All Forum Posts by: Charles Carillo

@Nathan Betesh

Seller financing benefits sellers if they are looking at a large capital gain on the property and/or they are getting a higher price for their property because of the added hassle. 

Subject To is a way for a seller to get themselves out of a distressed situation. They cannot afford the payments anymore or there has been a family emergency or work emergency and they need to move now but, they have a loan on the property and they might be underwater or the property is in poor condition etc.

@Karen Young

Possibly consider a qualified opportunity fund.

@Dom Battezzato

Great strategy, but most new wholesalers want fast money with a minimal time investment and a minimal financial investment. They understood this to be true since the guru who sold them a course told them.

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to share some tips for new landlords.

Becoming a landlord may seem like a straight forward endeavor but there is a lot that goes into managing rental properties and managing tenants. In this episode, Charles outlines some tips he has learned over the past 2 decades from owning rental properties.

Talking Points:

➡ I have been a landlord since 2006 and there are a few tips I wanted to share with new landlords.

➡ 1. Be aware of leasing scams when renting properties. Make sure to watermark images and if you are posting the rental on Craigslist; avoid putting the exact street address in the listing.

➡ 2. Be cautious of large up-front (usually cash) payments from tenants – why are they doing this – there is usually a trade-off. Now I personally have offered to landlords to prepay a year of rent for 1 free month but in most situations, these are scams. Usually you cannot verify their credit, criminal record or employment. Make sure every prospective tenant formally applies and goes through a credit and background check.

➡ Always have a written lease that your attorney has previously reviewed and always have important communications; written and documented and when in doubt; send them certified. This would include; a non-renewal, a renewal with rent increase, noise complaint etc. It is crazy how many people rent apartments with a boilerplate lease they downloaded off the internet or with no lease at all. You must enforce anything that you put in writing or it could create a precedent that something in the lease is not enforced and then not required; like paying on time or paying late fees.

o Create a coversheet that you provide to the tenant when you present the lease to them and walk them through the coversheet. (checklist)

➡ Never have your tenants do any work at the property for a rental discount. You vetted them as a good tenant when they moved in; you didn’t vet them as a contractor. Unless they are a superintendent; do not make any deals with them for discounts on rent or doing work around the property. Keep everything separate.

➡ Have separate bank accounts; you should have one operating account; you should have one for security deposits and you should have one for reserves. When I owned and self-managed smaller properties; the property would be owned in 1 LLC and then I would have a management LLC that I setup. Under the management LLC I would have an operating checking account that was swept at the end of the month and I would have another account under the management LLC that was just for security deposits. I would keep a savings account under another corporation and that is where I kept my reserve fund. Any profits at the end of the month from the operating checking account would be swept to the reserve savings account at the end of the month. The management company has most of the legal exposure so you want to keep none of your own funds in there after the month is done.

➡ Always be professional with your tenants but do not be friends with them or become involved; even if you live at the same property. Limit text messages, no social media contact, no social meetups, don’t socialize when seeing them face to face; be nice, caring and then move it along. Don’t stand in their apartment or the hall for an extended period of time talking about non-property issues.

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@Jacob Gawlik

Here are my favorite books:

Multifamily Millions by Dave Lindahl

The ABCs of Real Estate Investing by Ken McElroy

The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges

Commercial Real Estate Investing by Dolf De Roos

Trump: The Best Real Estate Advice I Ever Received by Donald Trump

Tax Free Wealth by Tom Wheelwright

Commercial Real Estate 101: How Small Investors Can Get Started and Make It Big by David Lindahl

Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money by Matt Faircloth

The Definitive Guide to Apartment Marketing by Josh Grillo

Investing in Apartment Building by Matthew Martinez

Crushing It in Apartments and Commercial Real Estate by Brian H Murray

The 7 Secrets to Successful Apartment Leasing by Eric Cumley

2 Years to a Million in Real Estate by Matthew Martinez

Burn Zones: Playing Life’s Bad Hands by Jorge Newbery

Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request by Michael Reinhard

It’s a Whole New Business!: The how-to book of syndicated investment real estate by Gene Trowbridge

