For most people I know with successful and driven businesses, work-life balance is nonexistent. Its not because they dont have the desire to spend time with their family, operate a killer business, and do things that personally fire them up. Its because balance doesnt exist in the way most people think about it.
Take a moment and imagine yourself doing something you love to do. Does it involve your imagination wandering to something else other than that one thing? Of course it doesnt! In personal development books, authors talk all the time about how the day before vacation you are so much more productive knowing youre leaving the next day. Why? Because its not a balanced effort. Its a full-out sprint toward the objective. Each of these three areasfamily, personal, businessare all interconnected. They live and breath through each other. But they are not the same. They do different things for your life, for your desires, and for the ultimate outcome of achievement; were you successful with ______ , or not? This is not balance. Related:The Simple Truth To Accomplishing Significantly More, Faster When I used to hear work-life balance, Id feel like I was failingbasically at everything. And the truth is, I was failing (and still do) at certain things. Whether I wasnt focusing enough time on my children, having date nights with my wife, leading my team as CEO at work, or being a great business partner. The possibilities of failures are endless. Thats why work-life balance is not only a false pretense, I almost think its dangerous. Personal Life Any given week, you can find me training MMA with my pro-fighter coach, learning to fly an airplane with my 80-year-old instructor, or playing bass guitar and keys in front of hundreds or thousands of people at a worship service. Each of these are different exercises in a specific discipline. They require focus and specific skills within that disciple. You think its good to be thinking about (or even making the mental space for) anything other than kick boxing when youre sparring with your trainer? Have you ever been leg kicked and not checked it?or punched in the face with a well-timed one-two combination you didnt see coming? It hurts! There isnt any balance here (other than your physical body in motion and movement within the mind); this is an all-out mental and physical effort. Family Life Our family recently bought a home on some acreage, and one of my kids loves to get into our ATV and roll around the property. We roll in and out of trees, around tight corners, up and down hills. It is so much fun. But do you think this is balanced time? Im making sure my kids are safe, and the ATV still has all 4 wheels on the ground. Im checking that the kids are buckled up and no branches are dangling too close to faces or eye balls. We enjoy time in the house playing games, and my son could build legos everyday. If I am in the moment with my kids, I am not bringing anything else to the table other than a desire to be 100 percent all in with them. This is not balance! Im not thinking about other things in life or balancing them in that moment. If I were, I would not be giving my kids and my wife my full attention. Work Life I remember distinctly a few weeks ago I sat with our main acquisitions guy from around 7 p.m. to well-past midnight working through dozens of potential deals. We had only 24 hours to work through everything, and the one and only thing that was important was working through the opportunities, quickly understanding them, dissecting them, and making decisions. These were million-dollar decisions! Its not a game; we dont get a do-over. If you buy a house thats a dud, you get to deal with it afterward (and Ive been there, and its not fun paying to sell a house). On our team, as a leader (or as a person in a specific position in an organization), you still dont want balance. You want someone with a specific job who is at work to be supremely focused, clear on the objective, dialed in, and executing the activity. This goes for leadership specifically. You cant have balance doing a bunch of different stuff in your business at the same time. Now, there are different personality types who do different things (and some more than others) pretty well. But, this is not an excuse to be all over the place. Its not an excuse not to get everything done. Related:Why You Should Focus on Improving Your Strengths, Not Your Weaknesses Final Thoughts I journal almost every morning before my day starts and often at the end of the day as well. Some days I am all about my family. Other days Im all about the number of houses we need to buy, projections for our business that month, or what we need to do to execute that result. Sometimes its literally a task-oriented to-do list. Each of these take a specific focus and a specific discipline. When I finally let go of the idea of work-life balance, I found something interesting in my life. Everything I got into during my day, whether it was buying houses, leading my team as CEO, flying an airplane, training in MMA, driving the ATV, date night with my wife, anythingthe more I was interested and all in in that moment, the more engaged and more enjoyment I got from it. Its time to stop trying to balance everything and realize you cant. Instead, be focused in the moment on whats in front of you. Put your phone down. Look people in the eyes. Be present. Be in the moment, and be all in. I want to hear your thoughts! Do you agree or disagree about work-life balance? How do you separate the different aspects of your life? Share below! https://www.biggerpockets.com/renewsblog/why-work-life-balance-is-a-fallacy/
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BiggerPockets Money Podcast 11: Financial Freedom in Less Than Five Years with Joel from FI 1803/12/2018 Joel and his wife were barreling down the wrong financial pathsaving nothing and spending more than $100,000 every year.
