

Virtual Assistants Save You Time

Time is your most valuable asset; virtual assistants protect that asset by taking on lead generation. 

Cold calling is among real estate investors' most effective lead generation methods. While it is effective, it is also challenging to stay consistent because of the time sink and the amount of burnout. 

A dedicated, trained virtual assistant can make 400 to 600 cold calls daily. VAs: 

• Use a script to call 
• Alternatively, you can use text messaging
• Are consistent 
• Set up your appointments
• Pre-screening for motivated sellers and hot leads to you or your sales team

Virtual Assistants Consistently Follow Up

A consistent follow-up to your leads usually means money. 

Most deals are closed by following up, but sometimes this is left by the wayside because of other equally pressing matters in your business. That costs you deals and money.

Bob Lachance at REVA Global puts the importance of follow-up in perspective:

• Only 2% of sales close after the initial meeting
• Sales follow-up usually drops off a cliff:
  • 44% of sales reps stop following up after one rejection
  • 22% stop after two rejections
  • 14% stop after three rejections 
  • 12% stop after four rejections

All in all, 92% of people are done trying to convert a lead by the 4th rejection. You can automate your follow-up through the use of a virtual assistant. It takes several touches to close a deal. 

Optimal Tasks For Virtual Assistants

Another task that you can have your VA do is the property and lead research. While you are out looking for deals and securing financing, your VA can vet the properties by: 

• Conducting due diligence on the leads using a checklist
• Compiling comparables data 
• Researching the property's
  • Tax information 
  • Title information 
  • Liens and judgments
• Marketing
  • Design graphics, posts, and flyers for properties
  • Share listings on social media and listing sites
• Lead intake
  • Take all calls for you 
  • Gather relevant information
  • Qualify the lead
  • Set appointments 

Once you train a virtual assistant on how to do these processes, you'll be free to spend your time doing activities that matter the most to you. That could be anything from finding deals to spending time with your kids. 

Secrets To Scaling: Virtual Assistant  

There are several tasks that you can delegate to your VA. These tasks are essential but may not necessarily be the best use of your time. As a result, it might be ideal to leverage the skills and expertise of a virtual assistant. 

The most common tasks for scaling that a VA can assist you with include, but are not limited to: 

• Lead generation 
• Lead follow up 
• Marketing 
• Administrative tasks

Save Money With A Virtual Assistant

As you grow your real estate investing business, you'll need help. A VA can provide you with that help efficiently and for less money than hiring an in-person or in-house assistant. 

Bob Lachance at REVA Global breaks down the savings: 

Key Takeaways

Running your real investing business takes a lot of energy and time. It often requires you to take on several different responsibilities. You have to grow and maintain your business through steady leads. 

You can reduce the time you spend generating leads by leveraging the skills of a virtual assistant. A VA can handle the following tasks with accuracy and ease: 

• Cold calling, texting, or direct mailing potential leads
• Following up and locating motivated sellers and hot leads
• Conducting due diligence

Generating leads is a time-consuming process for one person. The time sink and attention to detail it requires can cause even the best of us to miss leads or burnout. If you're not working efficiently, you may let leads languish, pile up, and ultimately lose those opportunities. 

Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom, reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.

You have to collect rent that is past due. That's not fun, but it's sometimes necessary. This whole process can be a sticky situation for any real estate investor. 

Maybe you disagreed with your tenant over their excessively late rent. Or maybe they broke the lease and added another pet without your knowledge. Maybe their kids dropped a firecracker in the toilet, and it exploded. 

For whatever reason, either you had to evict, or your tenant packed up and moved out, denying you the ability to collect back rent.  

That's not an ideal situation. It's an unpleasant annoyance that a real estate investor contends with as part of doing business. But it doesn't have to be. 

In this article, we'll cover three practical and actionable strategies that enable you to collect back rent for the services you rendered. 

Collect Back Rent From The Security Deposit

You can't control that your tenants violated the terms of their lease, broke it, and left. You can control how you respond to their actions.

Suppose your tenant left without paying rent. Their violation is a situation in which they surrender the security deposit to you. Being behind on rent or breaking the lease is probably enough for you to collect back rent. 

Check with your real estate attorney to be safe. You never know when your absent tenant might demand the security deposit back. 

Use The Courts To Collect Back Rent

Even if your tenant left, they still have the responsibility to fulfill the terms of the lease agreement. First, you should try communicating with the tenant to explain their financial obligations. That doesn't always work out.

A lease is a legally binding contract. In other words, your tenant signed a legally binding contract stipulating that they would pay rent to live on your property. Once they violate the terms of the agreement, you have legal recourse in the form of your state's small claims court system. 

