A Trillion What
This has been covered a trillion times (pun intended), however I think people need to be reminded on how much of anything encompasses a trillion. Joe Biden offered up his plan for a 1.9 trillion dollar stimulus package and I am flabbergasted by the sheer number of dollars that our government is able to spout with a straight face. I am not going to dispute that people and small businesses are in great need of this help. This is not to debate of which party spends more, the only goal is to put a face to the behemoth of a 1 followed by twelve zeros.
I’ll make you the richest person in the world ( well kinda)
I am a genie and I am going to grant your wish and pay you 1 dollar every second for your entire life, from the time you are born to the time that you die. If we do some quick math, every day of your life you will make $86,400. With that figure in mind we can calculate your annual one dollar a second income to be 31.5 million dollars every single year of your life. To keep things simple you will also not have to pay taxes, because I am a genie and I can make that happen.
OK, let’s figure out how much you would make in your lifetime
On average a US male lives to be 78.5 years old, but for the sake of argument we are going to round to 80 years. So if you made $1 for every second of your life you would accumulate a grand total of $2,522,880,000. That is 2 billion, 522 million, and some gas money, to spend on whatever you want, all completely tax free. Side note: that wouldn’t even get you in the top 200 billionaires, you would still need another 5 billion just to break into the list.
OK, so you’re not the richest, but does this have to do with a trillion?
You’re right, but I am getting to the point. Let’s say that you wanted to crush the billionaires list and be the first guy with four commas. Screw the three commas club!. At your current rate of income to reach 1 trillion dollars you would need to live for 31,709.79 years.
Wait a minute, that sounds like a really long time…
Glad you brought that up. You would have to start making one dollar a second, 86,400 dollars a day ~20,000 years BEFORE the Saber tooth tiger became extinct and ~28,000 years BEFORE Wooly Mammoth became extinct. By the way, to get to the 1.9 trillion in the aforementioned stimulus package, it would take you ~60,208 years, which would put you into the end of the middle paleolithic era. Maybe you should have wished for $100 a second?
Oh god, what about the national debt?
Why would you even ask that! The national debt is racing toward 28 trillion dollars. With that in mind, using our calculation of $1 a second, the national debt would take approximately 881,000 years to pay off the national debt. However that 881,000 years does not include interest. That would put us closer to the Big Bang.
By Chris Hinshaw
NUGGETS OF WISDOM
Napoleon Hill was an American author; 1883-1970 who developed a relationship with Andrew Carnegie. Obviously, Andrew Carnegie needs no introduction but in case you forgot, Carnegie revolutionized the American steel industry and became one of the greatest philanthropists in the United States as well as the British Empire.
Andrew Carnegie made an incredible impression on Napoleon Hill because Carnegie revealed the secrets to his success. Hill performed 20 years of research in order to find the biggest secret to achieve success, all done at the request of Carnegie. Hill analyzed hundreds of well know men and women who admitted to achieving great success with the help of Andrew Carnegie’s secret.
These people included John D. Rockefeller, Thomas Edison, Henry Ford, Alexander Graham Bell, Charles Schwab, and even Theodore Roosevelt. Each of these men utilized the “secret” with great excitement. There are many tools that an individual can use and recognize while utilizing the “secret”. The first tool or step an individual needs to recognize is his or her desire. Desire is the foundation for any achievement in life. How can we excel or be good at anything unless we have a desire to improve and become better? If there is no desire, then we should not expect to accomplish much of anything in our lives. Also, no one should sit back and wait for the perfect time to act on the desire they have within their heart and mind. Desire in the basis for any action you take in life. Desire is not a fleeting hope or wish, but it’s something that repeatedly rises up within us, and this can be your motivation to take action.
What is your desire? What is the repeated theme in your mind that tells you what you are truly passionate about? True desire is the thing that will push you through and obstacles you face in life. Who do you keep company with? Who’s within your inner circle? Who have you shared your desire with? Who can help keep you accountable? Answer these questions for yourself and you’ll begin to understand how desire can be a tool you use while utilizing the “secret” in any venture you have.
