All Forum Posts by: Brian Burke

I'm interested in NNN investing, but if I were searching for a book on the topic I'd be drawn to #1. It gets straight to the point. There are countless books touting "freedom" using real estate—I'd probably chalk #2 off as another one of those. But the first one gets to what's more important to me and that's learning the strategy, versus the second one which is selling the dream.

My opinion (not worth much) is that active and prospective NNN investors tend to be people somewhat more advanced in their investing journey and have likely already reached a level of freedom. Thus, #2 speaks less to me (but still somewhat relevant as it relates to seeking freedom from tenants, toilets, and trash, so keeping it in the subtitle makes sense).

But @Taylor L. is probably right that #2 sells more books…because it seems that more people want to buy a dream than learn a strategy.

One more big shout-out goes to @Tarl Yarber, who co-MC'd the live charity auction at BPCON with @J Scott, and the other BP powerhouses that helped the auction run smoothly, like Matt Faircloth and Nate Robbins.  We raised over $100,000 in twenty minutes from generous BP members and we are so appreciative!

If you are looking for the website Jay missed an "s" in the thread title, it's aheroshome.

Very well said, @Jake Wiley.  It's amazing how little you learn when things go well versus how much you learn when they aren't.  Plus the tougher lessons stick with you for a lot longer.  I remember back in the day how I'd flex every principle to get a deal to work, and contrast that to now where I feel like I'm trying harder to make it NOT work than to work.  Good deals are hard to find, bad deals are hard to exit.

I'm glad you're enjoying the book!  For those that might not know, it's The Hands-Off Investor.

 Hmmm…not sure why the link didn’t work, it’s working for me. I’ll try a different way.

Click here for article.

Are you sure?  How about this one coming:  https://www.bomaonthefrontline...

Aside from constant threats to drastically alter the property tax structure, existing and expanding rent control, anti-landlord regulatory environment, anti-landlord/investor public sentiment, litigious tendencies, liberal judges, tents popping up everywhere, cardboard sign carrying panhandlers at virtually every roadway intersection, trash on roads pretty much everywhere you look, increasing crime, high cost to get pretty much anything done, and not the greatest economics (speaking from an investment point of view such as price-to-rent ratio, etc), probably my biggest reason is that I like to invest in places where people are moving TO, and avoid places where people are moving FROM.  And lately, people are leaving CA (no wonder why considering the above)--which leaves me with better investment options elsewhere.

Yes it's capped at 2% increase per year even for multifamily.  But be aware that there is a lot of push from some people to create a split tax roll in CA which would separate commercial property (which includes large multifamily) from residential property and strip prop 13 tax methodology from commercial properties.  If that happens, it would be tragic for commercial property owners.  That's one reason I'm not buying anything in CA (but if I'm shopping for excuses to NOT buy property in CA I have a whole menu of excuses to choose from).

Mortgage and capital improvements are excluded. Taxes and insurance are not excluded.

So now subtract insurance from the net income, and subtract what the taxes would be at the higher value (sale price) which is likely considerably higher than the taxes you are paying.  Also subtract a vacancy factor and an allowance for bad debt, rent concessions, property management fees, advertising, and turnover costs and see if the number is more reasonable.

@Eric Berkner, your confusion lies in your attempt to connect cap rate to investment return. 

Cap rate has nothing to do with investment performance. It is simply a thermometer that reads the market temperature. When the market is hot, cap rates are low because buyers are willing to pay a premium for an income stream, typically on the belief that the income stream they are buying will be larger tomorrow than it is today. If the market is soft, cap rates go up because buyers aren't willing to pay as much for the income stream, usually because they think that the income stream isn't going to go up much, if at all, or might even go down.

Today's pricing (meaning low cap rates) is predicated on revenue growth. Revenue growth isn't tied to interest rates, it's tied to supply and demand in the rental market, plus what other comparable properties are charging.

Here's an example: We bought a property last year at around 4% cap. Rents were about $940. The deal made sense, because our analysis of comparable properties plus our experience in the market led us to believe that we could achieve $1,090 rents if we made some light renovations to the units. We were right, we were immediately renting units at the goal rent. If you were to look at our income a year later and recalculate a yield on cost it would offer a really nice spread over our mortgage interest rate and a healthy investment return.

Fast forward to now--we are actually renting units for around $1,600 (that's not a typo)--which is a 70% increase and we've only owned the property for 12 months. This is why people are now buying at 3% cap rates...they are seeing the out of control rent growth and they know that the revenue stream is growing--rapidly.

I remember years ago when @Brandon Turner and @Joshua Dorkin called me and told me they were going to do a podcast and asked me if I’d want to be a guest on it. I was like, “what’s a podcast?”  Next thing I knew I was the guest on show #3.

I think I’ve been on five times now, plus one brief cameo—and I can say without hesitation that podcast changed my life. Suffice it to say I now know what a podcast is. :)

This show came a long way since it’s early days and I congratulate Brandon on not only making that show the #1 podcast in the real estate space but also his own career path that has given him the freedom to make this decision.  The impact he’s made on countless lives will not be forgotten.  Congratulations my friend!