106: Q&A with Jennifer de Jesus

Episode transcript

00:01 Welcome to Episode Six of season one of the Growing Empires show. Today is our question and answer segment and I'm going to be answering questions that were submitted by investors just like you.

00:11 Welcome to Growing Empires hosted by real estate entrepreneur and trusted investment advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

00:29 I want to invest in real estate. I don't have the time to do the research. What should I do? Well, I think that the most important thing here is that number one, even identify that you've actually want to invest in real estate. That's a huge step for people. It's very hard for anybody who has saved up some cash to make a determination that now it's time to spend the cash. Because all you usually hear about money as save, save, save, save, save, right? But you don't hear a lot of people say spend spend spend, spend, spend. There's a difference between spending money on things that will create no wealth. And there's a difference between investing or using your money wisely.

So the fact that you've even identified that you want to invest is a huge step forward. But let's say like most people, you don't actually have time to do the research. So what do you do? First, I think it's important that you have to identify your goals. And once you know your goals, you can figure out what the next steps are. So the main things that you have to determine are, how much money do you have to spend, how much time do you want to be involved, and how much save do you want to have. Those will help you identify the right vehicles to invest in, and then you can locate the professional that can help you make those decisions.

So let's fast forward and let's say that you've decided that you want to invest in passive income producing properties or rental investment properties. Then what you're going to want to do is you're going to want to find a local expert, a local market expert, and you're going to want to get on the phone with them and have a quick consultation. That doesn't have to take a lot of your time. But you should know from that first conversation, whether the person that you're talking to is going to help you invest smartly, or if they have no idea what you're talking about. So if you want to invest, but you don't have time to do the research, honestly, what I would say is find an expert in in that area that you want to invest, and have them educate you that is the quickest way to be able to get to the actual investing, without spending a great deal of time researching.

The problem with researching in general is that there's so much information all over the web, it is very difficult to navigate, what would make sense for you. And I find that sometimes there's so much information on Google that it derails a potential investor. So go straight to the expert. That's my best advice. Go straight to the expert. So how do I know where to invest? Well, picking a location to invest is assuming that you're going to do residential rental properties or commercial properties. And it's important that you are finding a demographic where the population is increasing and the job market is stable. Those are the two most important factors. So some of the things that drive economic cycles in any given area are warehousing, hospitals, universities, casinos, and those sorts of jobs. Those things have a direct impact on the economic stability of a local market.

In Season 2 of the Growing Empires show we are going to talk about Lehigh Valley, Lehigh Valley, Pennsylvania is one of the hottest markets right now. But what you're going to want to duplicate here is that you're going to want to invest in a location that has two very specific factors, demographics, a population that is growing exponentially, and a very consistent and stable job market. That could be any state in any region as long as those two things are happening.

04:16 The episode will continue in just a moment.

04:20 It's true passive income from real estate investing is the secret to building wealth. However, portfolio development takes a great deal of time and experience to be successful. It's important to protect your portfolio so that it remains strong and can continue to provide you with passive income you desire. I help investors bulletproof their investments by developing a portfolio strategy that hedges economic cycles and provides for consistent income growth. I can do that for you to start by scheduling a call with me at growing empires calm. Whether you're a new investor or have several properties that need better management, I can help schedule a consult today at GrowingEmpires.com that's GrowingEmpires.com and will ’ll make your portfolio stronger than ever.

How do I build a team? And do I even need one? The answer to that question is yes, yes, yes. And yes, you absolutely need a team. Real Estate Investing is not a one man show. And if you think it is, you are going to find yourself frustrated, potentially a loss of income. And in many cases, maybe you give up. So yes, you need to build a team. The question is, what do you need to build a team for? Do you need to build a team to locate the deals or do you have experience doing that yourself? If you've got experience sourcing your own deals, then perhaps all you need is a property management company. Somebody that can look over your residential or your commercial property, so that you can back away and continue back to the things that you do. Best sourcing deals. If you have no concept of how to source deals because you have no experience in the real estate market, then the first team you need to build as a team is going to help you acquire the property.

06:12 I highly suggest though, that when you're looking to source a team, if you're going down the path of investment, real estate for passive income, which is what our topic has been all season, if you find a real estate broker or a real estate agent that has no concept of property management and their company does not do property management services, you're going to find an agent or a broker that quickly just wants to sell you a property because when they're done selling your property, they make a commission. Unfortunately, what you may be relying on is inaccurate information. That may be costly on the back end, when you find out that that property cannot achieve the income or the cash flow that you expected. On the other side. If you have a great property manager but they have little experience in real estate, again, you might likely not find the right type of investment property.

