Generational Opportunities For Creating Cash & Wealth In Real Estate
Featuring Gerry Guterman
The real estate market cycle appears to have come full circle again. This is one of those moments in which many will go broke, while others achieve substantial leaps in their wealth and incomes. It’s all about knowing how to take advantage of the market and the negligent moves of others.
While there are plenty of real estate investors still blindly and bullishly thrashing away in the market, and many uneasily eyeing where things are headed from the sidelines, the truly experienced are stepping in with predictable investment strategies. They see the same careless blunders being made by many of the same characters. They know where the market is going. They see the big opportunities to buy smart and convert assets into cash.
Where We Are in the Real Estate Cycle Now
It’s not rocket science. It’s no longer a closely guarded secret that only a few have the data on. All real estate professionals really need to do is look back at what was happening in 2005 to 2010. Then compare that to what’s happening around them today. You’ll see the same glaring mistakes.
Interest rates are going up, lending is tightening, oversupply is becoming an epidemic and too many people are paying too much for units that aren’t really a good fit for the market.
There are really only one of three choices to make in this phase of the market:
- Keep blindly investing and hold on as the sinking ships go down
- Do nothing and miss out on the best asset prices
- Replicate the successes of the biggest winners in similar historical cycles
Gerald (Gerry) Guterman and his firm sold out all of their real estate assets in 2006. They did it again in 2016. Since 1978 they’ve delivered 58.3% returns to their investors. Now Guterman Partners is in acquisition mode again.
Experience is Everything
Guterman Partners has managed almost 100M rentable square feet of real estate since 1969.
Among the buildings and locations they’ve been involved in that you may recognize are:
- Galt Towers, Fort Lauderdale
- Gramercy House, New York
- Sutton Tower, New York
- Ibis Club Apartment, Naples
- Memorial Building, Houston
- The Stanhope, New York
Gerry who is Senior Principal Partner and Chief Investment Officer at Guterman Partners has what is probably one of the strongest resumes in the business when it comes to being a sought out industry expert as well.
This includes being a guest lecturer at Cornell University. Being the founding benefactor of several charitable organizations and medical research facilities. Plus trusteeships and directorships with the Metropolitan Museum of Art in New York, New York City Opera and Dallas Opera, as well as The Rent Stabilization Association of New York.
On an international level Gerry has been Chairman of the Committee on Banking and Finance at the United States Center for Strategic and International Studies in Washington, DC. He has been an advisor to the governments of Romania and Austria.
So, if anyone has the depth and breadth of experience to really understand what’s going on in the market, and the track record of knowing how to manage real estate assets during these times, Gerry is definitely up there at the top of the list. We were hugely blessed with the opportunity to catch up with him for an exclusive interview and his take on what’s happening now.
Once Again, Generational Real Estate Opportunities
Gerry recently published the latest of his white papers covering the state of the market, and where he sees the opportunities now.
Among the current challenges he tackles in his report are:
- The increasing number of rental to condo conversions
- Reducing value of condominium units
- Cash flow problems due to rising costs and rates
- Difficulty in refinance for developers
- Over-leverage by builders
- Lack of product to market fit
- Reluctance of lenders to provide more debt
- Oversupply of luxury condo units
What this all leads to is that many of these developers are sitting on a huge amount of inventory. Inventory on which they can’t really reduce retail prices on themselves. While they are facing more cash flow crunches and challenges in restructuring debt. In some cases individual developers in NYC are sitting on 1,000 or more unsold units. They need out.
It’s a repeat of 2004 to 2008 all over again.
Though when the same problems show up, the same opportunities for creating great cash and leaps in wealth arise too.
Strategies for Taking Advantage of the Current Market
Gerry told us his firm currently sees opportunities in:
- Medical offices
- Retail strip plazas
- Family sized apartments
This is of course restricted to certain states and markets. Most notably outside of some of those facing some of the most fierce political and regulatory uncertainty at the moment.
Among Gerry’s favorite strategies in this phase of the market is bulk buying of condo units. For example, 80 or so units at a time. Those units are converted or resold. Typically within 19 months.
