How real estate investment can be a form of activism

 

How real estate investment can be a form of activism

I’m a real estate investor specializing in middle-income multifamily properties. In other words, I buy apartment complexes where people who aren’t rich live — places that aren’t luxury units, that don’t have first-class amenities or a doorman. Places where you need quarters to do the laundry.

A lot of times, when I tell people what I do, they can be a little suspicious. There is a stereotype I run into — a sad storyline about predatory landlords demanding rent in exchange for poor services, bad plumbing, and peeling lead paint. So it surprises people when I tell them that I got into this sector not as a way to milk profit from decaying infrastructure and under-served communities, but as a form of activism.

Let me back up and give you a little context, because I know this kind of a claim raises some eyebrows and some hackles. I started out in New York City as a struggling actor. My total income for an entire year was $7,891. I made my first real estate investment because I was about to get tossed out of my relative’s Chelsea apartment — a space I never could have afforded to rent at market price. Somehow, I managed to buy a run-down place in Washington Heights and fixed it up, and the rest is history.

I wrestled with myself a lot over that first purchase because a big motivator for me in those days was my passion for the musical Rent, where the archvillain is a landlord who is squeezing out the heroes by demanding rent for a dump in the East Village. I wondered, do landlords have to be the bad guys? Can’t landlords make investments that are good for everyone?

Can’t property owners put investment dollars to work in order to become the change they want to see in the world? Can’t landlords decide to be heroes? Shouldn’t property investment be a win-win for everybody involved?

Here are four ways that I’ve developed to help us all reimagine real estate investment as activism. These are ways to put our money to work building our vision of a better world.

1. REIMAGINE SUCCESS

While deals should be underwritten to make a substantial profit, the bottom line can be about more than money. By structuring deals as win-wins, underwriting responsibly, and managing properties in a way that makes them proactive, positive, and productive for everybody, you can put your dollars to work while charting a different course for the industry.

2. ADOPT A VALUE-ADD STRATEGY

With this strategy, you purchase an asset that is not at its best and highest use and then improve it. Maybe it’s a property that was built 30 to 40 years ago and hasn’t been updated since. Often, value can be added by doing upgrades to the interiors like putting in new appliance packages, new paint, or new flooring. Perhaps you can add some amenities like a dog park or new pool furniture. These types of improvements really add up in terms of increased value while substantially improving the quality of life for the folks who live there.

3. GREEN IS ABOUT MORE THAN MONEY

You can often get lower interest rates on loans by agreeing to make environmental improvements that are good for everyone. Electric and water conservations can make a significant impact on your property. Consider replacing existing fixtures with LED lighting or water-saving toilets, showerheads, and sink aerators. Not only will you do your part to conserve water, but your residents will also be thrilled to save money through reductions to their utility bills.

4. UNLEASH THE POWER OF THE PEOPLE

A syndicate is when a group of people pool their resources to invest in a project together. Many, if not most apartment complexes, are bought through syndicates. So are many other things — even Broadway shows. Through syndication, you can come together with like-minded people who share your values and philosophy about the changes you’d like to see in the world. Together you can exercise far more purposeful power than you have on your own.

Today, investment is about more than just the bottom line. I believe that purposeful investment — making a difference with your investment dollars — is one of the ways we as real estate professionals can help rewrite the narrative. I think it’s incumbent on all of us in the industry to change the stereotype of the evil landlord and turn real estate investment into something that makes life better for everyone.

Real Estate Investor, Syndicator, Operator, and Author Matt Picheny is the Founder of Picheny – Your Backstage Guide to Passive Investing.

15 Simple Ways To 'Test Out' Real Estate Investing

 15 Simple Ways To 'Test Out' Real Estate Investing

As an aspiring investor in the real estate industry, you might be hesitant to commit to your first investment. You don’t want to put all your eggs in one basket, especially right away.

There are many factors to consider before investing in a property or housing opportunity, and it’s important to start slowly before diving in blindly. It’s a good idea to test the waters, so to speak, to make sure it’s the right path for you.

To help, 15 members of Forbes Real Estate Council share simple ways first-time investors can dip their toes into the world of real estate investments.

Members of Forbes Real Estate Council share easy ways aspiring investors can get involved in investing.

Photos courtesy of the individual members.

1. Become A Passive Investor

In regard to multi-family housing investments, first-time investors often invest as a “passive” investor in their first deal. This allows an experienced investor to lead up the investment and reports to their shareholders. This helps passives understand the ins and outs of how a property performs and low points that can affect performance of the returns. - Caroline Kane, CKR Property Management, LLC

2. Partner With An Experienced Investor

Partnering with fellow investors who are more experienced than you will provide enormous value. Creating these relationships can help you with your first investment decisions, review your projections and discuss the real-life implications of your choices. Consider these relationships the keystones of your community of trust and hang on to them like gold. - Matt Picheny, Picheny

Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?

