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What makes us the #1 Women-lead multifamily investment firm?

Why people should choose APQ:

We solve common problems that individuals in our industry do not. These include but are not limited to, flexible financing terms, boots on the ground in every apartment deal, because of our small size of a team we are able to make quick decisions, we are passionate about our community and improving quality of life, we implement business minded systems, we double check underwriting at a minimum, we do not own a construction company or a property management company to completely avoid any cross pollination or what we called double and triple dipping into the profits. We do extensive background checks on every General partner for bankruptcy and any other bad outdoor activity no matter how close of friends they are. And I think one of the biggest features that we offer is that we are in this for the long-haul. Most individuals in our industry are partially invested or only put in as much effort as they are paid for. With us all actions align with our mission, vision, values and we understand the empires are not built overnight. We love technology and strive to reduce the friction of the investment process which is very common in our industry.

What makes APQ special

For now, we are one of the very few all female lead Multifamily investment firms. We are also a Government approved “who” or Women Owner business”.

Like I mentioned before everything that we do must be in alignment with our mission vision and values. Our standards and “why” differentiate us from everyone else in our industry, and most on the planet. It makes it worth it to come to work when your purpose has a greater impact because of what you do every day.

Here are our core beliefs-

The mission of the Apartment Queen is:
To stop abuse and codependent relationships by providing women with investment opportunities and convenient education on creating wealth through real estate investing. This will create financial, mindset and other freedoms ultimately leading individuals to find and live their why and purpose in life.

The vision:

We WILL change the world, create financial independence for a minimum of 1 billion women investors and create 1billion “givers”

Our values:

-Teammates to make decisions with open constructive communication. 

-We want statements of what is strong, good, and positive, while focusing on building our strengths.

– Emotions are good, in the right time and place.

 -We are grateful for everyone and everything we have.

-We believe that our ethics are key,

-We want to help put people in the right direction when we don’t have the answer

-We’re always honest with RADICAL TRANSPARENCY and RADICAL OPEN-MINDNESS

-We keep our word, all while under promising and over delivering results. 

-Compliments are constant, treating others how we want to be treated,

-we stand up to all bullies

-we put families first. 

-Our main concerns are running a business using principles, asking questions and never assuming. 

-We always ask for help-shit happens

-MENTAL HEALTH IS A PRIORITY, physical health is a priority, and we celebrate all wins. 

-We want to know and nurture each employees Personal financial and business goals. 

-We want employees to share regularly good news, what they love/loathe in their role, where they are stuck, new ideas, fears, concerns, opportunities, decisions, and feedback from customers/employees.

What are you proud about the most regarding APQ

How we aren’t afraid to be different when we are looked at funny. This just means we are different and thats what we want. We want to focus on the exact people who align with our “why” and how impressive our team truly is when it comes to each of their skill sets in their role.

FIVE key benefits for anyone who invests with APQ

  1. Transparent updates or news, even if it is painful
  2. You’re part of a movement here to change the investing world and therefore the entire planet in-turn
  3. We are technology-driven to reduce friction. We will be early adopters and over time our investments will become the most transparent and frictionless available.
  4. We believe in giving. If this is content, property tours/ride alongs, giving more equity in the deal to our limited partners we will do it. You must give first to receive.
  5. We are long-term and business-minded. For every process there is a system. Our moves are with the long term in-mind. Ig you want quick cash we are not your sponsorship team/company. We want to help people to build long-term generational wealth.

THREE important things investors should know before investing with APQ:

  1. You must educate yourself-we have some materials and resources but we are not a mentorship program, we will not allow uninformed individuals to invest
  2. You must be an accredited or sophisticated investor- we have a quiz to help determine which you are
  3. We send out regular communication. We work best with investors who don’t need weekly communication, and actually prefer less communication. 

We will take care of you. Warren Buffet’s first investor update ever was delivered annually and was one page-keep this in mind. Also, we prefer investors who like video updates, these are our favorite.

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Rip off the Tax Man!

Let’s talk about how to avoid taxes!

We personally want to rip the government off. Here’s the legal ways we do it-

IRA

401(k)

403(b)

Keogh

Defined Benefit Pension Plan

Simple IRA

Individual Retirement Account

A custodial or a trust account in which an individual may set aside up to $2,000 of earned income in a tax-deferred plan. A non-working spouse (if the working spouse earns $2,250) may contribute up to $250 to an IRA. Individuals who are not covered by an employer’s plan (and do not have a spouse covered by a plan) or who earned under $40,000 may deduct their contribution from gross income.
Contributions and earnings grow tax-deferred. Contributions must be made by April 15th of the succeeding tax year.
Withdrawals prior to age 59 are subject to a ten percent (10%) penalty (some exceptions apply as well as ordinary income tax.) Withdrawals after age 59-½ are subject to ordinary income tax. Mandatory withdrawals begin in April of the year following the year in which the individual turns age 70.
Congress is always considering changes to these plans.

401(k) Salary Reduction Plan
Similar to 401(k) for non-profit. The main difference is that $9,500 may be put away annually.

Simplified Employee Pension (SEP)
A tax-deferred retirement plan developed for small businesses or anyone with self-employment income. An individual is allowed to contribute up to fifteen percent (15%) of net earned income (see IRS definition), to a maximum of $30,000. All contributions are fully deductible.

