Priced To Sell
Scaling To 420 Units! From Police Officer To Mr. Cashflow: How To Explode Your Real Estate Portfolio
Tue Jul 18 2023Description
Adrian Prenozo, CEO of Executive Properties Capital, shares his journey in real estate investing, the benefits of joint venture structures, insights on investing in Hamilton and property management, securing deals and stabilizing properties, and the overall benefits of real estate investing.
Insights
Joint Venture Structures
Joint ventures are commonly used in real estate investing, with a money partner providing capital and a sweat equity partner executing deals. The split of profits can range from 30% to 50%. By refinancing properties and forcing appreciation through construction, investors can generate cash flow and minimize capital left in the deal.
Investing in Hamilton
Hamilton is a preferred choice for real estate investing due to favorable numbers, cash flow, and tenant quality. The majority of Adrian's portfolio is located in downtown Hamilton, with opportunities for apartment buildings, triplexes, and fourplexes. Thorough tenant screening and an in-house property management company contribute to a delinquency rate of less than 1% over 420 doors.
Securing Deals and Stabilizing Properties
Adrian sources off-market deals by analyzing numbers and presenting attractive opportunities to potential partners or investors. Building relationships with wholesalers has been key to securing deals. Stabilizing properties involves renovating, improving rents, and cash flowing the building. Vacant periods during renovations are offset by staggering tenant move-outs as much as possible.
Benefits of Real Estate Investing
Real estate values have more than doubled in 12 years, making it a lucrative investment option. Leaving money in real estate for longer periods increases its value. Expansion mode should be in people's mindset to capitalize on today's market. It is important to be cautious and conservative when analyzing deals and take action to get started in real estate investing.
Chapters
- Adrian Prenozo's Real Estate Journey
- Joint Venture Structures in Real Estate Investing
- Investing in Hamilton and Property Management
- Securing Deals and Stabilizing Properties
- The Benefits of Real Estate Investing
Adrian Prenozo's Real Estate Journey
00:00 - 07:34
- Adrian Prenozo, CEO of Executive Properties Capital, has over 84 investments and 420 units in real estate.
- He started investing in rental properties 12 years ago with a line of credit and leveraged everything he had.
- He focused on cash flow and buying multifamily properties to ensure steady income even if one tenant vacated.
- Adrian joined venture with other investors to accelerate his investing career and ultimately retired early from the police force after 21 years.
- He now has a portfolio of 420 units and owns a property management company and an in-house construction company.
- Adrian works with joint venture partners who provide capital while he sources deals and handles all aspects of the investment process.
Joint Venture Structures in Real Estate Investing
07:15 - 14:40
- Joint venture (JV) structures are commonly used in real estate investing.
- Typically, a JV involves a money partner and a sweat equity partner.
- The sweat equity partner provides expertise and executes the deals, while the money partner brings capital.
- The split of profits in a JV can range from 30% to 50%, depending on the size of the deal.
- By refinancing properties and forcing appreciation through construction, investors can minimize their capital left in the deal and generate cash flow.
- Long-term wealth is the goal in real estate investing, despite market fluctuations.
- Numbers and exit strategy are crucial factors when considering an investment property.
- Commercial financing is generally easier to qualify for than residential financing when buying apartment buildings or larger properties.
- Commercial lending is based on the building's net operating income, while residential lending considers individual qualifications.
- Pivoting to commercial properties can be advantageous due to lower interest rates compared to residential rates.
Investing in Hamilton and Property Management
14:17 - 20:48
- Residential rates for rental properties are currently in the mid-sixes on a CMHC loan.
- Commercial lending and transactions are becoming more attractive in the current environment.
- Hamilton is the preferred choice for investing due to favorable numbers, cash flow, and tenant quality.
- The majority of the portfolio is located in downtown Hamilton, with opportunities for apartment buildings, triplexes, and fourplexes.
- Automating property management became necessary as the portfolio grew to 420 units.
- An in-house property management company was established to ensure better control and care of properties compared to outsourcing to third-party companies.
- Delinquency rate is less than 1% over 420 doors, thanks to thorough tenant screening.
- Short-term rentals offer less hassle as tenants do not have long-term ownership rights.
- Sourcing off-market deals involves analyzing numbers and presenting attractive opportunities to potential partners or investors.
- The goal is to have little or no money left in a deal after stabilization and renovations, allowing for capital rinse and repeat through refinancing.
Securing Deals and Stabilizing Properties
20:29 - 27:10
- Plug and play. Bring it to a JV partner.
- Show the JV partner the numbers and the exit plan.
- JV partner has final say on whether to proceed.
- Experience in scaling to 420 doors with successful returns.
- Commercial down payment can be 80% of local value.
- Depends on lender and bridging options for reaching 80%.
- Securing under market value through relationships with wholesalers.
- Getting deals twice a week, some good and some not so good.
- Building relationships with wholesalers over the past 12 years is paying off.
- Closing deals leads to more opportunities from wholesalers.
- Timeline for renovating and stabilizing property is typically between 8 to12 months.
- 'Stabilize' means renovating, improving rents, and cash flowing the building.
- Vacant period during renovations depends on the building type and number of tenants.
- 'Stabilization' also refers to tenants paying under market rents before renovation starts.
- Offsetting vacant periods by staggering tenant move-outs as much as possible.
- No exploration of other markets outside current geographic area due to success there.
The Benefits of Real Estate Investing
26:54 - 33:25
- Real estate values have more than doubled in 12 years.
- The longer you leave your money in real estate, the more it will go up.
- Many people have seen their properties increase in value over time.
- Expansion mode should be in people's mindset to capitalize on today's market.
- Be cautious and conservative with your numbers when analyzing deals.
- Take action and get started in real estate investing, even if you have to leverage or seek advice from professionals.