A freak car accident changed the direction of their lives by causing them to re-evaluate what was truly important to them. In five short years, they went from a negative savings rate to saving 85 percent of their income, allowing Joel to quit a job that was making him miserable. They did this by making regular changes to their spending and cutting out the things that werent actually making them happy alongside shedding poor investments they had previously accumulated and sticking to a strategy of simple, long-term index-fund investing. This episode is for anyone who earns an upper-median income yet feels stuck and unable to get ahead. Joel will show you how to make the tough changes that will ultimately lead to more happiness, more freedom, and a stronger financial position. Click hereto listen on iTunes. Listen to the Podcast HerePodcast: Play in new window | Download Subscribe: Apple Podcasts | Android | RSS Watch the Podcast Here [embedded content] Help Us Out! Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds.Thanks! We really appreciate it! Podcast Sponsor Im sure many of you have seen explosive growth in residential solar installations.Similar to residential, small and medium sized businesses want to go solar. However, financing for commercial solar isnt available to businesses unless they have investment grade credit. Todays sponsor, Wunder Capital, is helping to solve that problem by financing solar for SMBs.Learn how you can begin earning up to 11% returns atwundercapital.com/bp. In This Episode We Cover:What Joels life was like before he focused on financial freedomHaving an expensive lifestyle as the normThe logic behind high expendituresWhy the 180-degree shift to financial independence?The first steps they tookThe value of cooking good foodCutting out unnecessary expenses while optimizing needsBuying the worst mortgage propertyTheir crazyreal estate investment experienceThe tenant from hellWhat they did to increase incomeHow Joel finally decided to quit his jobTheir FI numberAnd SO much more!Links from the ShowBooks Mentioned in this ShowTweetable Topics:Things get stressful when you have an unsustainable lifestyle. (Tweet This!)The key to financial independence is to know what is your enough. (Tweet This!)Money shouldnt be the only deciding factor when deciding for a job. (Tweet This!)Your worst case scenario is everybody elses everyday life. (Tweet This!)Connect with Joel https://www.biggerpockets.com/renewsblog/biggerpockets-money-podcast-11-financial-freedom-in-less-than-five-years-with-joel-fi-180/ When BiggerPockets first reached out to me about two years ago to write a book on note investing, the note market wasnt like it is today. In fact, the economy wasnt like it is today. We werent quite in an upmarket yet, though signs of an upswing were rapidly approaching (growing construction starts, less foreclosures, etc.). And at the time, my company (then in its eighth year) was still going strong as a note seller. Selling notes, along with loss mitigation, was the core of our business (mainly second liens, but also some firsts as well).
I had also been blogging for more than three years about real estate, and in my posts I had been consistently recommending one of my favorite niches to everyonenotes! Now, lets fast forward to today. Our business has grown, and we now favor first liens to second liens. Ive tried to expand my blogging to cover more than just notes by including all types of real estate investing. Oh, and the book is completedand were officially a month away from launching! I suppose we can also probably all agree, a lot in the world has changed since even 2016! Were in a different place than we were two years agoin more ways than one. But were also in a different market than the one we once knew. And this revelation, like most things, is something that only dawned on me quite recently. Around the beginning of the year, a forum post in the Tax Liens, Notes, Paper & Cashflow Discussion Forum caught my eye. The majority of responses, including my own, probably sum up the answer to the question posed by this article. But lets expand on that. The original poster was someone relatively new to the institutional note industry. His general feeling, in his words, was that it seemed like there was less inventory and more people chasing it. Now, this was something I kept hearing over and over again from note buyers and investors, and I wanted to give my take. Related:The Top 5 Resources to Educate Yourself on Real Estate Note Investing In this current market, is their room for new investors to get started in the note space? I think thats the real question people are after here. Looking back at the forum, my answer was this: My company and I entered the space in an upmarket as well; the only difference being it was really just a matter of months before one of the biggest economic crashes ever. Fortunately, we were able to build and eventually thrive as a second-lien business in a down market because of that. The irony is, weve now grown enough in the time since the pendulum has swung the other way: weve bought more first- and second-lien product this year than the past few years combined. The rub to the retail institutional note buyer is, weve also sold less than ever. What youre describing when you talk about what you see right now is really just a factor of the marketplace. What do I mean by that? In some ways, its a simple supply-and-demand equation. With employment at an all time low, and the lack of underwriting for junior liens, its only natural to see a dip in supply of that particular type of product. But surely there is still product out there, right? Right. And the closer you get to the top of the chain of product, you see the same large funds, banks, and servicers. So why dont more assets trickle down? The answer again, lies in the characteristics of an upmarket. With notes being in direct correlation with property values, notes are worth more and more as the real estate market continues to rise. So of course these outfits are going to hold onto their product if it increases the value of their portfolio. But theres more to it than just money. So going back to my question in this post: on the institutional side, theres not much advantage to sell to the retail buyer for a variety of reasons. For example, many institutional