  • The percentage contributed must be the same for all employees who have been with the firm for three (3) of the last five (5) years (part-time included).
  • Contributions must be made by the due date of the tax return, including extension, of the succeeding tax year.
  • Easy administration
  • Rules on taxation of withdrawals are the same as IRA
    KEOGH (Money Purchase/Profit Sharing)
    A tax-deferred retirement plan that allows self-employed individuals to contribute up to twenty-five (25%) percent of net earned income, to a maximum of $30,000. If a “paired plan” is used, part of the contribution is mandatory each year, and part of the contribution is elective. All contributions are fully deductible and earnings are tax-deferred.
    Lump-sum distributions may be eligible for five (5) year averaging
    All plans must file Form 5500 annually with the Internal Revenue Service. (One participant plans, with less than $100,000 in assets, are exempt.)

Defined Benefit Pension Plan
A pension plan in which retirement benefits, rather than contributions to the plan, are specified. Contributions are actuarially calculated, to find an annual retirement benefit of the lesser of $10,000 (indexed) or one hundred percent (100%) of the average compensation for the highest paid three (3) years.
You must use an enrolled actuary to determine your contribution. Administrative responsibilities are the same as KEOGH plans (the actuary may file your Form 5500 as part of his/her annual fee.) You may need to purchase Pension Benefit Guaranty Corporation (PBGC) termination insurance.
Tax benefits and distributions are the same as KEOGHS.

SIMPLE-IRA
The SIMPLE-IRA, or Savings Incentive Match Plan for Employees, replaced the SARSEP-IRA for new plans established on or after January 1, 1997. The SIMPLE-IRA is a tax-deferred retirement plan provided by sole proprietors or small businesses (fewer than 100 employees) who do not maintain or contribute to any other retirement plan. Contributions are made by both the employee and the employer. In a SIMPLE-IRA, contributions, which are pre-tax, and the investment earnings can grow tax-deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income.
Annually the maximum employee contribution is $6,000, plus your employer’s contribution. With the exception of higher contribution limits, SIMPLE-IRAs are subject to the same rules as a regular IRA. A SIMPLE-IRA allows you to invest in regular IRA’s, giving you another opportunity to save for your retirement.

ROTH IRA
A Roth IRA permits non-deductible (after-tax) contributions only. However, there are no taxes on earnings as they grow or when withdrawn (subject to certain restrictions.) Allows up to $2,000 or 100% of earned income, whichever is less, to be contributed annually. Eligibility to contribute is based on adjusted gross income as shown in the chart below. All contributions are made in after-tax dollars and are not tax deductible. Contributions can be withdrawn at any time without any taxes or penalties. Earnings can be withdrawn without paying taxes or penalties after the account has been opened for five years and under certain conditions. Tables are updated yearly, so confirm by reviewing PUBLICATION 590.

Well
There we go folks! Ways to save on taxes by putting funds into IRA accounts.

When you self-direct a 401k, or Roth IRA you can start making big big returns by self-directing into alternative assets!
That is what we do- but only in Apartments.
You can do land deals, house flips, buy notes, self storage, mobile homes, and much more.

If you’re wanting to invest and you have money in an account with and active employer, we can teach you how to get that out too!

Even if you’re a teacher, there is a loophole in the TRS which you can self-direct your retirement funds to do deals in alternative assets.

There’s almost always a way to create a new investor everyday- and that is my personal goal, to create more investors who enjoy passive income.

Plus there are more options to avoiding taxes and investing. I will write about those next time!

For more information please email me and we will first show you how to self direct your account.
You can reach us-
Admin@theapartmentqueen.com
Or schedule a quail call here-

https://calendly.com/kaylee-6/15min

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How you can stop paying income taxes on your active income due to your PASSIVE income!

This year I have been to so many meet ups and spoken in front of different groups of women and men and in every session we always ask what is your word for 2020? I hear a lot of intentional, Focus, one thing or other very similar and related words.
I’m not quite sure what everybody is deciding that they want to be focused on or they want to be intentional about, but if you ask me everybody is looking to create freedom or the ability to do whatever they want. Reason I think this is because people want to focus on being strong or succeeding one thing to be able to see massive results in that area. Most of the people I hang around the business professionals so the thing that they’re focused on is being massively successful or CMS a change in there were production or more importantly Their income. One thing I’ve learned that everything in life is if you follow the money you will see where peoples actions will go. Follow me here…
So imagine right now that you are somebody who is an engineer, is a medical doctor, is a executive in a company, you are the top sales rep at your medical device company, you are a successful lawyer, you are a dentist to own your own practice you are a fund manager, you are a house flipper does it on large-scale, you are a homebuilder, or any successful individual who owned her own business and is self-employed. You have to show up every single day and do some sort of action every single day to be able to make money. This is called active income and this is the type of income the large, the government taxes you’ve the most on. Even if you drop everything that you’re passionate about and completely focused for 2020 on rating massive income in what you specialize in the government will still take its chunk of what you make. I’m really not a fan of working my butt off have somebody clean the right to the income that I made. All this time you have been trading time for money almost like an employee. The trade-off of time versus money is much greater in these professions for example instead of making $15 an hour you’re making 500 or $2000 an hour but still depending on your tax bracket the government is still going to take say 30% of your income. Think about it this way that means 30% of the time that you were working to create that income and for using your focus and your energy was literally wasted. If you could structure your time where instead of giving away 30% of your time you could instead use that 30% to give yourself time back and continue making income at the same time wouldn’t you opt to do that? As I’m reading over and over get it isn’t how much money you make it’s how much you keep. So I want to challenge you instead of to focus on doing one thing in your career all day long or specializing in one thing so that all the money comes to that thing I want you to focus on how much of your income you are keeping. Think about it this way if you made $100,000 and it was totally tax free you keep the hundred thousand dollars to make $100,000 dollars and you’re in a high tax bracket you’re only going to keep $70,000. And that is before expenses. One of the easiest ways that you can start today to save yourself taxes on earned income is by instead of making earned income start make passive income. K-1 income saves you a massive amount of taxes and guess what it’s easy as hell because you’re not showing up everyday earning if you have made any kind of decent income in your career you need to be leveraging that to multiply that income while you sleep or while you vacation or while you have your family or while you pursue whatever it is that your passion in life is. It makes me really sad that people want to waste 30% of their lives their entire lives up to 30 years of their lives literally wasting their time. If you’re like me my focus is on pursuing what matters to me which right now is making everyday count like it’s your last. Now if I’m forced to spend 30% of my life working just like compared to government I’m knocking to be able to be at the hospital for my grandma, or be at my kids recital, or be able to chase butterflies in the field, backpack to the mountains, take a week or two off for vacation because I’m exhausted, or whatever it is that you want to do.

