NEW YORK, NY / ACCESSWIRE / April 1, 2020 / When Julian got kicked out of college and got fired from his job at a call center, he never would have thought in a million years that he would go from being a tenant in a $300/month cat-infested apartment to becoming one of the youngest real estate investors in South Florida.
In 2019, Julian purchased a 10-unit apartment in West Palm Beach and has consistently invested in projects and built multiple businesses over the last 9 years.
Today, he wants to break down some of the things he did to avoid mistakes, and hopefully, you can learn from what he did to get your first deal done.
Seek out great representation. One of the most important things you can do to start is to know who's representing you and what kind of experience they have in real estate. Everything from negotiations, to communication, to helping you structure deals correctly, play a big part in getting a good deal. The success of real estate transactions can depend heavily on having a good agent that can ask the right questions. You do not want any unturned rocks. If you represent yourself as a realtor, Julian believes it's important to really understand the area, the comparables, and have an understanding process of duplex/quad residentials deals, as well as deals that will be commercial if they are 5+ units.
Search out the right deals. The last thing you want is to be surprised by things after you purchase because you did not do due diligence. You should check for zoning issues and liens on the property. This could mean a lot more money will come out of your pocket if you don't. Follow the 1% rule for a property - the income property should rent out for at least 1% of the purchase price to yield positive cash flow. Check out the Cap Rate (the price/earnings ratio); it is a great signal for analyzing the property in a specific area. The Cap Rate is accessed for its profitability and return potential. Don't overlook this number. Make sure to double-check the numbers and validate that the earnings stated are accurate and not hyped up.
Do multiple inspections. Ask for a longer inspection period so you can do a thorough inspection with a professional. They will look at structural damages, mold, electrical issues, and other specifics that could end up costing you tens of thousands if not taken seriously.
Check the appeal. If a property has very few pictures online and not a great curb appeal, you can go there and offer a bit lower than what they're asking. They don't feel confident enough with the property and probably want to get rid of it since they have not taken the time to really invest in pictures or appeal. If they did not spice the property up, think about going in there and improving the curb appeal to make it more valuable. Julian's personal property did not have the best curb appeal, so he put a plan together to spice up the outside and make it look great to future investors & the current tenants.
Negotiate the rate. Negotiations with a lender can work in your favor if you have all your ducks in a row. Credit is important, as well as history with commercial or personal real estate. If you have personal property, that can help as collateral a bank needs just in case. They will give you better rates if you have that. Even if you don't, you still have lots of negotiating power. Contact smaller banks directly and try to stay away from brokers. They will typically add on %s for connecting a bank to your deal, which would be unnecessary if you can just make a few calls yourself instead. Everyone is trying to get a piece of the DEAL, so you don't want or need extra % tacked on because you did not take a few extra minutes to make some calls. If you can lock a no interest rate in as well, go for it! That will give you a lot more cash flow to make improvements if you want, and you will just end up paying the principal down later on.
There are many factors when it comes to making a good deal in the real estate game, but Julian believes if you have the right guidance and you do your due diligence, you will be able to make a deal. The right guidance is important from a realtor as well as real estate attorneys that can examine the legal jargon and sort through it.
Do NOT leave it up to someone else to know everything about the deal for you and do not leave it up to someone else to understand the basic terminology. This will make you look like an amateur, and amateurs are taken advantage of.
Even if you are not ready to do your first deal, start listening to podcasts and videos that will help you understand the art of the deal. The "BiggerPockets" podcast and free videos on YouTube are a great help. Seeking out mentorship and advice from those who have done many deals in the past can immensely help, too.
This quote by Andrew Carnegie is one of Julian's favorites and really got him interested in real estate investing: "Ninety percent of all millionaires become so through owning real estate." That percentage blew his mind.
Getting your first deal done is very exciting, and in Julian's experience, once your first deal is done, it will be easier to get into more deals. Banks look at you as more reliable, and you build more connections within the real estate and investor community, both local and global.
Enjoy the art of the deal, and enjoy the process of real estate investing! You can contact Julian Kuschner directly through his contact number: +1 561-291-0587 or his email: [email protected] to get to know further advice to make your first investment right!
SOURCE: Julian Kuschner