real estate investment Archives

How To Invest In Commercial Real Estate In Your 30’s

December 28, 2022June 10, 2022 by devteam

If you’re looking for a new way to invest your money, commercial real estate may be the answer. Commercial property includes everything from office buildings and apartment complexes to warehouses and retail space. If you’re considering investing in real estate in your 30 Here are some tips for investing in commercial real estate. Know your goals: Before you begin investing, it’s important to understand what your financial goals are. Are you looking for passive income or do you want to use real estate as a way to build wealth? Knowing what you want out of your investment will help guide how and where you invest your money. Do your research: Once you know what type of property interests you most, it’s time to do some research. Learn about the market and other investors in the area so that you can make an informed decision about what type of property would be best for you. You may also want to talk with a broker who can help guide you through the process of buying or selling a building or piece of land. The more knowledge and experience he or she has with commercial real estate, the better off you will be when making decisions about which properties are worth pursuing: Learn from your mistake: If you’ve already made investments in property that haven’t worked out, don’t be discouraged. You’re bound to make mistakes as you’re learning about investing. The key is to learn from your mistakes so that you don’t repeat them again. For example, if you lost money on an apartment complex because it was poorly managed, don’t make the same mistake by buying another apartment complex without knowing who is managing it or how well they manage the property. Choose a niche market or geographical area: where you have experience or expertise and stick with it until you become an expert at it. For example, if you’re a plumber who knows how to fix plumbing problems in apartments, then focus on buying apartments with lots of plumbing problems (a sign of poor management). Or if you’re an accountant who knows how to manage finances for small businesses, then focus on buying small businesses with lots of financial problems (another sign of poor management). Types of Investment Strategies Investing in commercial real estate is a great way to build wealth and passive income. The benefits of real estate investing are cash flow and appreciation. As a young real estate investor, building wealth through real estate is appreciation and cash flow. Cash Flow – Commercial properties have tenants that pay rent on a monthly basis. The cash flow from your investment property will be used to pay off your mortgage balance and any other expenses related to owning the property such as property management fees and maintenance costs. This is one of the primary reasons why many people choose to invest in commercial real estate instead of residential properties because they can rely on consistent income each month after paying their expenses. Appreciation refers to the increase in value of a property over time as its market price rises due to changes in supply and demand. In other words, if there’s more demand than supply for a specific type of commercial property (or any property), it will tend to increase in value over time because people are willing to pay more for it than they were before — essentially bidding up prices until everyone agrees on a fair price point based on what buyers are willing. Types of commercial real estate investments Commercial real estate investing is a great way to build wealth and passive income. If you’re looking for a new way to invest your money, commercial real estate could be just the solution you’ve been searching for. There are many different types of commercial real estate investments, including: Office buildings Retail properties Industrial warehouse properties Multi-family housing units Apartments Parking Garages Gas station Building Self-storage investment Mobile Homes But before you jump in headfirst, there are some things you need to know. Here are some tips on how to invest in commercial real estate in your 30s: You don’t need a lot of money upfront Buy a property that needs work Make sure you have enough cash flow after repairs Never go into debt when buying commercial real estate Don’t use all of your savings to buy your first piece of commercial property Get professional advice about how much you should spend on repairs and renovations Be prepared for unexpected costs like insurance premiums and tax bills Don’t forget about taxes when calculating your return on investment (ROI) Don’t expect too much from your first property – results don’t come overnight! Final Thought Ready to dive into commercially investing? The suggestions and recommendations in this article can provide you with the tools and knowledge you need to get started. With the right amount of research, preparation, and attention to detail, investing in commercial real estate can add a source of steady income for life to your financial portfolio. Learn the Steps to Invest in Commercial Real Estate Like a PRO by becoming a part of Cherif Medawar’s Commercial Real Estate Mastermind

What Are Real Estate Funds And How They Work?