Whenever you choose to make passive income, even when there is a capital gain event (govt wants their check here from your hard work) like a sale of an investment, you still even get the benefit of being taxed at the lower capital gains rate which is less still than earned income.
Now if you’re invested passively in the stock market via govt sponsored investment accounts like a Roth IRA or 401(k) you do not get the benefit from the lower capital gains tax rate (you can only benefit from this if your gains are coming from real property) but you can benefit from a 1031 “like kind exchange” to defer capital gains taxes…. But this only increases your net worth for the value of your investment and continues to circulate your money. This does not allow you to withdraw your game to be able to use those for whatever you see fit. When you invest in real property you get to not only 1031 exchange or like kind exchange your games but if you choose instead to cash out your tax at the lower capital gains rate. There are also ways around this capital capital gains event tax by rolling your government sponsored savings accounts into self-directed accounts. Ask me how I know. There are many other ways that passive income can also help you to offset your other active income or your spouses active income we’ll have to have an event on this. I want everybody reading this to start thinking about focusing their energy on creating passive income. The faster and younger you can do this the more freedom of time you’ll have and the more money you will make over your lifetime. As in the Rich dad poor dad’s series they discuss everything you own is either an asset or a liability. If it is making you cash flow (not trading time for money) it is an asset if it is not creating cash flow it is a liability. So try To think about your car your home your expensesIs I an acid or is it a liability? There’re certain expenses we have to have’s and kids sports etc. But if you can offset those with assets that cash flow and you could live net zero meaning you’re not in debt but everything that you need is completely paid for and you don’t owe taxes wouldn’t you be happy?

Think about it and really try to simplify your life.

This is the kind of crap that they teach you for the government wants you to subscribe to is that-Any excess income should be put away into accounts which will compound annualized into large accounts to take care of all expenses when we end up not having our tax deductions when you retire.

Or guess what everything you own the cash flows you can retire whenever you want you stain a low tax bracket because you have passive not earned income and you don’t have to work. Let us teach you how to make passive income today you can retire when you want and pursue the things are important you. I have a monthly meet up in Dallas Texas where we discuss opportunities for free passive cashflow.

And coming soon I will be starting a woman only fund, the first of its kind in the entire world to help women become investors, make passive income, do it they won’t with her time, create independence. If you have a wife, sister, daughter, anyone in your life is a woman that you care about the need to be involved in Ness.

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Six critical teammates to start scaling and FOUR steps to start your growth TODAY

Six critical teammates to start scaling and FOUR steps to start your growth TODAY

For a weekly update of where we are at with our company growth and all that is on my mind, I’ve decided that a blog is most appropriate.

  1. We have an accounting analyst currently being connected to our accounting department personally, to the brokerage and for the apartment capital company. She is in California
  2. We have a marketing team getting started on the backend with Google Adwords, Bing, other Social Media, etc-they are in the Philippines. More expensive than I hoped, but when we can get leads converting and rolling in, it will be worth it.
  3. We have a tech wiz working on our Podio/crm automation flows for apartmentqueen.com called “finding new deals off market” and we are about to start working on two more CRM build outs. One will be for managing our communications with passive investors and another for the brokerage. He is in India and he keeps me on MY toes which is what I REALLY NEED from all people in the company! Very happy with him.
  4. We have added two new agents to the brokerage. We have a new TC (transaction coordinator) who is in Houston. We are taking on a media intern to get our content to be more professional, then I’ll teach him how to make money in Real Estate WITHOUT a license! $$$
    We closed on two houses Friday, closed another yesterday and have yet another one under contract. We have a new buyer this week from my high school!
  5. We have a new investor portal being built, but it will be put on the backburner until I find a deal to KP (key principal) I will build in the cost to do this into the raise within that deal.
    We have started to learn the correct time to monetize and are still studying this fine art to get it nailed down. I have experience writing sales presentations and how to do launch schedules. Also learned how to attract high-end clients who really get me and this is the main focus right now. We are working on training someone (probably cha) how to post the launch race prior to our events. This is our magic marketing strategy Get our goals accomplished in a big way!
    I have learned about some life-changing investment strategies. Have you ever heard of Warren Buffet’s largest strategy, or the owner of pampered chef who then sold to Buffett? Many more intelligent folks are just investing their free cash into accounts which make returns THEN using those same accounts (think Roth IRA on steroids) to reinvest in Securities like apartments, or house notes, or to flip home projects and more. This is also protected against any creditor, debtor, predator, and legal action in a company you own-truly protects your assets.
    I have now done all of these and will like to make several times the return on my money so that it can skyrocket. We have to make our money work for us, and I am doing that, especially while I am young!
  6. We have a business development team member who showed me how to write up my first detailed business plan. It’s essentially made of who’s on the team, their roles, what cash the company needs, SWOT (strengths weakness’ opportunities and threats), exit, and ALLL the things a bank would need to review in addition to track record to lend us millions- growth sucks cash my friends! Finally finished this for The Apartment Queen. Next up is same thing for “ReByKaylee “ Brokerage.