So when you're talking about building a team, you need to make sure that you're looking at more of a one stop shop, you need to find a company that enables you to buy the best investments because then they're going to work with you and help you transition into property management services in a very seamless manner. You may only need one person, that right one person should be able to have all the connections that you need for any future growth, they should know the best banks to talk to they should know the best insurance companies to use, they should have experience in the real estate market, they should understand property management, they should be able to take care of the repairs and maintenance or capital improvements on your property.

And they should even have a handle on inspections and assessments of properties from a condition standpoint. Those are the functions of a great team. And those are the things that you need to look for when trying to build your own team. How much cash Do you need to start investing? Well, that actually is a really loaded question because it depends on what You're actually going to buy. So let's say I'm going to invest in a hedge fund, I really, really truly want to have a passive investment vehicle and I don't want to have a lot of risk. So I've chosen to or you're going to choose to invest in a hedge fund, every hedge fund is going to have a buy in for the shares, they're going to have a minimum requirement. I've heard hedge funds have as low as $50,000 requirements as much as a $250,000 minimum requirement.

So it just depends on the type of hedge fund that you're going to be involved in. In a syndication, you might be able to invest a lesser amount of money if you take a more active role in the actual syndication of the property. So perhaps maybe you're the one out there sourcing the deals, but you have the least amount of invested capital because you're the one that's spending all the time sourcing the right deals. Or maybe you are able to run the property management aspect of the property, the day to day operations. So you've got more time in And therefore you are asked to put in a minimum amount of capital. If you're intending to invest in your own residential properties or commercial properties, then the amount of capital that you're going to need is going to be based on the sale price of the property.

So for example, a typical investment loan is anywhere between 20 and 25%. down. So if I'm buying $100,000 property, I need to have $20,000 of cash. Now, where you get that $20,000 of cash really is is completely up to you. Sometimes it's your savings, it could be your 401k plan. It could be an IRA that you have that you want to borrow against, it could be a line of credit that you have an open line of credit and revolving line of credit, you could pull out equity on maybe your primary home. There's many ways to get that money and if you're looking to invest less than $20,000, well, then perhaps you're buying a property that's of lesser value. But once you've identified How much liquid cash you have or where you can get cash from, then you're going to be able to identify the properties that you can buy with that. But it is important for you to know that before you actually start out, you need to know how much liquid cash you have to fund your first acquisition, or to fund future acquisitions.

And if you really don't have any cash at all, something that you might want to think about is going the route of a hard money loan. So a hard money loan is typically where the least amount of your capital is invested. I've actually witnessed and experienced clients of my own purchasing properties for 1000 or 2000 bucks. Now, this includes a very high level amount of risk. So I don't want to make it sound like this is some great vehicle to invest in properties, but it is perhaps a starting property or starting place for you. If you found the right team, as we talked about in a previous answer to a previous question, you might be able to find somebody that can help you source a hard money loan and use it to create quick cash flow, pour lump sums of cash by doing perhaps a buy, fix and flip. And if you have the right team, it won't include a lot of time, it won't require a lot of your time, but you've got to find the right team. But a hard money loan is typically where a bank will fund the majority of the cost of the acquisition as well as the cost of the renovations.

Typically, you're going to pay interest only payments for a period of six months to a year and then within that six months to a year, you're going to be required to refinance out into a typical mortgage but by then you have cash flow on a property potentially, or you've sold the property before you need to refinance out. So a hard money loan is probably the easiest way to get in to real estate investing without using really any of your own capital. As long as you are able to be funded. You're going to essentially borrow a bank's money for anywhere from six months to a year. You're going to buy a property, fix it up. And then sell it or flip it, sell it to an end user typically an owner occupant that's going to pay a premium for a fully renovated turnkey property.

That income that you make the cash flow that you make on that deal can then fund your next property. So I have watched investors get started essentially, by spending, let's say 1000 to $5,000 of their own money, they get a hard money loan, they find a great team, they buy, fix, and sell a property off and the income generated from that investment vehicle now funds the next investment purchase. If you do this, right, that one to $5,000 that we referred to earlier could turn into $50,000 or more, that $50,000 or more now I was gives you the ability to buy a much larger property that $50,000 that we referred to under the typical financing methods.

So 20% down, would buy you a property worth 250 thousand dollars, so a quarter of a million dollars. So that was a very quick way to get $1,000 to $5,000 to turn into $250,000. So how much cash Do you need to start investing? Well, it all really depends on if you're able to find the right team and how much money you are willing to invest. And then you've got to help pair that investment with the right investment vehicle, and then right amount of time that you want to spend on that investment. This concludes our question and answer segment for season one. Until next week, take care.

13:35 For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio visit GrowingEmpires.com.

Season 1JENNIFER DEJESUSAugust 6, 2020Comment