In this video, the two speakers will walk you through all the key factors to consider before making your first real estate investment.
The first speaker questions what the investors should look for on their first syndication and discuss about market trends, property location, and financing options.
The second speaker will cover some of the common pitfalls to avoid, so that you can make an informed decision and increase your chances of success.
Whether you’re a beginner or an experienced investor, this video will provide you with valuable insights and tips that you can put into action today.
Start your real estate investing journey with confidence by watching this video now!
Transcript:
Chris Bounds 00:00
You’ve got a vast experience not only working as a on the brokerage side as an investor side, but then also coaching other brokers and investors. What should investors look for when they’re considering their first indication?
Joseph James 00:15
Oh, lots of stuff. Right? So agree with what the previous speaker said, you know, operator always is up on the top to make sure that you connect to the operator. I think more importantly, how they communicate, like, is that? Are they easy to access? Are they local in the market, where you’re buying the property, a lot of those things that you should be you should be looking at, you know, when you try to reach out to them, are they going to return your phone call, right? Or are they going to respond to your emails? So those are all very important communication is very important. And look at their track record and how many other properties they have and what their, you know, credibility is. But I think more importantly, more, even more than that is, you know, does their strategy agree with what you’re trying to accomplish? Right. So,
01:01
you know, you can be doing a development project where you can get a higher return, you’re also higher risk in the next couple of years. Or you can do a stabilized property where you have a stable return from day one. Or you can do a value our property to get maybe less returns in the first couple of years. But you know, pick it up later. And when you sell or refinance, you get a higher return. So you have to look at what the operator is doing is in agreement with your own strategy about how you want to grow your wealth. So that is really important, because a lot of
Chris Bounds 01:30
folks will, I mean, they’ll narrow it down to the IRR. And especially if you want to go into these crowdsourcing crowdfunding sites, the I don’t know, cadre Realty mogul those guys, and then filter by return. It’s not always, I always say return isn’t always a good thing for you.
01:50
Exactly. So that’s exactly what I mean, then you have to look at it, you can look at our what is our right is because we are uneven cash flows. And it’s kind of, you know, an annualized return, when, when it’s all said and done when the property is sold. Now, if you want your money back sooner than that may not be the best way to look at it, right, you’re gonna be looking at it, you know, I’m, you know, I’m not getting much of a cash flow for the first two years. But at the end, when they sell it in five years, I’m going to get a decent IRR. And I don’t mind waiting, as long as I get my return.
So those are some of the things that you look at. But we always tell people look at the market first, you know, you should know which markets you want to invest in, based on the fundamentals. Right. You know, I know this is everybody talks about it, but it’s a good reminder for people to look at to see is the market improving, is the population growth, the job growth, you know, the new construction in our average household income, median, Home Price, all those things, battle in the market, because you know, you want to invest in them,
Joseph James 02:50
I think first thing is to select the right market that you want to invest in, you know, you’re obviously looking for a landlord friendly business friendly states to invest in so that way, or they will know, you know, regulations or law changes that may surprise or impact your events,
03:06
then you look at the you know, you look at the location of the property and make sure that’s a good location. So you start with the market narrowed down to sub market and the location of the property. And then you also look at the property itself. Does that property doesn’t make sense, right? So I think some of these things that, you know, passive investors should do at least some due diligence to find out, is this what I want to invest in, right? Is it in? Or do I want to invest in the value at play?
Knowing that I’m taking a risk along with the operators of you know, this may play out pretty good for me, or it may not right, so what do I want to go into stabilized investment where I can get a preferred return and get a cash flow from day one? So those are some of the things that you look at, then obviously, the last one, but not least, is the operator, right? Do you know if you’d like to operate? Or can you get along with the operator, right?
Joseph James 03:53
And I also tell people to look at, you know, a lot of lot of passive investors want to become active or they want to become syndicators or co sponsors. You also look at is this the team that I want to work with? So in my own example, I invested with certain groups, knowing that those are the people I want that I may want to partner with in the future, as co sponsors, so I have the same personality or I like them personally. So that’s another thing that you have to look at. If that is your goal is to get into a co sponsorship or becoming a GP, then you might as well invest with people that you want the business to be business partners in the future.