funds can make more money either holding notes that are appreciating in value or selling notes in bulk to another bank where they can get things like NSO credits. Its not only about the money, but also the risk with compliance being what it is. Imagine you were a bankwhat would you do? Would you sell to a guy off the street who you didnt know from Adam? Or would you choose to hold assets that are gaining value and only sell in bulk to other reputable funds, non-profits, and banks that can purchase product in bulk from you? And these larger outfits that have the ability to purchase in bulk, they could obtain what are known as NSO (Neighborhood Stabilization Outcome) Credits, which could allow them to continue to qualify to purchase directly from government entities. I know, I know, youre not the bank. And hey, Im not either! But its important to put these things into perspective. People often ask me, Why arent you selling as many notes today? And like I said in my forum post, my new favorite reply is, Where were you five years ago? We sold everything we had! If youre going to buy in 2018 like you would in 2013, youre going to struggle to get the same type of product with higher prices, higher demand, and lower supply. Of course, there will always be some sort of institutional product out thereits just a matter of how much and when. But you cant just sit on your hands while you wait. Theres only one thing you can do in times like these, and thats adapt. Listen to the Market To the point in my forum post, notes will never go away. In times like these, it goes to show how much the institutional note market is capital intensive and all about relationships. Theres still product out there to findwhether its different from the product youre accustomed to buying (or even if it requires you to buy it in new ways). For example, partnering with others to take down larger trades in order to cherry pick the assets youre looking for while selling off the rest. Keep in mind the note business isnt just limited to the institutional space. What I tried to express in my book, above all else, is that the note space is versatile, vast, and full of possibilities. As with any investment, you cant tell the market what you want it to do for you. You have to listen to the market and adapt to it. And the good news is you have options. Heres an Example Now what Im going to tell you next is a short little story that is one of my favorites about doing just that. I often tell investors this story when I speak. I tell it in the book (albeit in a different way), and Im going to tell it again here by quoting my post. Obviously I love this story! And I think by the end of it youll see why: Ive told this story before, and Ill probably tell it again. But around the time of the crash, I had a friend who didnt know what to do. He was struggling financially. His then-current buy-and-hold business model was no longer working. He just couldnt get much financing. So instead of remaining despondent, he decided to take a banker to lunch. What he was really doing wasnt, Hey, I have _____, will you lend me money on it? Instead, he took the approach of asking, What is it youre looking for? What is your bankor other banks you know oflending on? The banker responded: student housing and commercial multifamily. So my friend goes, Okay, and he began to adapt. He started by pounding the pavement for apartment and student-housing deals, reaching out to his network, and building his team. Pretty soon, he was raising private money for student-housing rentals and finding the remainder of traditional financing he needed pretty easily. That was 10 years ago. He now owns over $100 million in student- and commercial real estate, and makes a pretty penny in his salary raising capital as well. Lets take a lesson from my friend and go from there. With market time being quicker than ever, were switching back to a sellers market. The good news for us note investors whove been working for years in the business is that our portfolio valuation has never been higher! Even in my own personal portfolio, the notes I own are worth more than ever. Im getting cashed out more often (with more people refinancing as they gain equity in their homes). But the flip side isI still have to look for places to put my capital with fewer notes in the marketplace. Related:7 Common Challenges Real Estate Note Investors Face So what do I do? As I see the interest rates going up on my properties, Im starting to do something I was never a fan of in a down market: Im paying some mortgages down. Sometimes the best mortgage notes are the ones you already have. This is why I also just did 4 modifications from adjustable to fixed. I try not to limit myself to any one part of the industry. And I dont want you to either! Hopefully my upcoming book (and series of articles) will help illuminate new ways to look at your real estate and note investing strategies to create profitability from a new angle. So whether its using unsecured notes to buy properties, taking over a note (via subject-to), or partnering notes with commercial real estate, the skys the limit! Dont Follow the Herd, Lead It Way back when, when we were starting our note business and the market crashed, we were in quite the predicament. My partners and I couldve tried to continue on like nothing had changed, but we chose to really dive head first into distressed, upside-down second mortgages. And people thought we were nuts! But hey, Im glad we didnt listen to them. Were still here, and were bigger than ever after years of forging our own path. And with the creative strategies in my writing to come, I want to help you do the same. So if you cant find a performing note, create one with seller financing or hard money lending. If you cant find a NPN? Work in P2P Lending. Or better yet, dont listen to me. Do whatever the market is telling you. What do you think? Share your own opinions in the comments below! https://www.biggerpockets.com/renewsblog/where-are-all-the-notes-the-elephant-in-the-room/ For landlords who dont have much experience, the first few tax seasons can be incredibly overwhelming and stressful. And though you can always hire an accountant to handle your taxes, its wise to study some of the key principles so you can make strategic decisions throughout the rest of the year.
