During today’s HyperFast Wealth segment, host Dan Lesniak speaks with Jeff Love, an attorney who focuses on real estate, corporate, and securities law. Listen to hear Jeff’s advice for new investors putting together contracts for residential and commercial real estate investment deals.
- Jeff Love is an attorney that specializes in putting together contracts for residential and commercial real estate deals.
- It's important to understand the market that you're working in to advise potential investors.
- When getting into larger deals, understand that investors are looking more at cash flow, potential appreciation, financing, and the tenants they might attract.
- If you want to get into bigger deals, start understanding the metrics investors are using to look at those deals.
- A common pitfall first-time investors make is not understanding their market.
- You need to understand the whole process if you don't already have experience.
- Educate yourself before you get hands-on experience.
- Talk to fellow agents that are in the multi-family space.
- Team up with someone with experience.
- A big part of what Jeff does is putting together different types of partnerships.
- You need to have a strong team in place as a new investor.
- You need a strong agent to help you find properties and to negotiate a good deal.
- Ask if you have a good insurance broker that ensures you have the right coverage and premiums.
- There's no substitute for a good accountant. You may also want a cost segregation expert.
- You need a good attorney to help you prepare these documents.
- When you put together an agreement, make sure you have the right structure in place.
- Know the intention for your project. Know your exit plan for these assets. Make sure your investors are on the same page.
- If you bring on partners your timelines may be different.
- You can use a buy/sell agreement to manage different triggering events with your partners.
- Set up your business entities in the beginning with contingency plans in place.
- You want to be able to understand the purchase agreement so you can guide your client.
- It helps to have a basic understanding of these agreements.
- You'll see a limitation of liability more frequently in these agreements.
- Due diligence is much longer in commercial deals because there's much more to review.
- It's important to realize that the value of some of these documents that you can get in your due diligence period.
- Almost universally you will want to get title insurance.
- Being an experienced investor will help you know how to get the best terms.
- Understand the financials and the market.
- The environment is less competitive now. There will be room to negotiate.
- Remember that investments are non-emotional transactions.
- New investors should get their team in place before they jump in.
- Successful investors learn from their mistakes.
- In 2021, we'll see depressed assets and investors taking advantage of those.
- Jeff shares what he enjoys doing in his spare time and where he sees himself in five years.
3 Key Points:
1. It’s critical for new investors to understand their market and the whole process.
2. You need to have a strong team in place as a new investor.
3. Be intentional with how you set up your agreement and put contingencies in place.
- “It's never bad to team up with someone that has that experience.” – Jeff Love
- “With putting together the agreement you really want to make sure you have the right structure in place.” – Jeff Love
- “The more planning you do ahead of time the better.” – Dan Lesniak
- “It's an investment and if it doesn't work, you kind of move on to the next one.” – Jeff Love
- “You'll really want to start getting into...understanding these metrics and formulas that real estate investors use to be able to compare competing properties.” – Jeff Love