How Does Small Claims Court Help Me Collect Back Rent?

Small claims court is a relatively cheap and time-efficient way to collect back rent. The process differs from state to state, but in general: 

• It's without attorneys
• For claims less than $10,000
• The court guides you through the process

You'll get an enforceable judgment if you win in small claims court. With that enforceable judgment, you can collect back rent from your tenant via:

• Wage garnishment: you may be able to collect a portion of someone's wages to satisfy your judgment
• Bank levy: you have your tenant's bank info, and you're a creditor that needs payment
• Sell the judgment to an enforcement specialist: you'll get paid some, but not all the judgment

Use Other Legal Remedies to Collect Back Rent

Another excellent, straightforward legal remedy to collect back rent is to sue in assumpsit. 

When you sue your former tenant in assumpsit, all you're doing is asking the court to get them to pay what they owe you. That's it. Some states don't believe you're entitled to just back rent but also interest on the unpaid rent. We're fans of such landlord-friendly statutes.

It's always a good idea to check local laws and retain counsel if you plan to go to court. The court may be a worthwhile endeavor for large enough sums that the tenant could plausibly pay. Others may prefer to negotiate directly, arbitrate the dispute, or seek small claims damages as alternatives.

When Is Suing Worth it?

Your mileage with success in court will vary. The most significant considerations are their likelihood of success and the value of their own time. State law largely determines the former, how much you can recover, and in what venue.

The second consideration--about the value of your time and how you wish to spend it--is far more personal. Lawsuits are lengthy, often painful affairs. Most people will go well out of their way to avoid one. The reward and chances of victory need to be sufficiently high for the stress to be worth the trouble for most of us.

That said, court remedies exist for a reason. They're there when all your other, more straightforward solutions to your problems fail. When diplomacy, asking nicely, raising your voice, lowering your voice, offering to solve it between yourselves, offering to "release" from or any won't do anything. 

If you've lost money from nonpayment, you can be made whole financially. Just understand that with anything court-related, there are never any guarantees.

Key Takeaways

It's never fun to have to collect back rent. It's time-consuming for you and takes you away from running your business. Unfortunately, collecting back rent is a necessity sometimes.

You have several options to collect back rent that we covered. You can use each or all of the following strategies to get your money:

• Use the safety deposit to recoup your losses
• Go to small claims court and get an enforceable judgment 
• Sue in assumpsit

Royal Legal Solutions helps real estate investors protect their assets. Secure your financial future, and register for your FREE Royal Investing Group Mentoring Wednesdays at 12:30 pm EST! 

Millennial homeownership is historically low. According to the most recent Census data, about 49% of millennials own homes. It's become a national pastime or running gag to blame the millennial generation for killing different industry types. Or they are chalking up the low millennial homeownership to avocado toast and overpriced pumpkin spiced lattes. 

In this article, we give an overview of the struggles that millennials face. Also, we cover how you, as a real estate investor, can benefit from understanding their plight. 

Millennial Homeownership Is Historically Low

Millennials want to own homes but can't afford the price tag. More than 75% of millennials still view homeownership as part of the American Dream. But, a growing number (more than 20%) believe they will never own a home and will be eternal renters. 

Millennial homeownership is much lower than the rate of 26-41-year-olds of the past. There are reasons beyond any person's control for that. 

Several factors characterize the low rates of millennial homeownership:

• The average home price is over $330,000
• Surging inflation that is outpacing wage growth
• Rising mortgage rates

All these factors combined are squeezing millennials as they enter the financial prime of their lives. But the issues are forcing many millennials to delay marriage, kids, and homeownership. 

First-time home buyers are in a disadvantageous position; home prices are to the moon; mortgage rates are spiking. Low wages and debt make wealth generation more difficult. These realities form the perfect storm for low millennial homeownership rates. 

America has become a much more difficult place to secure an affordable mortgage. "First homes" (single-family homes, even multis under $250,000) make up less of the market than ever before.

After the 2008 crash, real estate investors scooped up hot deals on all kinds of properties, enjoying a single-family budget property free-for-all. By now, most investors have upgraded these homes, upsold them, or maintained them to be competitive in today's market.

That means the homes are worth more than appreciation alone. Yet, it's the same asset investors got cheap after the crash. Millennial tenants are now more likely to become lifelong tenants instead of purchasing their own homes. It's bleeding down into Generation Z too. They're the generation with the most people in crisis. As a whole, they're the generation struggling to transition from renters to buyers. 