December 28, 2022March 24, 2022 by devteam

Investing in real estate is a lucrative strategy that attracts many entrepreneurs, which is why there are so many different types of real estate business models. People chose to find the deals and do the work themselves OR they choose to passively invest in REITS, hedge funds and real estate funds and syndications. Today we will focus on real estate funds and syndications. These are investment vehicles that enable sponsors to raise capital for deals and give investors the alternative to stocks, options, crypto and other investments to earn passive income based on the assets held in the portfolio. Sponsors structure a fund or syndication to legally raise capital for a broad range of real estate assets in an attempt to generate high returns, protect against potential losses, pay their investors and scale the portfolio. DEFINITIONS A real estate syndication is when a group of investors pools together their capital to jointly purchase a large real estate property. Apartments, mobile home parks, land, self-storage units and other real estate assets are some of the investment opportunities available through real estate syndications. A syndication is usually focused on one deal at a time. An investment or real estate fund is an entity formed to pool investor money and collectively purchase securities such as commercial and residential real estate. Thus, a real estate investment fund is a combined source of capital used to make real estate investments. A real estate fund may have a variety of projects under management at the same time. HOW DO REAL ESTATE FUNDS WORK? Real estate funds are a relatively new addition to the real estate market. Generally speaking, RE funds are pools of money — sometimes tens of millions or billions of dollars — managed by investment professionals. Unlike mutual funds, which must be registered with the Securities and Exchange Commission (SEC), RE funds are exempt from most standard securities regulations. However, they are filed with the SEC and are managed with Rules and Regulations that the SEC sets. There’s no single definition of what qualifies as a RE fund, but they typically share these four characteristics: They’re not registered with the SEC. They are filed. They must follow Blue Sky Rules. They may only accept accredited investors. Although there are exceptions with the Regd 506b; whereas if you have a preexisting relationship with the potential investor(s) you can accept up to 35 unaccredited. However, they must be sophisticated and the process to invest must be met. They use some combination of advanced investment strategies to maximize returns, such as short selling, leverage and derivatives. These real estate investment vehicles may invest in commercial properties, such as office buildings or apartment complexes, or residential properties. The fund may also invest in shares of publicly traded companies that specialize in real estate, such as homebuilders or mortgage lenders. Some real estate funds invest directly in property, whereas others use derivatives or other strategies to express their view on the real estate market. Some may combine these approaches within a single fund. Like any other fund, a real estate fund may charge management fees and performance fees depending on the type of structure used. Management fees are usually assessed on assets under management and are typically 1% to 2% annually. Performance fees are often charged at 20% of the profits generated by the fund above a certain hurdle rate such as 8%. WHAT IS THE DIFFERENCE BETWEEN REAL ESTATE FUNDS AND MUTUAL FUNDS? Real estate funds and mutual funds are two similar forms of investing that come with distinct differences. There are a few key differences between funds and mutual funds. Real estate funds have less regulation than mutual funds. They do not have to register with the SEC, and there are no requirements for how often they have to report what they own or how they’re doing so long as the total capital invested in the fund is under 20 million dollars. Obviously normal management, compliance and accounting processes must be in place. The only requirement is that fund managers must register with the SEC if they manage more than $100 million in assets and they must register with the Commodity Futures Trading Commission if they trade certain types of derivatives. Those who invest in funds must be accredited investors and have a net worth of at least $1 million. Funds typically have higher fees than mutual funds. Real estate funds are more liquid than mutual funds, allowing investors to enter or exit an investment faster. The sponsor or syndicator sets that timeline in their offering documents. Mutual fund managers have more constraints on how much risk they can take on, which limits their ability to generate big returns when markets are rising but also limits losses in bear markets. Mutual funds are required to report holdings every quarter, so investors know what the manager owns at any given time. Individuals can invest in mutual funds by buying shares directly from the mutual fund company or through brokers. There’s no minimum net worth requirement. HOW DO I INVEST IN A REAL ESTATE FUND? The rules for investing in real estate funds are rather different than those of other investments. To invest in most real estate funds, you must be an accredited investor. This means that you must meet one of the following criteria: You have an annual income of at least $200,000 (or $300,000 together with a spouse) for the past two years and expect to make the same or more in the current year. You have a net worth of more than $1 million, either alone or together with a spouse (excluding the value of your primary residence). Additionally, real estate fund investors typically must contribute at least one share to the fund itself. There are some funds that allow smaller contributions, but it’s unusual for these to be less than $25,000 to 100,000. For a Regd 506b you must have a preexisting relationship with the sponsor prior to investing. With a Regd 506c there … Read more