6 Amazing Reasons You’ll Love Passively Investing in Multifamily
Over the years, I have learned that investing in single-family homes (SFH) would not get me to the financial freedom I was seeking, especially while serving overseas. For example, trying to research new markets, find that next investment property, complete the due diligence, and form the team to fix and manage my rental property took up a lot of my time and effort. These are just a few of the challenges that investing in single family rentals presented.
While serving overseas, I became even more frustrated as my SFH investing plateaued but luckily I was introduced to Multifamily real estate. In just one year, I was passively invested in over 4 different apartment complexes (over 1000 doors total) and learned quickly that multifamily allowed me to 10X my rate of investment.
When I speak about investing in multifamily real estate, many people do not even know that there are options available in these investment vehicles. For the longest time, I never even considered the idea of large apartments deals since I didn’t have the capital or experience to purchase a multifamily complex. I was very stubborn to look at anything other than SFH, until a mentor introduced me to the idea of Multifamily Syndication.
My mentor opened my eyes to that fact that there are opportunities to passively invest in multifamily real estate while still enjoying all the benefits of real estate investment. I remember him saying “every time you drive by an apartment complex just think that someone owns that property, why can’t it be you?”
To get in on Multifamily investing, I invested Passively in a Multifamily Syndication as a Limited Partner. Passive investing is an approach for investors who are looking to establish long-term financial returns while minimizing their time investing. By investing in multifamily syndication, you can enjoy the six benefits listed below, and more, of this investment class.
- Time – Let’s face it, your time is one of your most valuable resources, and you should spend it on doing things you love. By investing passively, sponsors like JCORE Partners are spending the time to find the right property and execute a sound business plan so that you focus on doing other things. (we like to call this making money in your sleep, a.k.a. mailbox money!)
- Tax Benefits – Like any investment, you should anticipate some sort of return, but along with the opportunity to earn income, investing in multifamily properties offer several tax benefits to investors. Taking advantage of these tax benefits allows you to increase cash flow in the short term while maximizing tax savings.
- Diversification – The most commonly cited reason for investing in multifamily real estate is portfolio diversification. Meaning you are looking to add real estate to your investment portfolio. You can also diversify your real estate investments across several properties in different areas with different property types and other sponsors. Doing so keeps you from over-allocating assets to any one group and will help you learn what you do and do not like from a multifamily sponsor.
- Liability – With syndications, one of the greatest benefits to investing passively is that you have no liability beyond your investment.
- Philanthropy – With most investments, only you or your family are receiving the benefits of the investment. However, when you invest in a multifamily syndication, you have the opportunity to not only receive monetary returns but positively impact the lives of many families. Each multifamily syndication we execute aims to create a clean, safe, and pleasant place for people to live. Doing so also has a positive influence on the community and environment. This is a benefit you typically do not see from investing in stocks or bonds.
- Leverage – When you invest in multifamily syndications, it all comes down to leverage. In this instance, we define leverage as using something to its maximum advantage. Leverage allows you to use various instruments of the sponsor to increase the potential return of your investment. Passive investing enables you to leverage things like experience, knowledge, research, time, network, teams, and ability to syndicate with other like-minded investors to take down large multifamily deals.
Passively investing in multifamily real estate is a great way to diversify your portfolio and mitigate risk. It allows you to use your most finite resource, time, on the things you love instead of doing so much effort to find that next SFH investment. Also, you aren’t involved at all with fixing toilets, screening tenants, or handling the day-to-day operations of your SFH property. You benefit from several tax advantages, have minimal liability, and positively impact many families and communities. That said, we hope that this article helps you build a stronger foundation in making an informed investment decision.
What are a few Key Terms to know when evaluating a Multifamily Syndication Investment?
