Creating Change Through Impact Investing

[Steven Libman]

Explore investments that can create profits that benefit communities and learn valuable tips for finding the right real estate partner.

Advantage of understanding taxes and tips to have better real estate equity

Real estate is a popular investment choice for many individuals seeking to build wealth and create financial stability. However, to maximize the benefits of investing in real estate, it's essential to understand the impact of taxes on your investment and implement strategies to improve your real estate equity.

Understanding taxes can help real estate investors maximize their returns by identifying deductions, credits, and incentives that reduce tax liability. This, in turn, can free up more cash flow to reinvest in the property, making it more valuable over time. For example, there were tax benefits in multifamily investing that did not exist in the single-family space, which allow you to mitigate a significant tax burden. Reading books like Tax-Free Wealth by Tom Wheelwright, talking to CPAs or tax professionals, and grabbing a copy of the tax code may help you understand the tax benefits.

In conclusion, understanding taxes is a critical component of building real estate equity. Real estate investors who take time to learn about tax laws and regulations can maximize returns, avoid penalties, and plan for the future. By keeping accurate records and staying up-to-date with tax laws, investors can make informed decisions that help them achieve their real estate investment goals.

Importance of core values in business and investing

Investing in a business may be lucrative, but it has risks. Many investors look for companies that have a track record of success and are financially stable. However, there is more to investing than just numbers and statistics. Core values, such as integrity and grit, are essential when investing.

Steven emphasizes the importance of core values in a family-owned and operated business. They look for companies that align with their investment ethos and familial moral value compass. According to them, it is crucial to invest in people with a plan of attack and remain level-headed and calm during stressful situations. The importance of core values is further exemplified by the fact that the investor has had deals with people they wouldn't do business with again. Stress reveals these individuals' true character, which may not align with the investor's core values.

While the numbers are significant, investing in people who align with your core values is equally crucial. Grit and perseverance are essential qualities, especially in the real estate industry, where one must be willing to get their hands dirty. The investor shared a story about how they had been scraping windows at 11 o'clock at night with razor blades after painting them. Today, that same person runs the business's underwriting and asset management side, managing hundreds of millions of dollars worth of real estate.

Another essential core value is growth orientation. It is crucial to surround oneself with continually learning and growing individuals. This is especially important because growth only happens sometimes after college. It is necessary to have a passion for learning and the desire to pursue something to continue growing.

Therefore, investing in businesses that align with your core values is essential. It is not enough to look at the numbers and statistics; one must also consider the people behind the business. A shared value system and mindset might be the difference between success and failure in investing. Investing in individuals who align with your core values might create a business partnership built to last.

Helpful advice in choosing a partner and finding the right places to invest

Multifamily real estate is a popular investment opportunity for many people. However, it's essential to be cautious when selecting partners in this industry. While partnering with someone who shares your values and has the necessary skills and experience might lead to success, a bad partnership may be costly.

One of the most essential lessons in multifamily real estate is picking the right partners. Some people may seem like a good fit initially. Still, they may need more operational expertise for the job. Additionally, they may try to hide issues with the property rather than address them, which may lead to problems down the line. To avoid this, finding partners who share your core values is essential. Before partnering with anyone, discussing what values you both hold dear is vital. Ultimately, if your values do not align, looking for someone else to work with may be best.

Once you've identified potential partners, it's important to vet them thoroughly. Meet them in person, ideally over dinner or on a video call. Bringing along your spouse might also be helpful, as they may have a good intuition about people. This may seem like a lot of effort, but it can save you a lot of trouble in the long run.

When evaluating potential partners, ask them for references from people who have invested with them. It's essential to ask for references from people who have gone through the entire investment cycle, from the initial investment to the final payout. Additionally, ask about their reinvestment rate, as this may provide insight into their performance.

In the world of real estate investing, location is key. Successful investors often seek areas with growing populations and economies that tend to follow the people. It is also vital to highlight the importance of identifying trends and making wise investment decisions.

The key takeaway is that picking the right partners is critical to success in multifamily real estate. A bad partnership might be costly, both financially and emotionally. Taking the time to vet potential partners and ensuring that your values align might save you a lot of trouble. For those interested in real estate investing, it's vital to research and carefully consider location and trends before making any investments. By doing so, you may increase your chances of success and achieve windfall profits.

Updates on today's market and ways to mitigate risk

In real estate investment, the primary objective is to generate profit while mitigating the risk of financial loss. Underwriting today's metrics is crucial in ensuring that the investment is sound. It is essential to ensure that today's numbers work and that the deal carries itself today. Warren Buffett says the number one rule of making money is not to lose it. So how does one mitigate the risk of losing money in real estate investments?

The first step is to check the deal. Since long-term debt is based on today's income, the income can cover the debt. The next step is to consider how expenses can be decreased. This may be achieved by examining the operator's expense ratio and looking for ways to narrow the NOI gap. If the market rate is higher than what is currently being charged, the rent can be increased to increase the NOI.

Fear is a familiar feeling in real estate investment, and it may prevent investors from taking the necessary risks. To mitigate fear, investors should get around people who have helped them before and talk about their fears. Naming and claiming fear might help investors move past it and focus on making sound investment decisions.

While there are risks in real estate investment, good underwriting trumps waiting. Investors should never stop buying and should capitalize on opportunities that arise. Recessions make more millionaires than they break. Investors who recognize and capitalize on opportunities might thrive even in uncertain times.

Real estate investments might be a great way to generate passive income and build long-term wealth. However, it is essential to approach real estate investing cautiously and clearly understand the risks and rewards. By focusing on cash flow, reducing expenses, partnering with experienced investors, and being prepared to make adjustments as needed, you might minimize risk and increase your chances of success. Remember, the key to not losing money in real estate investing is to focus on the metrics that matter and to be patient and flexible in your approach.