Raising Capital For Real Estate In 6 Steps

December 28, 2022February 18, 2022 by devteam

For investors in the real estate industry, raising investment capital is one of the first challenges that you will face. You need to be able to raise sufficient funds to cover the down payment on your real estate property, closing costs and brokerage fees and construction. Because you may be relying on other individuals and investors for a significant portion of the cash needed for your projects it is important to create an investor profile that will help you to attract investors. And it is critical that you are raising capital through legitimate vehicles, whether that be JVs, partnerships or syndications and/ real estate funds. You should not take money from investors without the proper legal structure so you protect the investment, yourself and most importantly your investors. Improving the performance of your real estate business has a lot to do with how much you spend on it and what your budget or strategy is to take it to its highest and best use. For example, how much money you can afford to buy property will determine how quickly you can reach your volume goals. And if you want to start spending money on advertising, you first need to make sure it pays off by having the funds. There are many different ways to raise capital for real estate investing. We focus on JVs. partnerships and syndication. Once you know the vehicle you will use to raise capital you need to focus on your plan. There are certain things you should do first to ensure your success. The following steps will help you not only attract investors. Step 1 – Always be Improving Your Credit The first step is to improve your credit score. It’s not that potential investors will run a credit report on you– but it does give you power with your structure to work with financial institutions to get more money to use towards the projects, like construction loans. Your investment vehicle will stand as one score, as will yours. The better your credit the bigger the opportunity to get inexpensive money and leverage the deal. This can be done by paying off any outstanding bills and not applying for any new loans until you are at a 720+. It may seem counter-intuitive, but raising your credit score is necessary in order to find banks and lenders for a loan at a great rate. Having a good credit score shows lenders that you can be financially responsible and that you have a good chance of repaying their loan. And having lenders who will loan you for the construction allows you to use the money you raise with you JV, partnership or syndication for scaling the portfolio. Step 2 – Save up Money Once your credit score has improved, it is time to save up some money. You should have enough saved up to pay back the loan, with some extra cash left over as profit. You will need this money to put down on the property as well as pay closing costs and other fees associated with the purchase of a property. Step 3 – Find Investors Once you have saved up enough money and your credit score is high enough, it’s time to find some investors. You can put ads out on the Internet or approach people face-to-face. What Is Investment Capital? Investment capital is money your business uses to grow. You can use it to buy supplies, inventory, rent space and employees, launch new products, or expand your business. You may need up to several million dollars for an initial outlay and ongoing financing for your operation. Your goal as a business owner should be to get the most capital for your business at the lowest cost possible. An investor gives money to an entrepreneur in exchange for a financial stake in the business. The most common type of investment is equity financing, where the business issues stock that investors purchase as part of a company offering. Revenue-based financing is another form of investment, whereby a company receives monthly payments based on its monthly revenue. Another popular form of financing is debt financing, which allows entrepreneurs to borrow money from investors for a set period of time at an agreed upon interest rate. Contingent promissory notes are another option, where investors can receive returns on their investment if the business achieves profitability or meets other goals established by investors. Sources Of Private Money In order to raise money, you will have to borrow from other sources. First, you will look for private money sources. Private money is the funding that comes from either an individual or group of private individuals. The best place to find private money is through your network of friends, family, and business contacts that know you well and trust your abilities. You should be prepared to show that you have thought out how you plan on using their investment and how they will get their money back plus some profit with enough left over to buy the next property if they choose to do so. What Are Money Partners? Money partners, also known as capital partners or investment partners, are people and organizations that provide the primary capital for a real estate investment deal. Money partners function as the financial backer of the deal and are responsible for financing, funding and paying back any debt that’s created by it. Real estate investing often relies on money partners to supply a portion of the investor capital for a property to be acquired, developed or redeveloped through a loan or by equity investment. How To Raise Private Capital For Real Estate Raising capital for real estate can be a challenging feat. Few people think about the fact that real estate investments are always capital-intensive. While there are several ways to finance your property, you may opt to raise money on your own. Here are some tips to help you raise private capital for real estate: 1) Make sure you have a great … Read more