4 Tax Tips to Lighten Your Load The complicated nature of the IRS tax code can make the filing taxes quite a challenge, especially for landlords who often have fragmented expenses, multiple properties, and unusual investments and revenue streams. When you recall that every state has different rules and qualifications, that means youre not going to be able to find easy answers by searching Google. As you prepare to file taxes for the last fiscal year, here are some tips that may help to lighten your load. 1. Understand current versus capital expenses. IRS tax rules dont just cover what can be expensed, but also when it can be deducted. Some expenses are deductible in the year during which theyre incurred, but others are deducted gradually over a number of years. In order to know how an expense should be treated, you need to know whether its a current expense or capital expense. Current expenses refer to everyday costs of doing business. Things like maintenance, utilities, insurance, and advertising would fall into this category. Capital expenses have to do with improvements and long-term investments that typically improve or extend the life of a home or property. This would include something like a $10,000 kitchen remodel. 2. Recognize when you can write off mortgage interest. If you have mortgages on your rental properties, then youre probably paying a pretty hefty amount of interest every year. Knowing when you can and cannot write off mortgage interest could represent a difference of thousands of dollars. According to E-file.com, You must use the property for at least 14 days each year, and you can only deduct interest for one primary and one secondary home. The property must have sleeping, cooking and toilet facilities, and properties that qualify include primary and secondary homes, trailers, condominiums, mobile homes and boats. 3. Take the home office deduction. Today, when remote working is hugely popular and a large portion of the population works from home, claiming a home office deduction is easy. Assuming you have an office in your home where you conduct at least some business activity, youll just have to decide between the two options: simplified version and actual expense deduction. 4. Document and deduct travel expenses. Many landlords dont even think about tracking their travel expenses, so they miss out on saving hundreds or thousands of dollars a year. If you have your own automobile for local travel, you can take your deduction using either thestandard mileage rateor using the actual expenses incurred, such as the cost of gasoline and maintenance on the vehicle. You can also deduct parking fees and tolls, interest on a car loan and any applicable registration or license fees and taxes, real estate investor Erin Eberlin explains. If you do not have your own vehicle, you can deduct your public transportation expenses for business purposes. The key is to be meticulous about how you track your travel expenses. There are lots of handy apps out there that make recording your mileage a breeze. Dont Cut Any Corners Just because we see some leniency about calculating expenses and claiming deductions, it can be tempting to be liberal with yourself when filing your taxes. But theres very little value in cutting corners or skirting the truth. Youll enjoy much greater peace of mindand fewer inquiries from the IRSif you play it cautiously and document everything with care. What deductions will you be taking advantage of this year? Comment below! https://www.biggerpockets.com/renewsblog/helpful-tax-tips-overwhelmed-landlords/ Twenty-four months ago, I was completely against real estate. I wanted nothing to do with it. I thought that in order to qualify as a real estate investor, you had to pass this unofficial test to prove that you were money-grubbing jerk who would step over your mothers dead body for a dollar.
Thanks to BiggerPockets, I realized that not all real estate investors are like that. I learned that there is a community of real estate investors who are willing to give advice without compensation. After 11 months of research, networking, and interacting on BiggerPockets, I was able to go from a hater to closing on my first house hack. Nine months of landlording later, despite all of the research I did, I still made mistakes. Since I learned so much from other people, I am morally obligated to share with you my three biggest mistakes that I made as a first-time landlord and home owner. Mistake #1: The Up/Down Duplex My first purchase was an up/down duplex. My plan? To rent the top off half and Airbnb the bedroom in the bottom half while making a quasi-bedroom out of the living room. That plan 85 percent succeeded. What I did not realize was the noise transfer from the top to bottom floor in an up/down duplex is almost unbearable. I can hear EVERYTHING that the folks on the top floor are doing. And yes, I mean everythingfrom them walking, to their TV, to normal conversations and other noises you dont want to hear (peeing, sex noises, etc.). This gets very annoying, very quickly. Aside from the noise, another problem with the up/down duplex is gravity. Everything runs down. That includes plumbing. The water that my top tenants use comes through their pipes down the pipes in my unit into the main line and out to the street. What does that mean? If there is a blockage, guess whose unit gets flooded with a disgusting mixture of kitchen sink and toilet water? ME! Related: Why Im Not House Hacking (& the Strategy That Will Cover More of My Rent) Lesson Learned This is not to say all up/down duplexes are like this. My advice to you is that if you are thinking of purchasing an up/down duplex, make sure you are with someone else. When you visit the property, have them walk around upstairs while you are downstairs. Have them walk and talk, as noise transfer can be both on impact (walking, dancing, etc.) or airborne (talking, music, etc.). If it seems kind of loud, then it will be almost unbearable when you are dealing with it every day. On the plumbing issue, it is tough to test this before getting in. I suggest getting a sewer scope done and asking the technician to scope the plumbing lines within the property as well, from the sink of the top unit, through the bottom unit, the main line, and out to the street (or septic tank). This will make sure that the pipes are not blocked, in good shape, and will have a lower probability of clogging. Mistake #2: New Build or Complete Remodels The up/down duplex I purchased was a complete gut and remodel. The only thing that remained the same was the exterior wallat least thats what they said. Supposedly, there was all new plumbing, HVAC, water heater, electrical, roof, and appliances, all of which were under warranty. The problem with all these systems working together is that they had not yet been tested in a living situation. Most of these upgrades would have failed the real life test. For example, it turns out that only 50 percent of the plumbing was replaced. The sludge from the previous occupants was clogging the pipes, which caused a backup in the lines such that my unit flooded every time I turned the kitchen sink on. The smell was rancid, but the hundreds of flies loved it! Plumbing was not the only issue. For 2-3 weeks in the heat of the summer, the