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Welcome to Episode Eight of Season Eight of the Growing Empire Show. Today is our trailer for Season Nine and you’re going to hear all about what to expect out of the upcoming season, as well as a recap of what we went through in season eight. So stay tuned.

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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.

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Before we jump into today’s episode of the Growing Empires podcast, I have a program update for you as we are shifting this podcast from a weekly to a bi weekly show starting with season nine. I launched this podcast in July of 2020. Right in the middle of the pandemic. The real estate investment market was quite different back then versus how it is today and how I expect it to evolve over the next few years. I will continue to make sure that each podcast episode focuses on new ways to help you optimize your real estate investment portfolio as an active investor and I am adding a new way for you to get the best information about investing in real estate for passive income. Combined with this Growing Empires podcast and my Growing Empires Advisor Guide newsletter, I’m launching the Empire Investment Club. Which is specifically designed for people who want to earn passive income from real estate. I’ll be sharing more about our new Empire investment club. So make sure you’re signed up for the growing empires advisor guide newsletter by visiting my website JenniferdeJesus.com. Finally, I want to thank you for listening, whether it’s your first time or you’ve been a loyal listener for a long time. I’m looking forward to continuing to bring you the very best expert interviews, information and education to help you grow your real estate empire.

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So as I had mentioned in the opener here, we are going to be transitioning to a biweekly podcast. The next season, Season Nine, is going to start on September the 30th. And I hope you stay tuned for that. We are going to talk about the method to the madness how to know which investment strategy or method is best. We are going to talk about cap rate and does that matter should that be part of your equation when you’re looking at investment properties. We’re going to talk about the BRRR method. Buy, Rent, Rehabilitate, Refinance, and Repeat. We’re going to talk about that common method and when to use it and when not to use it. We’re going to talk about classes of properties and how to know which type to invest in. We’re going to talk about location, location, location. All of the things that you need to know about determining what area you’re going to invest in. We’re going to have our question and answer segment as we do every season. And we are going to talk about the value add king, what can you do to add value to your properties to really make them appreciate very quickly. How to determine what your buy and hold strategy is going to be and how to know when it’s time to buy and sell those properties. We’re going to have some great special guests during the season. So I hope you stay tuned for all that Season Nine has to offer.

