Oct. 1, 2008 Edition - Focus on Investors

How To Court The Next Generation Of Investors

Cultivating relationships pays off for one franchisee
By Monica Feid

Monica Feid

Meet the next generation of real estate investors: Full-time executives with busy careers, fiscally conservative spending habits, untarnished credit, and a bit of philanthropic drive to do good for the community.

Robert Brandes, of Alpharetta, GA., is now one of them. This week he is closing on the refinancing of a beautiful three bedroom home in Lithonia, GA. Not long ago, it was a shack with fire and water damage that, as Brandes said, “could have been knocked down.”

But Brandes didn’t find the property, he didn’t rehab the property, and he didn’t find the happy renter for the property who now gushes over the pretty house she and her kids can call home.

All of that legwork was the job of franchisee Todd Reid, owner of Nosara, Inc. in Roswell, GA.

And the relationship between Reid and Brandes is a sign of the times: real estate experience meets impeccable credit.

Even in the shaky economy, Atlanta has been attractive for real estate investing because of stable housing prices, a market for renters and white-collar wealth that is looking for alternatives to the stock market.

Brandes is a fiscally conservative family man. His personal investments involve a home, a second home and a low-risk mix of CDs, stocks and bonds. As a vice president at FleetCor, overseeing the MasterCard® products group that provides commercial charge cards to companies, he has a full-time job that keeps him busy. And while Brandes admits that this may be a good time to invest in real estate, he also admits that he’s no expert.

Robert Brandes

But Reid is. 

Reid, who coached one of Brandes’ sons in soccer, calls real estate investing a full-time career. And his business has evolved to meet the changing economy. Mortgages are harder to come by. And he can’t finance everything.

So if he can’t rehab homes to sell to first-time homeowners, he can rehab homes to rent. That’s why Reid opened a property management division. He takes on all the headaches so more than 20 C-level executive investors, like Brandes, don’t have to.

“It’s not like people are exiting Atlanta,” Brandes said. “Business is pretty stable and people need to live somewhere. It’s a good market for what Todd is doing. In fact, I know he has investors from out of state.”

But Brandes took his time before becoming a first-time investor, and he examined all the numbers to make sure it was a good decision.

“It took me a long time to get comfortable with it,” Brandes confessed. “When he gave me the estimate [for the repairs], I said, ‘Are you sure?’”

After the rehab, Brandes watched his investment property rent within hours.

The rehab went smoothly. And, as expected from Reid, so did finding a renter.

“It rented literally in two hours,” Brandes said. “In fact, they stuck the sign in front and, by the time they got back to the office, they got the call. It’s a single mom with kids, and she works at Sara Lee in town. She was just thrilled.”

So goes the evolution of real estate investing for one “We Buy Ugly Houses” franchisee and his growing network of local investors. Reid still gets to rehabilitate neighborhoods, families still get to live in beautiful homes, and conservative investors like Brandes get to keep their money closer to home and make a difference in the community while also making a return.

“When I met the woman who’s renting it, it gave me such a sense of satisfaction knowing that I had taken a place that you could have knocked down and turned it into something that someone can be proud of,” Brandes said.

. . . Monica Feid is vice president of BizCom Associates, HVA’s public relations agency.

Recruiting Professional Long-Term Investors

Publisher Andrew Waite explains HVA’s role in developing long-term investor relationships
By Ken Channell

Ken Channell

When Andrew Waite, publisher of The Personal Real Estate Investor magazine, spoke to the Leadership Invitational in Lake Tahoe he presented some interesting information about opportunities for franchisees to help long-term investors make successful investments in residential real estate.

In presenting the findings from his March 2008 study, "The Invaluable Investor: How to Serve the $300 Billion and Growing Market for Individual Residential Real Estate Investors," Waite created a profile of the long-term investor and explained how HVA can recruit and develop professionals who want to invest. His findings included:

• 89 percent of total market is looking to justify their investment in any home purchase.
• 22 percent of the total residential market represented “intentional investments” and was looking for a seamless buy at a decent price, to hold and generate portfolio growth from positive cash flow and appreciation.
• Less than five percent are independent investors and less than two percent have a “flip mentality.”
• 18 percent of the U.S. residential market or $55.8 billion dollars of investment is looking for formal real estate guidance and hands-on help to buy and hold residential real estate.

Waite reported that these investors represent a market of $320 billion, and that REIA and declared investors are less than five percent of the market. The majority of the market, he said, can be described as:

• Hands off management
• Relationship with their real estate provider
• Multiple Properties or assets = lower risk
• Focused on growing profits
• Expect Analysis / reports / monitoring of their portfolio.

Based on this information, 95 percent of the existing investment market wants more help than currently provided by the traditional real estate educators that sell process and not profit.

This creates an opportunity for HVA to provide a full cycle service to these investors. Waite says that the real estate portfolio management cycle has nine steps to produce success for this type of investor:

• Investor goal assessment
• Legal structure for the client
• Find the property
• Analyze the property
• Finance and acquire the property
• Arrange for property management
• Portfolio monitoring
• Reporting
• Compliance
• Re-leverage the portfolio

This creates a tremendous opportunity for Team HVA, which has bought more houses than any other system ever created and is in the best position to take advantage of this opportunity.

If you have not read "The Invaluable Investor" and you have not subscribed to The Personal Real Estate Investor magazine, I recommend you do that today. Click here for more information on personalrealestateinvestormag.com.

Working with long-term investors is a major emphasis of this year’s annual convention in Las Vegas -- make plans now to attend. 

. . . Ken Channell is vice president of team development. He can be reached at  Ken.Channell@homevestors.com.