Sep, 2023

Kinds of Real Estate Deals Explained by a Successful Investor

Wouldn’t it be great if someone explained the kinds of real estate deals in easy to understand language? In this video, successful multi-family property investor Rob Rowsell does just that. Are you a cash flow investor? Perhaps are you looking for back end equity instead? Either way, you will learn the nuts and bolts of these investment deals in this video.

What Kinds of Real Estate Deals Are There? How Do They Work?

Rob starts the discussion off on the kinds of real estate deals. He explains that a cash flow investor puts his or her money into an investment and receives a regular return on it quickly. A back end deal, however, works differently. An extreme example of a back end equity play involves injecting capital into a new construction project. You may have to wait a long time in order to get a return on your investment. Some factors in that deal include waiting on the land purchase to go through, hiring contractors, and building inspections before getting paid. Depending on the specifics of your deal, your payout could come at different times during the life of the building. Many times, a balloon payment is made to catch investors up when the building is sold.

Other factors to consider is turnover of tenants and renovations to an existing property. If you are in a position to wait these out, you could conceivably make a greater return than you could over the life of a cash flow deal.

Join Our Community

Now you know about the kinds of real estate deals. Why not consider joining our online discussion group, the Addicted To Life Community? Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

Jul, 2023

Retrading and Insurance

Rob Rowsell explains to the group the process of property retrading. Namely, he mentions the example of a multi-family real estate investment he is doing due diligence on now. Unfortunately, the rental property value is looking to be a lot less than what the seller expected. Namely, the HVAC and electrical will need costly replacements, numbering in the six figures. Sometimes you have to retrade, or negotiate, with the seller. Do not get emotionally attached to a property, especially before the sale goes through!

Property Retrading Explained

Rob began by updating the Community on a 168-unit property that he was looking into. The prospects of this multi-family complex were looking bleak. Specifically, Rob’s team found through their walkthrough that it was was worth about a half million dollars less than the seller’s asking price in its current state. Yikes! Imagine having to break that news to someone.

In that instance, Rob had to go through the process of property retrading. That means asking the seller for a price reduction, because of issues you have found with the property. If you retrade often, it could hurt your reputation as a real estate investor. Make sure you identify property issues as soon as you can in the process.

The Insurance Cost Downside

Not only that, if you find a lot of issues with multi-family home complex during discovery, the insurance costs could skyrocket once you take over. The property in question needed a $175,000 upgrade in electrical boxes alone, or Rob’s company couldn’t even take out a new policy on it. The seller won’t lose his existing insurance policy due to the outdated equipment, but there’s no way he can sell the property in the state it is in. We can all learn from this situation not to slack off on keeping our properties up to code. When we go to sell in the future, we could be in the same position as this seller.

In addition to the electrical issues, half of the HVAC units were well past their expected lifespans. Rob predicts none of them will survive the heat of this year’s summer in Texas. Most of the cap ex budget Rob’s team planned for consisted of interior renovations. None of them foresaw $500,000 in necessary upgrades.

Rob’s team did not expect the seller to accept a property retrade proposal of subtracting the full 500k, but they were hopeful he would meet them halfway. Thus far, he is not playing ball at all. Sometimes, you put a ton of sweat equity into property discovery and writing up a deal, just for it to fall through in the end. It’s easy for Rob to say, but don’t get emotionally attached! It’s just business after all, so put it in God’s hands and move on to the next deal.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

Jul, 2023

Property Walkthrough 101

Rob Rowsell talks with our Addicted To Life Community group about how to do a property walkthrough. If you intend on investing in a real estate property, you need to do your due diligence. Walk the halls and examine every nook and cranny. Get to know all of the staff at the property. You must ask a LOT of questions, so that there are no surprises. That way, you will make sure you won’t invest in a lemon!

How To Perform an Effective Real Estate Property Walkthrough

Rob started the video recalling a property walkthrough he did with a seller. When the session took place, Rob’s partners walked the vacant units with the seller, while Rob joined via live video. He requested phone numbers from the seller and maintenance manager. Get these contacts, if at all possible, since you will think of something you missed asking about while walking the property.

While walking through the property, you should ask questions and get to know everyone you can who works there. They may not realize it, but you are effectively interviewing them for their own jobs! If and when you take over, you may or may not want to retain their services. If you use a property management service like Rob does, you will save some future headaches by passing that information on to them.

Current tenants can also be a great source of information. They may not know their property is for sale, so tread lightly. If renters see you walking the property with their landlord or property owner, you may give off the vibe of a maintenance worker inspecting issues with the property. Don’t be surprised if they start spilling their guts to you about their leaky faucet or broken air conditioning unit! All of this, of course, is useful information. Take notes of what problems people are experiencing. Knowing their issues have been going on for months without a fix can be a real eye opener.

Remember, a property walkthrough is a fact finding mission. Leave no stone unturned in searching for the information you need to make your investment choice.

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