3 Big Differentiators
Three things that Gerry tells us have really helped the firm continue to excel include:
- Making your money on the day you buy
- Focus on demographics and market fit
- Focus on the wife as the decision maker
Gerry says you don’t make a dollar on the day you sell. It’s all about what you are buying at. Guterman Partners targets prices of 45 to 55 cents on the dollar. That gives them plenty of room to absorb market fluctuations and to move units fast at a discount from the original list price, while still enjoying hefty profit margins.
However, not any product will do. It has to be desirable to the consumer. He says many speculators, converters and developers have had no interest in doing any homework on what consumers really want. They may put up stylish buildings. Yet, there aren’t many families who are really trying to move into micro-apartments in some of the better neighborhoods of Manhattan. He adds that you also have to consider who the real decision maker will be and what is most important for them. That often includes size of the unit and security features.
Guterman Partners is now raising capital for its 47th year. The current fund is a 506c offering for accredited investors, which pays out a cumulative preferred return of 7% to 12% and 50/50 split of profits.
Find out more about the new fund, the firm’s track record and Gerry’s white papers on the outrageous pricing of real estate, the tricks funds are using to try to get investors to accept lower returns, and the rules to successfully investing in real estate at GutermanPartners.com.
Wife’s Life of a Real Estate Investor
By Rachell Reed
So, your husband wants to be a real estate investor?…. well, I understand.
My husband Jimmy Reed decided he needed a change. We were not yet married but had been together a long time…a long time! I knew him well enough that when he needed a change, he would get one. If one didn’t come his way He would make his own way. He’s a go-getter and he does not settle. Low and behold an infomercial… a Real estate infomercial… “Looks easy enough”. The most famous words ever spoken by anyone whoever thought about real estate investing.
It did look easy I thought “sure why not” we can do this! Well, I soon learned that I didn’t have the temperament to talk to people. Sometimes they can be quite nasty. If they yelled at me over an offer I would yell back. That’s just not good business no matter how ya look at it…
Jimmy jumped all in. Right up his alley so to speak. So his new part time career began. He went to a seminar. He was hooked!
It took a year for him to do his first deal. A whole year. Lesser men would’ve quit but not him. It took off from there. He started “buying” properties and flipping them. Back in the day flipping had nothing to do with rehabbing. It was contracting a property and selling it before you had to go to closing (buying it). So where does my life come into play in all of this??…
The busier he got the busier I got. He couldn’t do all of it on his own. I was working in retail clothing. Remember, those days shopping actually meant going out and trying clothes on not just ordering online and having your clothes delivered by FedEx…
I needed a change too at this time. I was tired of working that hard and seeing others benefit from all my hard work. So, Him needing help came at a good time for me.
So where did he need my help? Organization! I’m a bit obsessive about being organized. It makes life so much easier. It definitely makes business a lot easier, especially if you are self-employed. I didn’t like the interaction with the sellers but I am very good with paperwork and getting organized. Seeing what needs to be done and doing it.
These days I handle all of the paperwork. The computer work. The accounting. Dealing with all the monies. From rent to invoices to mortgages… and everything in between. What I do not handle are tenants because quite frankly tenants can be big babies and I gave up my babysitting job when I was a teenager!
Our business relationship works very well. We try not to step on each other toes but sometimes that does happen. We are very clear on whom does what and we try not to cross each other boundaries but it does happen ever so often. We gently remind the other that’s a no-no. Ok that’s not always true…sometimes there’s a lot of very loud talking and then we calm down and act like adults and work it out. Things are much easier that way. It’s been a lot of fun these 30 plus years. It’s a lot of hard work. It can be a lot of fun too. Real estate enabled us to do things we never would’ve been able to do. We’ve traveled and traveled and traveled some more… we’ve been able to help others and give back which is a whole lotta fun.
Real estate has been good to us. It will be good to you too as long as you understand it’s a part time job or even a full time career. It is not a get rich quick program but a real life hard working job that you need to work at to be successful. If you get to work with someone you love…even better.
Rachell Reed has been involved in many aspects of business, church ministry, design and motherhood.
She is a wife, mother of two, and is Self-employed with her husband Jimmy in their Real Estate companies which cover areas such as a Rental business, a Buy & Sell company, Real Estate Club, Real Estate Training Company, International real estate projects, and much more.
After 30 years of rehabbing Flips & Rentals, a lot of her creativity became more about taking old things and giving them new life, which birthed her refurbish & design company.
She has a love of all things outdoors… from hiking to scuba diving.