Yesteryear's Stats Don't Apply to Millennials: What REIs Need to Know About This Population

Even assuming 18-35 years olds are still the "homebuying age group" is foolish and inaccurate. Ask any 18-year-old how likely they are to own a home soon. Seriously. Any college student, even. The American Dream of homeownership isn't dead, but it's on life support.  

Millennials faced a different world: 

• skyrocketing education costs and student debt coming out of college
•  a workforce that doesn't value their labor the way generations past could count on
• lack of benefits or secure employment (gig economies and independent contracting are still on the rise)
• multiple "once-in-a-lifetime" economic downturns
• astronomical and rising rental rates

These factors present difficulties and challenges that prevent millennial homeownership.

Renting is often tricky. Millennials are more likely to move in with their parents than any other generation. Many in their 20s and 30s move home under financial duress, while others lack that option and live with housing insecurity.

These problems are natural barriers to home ownership. We haven't even delved into this generation's many cultural crises. Everything from later marriage age to the ongoing opioid crisis that continues to rage through mid-2019 can affect how this population rents and buys.

Why Millennial Homeownership Trends Matter for Real Estate Investors

Most investors count Millennials among their tenants or desired demographic. Single-family investors and those starter homeowners can stand to benefit in a seller's market. While the housing market has cooled somewhat, there are still ways to benefit from understanding your tenants. 

Millennials as tenants

As millennials learn that homeownership is just one path to building wealth, their preference for renting may align with your investment goals. Attracting and keeping these tenants is essential. 

You want consistent rental income, spend less time preparing a unit for rent, and avoid uncertainty with a new tenant. To keep your millennial tenants, consider: 

• addressing maintenance quicky
• provide targeted amenities
• renovate and upgrade where it's financially feasible

In general, Millennials are well-educated and tech-driven. For them, home prices, supply chain issues, and low cash reserves have made renting a certainty for the foreseeable future. Typically, a well-educated, employed tenant is an ideal tenant for you to have. 

Millennial homeownership as an exit strategy for you 

Millennials want to buy a home. That desire may provide you with an exit strategy. It's not all doom and gloom. A NAR report from March 2022 shows that millennials make up 43% of home buyers. Instead of McMansions, they are looking for good deals on properties and efficient use of indoor and outdoor space. 

If you have a property worth under $250,000, you're sitting on a high-demand property. Millennial buyers are competing, and investors can play fair while profiting.

Key Takeaways

Millennials sometimes turn to real estate investment to "escape" debt or employment barriers. Knowing this group's challenges helps you relate (or understand the real estate issues if you're a Millennial) to life and business. All real estate investors benefit from understanding their Millennial tenants, partners, and fellow investors' struggles. 

Come strategize with us. Secure your financial future, and register for your FREE Royal Investing Group Mentoring Wednesdays at 12:30 pm EST!

Starting in real estate isn’t easy. It isn’t easy. The challenge is why most beginner real estate investors struggle to build their business regardless of the blood, sweat, and tears they invest. 

Sound like you? Good news, you’re in precisely the right place! 

This article doesn’t list out a million mindless strategies. 

What we’ll show you instead are targeted strategies that work. These strategies are easy to replicate for your real estate journey. These strategies help you grab onto the bottom rung of the property ladder and climb your way to financial freedom. 

Surprising Path To Financial Freedom For Beginner Real Estate Investors

Renting is a solid option for beginner real estate investors. I know it seems counterintuitive, but let me explain. 

Should I rent, or should I buy a home? That question is especially salient now with interest rate hikes and inflation. Despite the projected drop in home prices, interest and inflation may make purchasing your first property too expensive. In other words, beginner real estate investors find it tough to get on the property ladder. Tough, but not impossible. 

The reality is that when you buy a home, you take on debt. Taking on debt is always a risky proposition, no matter how secure it seems. Renting enables you to mitigate that risk. 

I want to disabuse you of the notion that renting means throwing your money down the drain. That’s a lie. In exchange for rent, you get a place to live. No matter where you live, it’s going to cost money.

Indeed, you aren’t building equity in a home with rent. The thing is, not all that money goes to building equity in the house. For instance, mortgage interest eats up a large chunk of the cash a homeowner pays in the early life of the loan. 

Also, there are many associated costs that a property owner incurs that a renter never sees. A few of those costs include: 

• Insurance
• Maintenance and repairs
• Pest control 
• Property taxes
• Utilities

The landlord typically covers most or all of these expenses when you rent. That means you have an opportunity to keep more cash in your pocket. As you build a nest egg, you should look into the following so that you can get on the property ladder as a beginner real estate investor: 

• Save money
• Cut debt
• Work on your credit score
• Be creative with investing opportunities

The ultimate goal is to transition from renting to owning a property.

