Passive Real Estate Investing in Real Estate Development-with Mike Brown

Passive Investing in Real Estate Development & How to Build Retirement Income-Podcast Episode Highlights

Red Fox Capital& Red Fox Real Estate Co-Founder and real estate developer, Mike Brown joins us on this episode where we discuss passive real estate investing, real estate development, & building retirement income. As a real estate pro with a CCIM designation, Mike surprisingly excludes multi family residential real estate deals from his target, and instead focuses on commercial properties.  Mike just released his book on investing:  The REAL Perspective: Secret Investments Your Financial Advisor Won’t Tell You About.   Here are a few highlights from the show:

Target Real Estate Markets

Red Fox Capital focuses on buying investment property for the long term, and prefers secondary & tertiary markets over primary markets. His reason is lack of deal flow at reasonable prices-as the primary market attracts institutional real estate investors with low cost of capital willing to buy, or even develop assets at significant premium to market. The ideal markets should be located in areas of the country where population is migrating.

Target Real Estate Investments

As mentioned, Red Fox targets commercial properties over residential properties. Mike has found the market to have less competition and I’m inclined to agree. I personally invest exclusively in residential real estate-mostly single family or 1-4 unit properties, and I’ve found plenty of competition therein.

The residential real estate asset class attracts the largest portion of the real estate investor marketplace because it’s familiar. Think about it: people buy houses to live, then buy houses and collect rent from people living there. Everyone does lives somewhere and has either paid rent or owned their house during their life, so it’s not a stretch to invest in real estate in this familiar fashion.

On the contrary, in the commercial real estate market, owners are leasing business space to very unique businesses. There are many barriers to entry in the commercial real estate market including lease up time & financing challenges. Some properties remain vacant for a year or more in commercial while residential real estate is usually leased in a month or two. Banks realize this longer timeline is a risk to many investors, and for that reason, commercial real estate investment financing is difficult to obtain. These circumstances create the perfect environment to thrive in Mike’s opinion.

Passive Real Estate Investing to Build Retirement Income

Mike prides himself on offering “Secret Investments Your Financial Advisor Won’t Tell You About”, also the Tagline of his recent book, The Real Perspective. Those secret investments are often passive real estate investments in either long term holds, such as a portfolio of Dollar General stores Mike is currently amassing or 5-10 year real estate developments allowing investors to participate in upside normally reserved only for real estate developers.

While recent crowdsource platforms such as FundRise & CrowdStreet offer investors participation in commercial real estate projects, they are also fraught with issues such as investments failing to close due to lack of full funding, among other issues.  Like many things in business, knowing the RIGHT person can make a big difference.  In Mike’s case, knowing the commercial real estate world and being the developer offer significant advantages.

When I asked Mike to build the ideal retirement plan, he did deflect a bit, with a standard, but truthful, “it depends on the situation.” However, Mike added that often asset allocation might include index funds, mutual funds, other rental properties, in addition to some of his own passive real estate investment deals. I respected Mike’s answer for the simple fact that many real estate operators present their deal as a one-stop plan for retirement building, instead of a small piece of a multi asset class approach to supplement any social security benefits a retiree may be entitled. Enjoy!

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine.  This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals.  For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

Mike & I Discuss:

  • Passive Real Estate Investing
  • How to Invest $100K in Real Estate
  • How to Build Retirement Income

Relevant Episodes: (There are 175 Content Packed Interviews in Total)

Resources Mentioned in this Episode:

www.RedFoxCapital.co

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Jacksonville Florida Turn Key Rental Properties with Gregg Cohen

Investing in Jacksonville, Florida Turn Key Rental Properties-Podcast Episode Highlights

Gregg Cohen, founder of JWB Real Estate, joins us on the show today to discuss Jacksonville Florida turn key rental properties. Real Estate investors in the olden days were limited to investing in their local market-where they could physically manage the tenants, repairs, and any other issues that arise from owning property long term.

In today’s world, with the internet and property managers like JWB who offer fully renovated houses with tenants in place, out of state, or even out of the country owners can enjoy cash flow in any real estate market. With so many markets available, let’s talk about why I like Jacksonville, Florida, and the reason I sought to invite Gregg onto the show.

How to Scale a Real Estate Investment Portfolio Using Turn Key Rental Properties:

My main business is buying & selling houses as quickly as I can. Sometimes completing renovations, sometimes selling nearly as-is, with only minor cosmetics done after we buy the property. Even though I close close to 300 deals per year, when it comes to passive income, I prefer buying turnkey investment properties. I also have no issue with long distance ownership.

The bottom line is that I can scale quickly when turnkey companies are placing tenants and managing the details for me. The extent of my involvement is the heavy lifting on the front end to actually close the purchase: the loan application, signing documents, and providing the 20% down payment.