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So let’s talk about what we went through in season eight. Season eights theme was stabilizing your investment portfolio and we talked a lot about market rate and why it matters when you’re thinking about renting your property out. Why do you need to know what the market rates should be? And why should you be concerned if your apartments or your homes are not able to achieve the market rates? How to find that information, if you’re not one that’s very familiar with the marketplace that you’re investing in, and how to make sure that you always stay competitive in that market rate so that you can have long term occupancy. We had a special guest interview which actually was a two part segment with Joshua kam, where we talked in detail about SBA loans and what you can use them for, specifically to fuel your investment portfolio growth. I hope you took the time to listen to both of them Joshua has a wealth of knowledge on SBA financing and loans and how to use them for investment strategies. And on the show notes for those episodes, you will have his contact information in case you find the need to reach out to inquire more about how SBA loans could work for you. We talked about analyzing your portfolio each year, and what to do each year to make a decision on how to invest for future years. We talked about what you should be looking at when you analyze your investment portfolio. And we also talked about how to make sure that your portfolio was always growing. We talked about how to find and keep the very best tenants. We did our usual Question and Answer segment and we talked about how to make the right improvements to your investment properties. So today what I wanted to briefly touch on in, addition to our theme for season eight stabilizing your portfolio is, what I do, what I do personally? Because I always have people ask me, what do you do with your own investment property? So I thought today would be a good time for me to share what I do personally. So when I buy a property, first of all, I think it’s really important to acknowledge the fact that when you’re working with a real estate broker. You never want to go directly to the listing agent, okay? Because whether I’m buying it for myself, or whether I’m helping people to buy investment properties that we’re going to then transition into management, the time that it takes me to gather the necessary information and put together a plan with the investor is considerable. If you want your properties to start making money from day one, you’ve got to give us like a running head start. I recently had this conversation with an investor of mine that would always go directly to the source. He would always go to the seller to buy properties or to the listing broker. Because he felt like he was getting a better deal because he thought that well, maybe if there were commissions involved, you know, I would get a better deal. And what I explained to him is that that theory is crazy, because first of all listing contracts and how much somebody is going to pay for a property to sell it, as far as commissions are negotiated ahead of time. So whether there’s one buyer, two buyer, or 10 buyers, there’s still commissions that are being paid. And those commissions don’t decrease. If you go directly to the listing agent, what it means is that the listing agent gets to double dip, right. And in that situation, especially in Pennsylvania, where you’re a dual agent, you can’t really represent really anybody. You have to stay very neutral in those situations. So if you’re an investor, and you want to make sure that your best interests are at heart, you need your own representation. You should not be going to the seller directly. The other thing is, is that when the seller is not represented by any real estate professional, they’re not told all the walls regarding, you know, disclosures and what they have to tell you up front. So you may be thinking that you’re getting a great deal. But the repercussions of that could mean that you’re actually buying a very bad deal. Because you’re going to find out things later that were never disclosed to you because the seller probably didn’t know any better, because he had no actual professional advice. And now you’ve got some costly bills to deal with things that you never knew existed. And now you’ve got to decide whether or not you’re going to sue him or whether you’re just going to move on. And I will assure you that most of the time you just kind of move on because the cost of any kind of litigation is crazy. So what you need to know is leading up to the time that you’re buying your property, whether I’m buying it for myself, or whether I’m helping other investors buy their properties, we take so much time to plan and prepare for the actual ownership of that property. That is so valuable to making sure that you’re putting your best foot forward from the day of ownership.

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The episode will continue in just a moment.

07:41

If you’re like me, you know the importance of diversifying your investment portfolio. Real Estate Investments, whether you’re an active or passive investor are a great way to add variety and reduce risk to your overall portfolio. But what about stabilizing that portfolio? If your portfolio is diversified through real estate, you still have to stabilize your properties with the right tenancy, know when and exactly what capital improvements to do, and assess your entire property’s portfolio to maximize property values and their income potential year over year. Yes, it’s a lot. And you’ll need help to make sure you’re looking at everything as objectively and strategically as possible. Get the guidance you need to assess and make the right decisions that will stabilize and optimize your property so their longevity is assured. Book a call with me. And I’ll guide you through the process and answer your questions. Go to growingempires.com and click on book a consult, and you’ll be on your way to a healthier, more stabilized and diversified portfolio with real estate.