There are so many factors to consider when evaluating a potential investment and at times it can be overwhelming, especially for those who may be investing in their first real estate opportunity. Investing in real estate is not rocket science and sometimes it’s just about gaining a little clarity on what you are looking for. Here are a few Key Terms you should be taking into consideration when breaking down a multifamily investment.
First off, what is a Multifamily Syndication?
Multifamily Syndication is where a group of people pool their resources to purchase an apartment building which would otherwise be difficult or impossible to achieve on
their own. This typically involves the “General Partners” who organize the syndication, including finding the property; the general partners are sometimes referred to as the “sponsors”. The group of people who are providing the cash investment are often referred to as “passive investors” or “limited partners”. In return for their investments, the limited partners receive an equity share in the syndication along with cash flow distributions and profits.
KEY TERMS
Preferred Return (My Favorite)
A Preferred Return is a set return percentage to be paid to investors each year based on how much money they have invested. This is the minimum average annual return the investor can expect to receive. If the investment does not generate enough Net Profit to pay this Preferred Return in any given year, the amount of unpaid Preferred Return is rolled forward to the next year. Until all Preferred Returns are paid to investors, the GP team cannot take any Equity Distributions (meaning they don’t make any profit until the investors do).
Example: A 8% Preferred Return on a $100k investment equals a payment of $8,000 per year. If the investment can only pay that investor $4k in the first year due to renovation expenses, for example, the unpaid $4k is rolled forward and the GP owes the investor $12k the following year ($8k for the Year 2 Return + the unpaid $4k from Year 1).
Cash on Cash Return COC
A measurement of profitability often used in real estate transactions to assess short-term profitability, usually for a one-year period. The calculation determines the rate of investment income relative to the amount of money invested.
CoC Return can be increased either by increasing income received during the year or by reducing the number of dollars invested. A strong CoC comes from getting solid income from a small investment.
Net Operating Income
Net operating income in real estate is the money a property generates minus operating expenses. It is used to evaluate how much cash flow an investor can expect to earn from an investment property after operating expenses and vacancy losses.
There are certain costs that qualify as operating expenses and others that don’t. Operating expenses that should be deducted might include property tax, insurance, repairs and maintenance.
NOI doesn’t include depreciation, capital expenses, loan interest and loan payments, depreciation and amortization.
Internal Rate of Return (IRR)
The Internal Rate of Return (IRR) is a profitability metric used to asses the anticipated annualized return generated by an investment over time. IRR is a complex calculation that takes into account the amount invested, annual return distributions, and anticipated profit from the sale of the property in the future.
Importantly, IRR also incorporates the ‘time value of money’, meaning that it takes into account the increased
potential earning power investors enjoy due to 1) the early return of investment capital through refinancing and 2) earning annual income distributions rather than one lump sum payment at the end of the investment term. Receiving income or returned capital sooner means the investor has more time to use that money for other investments, which we call Opportunity Return.
Because IRR takes into account so many factors, it’s an easy way for investors to compare different kinds of investments at a glance. The higher the IRR, the better.
Since when did we decide good enough is good enough?
While growing up, I had the biggest dreams and ambition to become a famous actor. I left home at 18 years old and moved to New York City in order to chase after my dream of becoming an actor. My ambition and dream chasing took a big hit when I found out I was mentally unprepared to fight and grind in order to fulfill my dreams. Simply put, I left New York City to return to what was comfortable and predictable. This is when I decided; although not realizing what I was doing, that I was comfortable with life being good enough. There I stayed, living everyday for a few years and being just good enough.
I eventually served in the Navy for 26 years and began to learn day by day that good enough IS NOT good enough. Understanding that it’s very easy to be average, and knowing the world is full of people who do very well at being average, there is a great opportunity to not be satisfied with Good Enough!
I eventually met with Jeff, another sailor in my command, and Mike who was a former Naval Officer. They both had a similar mindset of chasing after their dream of doing tremendously well with something other than their typical “bill paying job”. At this time, I realized that I am fully capable of running after a dream and being successful while doing it.