Why Invest in the Jacksonville, Florida Real Estate Market?

The Jacksonville, Florida real estate market is attractive to me first for location.  First, there are jobs and population from all over the U.S. migrating to Florida.  Second, the home prices in Jacksonville haven’t detached from wages.  Normally I prefer buying turn key rental houses in markets with 5 Million people.   Jacksonville has about 1.5 million, which is smaller than I’d like, but large enough to catch my attention. Even though it’s smaller than I’d normally prefer, Jacksonville is among the fastest growing large cities in the US.

Why Does the Age of a Home Impacts the Value and Maintenance Cost?

Gregg’s latest innovation is build to rent single family homes. Turn key rental property investing normally focuses on existing houses.  First, the company buys a house, second, they renovate a house, third, they rent to a tenant, and finally, they sell the house with tenant to an investor like me.  JWB actually began buying lots and building brand new homes for the same purpose: to provide investors with a brand new turnkey rental investment. I have since attempted buying the brand new offering only to find out that they are in very short supply.   Somewhat disappointed…

Anytime I consider buying a turnkey rental property, the biggest variable, after location, which affects price is the current condition. I love the idea of a new home-since the entire house is new. That’s not usually an option, so I evaluate the home based on it’s current condition. I prefer buying renovated turn key real estate investments from the property management company who also does the renovation. You still need to to due diligence on the company, the house, & the market before you close the deal.

Many of the houses I’ve bought “turn key” were simply occupied rentals bought from mom & pop landlords. In these instances, I expect a risky tenant, many repair issues, and a significantly below market price to account for the risk.  Long term maintenance costs are higher on those deals.   On the other hand, a fully renovated turn key rental property purchased through a full service provider, such as JWB real estate, will cost less in the long run. Please check out the full episode & come up with your own conclusions.

Interested in Buying Off Market Real Estate Deals?  You Need the Deal Machine!

This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals.  For a Limited Time, You Get Free Access at http://REIDealMachine.com/


Greg & I Discuss:

  • Why Invest in Jacksonville, Florida Real Estate

  • Turn Key Rental Properties Offer Easy Scale

  • Build to Rent-Brand New Assets

  • Why a “Focused Approach” Beats a “New Markets Approach”

Relevant Episodes: (174 Content Packed Interviews in Total)

Resources Mentioned in this Episode:

www.JWBRealEstateCapital.com

The transcript of this episode can be found here.

Transcripts of all episodes can be found here.

Economic Forecast 2021 with Paul Sloate

Paul & I Discuss How to Avoid Capital Gains Tax:

  • America’s Economy 2021

  • Biden vs Trump Economic Plans Compared

  • 2021 Mortgage Interest Rates Forecast

  • How is the US Economy Going to Look in 3-5 Years?

Listen Now:

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Relevant Episodes: (There are 173 Content Packed Interviews in Total)

Resources Mentioned in this Episode:

www.GreenDrakeAdvisors.com

The transcript of this episode can be found here.

Transcripts of all episodes can be found here.

How to Avoid Capital Gains Tax Using a Deferred Sales Trust or Like Kind Exchange with Carl Worden

Carl Worden is the founder of DeferTax.com.  Carl & I discuss how to avoid capital gains tax using a deferred sales trust on this real estate investment podcast.  There are several other ways of deferring capital gains tax including the 1031 exchange.  Real estate investors maximize their long term gains by using IRS Tax Code strategies to keep their entire seed capital growing.  This is true even when assets are sold.

Big Idea: Avoid Capital Gains by:
1031 or Like Kind Exchange:

  • Defer Tax on the Entire Gain
  • Real Estate Investor Tax Strategy
  • Short Deadline on Reinvesting Proceeds
  • Like Kind-Limits Asset Types

Deferred Sales Trust:

  • Avoid Capital Gains on Sale Proceeds
  • Real Estate Investor Tax Strategy
  • No Deadline on Reinvesting Proceeds
  • Works with ANY Appreciated Asset

Listen Now:

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Carl & I Discuss How to Avoid Capital Gains Tax:

  • Legal Structure of the Deferred Sales Trust

  • Conservation Easement: How Donald Trump Avoids Tax

  • Sell any Highly Appreciated Asset and Defer Tax

Relevant Episodes: (172 Content Packed Interviews in Total)

Resources Mentioned in this Episode:

 Interested in Becoming a Tax Deferral Consultant?
Avoid Capital Gains Using Deferred Sales Trust & 1031 Exchange

Go to: https://taxdeferralstrategies.com/contact-tax-deferral-strategies/

Schedule a Tax Deferral Consult: https://calendly.com/chris-defertax/tax-deferral-consultant-introduction-phone

www.DeferTax.com

www.CarlWorden.com

The transcript of this episode can be found here.

Transcripts of all episodes can be found here.