2018 Investor Newsletter

Q1 Newsletter 2018

(Click above for a PDF copy of the Newsletter – or read below)

INVESTOR NEWSLETTER

           Articles at a Glance:

Gratitude – R. J. Palano

Future of Single Family House Rentals – R. J. Palano

IS IT THE TIME TO BUY AND SELL – R. J. Palano

Note from Got Our Home – Bridgette Cruz and Anthony Salmeri

GRATITUDE

Whenever anyone asks me how I’m doing my response is typically; I woke up today so I’m doing fantastic. I see you made it too; Congratulations!

This past Christmas my wife gave me and the office staff the “Five-Minute Journal” in which I journal in each day of what I’m grateful for. When I think and dwell on all the wonderful people that have touched my life, I know that I am a blessed man. For starters, I married my high school sweetheart and I’m still married to her to this day. Believe me, we’ve been through thick and thin and when it’s thin, that’s when you find out how strong your relationship is. Here’s a picture of us right after high school.

I have found that starting the day with a refreshing and thankful mindset of gratitude allows me to feel more connected to not only myself, but also to my environment. It’s the exact opposite of how I feel when I’m stressed or depressed if I allow myself to focus on negativity. And yes, I would all be lying if I didn’t admit that there have been times in my life when I felt depressed.
“Empathy is more than simple sympathy, which is being able to understand and support others with compassion or sensitivity. Simply put, empathy is the ability to step into someone else’s shoes, be aware of their feelings and understand their needs”.  We have to put ourselves out there, and a lot of times we might not do that on our own. But if you have one or two good colleagues who are supportive of your efforts, then you’re more likely to take a chance. And without taking chances, you’ll never know your capacity.” Giacomo Bono, Assistant Professor of Cognitive and Applied Psychology at California State University, points out that this give-and- take is a foundation for all our social and business networks because expressing gratitude is the key to developing trust.

One of my favorite authors and speakers was Zig Ziglar who passed away in 2012.  Zig said it best: “If you help enough people get what they want, you’ll get what you want.” Take a moment and just think of all the lives you’ve impacted – I mean positively impacted because the world is filled with double minded people who negatively impact you – if you let them. “Left to their own devices, our minds tend to hijack every opportunity for happiness,” says Robert Emmons, Professor of Psychology at the University of California, Davis. “Negativity, Entitlement, Resentment, and Ungratefulness all clamor for our attention.  Weighed down by negativity, we are worn down emotionally and physically exhausted. Gratitude is an ally to counter these internal and external threats that rob us of sustainable joy.”

I’ve lived this cycle of negativity and I’ll tell you it hurts.  The fortunate thing for me, is the people I surround myself with in my inner circle that lift me up when I’m under attack.  My hope for you is that you have the same type of positive people around you and you don’t become a victim of “Stinkin Thinkin.” The world is filled with people that want what you’ve got but they probably would never make the sacrifices that you and I have made to attain the personal finances and personal freedom we enjoy.  I personally know many of the investors reading this and, in many ways, we are very similar. We sweat blood and tears for our business and the people we serve. Why?  Because we care. Because we know if we put good seeds in the ground the harvest will come. If you don’t really care about the people you serve, you won’t last in this world and you rob yourself of the joy of that feeling of connectedness and purpose. Without purpose, you might as well stay in bed all day because you’re never going to live that day to the fullest or reach the capacity you were created for.  The same goes for bad seeds. I pity the fool that sows seeds of distrust, lies, deceit and hatred for surely his harvest is coming.

I look forward to everyday; it’s a new dawn with the new opportunities and challenges to overcome.  A life without challenges is a boring life – you’re already half dead. In my world life is a series of challenges that have to be met and I’m grateful for everyone that comes my way. Our reactions to challenges define our character and often we are refined by the fire only to come out better when we overcome the challenges at hand.

When I look back over the last 63 years, that’s right, I turned 63 last December, I am amazed at all the obstacles that stood in my path and my pursuit of excellence and success. The funny thing is when I look back, they seemed like tough challenges at the time, but I always progressed and moved forward and came out significantly better in the end.  That my friend is wisdom. Looking back those challenges were nothing more than a stone in my shoe and as time goes by they seem more like a grain of sand.

It’s a fact of life we all get tested in one way or another.  For some, they lose a child, a spouse, they get sick or a tragic accident.  I wouldn’t trade any of my challenges for any of yours that’s for sure. You want to know why?  Because each one of us are endowed with the seeds for success by our Creator and have the ability to overcome any challenge put in front of us. So, ignore the doomsayers in your life and go out and conquer.