AC would continuously trip the electrical breaker and stop working. My Airbnb guests (and I) were not happy. After the electrician and the HVAC company played the blame game for a few weeks, the HVAC company replaced the unit free of any monetary cost, but it was very expensive in terms of comfortability. In the winter, one of the PVC pipes on the furnace disconnected and caused a leak. This wasnt too destructive, but the constant dripping each time the heater turned on and off was quite the annoyance. The HVAC company came to fix it. Again, $0 but a huge pain in the butt. Most recently, one of the fuses that transfers electricity from the utility company to the property stopped working 100 percent. This was the line to a couple of the bedrooms and the hot water heater. So, I had a day of cold showers and really creepy electrical problems, with the lights consistently flickering, weird ticking noises, or half-lit rooms. This also was under warranty, but what the heck?! Cant I just live like a normal human who is lucky enough to live in a developed society? There have been a few other smaller problems that have resulted from these issues, including some broken dry wall, fly infestation, etc. I pray that the large issues are fixed. Lesson Learned Do not purchase an untested new build or a complete remodel. If you do, make sure you do your due diligence not only on the property, but on the person or company who performed the remodel. Do they have a reputation of putting lipstick on a pig? Putting lipstick on a pig means that they made the place look beautiful to increase the price, but the guts of the property are less than satisfactory. For example, they opted for new stainless steel appliances, hardwood floors, etc. However, the parts you cant see (plumbing, HVAC, etc.) are not up to par. Lesson learned! Mistake #3: Accepting Too Much Rent My property was the only one of its kind in the neighborhood. Believe it or not, there was only one newly remodeled up/down duplex attached to a row home. In fact, there were hardly even any 1-bedroom up/down duplexes at all. How did I know what to price this unit at? I didnt. So this is what I did. Once I went under contract, I listed the property for rent and started showing it. I started off at a high price and incrementally lowered it until I got a qualified tenant. The price we settled at was a two-year lease at $1,700 plus a $50 monthly pet fee. So the total was $1,750, which I later learned was likely $200-$300 above market rent. Related: 10 Lethal Mistakes to Avoid on Your First Real Estate Investment Whats the mistake here? Well, to start out, despite signing a two-year lease, the tenants no longer live there. We mutually terminated the lease due to a combination of it being too expensive and them not having the space they needed. They would frequently fight, the dog would bark at odd hours, and they would dance across the hardwood floors. The noise made it almost impossible to live beneath them. Fortunately, I do have enough buffer such that if I reduce the rent, my deal still works. It just doesnt work as well as it did initially. Lesson Learned Make sure you set the price such that you have a swarm of people interested in your place. After youve dwindled it down to 3-5 candidates who are interested and qualified to rent your place, make your pick as to who you think will be the highest quality tenants. Be careful to watch for any discrimination laws! While this is something I did not learn firsthand, be sure to there is a buffer in your rents. Can you reduce your rents by $200 and still make the deal work? If not, you may have yourself a risky deal. If so, there is a high probability you will be able to withstand a market downturn or lower rents. Conclusion Dont get me wrong, I could write a book on all the mistakes I made on my first property. Instead, I spared you the small, insignificant ones and left you with the three largest. Hopefully, this article did not scare you. Clearly, I have made some big mistakes that I am dealing with appropriately, but I am still doing well. Stay tuned for another article in the next couple of months about how well my house hack did from a financial perspective, despite the setbacks. Hopefully you learn from my mistakes! Happy investing! What are the biggest mistakes you learned from your first investing adventures? Share with a comment! https://www.biggerpockets.com/renewsblog/house-hacking-mistakes-prevent/ 9 Lion St, Ipswich. Picture: realestate.com.au
While property values remained fairly stagnant during February, property analyst Michael Matusik has revealed where the housing market is on the upswing. Mr Matusiks latest property clock for houses, has Brisbane, Gold Coast, Logan, Redlands, Sunshine Coast and Gympie all in upswing. He said a markets position on the property clock was based on the strength and direction of key indicators including sales numbers, price and rent, demand and how much new supply there was. His latest Matusik Missive also listed Ipswich, the Fraser Coast and Noosa markets as heading into upswing territory. Ipswich has many beautiful homes, often at prices well below what something similar would cost in Brisbanes suburbs. A four-bedroom home at 9 Lion St, Ipswich is listed for $879,000. The land the home sits on was bought in 1904 from the family of the then Ipswich Mayor Mr Pettigrew. A home was built on it in 1907. The period home has 3.5m high ceilings, VJ walls, period window, and timber floorboards which have all been restored. REAL ESTATE: 9 Lion St, Ipswich. Picture: realestate.com.au The home has two new bathrooms, a large separate dining area and study. It is listed through Steve Athanates of NGU Real Estate Ipswich. On the Gold Coast at Robina, 196 Easthill Drive is listed for more than $850,000. The three-bedroom home is within the Glades Golf Community. It has formal and informal living and dining areas, and an outdoor entertainment area with a swimming pool nearby. 196 Easthill Drive, Robina. Picture: realestate.com.au It is listed through Ian and Linda Mills of McGrath Palm Beach. On the Sunshine Coast at Noosaville a home at 15 Bluebell Court is listed for offers of more than $740,000. The three-bedroom home is in a cul-de-sac in a residential pocket bordered by the Lake Doonella Reserve. The single-level home has open plan living and dining areas. An outdoor area overlooks the pool and reserve at the rear of the property. 15 Bluebell Court, Noosaville. Picture: realestate.com.au The property has a double lockup garage, plus on-site side parking for a boat or caravan, on the 975sq m block. It is listed through Tansy Grant and Justin Sykes of Ray White Noosa. https://www.realestate.com.au/news/the-property-clock-strikes-big-for-hot-spot-areas/ When BiggerPockets first reached out to me about two years ago to write a book on note investing, the note market wasnt like it is today. In fact, the economy wasnt like it is today. We werent quite in an upmarket yet, though signs of an upswing were rapidly approaching (growing construction starts, less foreclosures, etc.). And at the time, my company (then in its eighth year) was still going strong as a note seller. Selling notes, along with loss mitigation, was the core of our business (mainly second liens, but also some firsts as well).
