All Forum Posts by: Enrique Huerta

@Account Closed ,

To answer your question, you will want to leverage your partner's track record in order to source and secure investors. Put together a presentation outlining what you and your partners have done, and really lean on their track record to spark interest in the projects you're working on. The importance of items that investors look at is Team, Experience, and Deal. 

You're currently helping with marketing, deal sourcing, fundraising, and content creation for social media. So if you're currently fundraising, what is the issue? You say investors don't believe in your credibility? Are you selling your partner's track record? How are you approaching prospective investors? Are you trying to sell them on you alone so you can break off?

@Jon Khalil , I used to sell real estate in OC with some business in LA/IE. You will NOT find a property at $250,000 at this time that is habitable in any part of LA/OC/IE. Someone alluded to Hemet/Victorville/Apple Valley, "the high desert." That will be your best option if you decide you want to buy now. But that drive is farther than Temecula from Irvine.

I commend you for being responsible enough to be in a position to buy so soon and at your age. Nonetheless, the best option is to keep saving or increase your income so you qualify for a larger amount. Once you approach the $400,000+ range, you can find a solid condo/townhouse. It still won't be multi-family, though.

@Shawn C. Here's 5:

The one's that will help most for commercial are Frank Gallinelli, Peter Linneman, and William Poorvu. Those are spot on. Peter's is an academic text book so it's more pricey, but a worthwhile read and you may be able to find a used copy online.

• What Every Real Estate Investor Needs to Know About Cash Flow...and 36 Other Key Financial Measures by Frank Gallinelli

This book is the analyst's bible. It is the book that breaks down the financial formulas and real estate jargon for the layperson. By reading this book, one can begin to comprehend how to analyze, understand, and make decisions on real estate investment opportunities. A benefit of this book is the inclusion of templates and a link to download complimentary financial analysis tools that one can use to practice analyses and to analyze real opportunities.

• The Millionaire Real Estate Investor by Gary Keller 

Written by a very successful real estate agent, investor, and brokerage executive, this book walks an aspiring investor through the necessary mindset required to succeed in real estate investing. It also provides a breakdown of business systems and processes that an investor can use to dictate what investments they will focus on and how much wealth they plan to create. It is simple to follow and has many impactful questions throughout that allow one to dig deep into one's psyche and understand one's WHY for their real estate investing journey.

• Rich Dad Poor Dad by Robert T. Kiyosaki 

Anyone who has spent any time in real estate investing or success seminar circles will stumble upon this book. It can elevate one's consciousness to a fixed understanding of earning money and paying bills, to truly comprehending passive income and how to go about achieving this remarkable lifestyle change. By simplifying the method by which anyone can achieve passive income streams, the author creates a paradigm shift in his readers. This is all told through a wonderful tale of his childhood and growing up with two fathers - a Rich one (his best friend's dad) and a Poor one (his own dad). It is quite an impressive tale and anyone who has read the book will sing its praises as life changing and often the spark that started them on their journey to financial independence.

• Real Estate Finance and Investments by Peter Linneman, Ph.D 

This is an academic textbook written by a prominent real estate expert. He is a professor at one of the US's best schools, and an experienced practitioner in the real estate field. This book is more for the academically and analytically inclined, but it is chock full of industry key words, real life case studies of true investments, and it dives deep into an understanding of real estate as a real investment, and not just a passing fad.

• The Real Estate Game by William J. Poorvu 

Authored by an experienced professor at HBS and a practitioner in the field, this book focused on DECISION-MAKING when it comes to real estate investing. We are often faced with competing opportunities and limited resources, as such, it is essential to make the best decisions one can make when putting their own money and other investors' money on the line. This book is full of stories about real investors and how they have "played the game" of real estate investing to succeed at a high level. This book dives a lot into the qualitative factors of the industry and the many players involved, thus giving one an understanding of the true interconnectedness of the industry and how important and valuable networking can be.

Bottom Line: These 5 books cover financial analysis, purpose, mindset, technical jargon, and a high-level overview of the industry. Armed with the data in these 5 books, an investor will naturally know their next best steps in their investing journey.

Hi @Account Closed,

I salute you for looking to expand out of your comfort zone and add value. In order to better provide an answer to you, can you elaborate on the below:

-What are you currently doing?

-What are your partners doing?

-Why do you want to bring new investors to the table?

I wanted to share the top 5 beginner books I recommend to anybody and everybody that asks about real estate investing, how to understand it, how to get started, etc. This is the cheapest crash course you can find and it is the foundation before expanding into other books, teachings, etc. 

This is not a definitive list but just an article I wrote for someone else and I wanted to post it here. There are many, many other books I recommend for specific niches such as Raising Private Capital, The Best Every Apartment Syndication Book, and Michael Blank's books, but below are the 5 books that laid the foundation for my understanding of this business from a qualitative and quantitative standpoint.