With a heart full of gratitude, we focus on the giftedness in life and every one of you are gifted in some way. Look at what you’ve overcome in your life – take a minute – you won’t believe it. Create a timeline of success and failures and you know what? Most of your learning came when you were experiencing failure. We affirm that goodness exists, even among the rancor of daily life. This realization is exhilarating, freeing and redeeming.

Gratitude works. And so you know; I’m so grateful to play a small part in your life and I appreciate the opportunity to learn together and work together.

“Anything worth doing, is worth doing to excellence!”
– R. J. Palano

 FUTURE OF SINGLE FAMILY HOUSE RENTALS

As we approach the 2nd quarter of 2018, the prospect of house values continuing to rise in the U. S. is very strong, especially the metropolitan areas of Atlanta, Georgia and Tampa, Florida.

Going forward, BuyCashFlowProperties.com is acquiring properties in both areas. Personally, I like the Atlanta area better for holding houses long term, due to the low cost of doing business there and it is a PRO-business State. The comfortable climate in the winter is what attracts snowbirds (people from the North to Florida). However, in the late summer and early fall is hurricane season. And last year with hurricane Irma approaching residents were really scared and some left for good. For me, I don’t want to take the chance of a large rental portfolio being wiped out with one storm. So, I have less than a dozen houses in Florida and much more in Atlanta.

Since our main focus is Atlanta, my remarks and research in this column will be specific to that area.

Atlanta is one of the top cities for millennials according to niche.com. It is quickly floating to the top of recent graduate’s lists of where to move to in 2018. This city offers a young population, plenty of diversity, great access to coffee shops, restaurants, low crime and high safety levels. Of course, there are some areas to avoid like every major city in the U. S. and we avoid those areas for holding real estate investments.

For renters and owners alike, it offers one of the top job markets in the U. S. and is cost-effective. While it doesn’t have the craze of Silicon Valley, Atlanta is still booming according to rentberry.com

Trees aren’t the only thing growing there! It’s known as the canopy city in the U. S. as there are so many trees – truly beautiful. 26 companies headquartered in metro Atlanta are among the 2017 Fortune 1000, of which 15 companies are also rated in the 2017 Fortune 500. In the fiscal year 2016, these 26 companies generated aggregate revenues of 373.9 billion dollars.

The Home Depot, Coca-Cola, United Parcel Post (UPS) and Delta Airlines are all names you are familiar with. It is the second fastest-growing economy, among the top 10 U. S. metro areas in 2015, according to the Bureau of Economic Analysis. It’s the transportation hub of the South East and you can readily see that by driving anytime of day through the metro area.

For investors, the rental property’s location is directly linked to profitability. Home Union released a list of the top-performing markets for single-family house rentals to help hedge funds and property managers scour the country for best places to buy investment properties. After considering such factors as investment returns, after operating costs, strong local economies, rent to income ratios, supply of new construction, and turnover times, Atlanta emerged as one of the best Cities in the nation to invest in rental property.

This State’s economy will add 86,700 jobs in 2018 with 18% of the new Atlanta jobs being “premium positions”, that are paying over $60,000 per year.

Labor shortages, rising mortgage rates and higher lumber cost are looming which point to increased values of properties. The labor shortage is very obvious in the construction business, as reliable quality workers are hard to find. That shortage of construction workers in every area of the trades are reflected on rehab cost to properties. Everyone is paying more to get work done. It seems like Trump sent all the workers back to Mexico! The reality is that quality rental houses cost more than they did a few years ago and so does the maintenance. This has not slowed the demand for rentals, because investors both inside the U. S. and outside the U. S. need a safe place to put their money where they can achieve monthly income and appreciation in value.

That isn’t happening in the stock market – it’s somewhat volatile and the stock market is due for a major correction. That isn’t happening in Bitcoin either. While some investors made the “Bitcoin fortune” others got bit in the butt. I’m writing about safe income for building long-term wealth and that’s what a portfolio of rental houses can do for you.

Foreign investors bought a record number of properties in the U. S. last year. And now, with the dollar dropping against other currencies, the opportunity is even greater for foreigners.

I must confess, we have not kept up with the demand for houses and in fact we are taking orders, and reserving houses for investors before we can complete the rehab and have them rented. Hedge Funds are buying direct from us prior to doing a rehab and you could be too.

IF YOU’RE NOT GETTING THE HOUSES YOU WANT FROM US, LET ME KNOW YOUR PRICE POINTS AND WE WILL OFFER YOU A HOUSE BEFORE THE WORK EVEN STARTS.
IF YOU DON’T LIKE IT WHEN IT’S DONE, YOU DON’T HAVE TO CONCLUDE THE SALE AND GET A FULL REFUND ON YOUR DEPOSIT. 