In her down time she likes to read and write. She also has a blog. Rachell has been involved in ministry for 20+ years, as a Speaker/Teacher and Leader of women’s ministries. She has written bible studies and encouragements.
Today you will find her working on her latest project, a book of daily devotionals. Her absolute passion is creating something beautiful from something ugly and that is why she loves sharing… “My Beautifully Messy Life”.
Young South Florida Entrepreneur Leads the Way in Enhancing the Community
By Tim Houghten
Young Entrepreneur John Aaron reveals his thoughts on the direction of the Florida market, and where he sees the most attractive opportunities ahead…
Going from small town to leading a popular brand in the Magic City of Miami, John Aaron demonstrates where his company is going and what’s possible with serious focus, commitment, and a leap of faith.
If you’ve ever heard of Sebring, Florida you know it is a little town without much going on. That’s were John Aaron grew up. There aren’t many options when you grow up in that type of environment. If you do really well you might eventually get a job at the local hospital, or perhaps get a football scholarship and a pass to a faraway college. Sebring doesn’t even have any interstate highways going through it. That didn’t stop this hungry entrepreneur from pursuing his passion and dream.
During a recent interview with Katrina Campins (The Apprentice) he is described as one of the few next generation young entrepreneurs that have both hustle and work ethic. Early on he knew he wanted to do something with real estate, and he believed Miami was the place where you could really make the magic happen.
Initially starting as an agent John quickly through in the towel and started investing. John formed the Aaron Organization in late 2012 and began hunting for his own property deals. While he insists that real estate investing is not a get rich quick gig, his first deal which landed him a check for $19,000 got him hooked and only emboldened his mission.
In the last four years the Aaron Organization team has flipped over 200 single family homes in the tri-county area of South Florida. However, John tells Realty 411 that more than just being about the money, his focus and persistence has really paid off in proving the ability for you to achieve what you believe in, in whatever field you are willing to take a leap of faith towards. The Aaron Organization has a great brand and blossoming company culture, but in John’s words the team is also winning in “creating something positive.” By enhancing the community and giving job opportunities
As John experienced; there will always be the pessimists, the bears, and those that have given up on their dreams willing to offer their negativity or two cents. Aaron Organization’s founder insists “It’s always a great market, if you have the right strategy.”
Aaron Organization is definitely on the rise in South Florida, and boasts a growing team including Acquisition Manager Darlenys Castillo who is young, hungry, and has been with Aaron organization for 2 years. Darlenys has helped acquire of over 80 homes and counting. Paola Vizcaino has been with the Organization for over a year and is closing transactions every week.
Aaron Organizations thoughts on the market now is that there may be more Florida buyers and investors using loans for leverage today than a few years ago, but for those that have ever visited Miami; you already know the international attention it commands and its role as a major global banking stronghold, playground for the wealthy, and investment haven for wealthy domestic and foreign investors. These are trends only likely to continue and grow with the recent finishing of the Panama Canal widening which is pegged to dramatically bolster the Florida economy.
John reveals that Aaron Organization has gone beyond its stronghold of renovating single family homes to enhancing the way of life in the region through developing commercial properties. Miami, Fort Lauderdale, and West Palm Beach have well built up areas, but despite that fact they still have pockets which are ripe for development and revitalization. John tells us that this is where the biggest opportunities are for both having the greatest returns for investors who are seeking better value and spreads than can be found in Miami’s more congested neighborhoods and districts and also have positive impact for the community,.
For investment and partnership opportunities for qualified investors find out more about this firm, its founder, track record and vision online at AaronOrganization.com.
Connect, Invest and Retire Rich
By Anita Cooper
For most investors, it starts with the dream.
You know the one…financial (and time) independence through investing in property?
While real estate is a fantastic wealth creation vehicle, you’ll be spinning your wheels a lot if you don’t have the right connections in place to get things done.
Yes, in real estate, success often depends on who…not just what…you know!
Everyone tells you that it’s important to build a team when investing in property, and that’s true, definitely.
But wouldn’t it be easier if you simply had a single contact instead? Someone who could “connect the dots” between what you need and who can help meet that need?
Meet Holly Lynn of Bay Area Multi-Family Meetup. She’s that “someone” who can help you make the connections you need to build your wealth.
“My database is global. I know 20 people for every 1 subject, so when people contact me, I can connect them with the right person for their needs.”