How Do I Start As A Beginner Real Estate Investor?

To start as a beginner real estate investor, you must plan. Some of the more immediate options include:

• Subletting your space, but make sure to clear this with your landlord, or you can get into legal trouble.
• Real estate investment trusts (REITs); REITs are companies that own rental properties. The companies pool together all the capital from investors and then distribute back the profits.

Another way to invest in real estate is through a Federal House Authority Loan. 

An FHA loan is typically for home buyers who do not meet the requirement of a traditional loan. These loans have low credit scores and down payment requirements. Also, FHA loans are for buyers who intend to use a property as their primary residence, also called the occupancy requirement. 

If you decide to use an FHA loan, you must possess the home within 60 days and use it as a principal residence for one year. 

As with all things, some exceptions apply. You can use an FHA loan to help you start your real estate investing business by buying a multifamily property.

Here is how it works. The FHA allows property owners to buy homes with up to four units (fourplex). The only rule is that the owner has to live in one of the units as their primary residence. That way, the owner can rent the other three units for income. 

Here is an illustration of how that might work: 

Suppose you use an FHA loan to buy a multifamily home for $250,000. The mortgage for that home will be about $2,000 per month. You have to occupy one unit, but three units are available. 

The average renter pays about $1,330 per month in rent. That means you could potentially live in your unit and charge three other renters $1,330 per month (or more, depending on market forces). In this case, you will earn $3,990 per month, have a place to stay, and a way to progress up the property ladder as a beginner real estate investor. 

No matter what step of this process, you need to protect yourself. Royal Legal Solutions offers expert advice and proven strategies to help secure and keep your assets safe. Take our FREE 5-minute quiz to get powerful wealth-building insights. 

Key Takeaways 

Renting is not throwing your money away. Remember, you get a place to live and don’t have to deal with the pesky taxes and costs associated with home ownership. For beginner real estate investors, renting is an opportunity to save money and reduce your debt. 

While renting, you can consider subletting out (if you’re allowed) or dabbling with REITs to increase your cash flow. Ultimately, you will want to transition to your first property. An excellent way to do that is with an FHA home loan, provided that you meet the requirements. 

Want to learn more about how to get started in real estate investing? Register for FREE Royal Investing Group Mentoring Wednesdays at 12:30 pm EST.

Why would you be interested in residential assisted living facility investing when you could stick with single-family and multifamily homes?

Residential assisted living facilities have the potential to provide a greater return on investment than other types of properties. Also, the country is aging and needs a place to live its golden years. This type of investing should be pretty lucrative in the coming years. 

Below you will find a simplistic guide that explains the fundamentals of this emerging investment opportunity. Keep reading to see if residential assisted living facilities are a promising addition to your portfolio. 

Check out our video replay with residential assisted living facility investment expert Isabelle Guarino Smith. 

What Is Residential Assisted Living? 

Residential assisted living is a group home for seniors that helps the residents with their daily lives. The help runs the gamut from hygiene, eating, and physical therapy. These are typically in single-family home neighborhoods with homes made accessible for seniors.

These are not nursing homes, nor is it independent living. It's somewhere in between.

Is Residential Assisted Living Facility Investing Feasible?

Yes, residential assisted living facilities are a reliable investment. The facilities are a reliable investment because of demographics. Like Bob Dylan says, "The times they are a-changin'."  

Let me show you how times are changing. To put a finer point on it, let me show you how the US is getting older. There are more than 73 million baby boomers in the United States aged 70 or older. By 2030, all boomers will be at least 65. In general, US citizens are living longer, and in 2034 there will be more older adults than under 18 children for the first time in history. 

More elderly means increased demand for certain goods and services. One of those goods and services might be a residential assisted living facility. You can take advantage of this inevitable shift in the country's demographics by investing in a facility. After all, aging boomers will need a place to stay.

As with all real estate investments, you want to be protected. Please look at how we provide asset protection strategies in all 50 states for all asset classes. 

Debunking 7 Common Residential Assisted Living Misconceptions

If you're anything like me, you hear "assisted living facilities" and think of bed sores and elder abuse. It doesn't have to be like that, though. Here is a list of 7 common misconceptions. 

#1 You have to work at the home

The facility is an investment that is similar to your other assets. But it's also a business. As with any business, you will need to dedicate time to the front end to become operational. One aspect of this involves hiring staff. You do not have to work at the home.

#2 Liability insurance is expensive

Insurance does cost money. However, if you shop around, you'll be able to find the appropriate amount of coverage for the right price.

