Use the player below to listen to the discussion:
Our June YPN Breakfast – Investing As A REALTOR® – explored how REALTORS® can use their real estate experience in the investment sphere. Some of the topics our panelists discussed included: securing financing, choosing a business partner and the importance of personal branding. A recap of May’s YPN Breakfast is available here.
This month’s panelists included:
- Tony Lupescu, Fifth Third Bank
- Erin Mandel, @properties
- Esther Williams, Ultimate Real Estate Group LLC
- Jack Berdan, Berdan Real Estate, moderator
The Sooner You Invest, The Better (So, Do It Now)
When Tony Lupescu first started investing, he felt like it would take forever to pay off. But the sooner you invest, the faster you will pay down the properties.
“Almost all of us in this room are commissioned sales people, so when we started this career we’re like ‘When’s the right time to do that?’” Lupescu said. “It’s probably never. You just have to go and do it.”
Esther Williams said REALTORS® have a leg up because they understand the market conditions, and you shouldn’t let fear get in the way.
“You can represent yourself when buying a property,” Williams said. “You can represent yourself to sell a property, so what’s holding you back?”
Jack Berdan said his major regret is not starting earlier.
“I bought my first property in 2015, and I was hooked,” Berdan said. “Honestly, the only thing holding me back was fear.”
Berdan said he lived in Logan Square in 2008 and 2009.
“I lived in Logan Square in 2008 and 2009,” he said. “I saw what was happening in that neighborhood. I could have picked up a three-flat there, you know?”
When it Comes to Financing, Keep Thinking Creatively
Erin Mandel said she saved every dollar she made to become the “small fish in a big pond” to diversify her cash flow.
“After I racked up $30,000 in credit card debt in 2006, I just decided I would never feel that pressure again,” she said.
Mandel said her success has helped her attract a band of investors for projects whose smaller contributions add up to larger developments. However, she’s not afraid to put her own skin in the game when financing to help build trust with investors.
“‘Hey, it’s my skin,’” she tells investors. “‘I’m borrowing against myself. I believe in this enough to take a risk against something I’ve already earned. How do you feel about contributing X,Y and Z?’”
Williams said this is another area that REALTORS® have an advantage. She said lenders care about the deal.
“You can come in and say, ‘I can sell this house, I know this neighborhood, I know the numbers, and that’s something you can take to lenders,” she said.
On the commercial loan side, a good deal is more important than the investor’s personal finances, according to Lupescu.
“You should be able to get a loan regardless of what your tax return shows,” he said. “A lot of people don’t realize that, but it’s true. On the commercial side, they’re strictly looking at how the building will perform. Basically, if you didn’t pay and they have to take it back, is it going to make money? Can they sell it?”
Berdan said there are so many creative options for financing and a strong appetite from investors for good deals.
“With investment deals, the key thing to remember is that if it’s a great deal, funding should never, ever, ever be an issue,” he said.
A Business Partnership is Like A Marriage
If REALTORS® are looking for an investor to flip an investment property, they should leverage their experience.
“You should know finishes,” Williams said. “You should know what buyers are looking for – you’re out with buyers every day. You know what makes their eyes light up. You have all of those ways you can sell to someone with private money.”
If REALTORS® are interested in teaming up with someone on a property, you should make sure your goals are aligned and you’re defining the roles of each partnership. Lupescu said he’s seen partnerships struggle when both parties have different long-term goals.
“In two years, one person wants to hold it, one person wants to sell it,” he said.
Berdan likened a business partnership to a marriage.
“Would you ever get married to someone you went on two dates with?” he said. “I hope not. I did that in business one time, and it was a big mistake.”
Tell People What You’re Doing, and Your Network Will Reach Out To You
Berdan notes the first deal is always the hardest, in large part because you don’t have a reputation yet for success.
“[My partner and I] probably went to about 20 different people … looking for money before one said, ‘Okay, we’ll take a chance on you on your first deal’” he said.
It’s harder starting off without a track record. But you just have to engage your network and find them.
“Now people have said to me, ‘Oh, can I get in?’” Lupescu said. “Well, I would have liked to talked to you ten years ago. It would have been a lot better.”
The best way investors can find you is by building a brand and doing the work.
“I tell people everything that you do, make sure you keep your name clean,” Williams said. “No deal is worth going down in your name and your brand. And I think as a REALTOR®, that’s your leverage.”
Join us next month for YPN’s July Breakfast – Lifestyle & Wellness on Wednesday, July 25, 2018. Registration is complimentary for CAR members.