I had also been blogging for more than three years about real estate, and in my posts I had been consistently recommending one of my favorite niches to everyonenotes! Now, lets fast forward to today. Our business has grown, and we now favor first liens to second liens. Ive tried to expand my blogging to cover more than just notes by including all types of real estate investing. Oh, and the book is completedand were officially a month away from launching! I suppose we can also probably all agree, a lot in the world has changed since even 2016! Were in a different place than we were two years agoin more ways than one. But were also in a different market than the one we once knew. And this revelation, like most things, is something that only dawned on me quite recently. Around the beginning of the year, a forum post in the Tax Liens, Notes, Paper & Cashflow Discussion Forum caught my eye. The majority of responses, including my own, probably sum up the answer to the question posed by this article. But lets expand on that. The original poster was someone relatively new to the institutional note industry. His general feeling, in his words, was that it seemed like there was less inventory and more people chasing it. Now, this was something I kept hearing over and over again from note buyers and investors, and I wanted to give my take. Related:The Top 5 Resources to Educate Yourself on Real Estate Note Investing In this current market, is their room for new investors to get started in the note space? I think thats the real question people are after here. Looking back at the forum, my answer was this: My company and I entered the space in an upmarket as well; the only difference being it was really just a matter of months before one of the biggest economic crashes ever. Fortunately, we were able to build and eventually thrive as a second-lien business in a down market because of that. The irony is, weve now grown enough in the time since the pendulum has swung the other way: weve bought more first- and second-lien product this year than the past few years combined. The rub to the retail institutional note buyer is, weve also sold less than ever. What youre describing when you talk about what you see right now is really just a factor of the marketplace. What do I mean by that? In some ways, its a simple supply-and-demand equation. With employment at an all time low, and the lack of underwriting for junior liens, its only natural to see a dip in supply of that particular type of product. But surely there is still product out there, right? Right. And the closer you get to the top of the chain of product, you see the same large funds, banks, and servicers. So why dont more assets trickle down? The answer again, lies in the characteristics of an upmarket. With notes being in direct correlation with property values, notes are worth more and more as the real estate market continues to rise. So of course these outfits are going to hold onto their product if it increases the value of their portfolio. But theres more to it than just money. So going back to my question in this post: on the institutional side, theres not much advantage to sell to the retail buyer for a variety of reasons. For example, many institutional funds can make more money either holding notes that are appreciating in value or selling notes in bulk to another bank where they can get things like NSO credits. Its not only about the money, but also the risk with compliance being what it is. Imagine you were a bankwhat would you do? Would you sell to a guy off the street who you didnt know from Adam? Or would you choose to hold assets that are gaining value and only sell in bulk to other reputable funds, non-profits, and banks that can purchase product in bulk from you? And these larger outfits that have the ability to purchase in bulk, they could obtain what are known as NSO (Neighborhood Stabilization Outcome) Credits, which could allow them to continue to qualify to purchase directly from government entities. I know, I know, youre not the bank. And hey, Im not either! But its important to put these things into perspective. People often ask me, Why arent you selling as many notes today? And like I said in my forum post, my new favorite reply is, Where were you five years ago? We sold everything we had! If youre going to buy in 2018 like you would in 2013, youre going to struggle to get the same type of product with higher prices, higher demand, and lower supply. Of course, there will always be some sort of institutional product out thereits just a matter of how much and when. But you cant just sit on your hands while you wait. Theres only one thing you can do in times like these, and thats adapt. Listen to