#3 Seniors all died from COVID

Seniors did not all die from COVID. While they were the most at risk and constituted the most deaths, many older people still need a place to retain their dignity and call home. Also, aging boomers are entering this market, so there will be plenty of residents on the horizon.

#4 Good employees are hard to find

Good employees might be hard to find for huge nursing homes. Those types of homes have a 50 to 1 resident-to-employee ratio. With that many people, it's hard for anyone to give the required level of care and attention. In contrast, a residential assisted living facility has a much lower resident-caregiver ratio, meaning better care.

#5 You don't need medical experience

You didn't need to be a contractor or real estate agent to invest in real estate. It might have helped, but it wasn't a requirement. Likewise, you don't need to have medical experience. It might help, but it is not a requirement. 

#6 HOAs can't prevent you from creating one

The Federal Fair Housing Act outweighs and supersedes any complaints. 

#7 Seniors can't afford the service

Since the pandemic began, boomers have a combined wealth of $71 trillion. This means they have the money to spend on dignified housing for the final stretch of their lives. 

3 Simple Routes To Investing

Here are the three ways to invest in residential assisted living: 

1. own the real estate and lease it to an operator
2. own the real estate and operate the business
3. private lender or partner

#1 If you own the real estate and lease it to an operator, you are a preferred real estate provider. That's important for you as a real estate investor because you potentially:

• get twice fair market rent 
• have long-term, low-impact tenants
• have little or no maintenance

#2 You own the real estate and operate the business. Owning the real estate and owning the company might be profitable. Here's why–the average cost of care in an assisted living facility is $4,500 per month. There are no standard configurations for a residential assisted living facility. Still, anywhere from 6-16 people can stay on your property.

#3 You act as a private lender or partner. Maybe you have cash, and you invest in someone who is going to be an owner and operator of the business. 

Key Takeaways

Residential assisted living facility investing might be a solid investing strategy for you. Here are the key takeaways from the discussion today: 

• residential living is not a nursing home, but it is not independent living either. It's somewhere in between. 
• demography is changing, and the country is getting older 
• elderly people need places to live too
• Options to invest:
  • you can own the real estate and lease 
  • own and operate the land and business
  • provide capital for an owner/operator

Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom, reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.

Due diligence involves investigating, auditing, or reviewing circumstances and facts around a deal. As a competent real estate investor, you’ll want to conduct due diligence so that you have a clear understanding of the financial ramifications of any agreement. 

Doing your due diligence is especially important when you consider note deals. Suppose you want to invest in first-position non-performing notes backed by real estate. Non-performing notes are when the borrower has stopped paying. You want to ensure that the investment you are committing to is fiscally sound, right? 

After all, notes are an asset class with growth potential. Like all investments, note deals carry some risk. Royal Legal Solution mitigates the risk to your property with our asset protection strategies in all 50 states, for all asset classes–including notes. 

This article outlines six factors you should consider when vetting your note deal. Continue reading to get a primer on due diligence best practices.

#1 Property Valuation

Property valuation is essential when looking at what notes to buy. You can analyze the property using online research tools. The next step is to have someone who is boots on the ground do an inspection and value the home for you as well. 

The property valuation is the basis for your discounted purchase price. You won’t necessarily pay the unpaid principal balance. 

#2 Verify The Property 

Sometimes note investors can get into a sticky situation by only doing online searches. You need to follow up by sending someone to see the lot and verify that a structure is on the lot. 

If you don’t do your due diligence here, you might buy a note and end up with an empty lot. That’s a devastating oversight!

Here are the things that you will want to get verified: 

• existence of structure
• occupancy
• structure type
• square footage
• lot size
• number of bedrooms and bathrooms in the structure
• year built
• county name
• population size
• violent and property crime ratings
• rents 
• comp sales, use “like for like” comparison and data 

If you choose to get into note investing, you’ll want a good return on your investment. Reasonable due diligence maximizes your profit and minimizes your risk. 

#3 Inspect The Asset

The bank might tell you that the property is a single-family home. What might happen is this–it might be a mobile home or a condo. Those types of structures might not be in your plan. Trust but verify because the banks get it wrong sometimes. 

#4 Check For Unpaid Taxes

Make sure that you know how much delinquent property taxes are. When someone stops paying a mortgage, they usually stop paying their taxes. In this case, you will want to know when and if a tax sale is scheduled. 

Steps to take when checking for unpaid taxes: 

• research on the internet 
• call the tax office 
• ask for tax deed sale or tax sale lien
• find out who paid the taxes (borrower or bank)

#5 Research Liens Or Judgements

You will want to verify any liens, judgments, or junior lien holders. Knowing about other lien holders is vital if you accept a deed instead of foreclosure. 