Yes, I’m bullish on Atlanta and yes I’m currently adding to my personal portfolio of houses for the production of predictable income and long term wealth. If you’d like to add to yours, call me direct and feel free to ask me anything about the U. S. market place.

Recently, I’ve invested in some commercial projects and IPOs (initial price offerings) in the stock market. I know that sounds crazy coming from a “single-family house guy” but I like some excitement too and there are many opportunities available. Three companies I invested in are going public this year. And you know what? If the investments work out as I expect, I will take those profits off the table and invest in more houses for safety, income and growth.

AS ALWAYS, FEEL FREE TO CONTACT ME DIRECT AT ANY TIME BY EMAILING ME AT:

RJP@BUYCASHFLOWPROPERTIES.COM

OR CALL ME AT:
813-495-3006

OR SKYPE ME AT: 
RJ.PALANO2 

IS IT THE TIME TO BUY AND SELL?

2017 was a year of adjustment for BuyCashFlowProperties.com.

Since the US single-family house market has stabilized, there are less opportunities for below-market value acquisitions. The hedge funds that acquire these type of assets are still active, some more than others. For the above average family operation like myself, we’ve returned to our roots on how we acquire houses. That is; we’ve abandoned mortgage foreclosures for the most part and we are back to marketing for distressed sales directly from homeowners. This is how I cut my teeth in this business back in the early 1980s. The funds are still buying at the courthouse steps and their acquisition price has little regard to do with the cost of rehab. in many cases they pay over retail for the properties. It would be crazy for mid-sized operations like me to do that because we are in the market to buy and sell in today’s marketplace. The funds have a hugh advantage over small operations because their cost of money is so low and in some cases backed by the government at 1% interest. When the cost of money is that low, you can afford to overpay and you’re going to make a profit on cash flow and you have a giant potential for upside returns in an appreciating market. That’s why the funds are still buying.

So, we’re back to the basics in marketing in every which way possible for distressed owners that need to sell now.
Since the real estate market has risen so much across the US, it’s been more profitable for us to sell houses retail to wannabe homeowners. Part of this reason is because the price points have moved up on many of the house we acquire and get sold for over $200,000.00. We could look at other markets in the US, but I am bullish on Atlanta due to the growth in the area, job creation and moderate climate. We do acquire less expensive properties in the Atlanta market but they’re not the kind that you would want to own for long-term appreciation and cash flow. These are the types of houses we wholesale to other investors because lower income properties are much more management and maintenance intensive. In some areas the skill set required to manage these types of properties includes a gun and a Doberman Pincher. But there is a market for these types of properties and we tie them up on a contract and wholesale them to other investors who have mastered this niche. Not for me. I lived that life in Buffalo, New York in the 1980s and 90s and even though I bought the upper end of the low income properties, it’s a thankless job and I got kicked in the teeth. Many of you heard me speak of my adventures in New York while on my first tour of the cities in South Africa in 2013. If not, the videos are still on the BuyCashFlowProperties.com website under education – then scroll down to additional education labeled “Money Talks”, the song written by AC/DC. That was one of my favorite presentations in Johannesburg, as the energy in the room was so high that day when I came out to the music of that song. You can still see it on the website.

   THE QUESTION IS SHOULD YOU BUY MORE OR SELL NOW?

The simple answer is, it all depends.  The real question you have to ask yourself is why did you buy houses in the first place?  If you bought houses for cash flow and upside appreciation, along with getting your foot into a safer economy, a safer currency then why would you sell? The only reason I can think of for people to sell now is that you have a greater need or opportunity for the money. It really all starts out with the goals you created for yourself and your family. And everybody’s goals are different.

If something is working, why would you change it?  Again, the reason is if you have a greater need for the money or better opportunity that you can take advantage of.

Another consideration is the US dollar is weakening against other currencies, which makes it a good time to invest in the US.

Last year I sold approximately one third of my portfolio of houses to a hedge fund. But there’s more to that story. You see, most of my houses were held in retirement accounts and upon the sale of those properties there was no income taxes. And in some case I did a 1031 exchange into other properties so that I wouldn’t have to recognize any income tax on that sale as well. For most of you reading this, if you sell your properties, you will pay income taxes and you would dilute your working capital.

When I spoke at the IMN Conference in Scottsdale, Arizona in December, I was on a shark tank panel and I was presenting one of our investors portfolio of approximately 50 houses.  A lot of interest was generated by my presentation and in the end the sellers raised the price of their houses and never concluded a sale. I’ve seen this over and over with investors now. They say they want to sell their house and then all of a sudden they get sellers remorse, or they’re just testing the market. Or, they go back to their original reasons and goals for buying the houses and realize there’s no point in selling when they’re making cash flow and the properties are going up in value.       