3. Find A Mentor And An Attorney To Guide You

Learn from project deal flow, sponsor backgrounds, projected risk and returns on crowdfunding sites, webinars/conferences that evaluate projects, transactional structures, funding and value creation plans. Assess your skill set, access to capital and partnering opportunities. New investors need experienced advisors, mentors and an experienced real estate attorney to support and advise them. - Anne Keshen

4. Mitigate Your Individual Financial Risk

Start small by partnering up with an experienced investor so you mitigate your financial risk. We all had to start somewhere. Many newbie investors jump into this solo and get burnt out or are over-leveraged without the experience. Get creative in working with a seasoned investor. You can hire them to coach you or partner up on a deal to observe and take note of how they operate. - Pam Scamardo, TPK Properties LLC

5. Start With A Multifamily Property

My in-laws came to this country with limited skills after working heavy industrial jobs their whole lives. They invested, started small and bought what they knew. A duplex or other multifamily property can be a wonderful soft entry into commercial real estate with limited risk. Live in one unit and rent out the other unit. Learn, grow and take your winning strategy to gradually larger properties. - Charles Argianas, Argianas & Associates, Inc.

6. Explore Up-And-Coming Markets

Start small in an affordable market that is beginning to pick up or expected to pick up soon. To do this, get advice from an experienced investor who has the background and data to help you identify where and what to buy. - Kevin Markarian, Marker Real Estate

7. Consider A Real Estate Investment Trust

Start with something simple and relatively low-risk like a Real Estate Investment Trust (REIT). By taking the day-to-day management hassle off the table, you can get an idea of the types of returns to expect and the market for real estate in certain geographies. This will form the basis of knowledge you’ll need to expand into more targeted, risky and lucrative investments in the future. - Megan Micco, Compass

8. Lock In A One-Year Tenant

Choose a property in a neighborhood that offers low vacancy loss and ensure that the purchase includes a tenant lease that is in place for at least one year from your purchase date. This will give you the opportunity to have immediate cash flow as well as secure your cash flow once the lease expires. - Mor Zucker, Team Denver Homes - RE/MAX Professionals

9. Turn Your Own Starter Home Into A Rental Property

Not sure if real estate investing is right for you? When you are ready to move on from your first home, get your feet wet by hanging onto it and turning it into a rental property. You are already familiar with the property, aware of its condition, monthly costs and needed repairs; it can become an excellent foundation for your rental portfolio. - Tara Hotchkis, Compass

10. Buy Into A Limited Partnership

For new investors, you can learn the ropes and limit your risk by buying into a limited partnership specializing in real estate investing. Follow their quarterly updates to see how they manage their properties, structure their business plans and report their profits and losses. Learning their strategy is a great way to then create your own strategy based on their expertise. - Jennifer Anderson, Anderson Coastal Group

11. Look For Fractional Real Estate Deals

If you've invested in stocks and bonds, you probably realize real estate is different because it's a physical asset. For your first investment, consider fractional real estate investing to get a taste of the return profiles. If you want to buy your own investment property, some say buy local first, but you can also find a reliable property manager to handle the day-to-day tasks and find investments for you. - Chuck Hattemer, Onerent

12. Help Other Investors Find Leads

I tell clients to start out by bird-dogging leads to other investors. This gives them an opportunity to learn about marketing and lead generation (which are key to this business) without risking any large sums of money. - Melissa Johnson, webuyhousessanantoniotx.com

13. Shadow A Current Investor

Get a mentor and shadow someone currently investing. See how they approach their work and the attributes that make them good or bad at what they do. - Jammie Jelks, JelksMBA

14. Start With A Small Property

Start small. While it is without question difficult to start small in real estate investing, the processes and burdens of owning investment real estate are very similar if not more difficult for smaller properties. Smaller properties often require the personal attention and care of the individual investor while larger properties can garner that attention and care of professional property managers. - Richard Lackey, City Commercial Real Estate, Inc.

15. Set A Budget And Go For It

Budget an amount you don't mind losing and give it a spin. Think of it like a roller coaster ride. When it's all done, you will know if you want to ride again. - Joseph Edgar, TenantCloud

NEWS: YouTube Small Biz Day on June 24 – First Ever

 NEWS: YouTube Small Biz Day on June 24 – First Ever

Want to get more out of YouTube and other Google offerings? definitely check out YouTube Small Business Day from Google.

To celebrate and support small businesses on YouTube, we’re thrilled to announce the first-ever YouTube Small Biz Day, as part of Google’s International Small Business Week. We’re dedicating an entire day to helping businesses grow their YouTube presence, and it’s all happening on Thursday, June 24, at 9 a.m. PT/12 p.m. ET, on the Google for Small Business channel.

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YouTube Small Biz Day will be hosted by Blogilates founder Cassey Ho, who has built and expanded her business on YouTube for over 11 years. With over 5 million subscribers and 800 million views, Ho’s channel has connected with audiences due in large part to her authenticity and candor, establishing her as a trusted brand for viewers.

Alongside Cassey Ho, Small Biz Day will feature YouTube creators and business owners Molly Burke, Erin on Demand, and TheDomesticGeek. These creators, alongside a selection of small business owners, will share their experiences and advice via insightful panel conversations, an instructive how-to workshop, and helpful resources.

Resources: Check out the Smart Hustle Guide to video marketing

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