For instance, suppose you receive the deed as payment in full for the loan from the borrower. Even though you are in the first position, someone with a lien, HELOC, or judgment against the property will move ahead of you. That means you become responsible for those liens. That could be costly.

#6 Follow Chain Of Ownership

You have to follow the chain of ownership with notes. Make sure you are intimately familiar with where the loan originated and all the subsequent note holders.

The county courthouse will have records of all assignments of mortgages for each transfer of the mortgage to subsequent note holders. These records will be in the correct order, so you should be able to follow the chain of ownership. 

Due Diligence Key Takeaways

Suppose you decide to get into note investing. Don’t you want a risk-free return on your investment? You’re in luck because doing due diligence maximizes your profit and minimizes your risk. Here are six critical factors in doing your due diligence when vetting notes: 

• Property valuation: do your research, and have someone local to supplement 
• Verify the property: your local team is invaluable here
• Inspect the asset: banks mess up sometimes; trust but verify
• Check on the taxes: the tax man will always extract their pound of flesh, don’t get bloodied
• Research liens: make sure no one skips to the head of the line 
• Follow the chain of ownership: find out any and everyone who has owned the mortgage

Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom, reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.

What options are available when inventory is low and priced too high to be profitable? You become the bank with note investing!

For a real estate investor, note investing might be an excellent option for you. With this type of real estate investment, you won’t have to manage property or deal with other types of transactions actively. It’s passive income. 

As with any asset, you need asset protection. We provide asset protection strategies in all 50 states for all asset classes, including real estate notes. 

Use this guide to start you down the right path. Are you in the market for an investment that provides passive income without the dregs of property ownership? If so, note investing might be the answer to your prayers. Keep reading to evaluate the feasibility of this investment for your financial situation.

Note Investing Explained

Note investing is when you purchase real estate notes. The idea is that you change the terms of the note by reselling it, or you foreclose on the property to generate cash flow. 

What’s A Real Estate Note?

Simply put, the real estate note is two things. The first is the promise to pay or a promissory note. The second is a lien. A real estate note is the same thing as your mortgage note. 

In other words, it’s a written promise to pay money plus interest for a predetermined time. The mortgage places a lien on the title of real property to secure the written contract. If you default on your mortgage, the property may go into foreclosure. Defaults and foreclosures provide unique opportunities for real estate investors. 

When you start note investing, you know the difference between performing and non-performing notes:

• performing notes are current. 
• non-performing notes are in default

Why Should I Invest In Performing Notes?

Performing notes provide passive income. There is less risk in note investing with performing notes because the borrowers are keeping up with their mortgage. That means they make on-time payments. Those on-time payments provide a source of relatively reliable passive income. 

Why Should I Invest In Non-Performing Notes?

Note investing has several advantages. They are: 

• cheaper
• income potential
• secured by real property

Cheaper: The non-performing real estate is secured by the equity in the property. If the borrower defaults, the real estate is more affordable to buy. You can purchase these notes from .38 to .62 on the dollar. 

Income potential: Another advantage is that depending on how you resolve the note, you could experience an excellent return on investment or create ongoing passive income. 

Secured by real property: Inflation. Stagnant wages. Whatever the reason, people are increasingly defaulting on their homes at a higher rate. For instance, there has been a 24% increase in foreclosures post-Covid indicates. Those homes represent a tremendous opportunity in this note investing space.

How Do I Get Started? 

You will need to find someone who will sell real estate notes to you. Typically, you will be able to buy notes from banks, other investors, note investment funds, and real estate brokers. 

Risks of Note Investing

No investment is without risk. Before making any financial decision, you should consult a qualified financial advisor or attorney to decide what’s right for you. There are a few perils associated with note investing:

• Not FDIC insured
• You can lose money at the auction 
• A borrower may stop paying altogether and default, thus destroying your passive income

Rewards of Note Investing

Note investing has several rewards if you decide it’s the right investment strategy for you. Number one is it might make you a lot of money if you do it right. 

The first step, you have always got to cover your assets. You don’t want your assets exposed, so protect them. 

After that crucial step, you could potentially enjoy the benefits, including: 

• potentially high ROI
• good deals on delinquent properties
• no real estate agents and their fees
• generation of passive income

What Does It Mean To Become The Bank With Note Investing?

When you buy a note, you become the bank. As the bank, you have complete control over your exit strategy. As a real estate investor, that will bring some peace of mind. 

