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3 Top Real Estate Investors Share Their Best Investing Secrets

[Updated: May 11, 2020 ] Apr 01, 2020 by Kevin Vandenboss
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How is it that some real estate investors are able to grow their portfolio with one successful investment after another while others are still struggling to turn a profit on their first single-family rental? We wanted to find that out directly from the investors who have been growing their portfolios at an incredible rate.

Luckily, these three investors were willing to share their strategies with us so you can start building your fortune in real estate.

Sarah Larbi

Sarah Larbi, host of the "Where Should I Invest Now?" Podcast and co-founder of the REITE Club, doesn't suggest trying to predict the market and waiting for the right time to invest. She says there are good opportunities in any stage of the market cycle.

"Markets will have ups and downs, and no one has a crystal ball, so it's not wise to wait until that happens. On the downturn and on the upswing there are opportunities. What you want to do instead is to look at market fundamentals and hold for the long term something that cash flows.

"Some of the fundamentals I consider are: immigration to the area, population increase, transportation improvements, postsecondary education nearby, vacancy rates, job growth, a variety of industries, etc. If I buy on those, I will do well in the long term."

Grant Cardone

Grant Cardone, internationally known entrepreneur and founder of Cardone Capital, looks for properties with the most units. Even for new investors, he recommends buying more units under one roof instead of multiple single-family homes.

"Here are the metrics I look for in every great real estate investment. Notice that price isn't one of them:

  1. Number of units: The more units there are, the more difficult it is to replace and the easier it is to manage. Personally, I target 320 units because every $25 increase to rents adds $2 million in value.
  2. Cash flow: I look for positive cash flow from month one (in excess of debt service). My fund looks for a 6% return from cash flow while we wait for another 9 to 15% return from appreciation.
  3. Location: I look for properties in a great location that I expect to continue improving over time. You can't pay too much for a superior location.
  4. Friendly, willing debt: Banks must be competitive when bidding on your deal. We just closed on $200 million of debt, for a 10-year term, below 3.25%.
  5. Competitive market: When buying, I look for deals where there is a lot of competition. If other people are bidding on the same deal, these are your buyers ten years from now when you're ready to exit."

Justin Fraser

Justin Fraser, partner at 88 Real Estate Capital and host of the "True Multifamily Podcast," recommends being open to partnering with other investors on deals. He says that when you have partners, you're able to take advantage of opportunities that you wouldn't be able to on your own.

"Including partners on a real estate deal creates win-win scenarios for everybody. With partners, you are each able to focus on the pieces of the deal that match your skill set or goals. For example, some investors have money but no time to do the legwork that goes into finding and running a deal. Others have the time but not the experience. Matching complementary skills and needs makes the project stronger.

"Many people are resistant to taking on partners in order to keep equity for themselves. However, I'd much rather have a smaller piece, percentage wise, of a property that's many times larger than any project I could do on my own."

Real estate provides opportunities like no other investment, but most people never see the massive success they hoped for. One of the main reasons for this is that they follow the advice of other investors who settled short of their original goals. Study how other investors have built their fortunes, and there's no reason you can't be the next real estate mogul.

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