I had surrounded myself with likeminded people. I understood that most people would continue to run through life with a “good enough attitude”, meanwhile dreaming of being able to do more with their lives. I also realized that these are not the people I need to have in my inner circle of influence if I desired to chase a dream and excel.
This all brings me to now. Through investing time and money into education, mentorship and beneficial relationship building, I have been able to capture some of my dreams of being an apartment complex owner. It took building the right team, finding out how I could bring value to others and to do it all with integrity, while having an attitude of putting others before myself. This life-changing mindset continues to motivate and prepare me mentally in preparation for whatever comes my way.
Good enough should never be good enough for any of us anymore. If you want to do more and you’re not quite sure how to get started? Reach out to us and we can help.
If you are reading this, it’s never too late to chase after your dreams and be great at whatever you want to do!
Multifamily is the Best Passive Investment on the planet?
Where else can you get these benefits?
*Below-Average Risk: When the housing bubble popped in 2008, the delinquency rates on Freddie Mac single-family loans soared, hitting 4% in 2010. By contrast, delinquency on multifamily loans peaked at 0.4%. So, if you’re looking for a recession-proof way to invest your money, there is no better option than apartment building investing.
*Above Average Returns: As I describe in the Special Report, the average stock market return over the last 15 years was 7.04% but after fees, inflation, and taxes that return becomes a paltry 2.5%. On the other hand, multifamily syndications routinely return average annual returns of 10% and above. That’s compounded (i.e. without volatility) and after fees, inflation, and yes, even taxes.
*Passive Income: Unlike stocks and bonds, multifamily syndications generate cashflow for its investors from the income generated by the property.
*Extraordinary Tax Benefits: Because of the magic of “bonus depreciation”, your investment income is taxed at a much lower rate than any other investment (in fact, you may actually show a taxable loss that can be used to offset other passive income!).
*Inflation Hedge: As inflation increases, so does the value of the property – the perfect hedge against inflation.
Bottom-line investing in multifamily syndication is the BEST Passive Investments on the planet.
Good Bye 2020
No one could have predicted the tumultuous year that 2020 turned out to be. However, from a multifamily standpoint, it was not as catastrophic as we feared in March and April. Some properties have suffered slightly lower collection rates as tenants lost jobs. At the same time, most tenants made it a priority to continue to pay rent. While there still is a federal eviction moratorium in place, rent is not canceled and almost all operators have been able to work with tenants to put them on payment plans if they fell behind.
We also continue to see a tremendous appetite for multifamily investments. Investors are looking for a return on their capital, and the returns on bonds, savings accounts, and CDs are so low that they don’t keep up with inflation.
Therefore, there continues to be an interest in investing in real assets. Low interest rates also make the multifamily attractive. Of course, this continued interest in the asset class makes it hard to find good deals, but our JCORE Team continues to develop broker and owner relationships so we can find a deal that makes sense to offer to our investors.
Why we love Dallas
Dallas Fort-Worth is one of the most resilient MSAs in the nation with a diverse economy, affordable living, and lower costs of doing business. The region is a top choice for multifamily investors due to its rapid population and job growth, leading the nation for several consecutive years. The graph below illustrates the demand for apartments in the DFW area - it's off the charts, literally!
Similarly, job losses in the DFW market have been less than any other major metro area in the country. All 12 of the nation’s largest metro areas had year-to-date job losses. Seven metros exceeded the national average of 7% - with New York and San Francisco leading the losses at over 11% each. Phoenix and Dallas were basically tied for the least job losses at 3.5% each - that's less than one-third the job losses or those two leaders and less than half the loss of the national average! Economic resiliency is key for investing in multifamily.