Key Takeaways

There are several things to consider when deciding whether note investing is right for you. Here are the primary takeaways from this guide:

• don’t expose yourself; cover your assets
• performing notes provides passive income
• non-performing notes have a higher risk, but can be lucrative
• there are both risks and rewards of note investing
• becoming the bank with note investing mitigates risk a bit

Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom, reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.

Why would you want to take the time and effort to acquire and manage real estate remotely?

Due to the demand, legislation, or tax laws, investing in your local real estate market is not always feasible. Remote real estate investing provides some distinct advantages that we discuss below. These advantages may provide the right mix of value and autonomy that you desire as you balance your investment strategy.

We featured this topic of discussion in a recent session of Royal Investing Group Mentoring. This session featured guest host Chris Weiler, who spoke in-depth about his experience investing in real estate opportunities outside of his immediate geographic location. Watch the Royal Investing replay.

Why Invest in Real Estate Remotely?

When you invest in real estate remotely, vast swaths of markets become available. You are no longer looking at markets in your state but all 50 states. In some cases, you may be looking globally for deals. That means you will have more chances to find properties with favorable terms.

Suppose you live in California. Typically, an investment property in California will cost more than one in the South or the Midwest. For instance, California's median sales price is $505,000; in Ohio, the median sales price for a home is $145,700.

In reality, people in Ohio also have to find a place to live. If they can't buy, they will need to rent. As a California resident, you may want to stay local and purchase a single-family home for the median sales prices.

Or it might be financially sound to shift your investment to Ohio, where you could purchase three homes for the less. Then you could convert each of those homes into rental properties.

An unintended benefit of remote investing is that it's more passive. You won't be there to contribute your sweat equity. Instead, you will be able to find better and more profitable uses for your time–like finding more deals.

How Do I Find Deals With Remote Investing?

Here's the thing, you don't find the deals. To successfully invest and manage real estate remotely, you must establish a strong network of trusted partners. Networking is a critical step in increasing your net worth.

Partners include, but are not limited to:

• Realtors and brokers
• Contractors
• Real estate conference attendees
• Convention-goers
• Wholesalers
• Fix and flippers

Your partners should have skills and core competencies that you can leverage. Also, offering your partners an incentive to work with you is essential. It can't be a one-way relationship that only benefits you.

Another way that you could potentially find real estate opportunities is to look where you vacation. Investing where you enjoy visiting can be advantageous because:

• you know the area
• you like to spend your time there
• you may be able to deduct your holiday as a business travel expense

How Do I Track My Remote Investments?

All the day-to-day considerations are the responsibility of your partners. In other words, they are your boots on the ground. Preferably, you will provide strategic decisions and capital while your local network will handle the operational decisions.

Delegating requires a lot of trust and communication, which is why having a solid network is crucial to your success.

One thing that is non-negotiable for your success is following accounting and bookkeeping best practices. At a minimum, you and your network will need accounting practices to know:

• How much you spend every month
• Types of issues that arise
• Where the money is going

Detailed and dedicated bookkeeping provides an accurate assessment of your ROI. It enables you to make the best decisions for your future. Since you are working remotely, you will need to do online accounting and bookkeeping. It's just more convenient.

Here is a list of accounting and bookkeeping products that may work for you:

• Quickbooks
• Stessa
• Wave
• Xero

How Do I Split Profits?

When it's time to decide how to split the profits, everything is negotiable. There is so much fluidity because every situation is unique to you and your partner. A potential way to divide the profits is to structure the partnership based on each party's value to the deal.

One key fundamental is to get everything in an ironclad contract. A contract provides clear expectations about how the business should operate, who is responsible for what, and how you split profits. As an added protection, you might consider including an anti-embezzlement clause.

Can I Scale Investing In Real Estate Remotely?

Scaling is entirely possible, but you have to make sure you delegate responsibly and appropriately. It's much easier to scale with a reliable and solid network.

What Are My Exit Strategies For Remote Investing?

In remote real estate investing, you exchange control for an opportunity. Protect yourself by being flexible and having multiple outs. You may decide to have plans to do the following:

• Fix and flip 
• Convert to rental 
• Sell down the line

Your decisions will rely on the market conditions and your discussions with your network of trusted professionals.

Real Estate Investing Remotely Sounds Good. What Are Some Drawbacks?

Some things may give you pause. You may not have the risk tolerance that remote real estate investing requires. After all, you may experience fear from being so far away to be on-site and control what's happening.

Another thing is that you have to be reliant on others and trust them to do their job right. That's tough because finding the right team can be challenging. When you find the right people, you still have to incentivize and grow the team.