I swear the more money I make the less I want to spend (unless it is on an asset not a liability). But the coolest thing about this is not just that you are able to follow the compound growth curve and stay liquid, but it’s protected, and it helps improve your balance sheet. I don’t need to be buying shoes and crap with my money. My car is paid off, well serviced, and I now have an opportunity to have the best case opportunity to grow my business.

I have set myself up by literally being on birth control since I was 16 to be able to figure myself out. Now over the last two years I have been able to really dig in through counseling, re-evaluating my friends, only allowing people in my life who want to see my success skyrocket to the moon, and trying to constantly work on my mindset/plan/execution.

I want to share with EVERYONE that the real reason good things are happening to me, I believe, is so that I can set an example. It’s not an overnight change and honestly I have to put in the work DAILY!

HERE IS HOW TO START TODAY TO GET ON THE PATH TO GROWTH

STEP 1- Figure out what you are naturally good at-I use several tests and meditation to go back in time to figure out what skills you knew you always had

Step 2 – Work on your mindset-manifesting/positive vibes only/big scary goals or BHAG as Gazelle’s Corp calls it. If your goals don’t scare the shit out of you then they aren’t big enough-visualize EVERYDAY. Have positive affirmations-control your breath-read read read-hangout with those who do what you want to do.

Step 3 – Create a plan. What do you want on your vision board? Do you write down what you want to make every month?? Well, who do you need to meet/what list do you need to be on/what higher paying position do you need/what knowledge do you lack? Make a plan to GO TAKE WHAT IS YOURS!

STEP 4 – EXECUTE…all of this is how you run a business! This can be applied to literally everything in life!! Write down dates when your dreams are due in pencil, then shave a few years off and re-write them. Start setting reminders in your phone or calendar to push you to get that shit done NOW! Remember, take massive imperfect action- look at me! I have typos, and goofy faces, and all kinds of stuff that a “professional” shouldn’t but I don’t care! My message and purpose is far greater than other people’s stupid opinions and the judgment they impart on others because THEY are insecure. Remember, it’s pretty much always “someone else’s shit” when they judge or tell you how you “should live your life”.

And I am off for the day to run, box, take care of me and raise 4MM from an investor who has been up my tail for over a year! It’s going to be a great day folks!! Take a bite out of what’s out there! I know I will!

If you are curious how to get into retirement faster than you thought possible, and are interested in being qualified for our next investment, set up a call at the link below and we will set up a meeting!! Looking forward to helping you create more time in your life to follow your purpose/why!!

https://calendly.com/kaylee-6/15min

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5 reasons why Apartment investing could be better than stocks and other real estate

Pros of investing in real estate

  •  Real Estate investors have the ability to gain more leverage on their capital and see some tax benefits. Although real estate is not as liquid as the stock market, the long-term cash flow provides passive income as well as appreciation.
    •Real estate has outperformed the stock market approximately two to one since 2000, earning 10.71% annually versus 5.43% for stocks. Due to this contrast in returns, many money seekers are cashing in and leveraging real estate by acquiring rental properties.
    • Real estate monthly rental income (cash flow) can increase with inflation even in a rent-controlled area, offering an additional advantage.
    • Another consideration is taxes after selling the investment. Selling stocks typically results in capital gains taxes. Real estate capital gains can be deferred if another property is purchased after the sale, using a 1031 exchange.
    Cons of investing in real estate-
    • Investors need to have the ability to secure a down payment and financing if they aren’t making all-cash deals.
    • Since real estate isn’t as liquid, investors can’t rely on selling their properties immediately should a need occur.
    • There are costs associated with property management and the investment of time that goes into the building’s upkeep.
    • For house flippers or those who have rental properties, there are risks that come with handling repairs or managing rentals on your own.

 

Dealing with tenants can cost a great deal and a time suck. It isn’t something you can do during your off-time—especially if it’s a rental. Tenants will always need something, and you may not be able to put them off if there’s an emergency.
o As an investor, you may want and need to consider hiring a contractor to handle repairs and renovations of your flip, or a property manager to oversee the upkeep of your rental. This may cut into your bottom line, but it does reduce your valuable time overseeing your investment.