Holly works with a variety of investors, everyone from individual investors to groups of investors, helping them obtain the finance they need to get the results they want.
Specifically, investors can look to Holly for their private lending needs, and for opportunities to build their team by attending networking events such as at her famous mixers.
“The feedback I’ve been getting from investors is amazing,” says Holly. “We offer loads of information that helps investors grow their knowledge. I’ve also been able to connect investors with people who help them get fantastic results!”
Your network begins here
Often, you’ll meet someone who is amazing in the real estate industry but is an average, or sometimes even less than average networker.
Holly, however, is one of those rare individuals who is a rockstar at networking, and a whiz at real estate…a powerful combination for any investor looking to grow their portfolio.
Why does she do what she does?
“I am passionate about helping people take back their time. Look, I haven’t worked a retail job since I was 19 – I want others to have the same opportunity.”
Face to face connections
Holly Lynn is all about making connections.
But it’s not just what she does…it’s who she is, and when someone has that level of passion they love to share it with others every chance they get.
One of the most popular, and effective networking avenues is to face to face…even in this modern, social media age.
So to help investors, each month Holly offers a mixer where she serves as a bridge helping investors connect with people they need for their investments and deals.
Social media connections
Holly’s social media accounts are ablaze with activity too – people share what they’ve been able to do, the goals they’ve reached and the connections they’ve made.
“Social influence is definitely me. That’s how I connect people. I make calls constantly to get to know people, then I connect the dots. I know who is looking for what, so I make the connection, get them together and enjoy watching the results!”
Her reputation is seen in the lives changed…
“Holly Lynn is a personable and well connected real estate investor and professional that brings deals together for a win win outcome.” – B. Sharma, Investor
“If you’ve been waiting for an opportunity, maybe this is it
As “The Real Estate Investor’s Lawyer” I have spoken in front of many real estate investor clubs. Holly’s investor club had some of the highest quality attendees I have ever seen.
They are engaged, experienced and actually doing deals and/or seriously interested in doing deals. I give her a lot of credit for attracting that high quality of real estate professional.
I have also had the privilege and pleasure of representing Holly and have been very impressed with her and her real estate investing activities.
They say that opportunity never knocks twice. There’s even a parable of how opportunity is a bald man with a long beard. You can only grab him when he’s in front of you and you can’t get him back once he passes you. If you’ve been waiting for an opportunity, maybe this is it. – J. Lerman, Litigator
Justin French on Business Strategy, Leadership, and SDIRA Wealth
Justin French is the kind of CEO who understands collaboration is the core of innovation. With a growing team that is now nationwide, French’s focus is on the strength of its people.
“I have always believed one of the best investments you can make, as a leader, is in the people you surround yourself with,” French said. “Great leaders never try to do everything on their own. They know a great company is built by everyone performing at their peak level. I spend most of my day working directly with my team and our affiliate partners so I can better equip them to be successful. In return, all of us at SDIRA Wealth are collectively raising the bar and achieving our goals.”
French uses his business-oriented insights to empower his team. He takes inspiration from one of the greats.
“Steve Jobs is a true innovator of our time,” French said. “He wanted to change the world. He did. He made an impact on everyone. He was successful not because he suddenly realized personal computers were his passion. That was not it at all. He knew computers could change the world. He wanted to be part of something bigger than himself.”
French said he admired Jobs’ dedication for making things simple to use, and this simplicity mindset is something French helps cultivate at SDIRA Wealth.
“What we do as a company is remove the barriers of having to deal with headaches of real estate, leaving our clients to enjoy all the benefits of it inside of their retirement accounts,” French said. “Making something simple requires harder work on the front side. You have to have the right talent and put enough time in to define the process. It’s worth it in the end because you have a product that is innovative and easy to use.”
His big-picture thinking combined with detailed actions has helped French make SDIRA Wealth a game-changer for retirement planning.
“The traditional way of retirement investing has been broken for a long time. Many people don’t know the 401(k) plan was never meant to be the main source of retirement funds that it is today, and sadly, pension plans have almost disappeared entirely. The problem is the money people are setting aside for retirement isn’t producing enough of a return for them to actually live on and maintain their standards of living in the future.”
To solve the problem, French said they had to answer three questions. What do people want? What do people need? Can we bring value? SDIRA Wealth’s solution answered all three.
