Manage episode 199051124 series 1265475
Jesse Brewer who is one of my partners in teaching off Wall Street investing is here today. Jesse grew up in Northern Kentucky, and he built a multi-million-dollar real estate portfolio. Jesse grew up in the real estate business, and he shares his real estate investing strategies in this interview.
We talk about the difference between equity and debt investing, and why Jesse prefers multi family investing. Everyone who is a millionaire invests in real estate. This episode will show you some ways to up your real estate investing game.You can find Jesse here:
- [01:37] Jesse has been involved in real estate since he was 22 years old. He basically grew up in the business.
- [01:58] His dad owned real estate and have some investment properties. Jesse was a police officer who started buying rental properties.
- [02:42] After five years, he had 30 rental properties. That's when he decided to go full-time into real estate.
- [03:06] 83% of Loral's community is interested in real estate.
- [03:12] There are so many different types of real estate strategies.
- [03:36] Jesse started off in the single-family racket. It was a grind. Logistically it was a nightmare, because he had to drive all over the place.
- [04:48] He had never really looked at multi family because there was a lower barrier to entry was single-family.
- [04:49] Then he started doing some multi family deals.
- [05:12] His niche is the 4 to 20 in a properties. This is his sweet spot because it weeds out some of the competition from all the single-family buyers and then the big institutional buyers who like the larger unit properties.
- [06:09] Jesse's market is a cash flow market. Where he invested, property values didn't shoot up really high, but they also didn't crash.
- [08:52] To have a property management company you have to have a real estate broker license. Jesse has a real estate brokerage which has a sales and acquisition arm and a management arm.
- [09:13] It's one big company but he runs it as two separate divisions.
- [09:25] The third arm is the project management arm where they do renovations and repairs.
- [09:50] There is a marketing arm on the brokerage side because they are looking for deals.
- [10:35] When people want to invest in real estate, but they don't want to be landlords they can invest in one of Jesse's deals or funds.
- [11:14] The last deal they did was an equity fund where they raised $500,000. With an equity fund you get part of the returned such as you own 10% and no matter how well the deal does you get 10% of the profits.
- [11:36] They also do debt funds where you get a fixed rate of return such as 8% no matter how well the fund performs.
- [12:28] A lot of sponsors prefer debt funds because you know how much are going to get. Jesse prefers equity funds can seize along for the ride.
- [12:44] With the equity fund they purchased several different properties. All of these properties were in disrepair. They purchased the properties for cash because they aren't leveraging the buy.
- [13:43] Then they renovate the properties. The properties are usually in disrepair, mismanaged, and have bad tenants.
- [14:12] They do a full-blown renovation on the property and bring them up to date and make them look nice.
- [14:41] It's important to know your market. You need to be able to look at the deals and know what value you can get after your renovations.
- [15:16] After the renovations, they get new tenants coming in and cash coming in. Because this is an all cash buy and renovations are done, you don't usually get any money back the first year.
- [16:04] Jesse likes urban properties. He likes to be in an area where boutique shops and bars are opening up. This is where the millennial's want to be. The people approximately age 24 to age 34.
- [17:42] It's important to understand them as renters because there's such a large sector of the population. There are as many millennials as there are baby boomers.
- [18:16] they try to cater to the millennial's with location and amenities. Things like butcher block counter tops and USB ports make the difference.
- [19:04] When buying a single-family home your appreciation is tied to what the neighbors appreciation is.
- [19:21] In a multifamily property you can force appreciation by increasing your cash flow.
- [21:53] The benefits of staying in one area. You need to know your market. If you're in seven different areas there's no way you can know the market unless you have a staff and then there are extra fees involved.
- [23:05] By sticking with one area, you will know the sub market.
- [23:40] You can maximize your value by knowing your market.
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