5 ReasonsWhy MULTIFAMILY is like SUPER real estate investing

We solve these problems for you

  1. Our sponsorship team and the apartments we invest in qualify for the multi-million-dollar loans needed – so you don’t have to worry about finding funding
  2. Investors get cash-on-cash return and liquid quarterly dividends while we hold property. Investors can swap shares with another qualified investor if you have a life event.
  3. The larger the property the more economies of scale.
    For example, an Air BnB manager might charge a 25% management fee. In contract, our managers are 3.5-5% of apartments income.
  4. Upkeep is maintenance man’s job! No more spending your weekends sweating at a rental!
  5. Property Manager oversees construction day to day and deals with the “people aspect” of tenants.

Let’s compare what we do to the stock market

Stock market risk

The stock market is subject to several different kinds of risk: Market risk, economic risks, and inflationary risk.
• Stock values can be extremely volatile, meaning prices are subject to fluctuations in the market. Volatility can be caused by geopolitical as well as company-specific events.
For instance, a company has operations in another country. This foreign division is subject to the laws and rules of that nation. But if that country’s economy has problems, or any political troubles arise, that company’s stock may suffer.
• Stocks are also subject to the economic cycle as well as monetary policy, regulations, tax revisions, or even changes in the interest rates set by a country’s central bank.

Becoming a confident investor takes skill, not secrets
There’s no magic secret. Becoming a financial investor takes time and a dedication to education. My favorite book when starting apartment investing is The Perfect Investment by Paul Moore. It compares, stocks, mutual funds, bonds, oil, single family rental investments versus apartment investing. It discusses the pros and cons not just painting a pretty picture of Multifamily investments. It’s a quick read also on audiobooks.

If you’re ready to start investing into real property and creating more independence from the rat race please book a call here: https://calendly.com/kaylee-6/15min

Or email us at admin@theapartmentqueen.com to learn about future offerings.
Most of the comparison information in this post is from Ryan Boykin originally posted here: https://www.investopedia.com/investing/reasons-invest-real-estate-vs-stock-market/

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Six Ways to Make Apartment Offers During an Outbreak

Six Ways to Make Apartment Offers During an Outbreak

Even though things are scary, the show must go on. And people will continue to purchase during recessions. I’m here to share some tips on what CAN be done.

#1. Hard Money

Negotiate that zero money goes hard, on day one. Everything should be soft earnest money. (“Hard money” means that there’s a certain amount of the earnest deposit which is non-refundable.)

The reason for this is because right now we are not able to enter units for due diligence. Normally during a recession, it wouldn’t be an issue. But due to the nature of COVID-19, entering occupied units is not reasonable. Normally in due diligence, you have 30 days to review every unit and check for any deferred maintenance or challenges that you couldn’t see from the exterior of the building. Brokers in Commercial Multifamily expect your offer to 100% account for any repair you can see with your eyes. However, you can’t account for what you can’t see – and this is why we have due diligence periods.
Currently our stay at home order has been extended twice, and who knows how long it will continue. You want to make sure that you can get the due diligence you need. This includes lease audits, unit examination, plumbing line examination, and checking the roof from the interior. Full access is the only way to make sure that you don’t have any surprises. If it is a GREAT DEAL and you have competition, then and only then should you consider hard money. In this case, negotiate to split the “hard money” amount half-and-half between the due diligence and feasibility dates.

#2. Financing Contingencies

Include a financing contingency with you offer to ensure you can get funding.

A lot of the new brokers are scared of this. It’s often something they don’t understand or know about. When I first started doing deals you were able to negotiate contingencies for financing. In the current situation, it is very appropriate to include financing contingencies that would allow for a portion or heck all of the earnest money, to be refunded back to the buyer if financing cannot be achieved. This is something that is out of our hands at this moment and up to the banks.
If you’re not aware, Fannie Mae and Freddie Mac are asking buyers to put 6 to 12 months of principal and interest aside in an untouchable escrow account. This means that more money has to be raised to close the deal. Note, things are changing quickly, so this requirement may change by the time you ready this.

#3. Critical Dates

As with all negotiation, ask for the moon and land among the stars.

Critical dates are something that we can adjust during this period of uncertainty. Inside the purchase and sale agreement there is a “critical dates” section. That section usually addresses due diligence dates, financing contingency dates, closing date, built in automatic extension time allowed, when earnest deposit needs to be delivered (both hard and soft), and any other critical dates that everyone needs to be aware of. I recommend attempting to extend the time period for due diligence based on legal orders from local and state level.

#4. Escrow Rent Guarantee

Have the seller setup an account to offset the risk of rents falling below a certain amount.

This may be a bit of a stretch, but is a huge help in offsetting uncertainty. Negotiate to have the seller escrow a large amount from the sale into a rent reimbursement account. This guarantees that the seller will have collections of the rent up to a certain amount set aside for the 3 to 6 months following the sale. If the rents far below the agreed minimums, the difference goes to the buyer from the rent escrow account.

#5. Seller Carry

Have the seller act as the bank and avoid large capital gains taxes.

Now do your homework on this item, there are many good short books out there which address the many creative ways that you can have the seller become the bank. This is something that may be very helpful right now. If for some reason you weren’t able to get bank financing (like the high reserve requirement), you could negotiate with the seller something like 0% down, interest only for 3 to 5 years, a 30-year mortgage, and many other really good terms.
If someone really needs to sell something this could be an advantage to them because you would be paying them more than their mortgage. It also allows them to avoid a large capital gain tax event. For sellers looking to retire or who are tired of dealing with rents and tenants this can be a huge win-win. Depending on what you work out I would suggest negotiating interest only terms during your entire term of renovations/construction. This is also assuming that you’re buying the kinds of deals that I buy which are value add deals. There’s always a component of construction involved because we are renovating and forcing appreciation into our properties.