the Market To the point in my forum post, notes will never go away. In times like these, it goes to show how much the institutional note market is capital intensive and all about relationships. Theres still product out there to findwhether its different from the product youre accustomed to buying (or even if it requires you to buy it in new ways). For example, partnering with others to take down larger trades in order to cherry pick the assets youre looking for while selling off the rest. Keep in mind the note business isnt just limited to the institutional space. What I tried to express in my book, above all else, is that the note space is versatile, vast, and full of possibilities. As with any investment, you cant tell the market what you want it to do for you. You have to listen to the market and adapt to it. And the good news is you have options. Heres an Example Now what Im going to tell you next is a short little story that is one of my favorites about doing just that. I often tell investors this story when I speak. I tell it in the book (albeit in a different way), and Im going to tell it again here by quoting my post. Obviously I love this story! And I think by the end of it youll see why: Ive told this story before, and Ill probably tell it again. But around the time of the crash, I had a friend who didnt know what to do. He was struggling financially. His then-current buy-and-hold business model was no longer working. He just couldnt get much financing. So instead of remaining despondent, he decided to take a banker to lunch. What he was really doing wasnt, Hey, I have _____, will you lend me money on it? Instead, he took the approach of asking, What is it youre looking for? What is your bankor other banks you know oflending on? The banker responded: student housing and commercial multifamily. So my friend goes, Okay, and he began to adapt. He started by pounding the pavement for apartment and student-housing deals, reaching out to his network, and building his team. Pretty soon, he was raising private money for student-housing rentals and finding the remainder of traditional financing he needed pretty easily. That was 10 years ago. He now owns over $100 million in student- and commercial real estate, and makes a pretty penny in his salary raising capital as well. Lets take a lesson from my friend and go from there. With market time being quicker than ever, were switching back to a sellers market. The good news for us note investors whove been working for years in the business is that our portfolio valuation has never been higher! Even in my own personal portfolio, the notes I own are worth more than ever. Im getting cashed out more often (with more people refinancing as they gain equity in their homes). But the flip side isI still have to look for places to put my capital with fewer notes in the marketplace. Related:7 Common Challenges Real Estate Note Investors Face So what do I do? As I see the interest rates going up on my properties, Im starting to do something I was never a fan of in a down market: Im paying some mortgages down. Sometimes the best mortgage notes are the ones you already have. This is why I also just did 4 modifications from adjustable to fixed. I try not to limit myself to any one part of the industry. And I dont want you to either! Hopefully my upcoming book (and series of articles) will help illuminate new ways to look at your real estate and note investing strategies to create profitability from a new angle. So whether its using unsecured notes to buy properties, taking over a note (via subject-to), or partnering notes with commercial real estate, the skys the limit! Dont Follow the Herd, Lead It Way back when, when we were starting our note business and the market crashed, we were in quite the predicament. My partners and I couldve tried to continue on like nothing had changed, but we chose to really dive head first into distressed, upside-down second mortgages. And people thought we were nuts! But hey, Im glad we didnt listen to them. Were still here, and were bigger than ever after years of forging our own path. And with the creative strategies in my writing to come, I want to help you do the same. So if you cant find a performing note, create one with seller financing or hard money lending. If you cant find a NPN? Work in P2P Lending. Or better yet, dont listen to me. Do whatever the market is telling you. What do you think? Share your own opinions in the comments below! https://www.biggerpockets.com/renewsblog/where-are-all-the-notes-the-elephant-in-the-room/ A FAMILY with long weekend plans won the keys to a Burwood East home two days before its scheduled auction, securing a house in a hot suburb as well as a holiday.