The Perfect City for a Real Estate Investor

December 28, 2022August 5, 2020 by devteam

Have you ever been to a place where you thought to yourself, “Wow this is a cool place! I like it here.” If so, have you asked yourself, why you had this impression? What was it that you liked so much about that particular city or town? Well, as a real estate investor and hedge fund manager, I have always paid attention to what I like and what other people find alluring in a specific city. In the past, I had the privilege to live in a variety of places around the world like Egypt, the Middle East, France, and Switzerland, throughout Europe, various cities in the U.S.(mainly California), Cancun, Mexico and also Old San Juan Puerto Rico, in the Caribbean. I have had many residences for over a decade now and have enjoyed the beauty and uniqueness of all these different places. But I have come to realize that there is a set of criteria, when met, any city becomes attractive to its locals and most of its visitors. Here is a short list I developed after 3 decades of travels, while always keeping an eye on the beauty of architecture and attitude of locals that impact the overall lifestyle in a particular location. To feel like a great place a city or a town must have: Order: Balance, symmetry, and a variety of forms and colors. Its layout must be organized in a way that flows well with nature even in its complexity. Visible life: The streets should be alive with activities, full of life, energy, and excitement. It must give you a sense that a lot is going on and you don’t want to miss out on something. You want people walking, talking, sitting in restaurants and cafes enjoying life; not just cars or people hustling and bustling for work. It has to be as much on display as possible. Compact: While you want space, you also want a decent density. Having the balancing, moderating influence of living close to other people in an uplifting surroundings. Tightly packed well-ordered cities, with lots of squares, plazas, and places where we can hang out. The art of the square is a having good size, symmetry, and height of buildings. Having great statues and maybe a water fountain in the center. You want to have a place that is private within the public space, surrounded by cool places to hang out. Orientation and Mystery: You want to get a bit lost in the back streets that are cozy and quaint. A place that is both cool and warm. Anonymous and mysterious yet personable and familiar. Where you get the sense of the old respected history and the new modern energy. You want to sense the newness of the place as well as some intimate old familiar surroundings. Scale: You don’t want it packed with commercial interest posted on high rises. You want a variety of places of worship, museums, culinary places, and shops. No more than 5 stories high buildings are always more welcoming. Sizes and spaces with a density that does not make you feel too small or too big. Local influence: You want to immediately feel that there is a uniqueness to the character and feel of the place. You want to see people and architecture that reflect the local customs, way of life, and history. Climate: An inviting climate that makes you feel you are at the right place, no matter the time. Safety: You want to feel that you can go venture on your own and discover without having to worry about your own security or well being. Friendly and happy: You want to feel that everyone around you is happy to see you there. Making you feel welcome, appreciated, and wanted. I like places where people take time to share their stories and carve time out of their schedules to involve you in what is happening in their surroundings. It is great to feel open and connected. Especially when look you in the eye, smile and greet you and each other which gives you a sense of warmth and welcome. Educational: You want to learn something new to be able to share with your friends back at home. Museums, local customs, etc. In the early 2000’s I found such a city— and it is called Old San Juan, Puerto Rico. It is the oldest historic zone under a U.S. flag. This area features all of the criteria I wrote above and more. It has hotels, museums, churches, restaurants, art galleries, and great shopping. This enchanting city is all nestled into some unique and colorful colonial buildings with narrow streets covered by blue stone-casts that were brought over as ballast on Spanish ships in the 1500 and 1600s. This area is very charming and I have worked hard and invested millions into the area to restore the beauty and integrity of its colonial buildings. My goal has been to make everyone enjoy the history and charm of this Old City. That city offers everyone, locals, tourists, first-time visitors (coming off the cruise ships) to returning guests an opportunity to connect with each other and with the historic architecture and the story that is very much part of nature in its design and creation. Come and visit Old San Juan, PR and you may just fall in love with itas I did back a decade and a half ago. Cherif Medawar Old San Juan, PR

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How To Invest In Commercial Real Estate In Your 30’s

What Are Real Estate Funds And How They Work?

Raising Capital For Real Estate In 6 Steps

The Perfect City for a Real Estate Investor

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