DFW is a leader in transportation and logistics. Dallas leads the job growth in the US. DFW has one of the most diverse economies in the country and it actually leads the country in net migration by adding over 1 million residents since 2010! I could go on and on but you get the point. We're not seeing any discounts in the Dallas market but there's a reason - the facts just don't justify it. With rates low and opportunities still in the market, we plan to continue moving forward.
Some Huge Personal News
If you’re reading this, I’ve been fortunate enough to connect with you over the past few years. And since we’re connected, it’s time to update you on some recent changes along with why I’m so excited about the future.
I’m beyond grateful for the support of my wife and family and the education and mentorship I’ve received from so many amazing people in my military career as well as in my Real Estate Investing ventures. This support has enabled me to achieve so many amazing milestones and set my family up for financial success for years to come.
It’s also a large part of the reason why I’ve formed a Real Estate Investing partnership with several other current and former military investors, the ‘JCORE (Joint Chiefs of Real Estate) Partners.’ We are dedicated to bringing you valuable investing education and passive investing opportunities.
As military members, we understand the demands of a busy work life, travel, family, and deployments. We acknowledge that not everyone has the time and knowledge to invest ‘hands on’ in Real Estate. Therefore, we have partnered to provide solutions through Apartment Syndications- a truly passive way to invest in Real Estate. We work to acquire, manage and operate large Apartments so that you can collect mailbox money and focus your attention on your career and family.
If you’re somebody who values your time and your financial future, then please visit our website at https://www.jcoreinvestments.com/ to access our FREE Multifamily Investing Masterclass Interviews and to schedule a call with me or one of my partners.
In spite of the challenges of 2020, we have seen tremendous success and our momentum is building! I want to thank you from the bottom of my heart for your connection, time and interest. Please don’t hesitate to reach out and let me know if there is anything I can do for you personally or professionally.
Signing Off,
Noel
What in the world is Clubhouse?
If you have heard of the new App called Clubhouse and were wondering what the heck this thing is, you’re not alone. Clubhouse is an application that was launched solely for iPhone users in April of 2020. Since then, Android users have been able to download Clubhouse to see what this thing is all about.
Let’s keep it simple here. Clubhouse is an app that creates live chat rooms for any subject you could possibly imagine. If you want to learn about and discuss real estate, there are rooms for that. If you want to talk about God, sports, weed farms, or even politics, there are rooms you can hop into. No matter what your interests are, you can join a room that has people from all over the world.
Clubhouse is still in the Beta stage so you can only join by being invited. Here is why it was created.
What is Clubhouse? Think of a live interactive podcast
Paul Davison, the co-founder of Clubhouse believes that the significance of Clubhouse is to share and discuss topics with each other through voice. I have to say WOW, WHAT A CONCEPT! Being able to hear tone and people for real outside of mute social posting is so awesome!
How Clubhouse works?
- Download the app from the App Store (it’s free).
- Be invited in by an existing user. Our entire team are users so we can get you in!
- Use the search icon to find people or topics you are interested in following.
- You can build your profile if you want. I would suggest this if you’re interested in connecting with people or groups. You can also add your Instagram and Twitter for connecting outside of Clubhouse.
- You can join a room just by tapping on the room banner and listen in. You don’t have to say anything unless you want to, and you can come and go as you please.
- There is no tracking of people unless you want to be known.
- NO, it is not a service to message each other! You can add your email in your profile if you want.
Why JCORE uses Clubhouse?
We have a room that brings in successful real estate investors, lenders, and developers. We share wisdom and knowledge with people who are interested in actively or passively investing in real estate. Especially multi-family real estate. The best part… It’s all free! You can join in from anywhere in the world! If you have time, a desire to do more, and you can jump on in!
Join us on Clubhouse Wednesday nights at 8 PM EST, or Monday – Friday mornings at 9 AM EST (starting May 3rd). Find our club THE JCORE PARTNERS and you’ll get notifications when we are on.
Just a bit of advice… Go under tools and turn your notifications to “Normal”. Otherwise, your phone will drive you crazy! Just a learned lesson.