Key Takeaways

If you have an internet connection, risk tolerance, and an ability to delegate, remote real estate investing might be right for you. To be successful, you will want to:

• Establish a network of trusted professionals
• Keep detailed and accurate accounting and bookkeeping records
• Decide how to split profits
• Establish flexible exit strategies

For more education about opportunities for real estate investors, join our Royal Investing Group Mentoring on Wednesdays at 12:30 p.m. EST. We meet weekly for an hour as a large group to learn, share, and collaborate on relevant topics in a fun and friendly format.

Are you ready to move beyond single-family home investments? If this sounds like you, multi-family real estate might be a good investment.

Before you invest in any asset, you must consider the pros and cons of each move. Also, you need to know what you specifically want as an investor. For each decision you make, there will be a variety of outcomes.

Here is a list of 4 multi-family real estate investment tips and tricks.

These tips may be just the thing you need to make an addition to or transition from single-family home investments. You'll enjoy these tips if you're ready to move in a new direction on your real estate journey.

Tip #1: Passive Income: Sensational Value!

A multi-family is any residential property that contains more than one housing unit. These properties include, but are not limited to:

• Duplexes
• Fourplexes
• Townhouses
• Apartment complexes (with 5 or more units on the property)

With more units come more tenants and more rent. Keep in mind that in the United States, the average rent is $1,326 per month.

For a real estate investor, that means more sources of cash flow.

Maybe you don't want to deal with finding deals, securing financing, and hiring a property manager. You still want to invest in multi-family real estate. A real estate syndication might be best for you.

With syndication, you pool your money with other investors and invest in a property. You get to spread the risk and responsibility among multiple investors.

Finally, multi-family real estate investing is an excellent way to create a diverse portfolio. When you diversify, you collect a variety of asset classes. A combination of assets reduces your risk. Any single asset class's performance doesn't tank the rest of your portfolio.

Tip #2: Professional And Reliable Team Fundamentals

When you invest in multi-family real estate, you need a reliable team to help you.

Multi-family is different from single-family home investments. It's both real estate and a business based on net operating income. So part of your team needs to be a mentor who has experience in the industry of multi-family real estate. Also, a mentor can find the sweetest deals and craft a safe exit strategy.

Next, you'll need a person to manage the asset. Your management might be a local person who can handle the property's day-to-day operations. For instance, you might employ a property manager who oversees the maintenance, finding and managing tenants, and emergency repairs.

Generally, people struggle with multi-family real estate investments when they mismanage the property. This type of investment takes a team and reliable partners.

It helps to increase your net worth when building your team. Part of growing your net worth is networking. You enter into a mutually beneficial relationship with someone who shares your vision.

Tip #3: Colossal Profits From Scaling

Economies of scale provide advantages when the cost of business spreads over a large number of units. With multi-family real estate, math and the law of averages works in your favor. Keep this in mind; people need a place to live regardless of market conditions.

You might have started with a single-family home and had success with your tenant. That's the limitation of your single-family home; you will only ever have one tenant. You can't scale that rental income.

With a multi-family property, you can scale exponentially. When you have more units in a property, you get more benefits, including:

• Saving time, you're still only managing one property
• Less work per unit
• The break-even point is lower

Tip# 4: No Compromise On Due Diligence

When looking for the right place to buy multi-family real estate, you must do your diligence. At a minimum, you need to research:

• Population
• Crime
• The economy of each city
• School district
• Landlord friendly

The population needs to be growing. Typically, people want to live in a safe area of town, so you have to know the crime statistics for your investment area.

The economy needs to be both strong and diverse. For instance, Killeen, TX, is home to an Army base called Ft. Hood. The entire economy revolves around the base. In most rental properties, you will find a soldier renting. The thing about soldiers is that they move or get deployed. When that happens, you are subject to the Servicemembers Civil Relief Act.

Find areas where the economy and renters are not homogeneous to avoid being stuck with empty units in the case of deployment or an economic downturn.

Good school districts are attractive to tenants with children. 32% of renting households have children, so you should keep that large chunk of the market in mind when doing your due diligence and research.

Key Takeaways

If you are ready to change your investment strategy or are looking for additional investment opportunities investing in multi-family real estate might be for you.

When you invest in multi-family real estate, you should:

• Enjoy that passive income
• Build a team
• Scale accordingly
• Do due diligence

For more education about opportunities for real estate investors, join our Royal Investing Group Mentoring on Wednesdays at 12:30 p.m. EST. We meet weekly for an hour as a large group to learn, share, and collaborate on relevant topics in a fun and friendly format.