Hocking Stuart Mt Waverley auctioneer Nick Goold said the Mt Waverley buyers paid $1.08 million for the really lovely home at 28 Robert St, having already sold their house. Their plans were to go away for the long weekend, when the auction was being held, so they submitted an offer early, Mr Goold said. The current owner has been there a long time and hes happy to see history repeat itself with another family living there. CLICK HERE FOR THIS WEEKS SALES RESULTS RELATED: No Labour Day pains on Mornington Peninsula auction market 28 Robert St, Burwood East, included a large covered deck. The property had been quoted at $1-$1.1 million. Mr Goold said Burwood East was a good convenient family area with tightly held homes. But more young families were moving into the suburb as homeowners who had been there for years sold up. A crowd of about 40 people held back at another Burwood East auction, where a 1960s brick veneer home had been held by one owner since 1990. 2 Tarwarri Place, Burwood East, passed in at auction for $1.25 million. On a 680sq m block and in the Mt Waverley Secondary College zone, the three-bedroom deceased estate at 2 Tarwarri Place passed in after one vendor bid of $1.25 million. Rounds Real Estate Camberwell director Colin Rounds said the house had sale expectations of $1.3 million. Families have been interested in it, but some people have inquired about building townhouses on the block, he said. The kitchen flows to a covered patio and gardens. SPOTLIGHT ON BURWOOD EAST Reported auction sales this year: 10 Reported private sales this year: 3 Top reported price this year: $1.29m for 32 Jade Circuit Demand: high, 982 visits per property on realestate.com.au compared with the Victorian average of 903 https://www.realestate.com.au/news/keen-family-snaps-up-burwood-east-home-days-before-auction-to-keep-holiday-plans/ Pradella Seachange Coomera
Developer Pradella has launched its third retirement community Seachange Riverside Coomera. The over-50s lifestyle resort will consist of 124 homes, a five-star Country Club and River House within the gated country estate. An aerial view of the future Riverside Coomera Seachange Lifestyle Resort by Pradella Seachange Riverside Coomera was officially launched on February 20, and follows the developers move into the sector with Seachange Arundel in 2007 and Seachange Emerald Lakes in 2014 Two more retirement communities are also in the works Seachange Toowoomba and Seachange Victoria Point. Pradella Property Ventures chief executive Phil Goodman said their focus was on lifestyle residents living active lifestyles in communities of like-minded people. We dont see ourselves as operating in the retirement sector. We are operating in the over-50s lifestyle resorts sector, he said. Many developers and service providers have dropped retirement or aged care from their promotional flyers, instead opting for the phrase over-50s lifestyle resorts. Last year, social demographer Bernard Salt suggested retirement was for old and obsolete people. Lifestyle is what people want. So, if you have the word retirement in your product, remove it now, he said. Mr Goodman said that when Pradella, a relative newcomer to the sector, started Seachange Lifestyle Resorts their goal was to deliver an award-winning facility. He said five stars are now the norm, and the market had changed significantly over the past decade, with buyers cashed up, healthier and living longer. And the battle for the grey dollar is heating up, with a host of new developments approved or before town planners for determination. Recently, Aveo was granted the green light to redevelop its Newmarket community, Tricare is set to launch the next stage at its Stafford Lakes development, a development application has been submitted for a health care and aged care development at Woolloongabba, and Lendlease recently announced that it had entered in to an agreement with Brisbane Racing Club to develop an integrated retirement and aged care precinct in Ascot. Artists impression of the Aveo Newmarket redevelopment Lendlease has entered into a development agreement with Brisbane Racing Club (BRC) to develop an integrated retirement and aged care precinct in Ascot, Brisbane. Retire Australia was also recently granted approval to build a three to five-storey complex next to the Tarragindi Recreation Reserve. At least 12 projects are also being considered by Gold Coast City Council. A recent report by Urbis found the top 10 suburbs for future retirement unit supply was spread across the southeast, and the move to vertical retirement living was really beginning to take shape. Urbis regional director Ben Slack said retirees had no interest in being locked up in facilities on the fringes and that could be seen in the number of vertical retirement villages springing up or being proposed in the inner suburbs of Brisbane. https://www.realestate.com.au/news/fresh-approach-to-retirement/ Renders of Tenor by Sanchi
A commercial warehouse will be demolished to make way for a new residential development at Teneriffe. Tenor by Sanchi Developments will be launched next month, and will be constructed at 31 Wyandra St, a street once populated by office blocks and light industry. Renders of Tenor by Sanchi Several developers have been active in Wyandra St, including Cavcorp with Le Bain, Como and Y43 apartments, and Devine with Mode Apartments. Tenor will consist of 49 one, two and three-bedroom apartments, with prices for a one-bedroom unit starting from $385,000. Renders of Tenor by Sanchi Renders of Tenor by Sanchi The median sales price for a unit in Teneriffe is $590,000, according to the latest data from CoreLogic. A house will set you back, on average, $2.585 million. Sanchi Development operations manager Chad Hsieh said the apartments would be targeted at owner-occupier young professionals and downsizers. Given its boutique size, we are expecting to get a lot of local purchasers, Mr Hsieh said. We are already getting a high level of interest amongst selling groups. Construction of Tenor is expected to start in the fourth quarter of this year. Mr Hsieh said they chose the name Tenor because it was short for Teneriffe, like a slang, how Brissie people like it. He said the biggest selling point was the location of Tenor, which will rise in one of Brisbanes most expensive suburbs. (Teneriffe) has a bit of everything rich history, heritage buildings, cafes, bars, restaurants, parklands, prestige homes, river location, he said. The Gasworks, The Emporium and James St are within easy walking distance. Tenor has been designed by Brisbane-based Ellivo Architects, and will feature a brickwork facade a nod to Teneriffes industrial past and sub-tropical greenery on its lower levels. There will also be a rooftop garden with city views. Each apartment will feature light, open spaces with timber and brass finishes to create a warm interior. The open-plan kitchen and dining spaces will flow out to the private terrace, allowing for easy entertaining. Teneriffe has the highest median house price in Brisbane, Mr Hsieh said. (There is) new apartment stock in suburbs such as Newstead, the Valley, but very little, if any, in Teneriffe so its exclusive. https://www.realestate.com.au/news/apartment-development-to-strike-a-chord/ |
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