“All great companies solve a problem and create value,” French said. “We don’t look at ourselves as a real estate investment company. We are an education company that provides a great product and solves America’s retirement epidemic. Real estate just happens to be part of that solution. We made the process simple and easy for everyone.”
French and his team are passionate about educating people about the benefits of real estate and Self-Directed IRAs.
“Our team is obsessed with educating others about all the benefits that Self-Directed IRAs bring with the power of real estate,” French said. “Most of the wealthy are already doing it. Look at Mitt Romney. He educated himself and took action for him and his family.”
Many people who invest in real estate are doing it the hard way, according to French.
“People expend a lot of their time finding properties, dealing with the headaches of being a landlord, trying to find ways to finance and leverage, and connecting all the players it takes to make a real estate transaction work,” French said. “That’s ok if you want to be an active investor. But what if you wanted the investment to be passive and to use your retirement dollars while still following all the rules and regulations?”
Complexity mixed with French’s drive for designing simplicity created perfect storm for a solution.
“Where there is complexity there is opportunity,” French said. “When companies focus on making things simple and easy for the end client, that’s when you start to innovate. We made real estate as easy as a stock.”
French said part of making it easy has been about solving challenges.
“People want protection from market volatility, they want a higher rate of return, they don’t like hidden fees, and they want to have control of how their retirement plan is designed,” French said. “We have been able to solve all four. We do this with our solution by utilizing an asset that has been creating millionaires for decades. That’s residential real estate.”
From those four problems, SDIRA Wealth created the acronym PACT, which stands for People Achieving Change Together.
“PACT started out small but now has become a movement across the country with our affiliate partners,” French said. “It also represents the four main benefits our clients love about SDIRA Wealth’s investment solution, which are protection, acceleration, control, and transparency.”
After building and honing the solution, French started focusing on telling people about it by launching a nationwide affiliate campaign.
“We are blessed to work with some amazing affiliate partners who are wealth advisors, investment firms, and big-name influencers. They have same values and beliefs we do of disrupting status quo when it comes to retirement investing. They have been waiting for something like this.”
SDIRA Wealth helps affiliate partners best serve their clients in their market.
“By offering an additional product to accelerate their clients’ portfolios and reach their goals faster, our affiliate partners stand out in their market and attract more cliental,” French said. “Many say it’s the ace in their back pocket that has allowed them to satisfy their clients needs in ways they were not able to before. Their clients see they truly care to represent all the investment choices allowing their clients to win in the end.”
French said affiliate partners are passionate about solving America’s retirement challenges.
“Our affiliate partners understand the benefits of real estate,” French said. “They are excited about what we are doing and see the benefits of what our solution solves. Every week we interview new potential partners. Most of them come through our website or meet us at events.”
French’s success stems from his skills of finding and developing talent.
“The people you surround yourself will always determine your success,” French said. “One of my mentors always reminded me, ‘Show me your team and I’ll show you your success.’ This has always stuck with me and has always been true. With every successful team I have built over the past 20 years, the one thing I have always been very involved with is the interview process. It is vital we are always selecting natural market leaders and influencers who fit our culture and have the ability to make our company better.”
French has three tips for entrepreneurs who are striving for success.
One, “take time everyday to reflect and be thankful.”
“Always remember to have gratitude for the things you already do have,” French said. “Practicing thankfulness has changed my mindset and my life. It’s easy to think about what you don’t have as we are always working toward building our future. When you develop an attitude of gratitude you become thankful for everything that happens to you in life. Don’t be so focused on the finish line that you forget to enjoy the journey.”
Two, “stay true to your vision.”
“Find something you are good at,” French said. “Create something that will bring value to others. Focus on it. It’s easy to get sidetracked into creating new features, getting involved in wrong projects, listening to too many people’s ideas. In the end if you believe in what you do and your product can solve a problem, you are going to bring value to a lot people. If you can do that, success is just the byproduct of adding value and serving others.”
Three, “write down your goals to create accountability.”
“It’s proven people who have their goals written down attract more success,” French said. “As soon as you start working toward a goal you will encounter resistance and hurdles. By writing things down you will overcome these obstacles by focusing on your goal, making the challenges feel like small road bumps. Even more effective is sharing these written goals with someone who can help follow up with you. If you focus on your goals and take action the results will soon follow.”