#6. Fear


Identify the seller’s needs and find creative ways to meet them.

We’re in a scary moment right now. I hate the idea of capitalizing on other people’s fears, but lots of people are afraid right now and they need solutions. As always, I try to figure out the other party’s problem. If you can figure out a way to solve their problem, even if it financially gives you more, everybody walks away happy. The type of broker you’re working with will be a huge factor in determining the amount of honest answers you will get from the seller. If you’re used to working with a very reputable broker and you know they always tell the truth, or mostly the truth if it results in a sale, then you need to find out from them what the problems are. In a perfect world we prefer to deal directly with the seller, but typically you won’t get this type of access.
One creative solution to identify the seller’s problems is bringing in a reputable third-party. For example, having a very reputable construction company that the seller already has a relationship with call the seller and sort of feel out the situation, and get real honest answers about the challenges that the seller is having. Then have them come back to you with the issues and then you go to town creating solutions. If you can submit a letter of intent to the seller, knowing their problems, and giving them three solution to that problem which still financially benefit you, then you create a serious WIN-WIN situation. Again, this is about WIN-WIN for everybody.
In moments like this, millionaires are made. Reach out to me and my team to see how you can be involved in our next investment opportunity.

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Multifamily Real Estate after Covid 19 Shutdown

Apartment investment effects after COVID-19 shelter in place order is partially lifted

Rent collections: Rents were not as affected as we expected. Nationally April 1-26 totaled 91.5% compared to 95.6% for the same period for 2019 (real page data). Some very surprising markets (Sacramento, Nashville, and Chicago) posted rent collections of 95.7% and greater.

Sales volume: Activity decelerated 1% in Quarter 1 (Q1) compared with same period in 2019, and slowed mid-March due to travel restrictions and shelter in place orders. Transaction volume weakened in the Q2 as sellers feared bringing their deals to market. Transaction volume is expected to significantly decline in Q2 and many deals will be on hold. However, off market transactions are still happening.

Sales volume by market: Investment sales slowed and in March we expect in Q2 2020 to deteriorate. Over the last 12 months top performing markets have been New York City, Los Angeles, Dallas-Fort Worth, Atlanta, Washington DC, San Francisco, Seattle, Phoenix, Houston, and Denver- all in that order by sales volume. It will be interesting to see how the next 12 months play out in these markets.

As we know New York had the largest issue with coronavirus deaths in March and April 2020. We think this may result in more people becoming suburban and moving away from densely populated areas. Places like Dallas-Fort Worth offer a more spread out city and has the same amenities and resources as major markets such as New York or Los Angeles. There are a few markets that we believe will shift and see an increase in net migration and therefore sales volume.

Investors have largely moved to the sidelines during COVID-19 but investment activity hasn’t fully stopped. For example, Barcadia sold over $200 million in multifamily sales in the second half of April. Compared to 1 Billion in 2019 is has greatly slowed.

Cap rates: Rates have been getting smaller the last 3/4 and quarter one we saw cap rate nationally rise to 5.47%. This is an early indication pointing towards yells adjusting after March. This means investors are seeking discounts compared to 2019 pricing.

Rent growth: Over the past year effective rent growth remained flat. In Q1 we saw .5% rent increase compared to 2019. Eight of the top 10 markets for rent growth are in the sun belt and this remains a strong opportunity for income growth even as we see rates slowing due to the pandemic.

Supply and demand: New supply for Q1 greatly outpaced demand. New supply was 70,319 units while demand was 42,714 units. New supply will likely be delivered in 2021. Inventory growth was strongest in Austin, Charlotte, and Orlando which saw large migration and job growth from 2010 to 2019.

Concessions: discounts to renters As of Q1 2020 look like this -Class C apartments are averaging 3.3% concessions, B Class apartments are offering 3.1% average concessions, and A Class has the highest concessions at 4.6%. Historically, C Class apartments had the highest concession amount after and during a global financial crisis. However, trends have flipped. As we travel more and utilize other spaces, it’s clear our homes are not the most important things. So living in a smaller and more efficient space is acceptable. Therefore, less people need A Class properties with amenities and high-end accommodations.

International capital: International capital has decreased 21% in the last 12 months. Interesting enough, 71% of acquisitions by international groups have been non-major or secondary markets. However, we believe this will shift to Core and essays which are considered to be safe havens. This will mean that secondary markets will likely see the first discounts if applicable. Secondary markets are secondary to a primary- for example Greenville texas to Dallas.

In the last 12 months the top five countries investing capital in the USA are Canada, Israel, South Korea, Netherlands, and United Kingdom. In that order.

This shows you the global confidence in the US market, and how it is changing.