• What Every Real Estate Investor Needs to Know About Cash Flow...and 36 Other Key Financial Measures by Frank Gallinelli 

This book is the analyst's bible. It is the book that breaks down the financial formulas and real estate jargon for the layperson. By reading this book, one can begin to comprehend how to analyze, understand, and make decisions on real estate investment opportunities. A benefit of this book is the inclusion of templates and a link to download complimentary financial analysis tools that one can use to practice analyses and to analyze real opportunities.

• The Millionaire Real Estate Investor by Gary Keller 

Written by a very successful real estate agent, investor, and brokerage executive, this book walks an aspiring investor through the necessary mindset required to succeed in real estate investing. It also provides a breakdown of business systems and processes that an investor can use to dictate what investments they will focus on and how much wealth they plan to create. It is simple to follow and has many impactful questions throughout that allow one to dig deep into one's psyche and understand one's WHY for their real estate investing journey.

• Rich Dad Poor Dad by Robert T. Kiyosaki

Anyone who has spent any time in real estate investing or success seminar circles will stumble upon this book. It can elevate one's consciousness from a fixed understanding of earning money and paying bills, to truly comprehending passive income and how to go about achieving this remarkable lifestyle change. By simplifying the method by which anyone can achieve passive income streams, the author creates a paradigm shift in his readers. This is all told through a wonderful tale of his childhood and growing up with two fathers - a Rich one (his best friend's dad) and a Poor one (his own dad). It is quite an impressive tale and anyone who has read the book will sing its praises as life-changing and often the spark that started them on their journey to financial independence.

• Real Estate Finance and Investments by Peter Linneman, Ph.D

This is an academic textbook written by a prominent real estate expert. He is a professor at one of the US's best schools and an experienced practitioner in the real estate field. This book is more for the academically and analytically inclined, but it is chock full of industry keywords, real-life case studies of true investments, and it dives deep into an understanding of real estate as a real investment, and not just a passing fad.

• The Real Estate Game by William J. Poorvu

Authored by an experienced professor at HBS and a practitioner in the field, this book focused on DECISION-MAKING when it comes to real estate investing. We are often faced with competing opportunities and limited resources, as such, it is essential to make the best decisions one can make when putting their own money and other investors' money on the line. This book is full of stories about real investors and how they have "played the game" of real estate investing to succeed at a high level. This book dives a lot into the qualitative factors of the industry and the many players involved, thus giving one an understanding of the true interconnectedness of the industry and how important and valuable networking can be.

Bottom Line: These 5 books cover financial analysis, purpose, mindset, technical jargon, and a high-level overview of the industry. Armed with the data in these 5 books, an investor will naturally know their next best steps in their investing journey.

It will really depend on your price point. Have you searched out neighborhoods on the real estate listing portals to narrow down the neighborhoods you're considering? Fresno has good pockets and bad pockets, but there's always gems spread throughout.

Let me know what your research has narrowed it down too and I can chime in further based on that.

Final thought, almost doubling the NOI seems like a decent investment. Make sure you conduct full due diligence though and determine for yourself if the reward is worth the risk.

A couple options:

(1) Ask them for trailing-12 financials (aka P&L Statement) so you can run some better numbers.

(2) Use the standard underwriting formulas for a quick and dirty offer:

Take current rental income of $2760 x 12 = $33,120

Subtract expenses between 40%-50% of the Rental Income = $16,560

This leaves you with the NOI of $16,560 based on actual, current income using the current vacancy of 12.5%.

Divide that NOI by the cap rate in your area and it should give you a rough valuation of the asset in its current condition.

If you want to find your proforma cap rate before CapX, then take the proforma figures to find the after-rehab value:

100% of Gross Rental Income at full market rents = $67,200 ($700/Mo x 8 Units x 12 months)

Less: 5% Vacancy = -$3,360

Effective Gross Income= $63,840

Less: 50% Expenses = $31,920

Net Operating Income = $31,920

Divided by your cap rate will give you the new value.

What are the cap rates for this product type in the market you're looking in?

@Mike Goldenthal

Using your example of 3 passive investors, and you as the active sponsor of the Investment, I would say you get limited partner returns AND general partner returns if you invest an equal share into the deal plus do the sponsor work.

Typically, the sponsor of the deal only puts in 5%-10% of the initial investment required, they do all the work, and then use other investors money for the remaining 90%-95% of the required equity.

So 4 total people. Will you be getting the loan and bringing 25% of the total down payment as well?

The structure varies substantially based on project type, investor sophistication, and overall business plan.

Do you plan to collect fees? Acquisition, asset management, disposition fees? Or just profit share?

@Ryan Ray , I wouldn't take one agent's word as gospel. There are plenty of opportunities available in Phoenix. It's a function of networking with brokers and scouring the MLS, LoopNet, etc.

There is a lot of new development in Phoenix, but that in no way, shape, or form will "phase out" the smaller properties.