I was listening to one of the other speakers at that same event and he said that  60% of all investors that outsource their property management don’t like the property manager. Property management is the foundation of holding rentals. If that foundation cracks or breaks all bets are off. There have been times when my own properties suddenly needed a new HVAC unit or a septic tank. Expenses I wasn’t expecting but you know what, it comes with the territory. Oh, I cringe like every other investor reading this and I know it’s part of the business. When the  temperature dipped below 20° for extended periods of time in Atlanta this winter, I had a couple of HVAC units that had to be replaced because they were working so hard to heat the house and they burned out. It’s a fluke, and it happened, and it’s no one’s fault. Just like it’s hard to fix blame when the stock market goes down, you really can’t blame it on the stockbroker that sold you the stock. One thing I do know, and I know for sure is the management company we all use never, marks up a fee for repairs, turnovers or maintenance of any kind and every other property management company does. One of my closest friends teaches property management companies how to mark up their fees so I know this is an industry standard. And that’s probably why 60% of all investors that outsource their property management don’t like their property management company.  My business is strictly buying and selling houses to investors and to homeowners. For our investors, I give a one-year warranty and I gotta tell you, I’ve paid in excess of $100,000.00 to keep those warranties in place over the last six years. During the first 4 years, we never even told the investors about the repairs made to their houses and I’ve come to realize that’s ridiculous because you need to know that I’ve honored our agreement and always will – no matter the financial impact on me.

To sell or not to sell? It’s really a personal choice based on your goals. My goal was to have a certain number of houses without debt that provided for my family’s lifestyle. Once I reached that benchmark, I created new goals that allowed me to be more, so I could make more, so I could give more. And guess what, I’ve gone back into the market and bought some more houses and I’m holding and I plan to add more.

IF I CAN HELP YOU OBTAIN MORE PROPERTIES, LIQUIDATE THE ONES YOU HAVE, OR GET INVOLVED WITH ME IN DIRECT OWNERSHIP WITH ME CONTACT ME DIRECT AT:
 RJP@BUYCASHFLOWPROPERTIES.COM
OR CALL ME AT:
813-495-3006

We have investors that tell us what they are looking for. If we dont have it – then we keep an eye out for the investment that fits their needs.

TO ALL OF OUR OWNERS, PROMOTERS, AND FRIENDS!

I hope everyone’s year is off to a good start. I get asked on a daily basis if Atlanta is still a good market to invest in and my answer is definitely YES! Not only is it a good and stable rental market, the prices of homes are appreciating daily.

The demand for homes in the Atlanta area is better than ever right now! Inventory is low, as people and businesses look to move into the area.

The more demanding it became the more I realized I needed to refocus on meeting the needs of our Investors and increase inventory now. In order to support the demand for rental properties; I will be transitioning into more of an Acquisition Management role.

I will continue to act as an Investor liaison and of course be here to better support you and your property needs but have relinquished a number of my responsibilities. In recent months we began to really evaluate all the areas that we knew we needed to improve upon as a Management Company. Those findings led us to bringing on a COO; Chief Operating Officer who could truly oversee all Operations and with fresh eyes, implement changes That would be crucial in our future effectiveness and growth.

With that being said I am excited to introduce Bridgette Cruz as our new Chief Operating Officer and Regional Manager. 

 

Bridgette is acknowledged for having over 15 years’ experience in Single and Multi-family Investments, Renovations, and Property Management. Managing thousands of units and personally investing and renovating over 200 major single-family homes.

She takes pride in taking things that may not be performing well and accelerating them to their highest potential.

She has already come along side not only the Corporate office team but the Portfolio Managers and even contractors to bring more efficient structures and policies into place to better serve you our Clients and our Residents.

We are excited to share a few things you can anticipate to see the “fruit” of in months to come:

● An Increase in market rents
● Lower turnover and maintenance repair cost
● Decrease in vacancy loss
● A more efficient screening process
● Aggressive collection/delinquency resolution process
● Online work order process for maintenance repairs
● Online Landlord Protection Plan Inspection reports
● Better communication with you……period.

Bridgette has already begun to reach out to Investor Clients on a one on one basis in an effort to hear for herself what we could be doing better. In the meantime, please do not hesitate to reach out to us if you have any questions or concerns.

AS ALWAYS FEEL FREE TO CONTACT ME DIRECT AT ANY TIME AT:
ASALMERI@NATIONALERASERVICING.COM
OR CALL ME AT:
813-335-3980

OR REACH OUT AND WELCOME BRIDGETTE AT: 
BRIDGETTE@GOTOURHOME.COM 
OR CALL HER AT: 1-866-521-7715
OR SKYPE: BRIDGETTECRUZ

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