Multifamily reserves from Fannie Mae and Freddie Mac Have increased

Fannie Mae reserve requirements for multifamily deals:

• For market rate deals <=65% LTV: 6 months of each of principal and interest (P&I) payments, taxes and insurance (T&I) escrow deposits, and Replacement Reserve deposits

• For market rate deals >65% LTV with an original unpaid principal balance (UPB) or a Supplemental Mortgage Loan UPB combined with the outstanding UPB of all Pre-Existing Mortgage Loans of greater than $6 million: 12 months of each of P&I payments, T&I escrow deposits, and Replacement Reserve deposits

• For market rate deals (same LTV parameters as above) with an original UPB or a Supplemental Mortgage Loan UPB combined with the outstanding UPB of all Pre-Existing Mortgage Loans, of $6 million or less: 18 months of P&I payments, plus 12 months of each of T&I escrow deposits, and Replacement Reserve deposits.

A few additional notes:

• These reserves can be released after one year if the property attains certain actual amortizing debt service coverage ratios (DSCRs) that are dependent on the specific loan program that the deal is processed under. For example, this would likely be 1.25 or 1.35 but depends on the leverage of the loan.

• The P&I reserve will not exceed 10% of the original Mortgage Loan UPB or, for a Supplement Mortgage Loan, 10% of the combined original UPB of the Supplemental Mortgage Loan plus the outstanding UPB of all Pre-Existing Mortgage Loans.

• Market rate properties with LTV <=55% are exempt from these reserves. Affordable Housing properties are also exempt where the property has either a project-based HAP (housing project) contract covering 100% of the units, or Low-Income Housing Tax Credit (LIHTC) with at least 8 years remaining in the initial 15-year compliance period.

• HUD deals still process in 45-69 days however underwriter assignment is 7-10 days. What does this mean? Slower than normal lending. How does this impact deals? We need longer due diligence and now contingencies exist.

Freddie Mac:

• Senior DSCR 12-month amortized debt service reserve. Released after 3 months if net rental income (NRI) and DSCR are higher than origination underwriting.

• New construction lending is severely limited.

Special servicing activity:

• Servicers have received 6,000 forbearance and relief requests, representing approximately 26% of the CMBS universe. 4% moved to special servicing.

• Coronavirus transfers to special servicing are less with loans approximately 3% of the CMBS universe.

 Metechi et al.

Currently, experts are predicting that banks will want to clean up their balance sheets Q4 2020, before 2021. So, until then we are focused on stacking cash and qualifying investors who want great investment opportunities moving forward. Our deals require that our investors are sophisticated or accredited. To find out which you are and to get on the list for future opportunities click here for our investor quiz:

“The Apartment Queen™ Investor Questionnaire” at: https://form.jotform.com/200207883604451

Moving forward: The strength of the real estate market is impacted by treasury bond prices, which are correlated to mortgage rates. When the stock market and real estate assets see volatility, investors will move their cash to bonds for stability and security. But as you could guess, as demand for treasury bonds increases, bond prices go up and guess what?!… yields (the interest paid to investors) fall. That pulls mortgage rates down, too.

Select markets with specific employment industries, like education, healthcare, government, and financial are expected to hold up well in the future if coronavirus hits again. The top markets are Washington DC, New York, Sacramento, Philadelphia, Baltimore, San Antonio, Boston, Los Angeles, Minneapolis, and Salt Lake City.

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How to make money in multifamily!

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How does Multifamily make money?

One thing I want to make sure to do, is to educate everybody about what I do. I feel like it’s a mystery to most people how multi-family investments make money. There are four different sources of returns.

1-Tax benefits
There are many, and I will go ahead and say I’m not a attorney or CPA but there’s a couple of advantages you get being involved in a multi family project.

Depreciation:

Tax law lets any apartment owner depreciate the building’s value over a 27 1/2 year time span. You can deduct 1/27.5th (3.64%) of the value from your current income each year. This eliminates some or all of your income would you have to pay taxes on in the current year.

Bonus depreciation
This can be used for certain items like cabinets, appliances, and items that are not the core structure of the property. A cost segregation engineer would be able to run a study which identifies these items and their value.

As a passive investor, passive income tax advantages are a great, great thing about in multifamily investing. Any income that is real estate related is taxed at passive tax rates and not subject to social security taxes.

Any appreciation is taxed at capital gain tax rates, which are lower than income tax rates.

2-principal paydown
What’s really cool is income or cash flow which reduces the loan balance.  This usually gives us 2 to 4% annual return.

3-cash return
Otherwise called mailbox money. This is the money you get from your multi family investments. To understand where this comes from, look at gross income for the property minus operating expenses, capital reserves, mortgage principal and interest, asset and management fees.  This number gives you your return or cash flow.

4-appreciation
And I don’t mean the kind of appreciation for someone sends you love letters but this is the biggest way to create long-term wealth in multifamily investing.  There is the market appreciation from population increase, job growth, demand versus supply, and there is forced appreciation caused by the active management team to increase income and decrease expenses.

Here’s a very simple example-

We own a 100 unit apartment complex with a 6% cap rate.  Each year, we increase rents by $25 per apartment (25x4x100=10,000). At the end of four years, the net operating income increases the value of the property by $2 million!

Are you as sold on multi family investing as I am?

If you were a passive investor in this deal who owned 10% of the company, you would receive 10% of the net proceeds from the increase of the value at sale!!!

If you’re interested in more information about upcoming multi family investment project opportunities, email me at

admin@theapartmentqueen.com

Or book a call with me calendy.com/Kaylee-6

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Syndicating Deals, the how?

syndication

SYNDICATION

What is it and what do our investors get?
A real estate syndicate is a group of investors who combine their capital to buy a property. Together, individuals and companies have more buying power than on their own. Syndicates are commonly structured as limited liability companies (“LLCs”). This special purpose entity is the method by which investors purchase property, like apartment complexes we purchase at The Apartment Queen.