When it comes to doing it all, Bill Manassero has a few things down. He is a Christian who started a non-profit helping children in Haiti. He is also a person who is an advocate for people learning to be financially independent and stand on their own legs. This is how he started in real estate; he wanted to build a nest egg. Bill started out with single family homes but then he realized that multi-family properties had more potential and began to invest in these. Soon after, Bill had over 100 units.
Bill realized early on that he had to buy his first properties with cash because he did not have any credit. This led him to doing things that he would not normally do to build up credit, such as leasing a car that he really didn’t need. He found out after using his American Express card that he could finally have the credit for a loan to purchase a property.
Next, Bill started a senior’s real estate investing group and then he branched out into podcasts. He said that it was interesting teaching because you really have to practice what you preach. After this, Bill found a mentor so he could grow faster. He says that mentorship is like a marriage because you need the same values and principles as well as objectives going into it.
Bill has had a lot of success with real estate investing but he says that if you’re a senior just starting out, you should get all the information first because it’s different getting into the real estate investing journey later in life.

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@Randolph Myers

Find a "No Doc" lender. There are many lenders out there that will loan on property without tax returns.

Today we’re going to be discussing how would you structure your passive real estate investing if you just received an inheritance? Well, in this episode, a listener asks just that and Charles discusses what he would do if he received a lump sum of cash and wanted to generate passive income.

Talking Points:

➡ We regularly receive questions from listeners normally they are questions we have answered on other episodes but a listener recently reached out to us and asked what I would do in their situation.

➡ I will not read the entire message but the question reads like this “I recently inherited a significant amount of money from a grandparent that passed away and my wife and I are not sure exactly how to invest it in order to generate passive income. We own our home but have never invested into a rental property and our goal is to create passive income”

➡ Since they mentioned passive income and not the goal of owning and managing properties; I would suggest they passively invest in a real estate syndication and since they asked for my advice; I will explain what I would do in this situation.

➡ First off, never invest into anything that you do not understand. It is important to be educated about anything that you invest into. If it is too complicated; it is best to hold off until you understand the investment, the strategy and the risks.

➡ Next, do not invest more than 5% of the inheritance into anyone property or investment. You want to make sure there is diversification; operator diversification and geographic/market diversification. Now, this becomes difficult if the inheritance is under $1 million since most syndicators will require a $50,000 minimum investment. But the point is to diversify.

o What is operator diversification; at Harborside Partners, we partner regularly with several operators who concentrate on specific markets and specific real estate asset classes. This allows our investors to access deals we are co-operating and investing into and join alongside us. If you are investing with an operator that only works with their own deals; you do not have operator diversification.

o Geographic diversification is also important. You do not want all of your investment dollars in one geographic area if there is a natural disaster; now you will probably be made whole and then some because of insurance and rebuilding etc. But your income might be paused.

o Market diversification is important and COVID is a prime example; what happens if the next pandemic occurs or there is a recession that hurts certain markets more than others? What happens if a market you are investing into imposes new laws like rent control? You want to make sure that all your eggs are not in one basket.

➡ Start small, invest passively into one deal and see how it goes. For a new passive investor; it can be a daunting experience since you complete some legal forms; wire money and wait 30 days until you receive an email that says you closed! Then you wait until your first monthly update; and then you want until your first distribution hits your bank account. It is important to understand how the process works before going all in.

➡ After you understand how the process works; you can develop some sort of criteria that you are looking for; I want to be in 5-10 markets; I want to have a cash-on-cash return of 7%-9%; I want to be in class B properties etc. This makes it much easier to immediately say NO to certain deals.

➡ Another point that I think is important, is when you come into a large sum of money; especially an inheritance; just stick it into a bank for a few months while you come to terms with it. You lost someone; this is probably the most amount of money you have had in cash before and it is best to let that sink in before you start investing. This is a great time to increase your real estate investing knowledge and do your research.

➡ I would also be weary of people pushing you to invest right away, or pushing you to invest a large percentage of it or invest into some financial vehicle that you have minimal knowledge of.

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@Heather Thuli

It depends on a number of factors. I would figure out what your 5 and 10 year goals are and work back from that. How much involvement do you want to have? What do you want to invest into? What is your time and financial ability at this point?

@Gurjot Grewal

We have partners who are foreign investors. DM me and I will send you contacts for; attorneys, lenders and accountants that they have previously used. It is important that you hire professionals that have experience working with foreign investors.