Financial Planning for REIs

[Matt Miller]

Financial advisors that will steer you toward mutual funds or insurance policies are easy to find, but finding someone that understands real estate investing and how to build a plan for the future around it is a different story. 

Is there a title for this type of advisor?

If not and this type of future planning is truly a DIY venture... Are there resources at the top of anyone's list?

[Chris Lopez]

@Matt Miller
My college degree is in financial planning. I've earned all the educational requirements to become a CFP, however, I never chose it as a career path and did not earn the designation. One reason is that I can only sell what I would buy. I buy low-cost Vanguard index funds, term life and would never pay an AUM (Assets Under Management Fee). There was not a clear path for me becoming a CFP or building a business that could be scaled.

Financial planners don't recommend real estate for two main reasons:

1. They receive no education on it. There was nothing in my curriculum about real estate. For some reason, they felt that calculating the Black Scholes model by hand to be important. The model is something that no one ever calculates in real life... off my soap box...
2. They don't make any money on it. They don't earn a commission and it's not included in the AUM model (which typically charges 1%)

Therefore, no financial planners recommend real estate.

Over the years, I've always kept a strong interest in personal finance. To my surprise, it's actually helped as an agent. A few years ago I became an agent to fuel my own investing. Naturally, I started weaving in personal finance and real estate modeling it with clients. It's been a great niche and a HUGE success from a business standpoint. No one else has offered it.

Now, this is where it gets exciting... One of my colleagues, who is an investor, agent, and computer programmer (common skill sets! ha) started building software so he could model his own investments - everything - stocks, bonds, and real estate. It's hard to describe because there is nothing else like it. It's lightyears ahead of spreadsheets (it even makes the CCIM spreadsheet look like Pre-K math). It can do the same level of modeling that robust financial planning software does for planning retirement, but it includes real estate. It even does Monte Carlo simulations (bonus points to anyone that knows that - beer on me when you're in Denver!)

It's grown into something a lot bigger than his own modeling. He now has a goal of creating a new industry that he's calling the Real Estate Financial Planner. It does exactly what you're talking about by combining real estate investing and traditional financial planning. The long term goal is to create a Certified Real Estate Financial Planner designation (or similar.) They can do the traditional planning and the real estate planning.

Fortunately, I get to geek out and help him with it. We're getting ready to officially launch it soon. Over the last few weeks, I started actively using it with clients. They are blown away!

We're in the process of figuring out compliance details at the SEC and state levels. Since it's a new area of financial planning, there are a lot of gray aways at the compliance level. 

If anyone is interested in a sneak peak of some of the modeling, PM me. This isn't to upsell anything, it's really to geek out and get a peak behind the curtain. We have a few webinars that through some common investing scenarios.

Matt (or anyone else) if you want to post questions or ideas or feedback, let me know!