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So, as I do for myself, I do for other investors. And what I do is this, I look at the property. I look at how many tenants are there, I look at what their rent is versus market rate, and I look at their payment history to the best of my ability to get that information. And I make a decision on what my plan is prior to actually owning the property. So let’s say I have a 12 unit building that I’m purchasing. And I have six of those units that I know are far below market rate and the other six are adequate. They’re still below market, but they’re not as far below market as the other six. So one of the things that I would likely plan to do is take the initial six that are the lowest of the low and start to improve them first. Because the bigger impact I can make on my income, the more I can stabilize my portfolio quicker. So I always look at like the worst case scenario. So who is paying the least amount of rent in conjunction with what the market rate is and those are the people that I go after first. Depending on the history of the tenant, you may want to try to give them an option to pay market rate. Now, it’s very hard to have a conversation with somebody about you know, you’re paying several $100 below market. You know, can you pay more? It’s very hard to have that conversation. But again, like I’ve said other podcasts, I choose to Just be frank with people, you know. The conversation will be something like this Look, I know that you’re paying, you know, $500 for rent, and you have been for quite some time, and I’m sure that you are well aware of that that is far below market for a one bedroom apartment. So you know, I’m in a position where this is a business for me and it’s important to me to give great housing for tenants like yourself. But it’s also important for me to make money. Because this is a business venture. So I cannot continue to have somebody paying $500 for rent. But I would like to really keep you as a tenant. Because you’ve been a great tenant for the prior landlord, and he very much sung your praises. So what I’d like to ask you is what do you think you can afford? If we can figure out how to come to a middle ground, maybe you can stay in this apartment. Unfortunately, if we’re not able to come to a middle ground, then maybe we’re going to have to move on. And you’re going to have to find a new place to live. And I’ll have to find a new tenant that could pay closer to market rate. And I usually wait for the tenant to say something back, like what can they afford, because you never know, you may have thought, Well, I can only give them a $50 increase, because that’s reasonable. But they may say oh, I could pay $200 more. You never know their financial situation if you’re just coming into purchasing that property. So I always try to give people the opportunity to pay more without having to put my cards on the table first. And if it comes out to that they can’t pay what I’m willing to take for that unit, then I will just give them notice to move out. Now the other thing that I’m looking at what I’m analyzing my portfolio, prior to a purchases, I look at when the lease has come due. I always want to take on a building with month to month leases to the best of my ability. Because that gives me complete control as the landlord to make any changes that I need to make once I own that building. Because all I need to do is give somebody a 30 days notice and then I can change any of the terms of the lease. However, if I’m taking on a building that has yearly leases, and they all expire at different times, I’m on the hook for those leases until those term of those leases. So please keep that in mind when buying or analyzing any kind of investment portfolio is that you’re on the hook for those leases until those terms have ended. The only thing I do is I look at the capital improvements that I need to potentially make on the property. And I also look at cosmetic improvements that I need to make. It is safe to assume that every time you turn over a unit, you’re going to have costs associated with improving that unit to get it to the quality that would be expected for somebody to pay market rate. So what I try to do is I try to analyze how to go about that in a way that I have only one or two happening at a time. So if I’m an in 12 unit building one or two apartments being turned over a time and money being spent there is not going to be the difference between making money and not making money. Okay. However, if I only had a two unit, and I had to turn over both units, at the same time, I’m making no money. So I think it’s really important to understand that you’ve got to look at the context of the whole building. So I put my plan in place of what I’m going to do to increase rents, who I’m going to talk to you first, what capital improvements I’m going to make and when, and then what cosmetic improvements I’m going to be required to make as the units turnover. And once I have that plan in place and written down, then what I do is I acquire the building. And honestly, I hold it for about 30 days before I do anything. Because what I want to do is I want to see if the plan that I put in place on paper makes sense in real life. And why I say that is simply this, you have no idea once you buy a property, whether that tenants gonna pay rent, be a problem tenant, or just bail on the property. And I like to give it about 30 days to determine how those tenants are going to behave before I actually enact my plan. And I’d like to see how the tenants fall in line with that plan. So let’s say one of the higher paid units were not ones that I was going to actively go after. But I find out that one of the tenants in those higher paying units is a real problem tenant and causing a lot of conflict for the rest of the building. Well, now my strategy may need to be realigned and I may need to go up to that tenant first, as far as turning over the unit, and then improving that unit. Because that may make the most sense for the building. So again, what I do is I have my plan in place, I buy the building, I hold the building for about 30 days to not only get a sense of what the tenants are going to do and not do and how good of tenants they’re going to be. But I also like to get an idea of the maintenance that is going to be needed on the building. Am I getting a lot more calls than I initially expected? Or is the building very well maintained and not giving me really any problems. That will give me a little bit more leniency on the improvements that I want to make and I don’t have to worry about offsetting that cost with general repairs and maintenance that has to happen anyway on a building. So that’s my strategy. I hope that gave you a lot of insight and some tricks for the future. And I hope you got a whole lot out of stabilizing your portfolio, the theme of Season Eight. Until next time, take care

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or more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio visit growingempires.com