The practice of teaming up to acquire real estate goes back hundreds of years,  It used to be that real estate entrepreneurs or professionals (now known as “sponsors”) could advertise their investment ideas to anyone.  Today, this is “public solicitation”.  The Securities Act of 1933 required all new securities offerings to be registered with the Securities Exchange Commission (“SEC’) to provide oversight and protect investors from fraud.   Now, the problem is that registering each offering and jumping through the necessary regulatory hoops made syndication less efficient. Although this effectively stopped public solicitation, private syndication continued. This is what we do at The Apartment Queen using a Regulation D 506B offering. This change in the law forced syndicators to gather capital from a private “black book” of money sources, These, for some, often included members of the country club, family trusts,  working professionals, and more. Those real estate syndications were put together quietly and relied heavily on personal connections or licensed fund brokers.

The SEC released “safe harbor” rules that allowed for sponsors to avoid registration under certain conditions. The safe harbors still do not allow for public solicitation. Sponsors had two choices: 1.) raise money without public solicitation and avoid registration, or 2.) register the securities with the SEC, wait for approval, and then solicit investments from the public. We have found, like most other syndicators, the prior is more efficient for sponsors, and therefore we almost always choose private syndication.

What do you get from syndication?
A sponsor has the knowledge and experience to locate, analyze, and purchase a multifamily property with major upside (investment earnings potential).

Passive investors (from here on out referred to as equity partners) usually don’t have the experience, free time and funds to purchase commercial multifamily property on their own.

Equity partners have the misconception that investing in a syndication means their money will be tied up during the entire hold period. (A hold period is the time that the property is held under ownership by all members/shareholders in the LLC that owns the building. The time period is usually measured in years,  Industry average hold times are currently five to seven years (Our hold times are three to five years).

When you buy a property in a syndication model,  this means you are part of a group of investors who all own shares of the property. You may have the ability to sell your shares to other investors from/outside the group . An investor or their family could have an accident, become ill or experienced hardship. We know when this happens,  they need cash. The syndicator  may allow the sale of shares in some specific cases.

As an equity partner, your due diligence should include knowing if the prospective syndicator allows investors to sell their shares, and the steps required.

A private placement memorandum (PPM)  is the agreement that you will sign when making an investment into syndication. It’s a SUPER LENGTHY legal document (required by the SEC/ written by our well paid securities attorney).This includes the partnership agreement. The PPM outlines all the information about the project, how everyone is compensated, the fee structures, preferred returns (if stated), and how income and appreciation will be distributed. It also addresses circumstances in which an investor that incurs a hardship and needs to sell their shares as equity partners.

The PPM is going to be your “go to” document for everything.  I have a feeling no one reads these, but please try.  It contains a treasure trove of information.  There is an intro paragraph that provides a summary of the deal.  Next, the down and dirty is the “risk factors” section.  Here is where you want to spend most of your time.  No one knows the risks like the sponsor putting the deal together.  This is well written by our experienced SEC attorney.  Everything is in here because if there were ever a lawsuit, the sponsor did their job to explain the risks.

GOOD QUESTIONS-

What are the loan terms?
What kind of loan did the sponsor get?  What is the interest rate?  Is it a fixed or variable rate loan?  How long is it fixed for?  How much money was put down?  Is the philosophy to pay down debt and then distribute money?  Or is there a return that can change after 5 years?  Is there an interest only loan?

How is the syndication funded/ how much do you need to close?
The sponsors usually have to come up with the remaining cash to close after the loan coverage (75/25 Loan to value is typical, leaving 25% of acquisition and development for the Sponsor to raise) plus additional soft costs/closing costs. Opportunity to invest in our projects is given to private individuals. This benefits equity partners greatly to make life-changing income.

Last project for example- 50k capital contribution (excluding quarterly payouts) ended up turning into 105% of that on sale.. Wow. We also offer 70-75% of the asset to be owned by equity partners even though managers do all the work.   Very generous.

To do this, we need to have access to other investors with liquid capital who can help fund our deals at all times. Otherwise, we have to go with debt lenders who provide all the capital for 50% of the deal and none of my friends or family benefit from the hard work that we do. I  LOVE making my friends RICH.

What about the stock market?-
How is the stock market different?
Investing in the stock market, investors cannot enjoy the many tax benefits that real estate investments carry, such as depreciation and expense write-offs. Don’t forget it’s highly volatile from one day to the next.. Remember the 1929 crash, Black Monday in 1987?

What about CD’s?
CDs are safe, but offer almost no return because interest rates are so low.  Heard of the rule of 72? (72/rate of return is how many years it takes to double your money)  money at 2% will double in 36 years, pretty crappy. Do the math using a number from my multifamily projects- with 10% return…much better.

Keep this in mind if you’re looking at someone “newer” to the syndication game.
An early operator just starting out, can be a slam dunk investment.  The newer operators are eager to make you happy, provide overly favorable terms, and in many cases, take a loss for you just too simply get your business and referrals again!  Searching out a new player with the above due diligence can be a superior combination.

If you’re interested in more information about upcoming multifamily investment projects and how we can serve you, email us at admin@theapartmentqueen.com Or book a call with me calendy.com/Kaylee-6