This is always the fun one! I spoke to many folks on my Podcast and they talked about Capital Stack. Then, I get so many emails asking "What is a Capital Stack?" 

Capital stack is nothing more than all the money you need to raise in order to buy that property, and it's going to come in a couple of different forms. It's going to come in debt, or your mortgage. 

"Well, I got an 80% loan-to-value." 

Great, 80% of your capital stack has just been taken care of. 

Now we got 20%. Well, where is that going to come from? 

"Well, my pocket, I could put down 5%." 

Okay, fine, now we need 15%. Where is that going to come from? 

"Well, I got investors. "They're going to come up with 10%." 

Good, now we're at 95%. Where's the other 5% going to come from? 

"Well, the seller's going to give me a seller financing." 

Boom, we just got our 100% capital stack. 

That's what a capital stack is. That's all it is. 

It's where all of the money is...

I love real estate investors. They are the most down-to-earth people you will ever want to know. Frank Rolfe is no different. You have got to hear his story about how he got started in this business and has grown to be in the top five in the country of mobile homeowners. I also just threw out there the concept of tiny homes and BOY DID I GET A GREAT EDUCATION!! Check it out!

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#49: Own Your First Mobile Home Park with Frank Rolfe 

Frank Rolfe has been an investor in mobile home parks for almost two decades, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with over 250 communities spread out over 25 states. But it all began with one mobile home park, Glenhaven, in Dallas,...

This is what we need to take into consideration when we are doing a value add, kicking people out, cleaning up the units, increasing the rents and putting it back on the market. Find out how to get the absorption rate in that marketplace. You better know what you're talking about especially when you are speaking to your investors!

You need to know, in your calculations for determining the cost of this value add proposition, what is the absorption rate in that particular community. That's the amount of time it takes for a new unit to be absorbed into the market and by a tenant. 

You have to determine how long it takes for a new unit to be leased up by another tenant. If it sits on the market for four months or if it is showing a four month absorption rate, you've got to figure that into your calculation. 

Once the deal is closed and once that unit is put back on the market, you’ve got to hold that unit for four months in order to find the right tenant. And it's not...

Every so often in the multifamily business, you meet a true gentleman. Actually, in this business, it is more often than not. In today's webcast, I interview one of the greatest success stories you will ever hear:  Paul Worcester, who went from 0 to 4000 units and then walked away. Find out how his company Simplifyy is transforming multifamily property management through technology. Learn how Paul is changing the way multifamily is done and how he can help you make better offers on your deals! 

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#48: From 0 to 4,000 units in 10 years with Paul Worcester

Paul was planning on becoming a Pastor, but once he read Rich Dad, Poor Dad he decided to make it his life's mission to becoming an entrepreneur and generating passive income. He burnt the ships and took the leap in 2006 with a 16-unit...

Mike Zlotnik is doing something that this industry needs but I have not seen until I had him on my show. I coach people on how to buy multifamily property. I am the best in the business (if I don't say so myself). When it comes to raising private money and syndicating deals, I give some pretty good advice but that is not my area of expertise. Enter Mike. Mike actually coaches people on how to raise private money, syndicate deals and create a real estate investment fund. I think after this podcast, Mike's phone lines will be burning up. 

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What It Takes To Create A Syndication Fund with Mike Zlotnik

In 2009, Mike joined Tempo Funding, LLC (Mortgage Pool Fund) as a managing partner, and Vice President of funding operations.  In January 2014, Mike assumed the responsibility of a CEO and has since founded TF...

There is one thing that sets the multifamily investing business apart from all others. That one thing is 'The Power of the Cap Rate”. Also, check out this fifteen minute presentation from Charles Dobens, The Multifamily Attorney, to find out exactly what he means:  The Power of Cap Rate

We all know what cap rate is.

NOI, cap rate and price - all three variables fit together. 

You need to understand how the cap rate works. A property that has a higher cap rate is less valuable than a property with a lower cap rate! 

Everybody else thinks, "Oh, a 10-cap is better than a four-cap." No! Just do the math. Remember, a one dollar increase on a four-cap is a 25% while a one dollar increase on a 10-cap, I think it's $12.67. Well, $16.67. And on six-cap, it's like 12 bucks. 

That is why we go for the more higher quality properties. That's why the insurance companies, the pension funds, the big investors who build - they go with a Class A property, because of...

If you have heard me say it once, you have heard me say it a million times: Direct Mail works every time it has been tried. But it only works if you know how to get to the right person. On today's call, Kathy Kennebrook shows us how she got involved with helping real estate investors reach out to the only party you need to know about - The Owners!

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How To Use Direct Mail To Find Qualified Sellers with Kathy Kennebrook

Kathy Kennebrook worked in the banking industry for 20 years before discovering the world of real estate and eventually purchasing 100’s of properties without any of her money through the use of direct mail. Today, she helps real estate investors find qualified buyers through direct mail marketing. 

In this episode we cover:

• Why you need to target a specific seller & how to do it
• Why...

I see an interest only period being used far too often by students. I will tell you what the problem is when using an interest only, and the only time it makes sense to use one.

Interest only is typically used only for value-add deals. If it's a performing asset, we don't go to interest only. There's a reason for that. 

At some point, when that interest only period burns off and it becomes what we call an amortizing debt, your mortgage payments are going to go up considerably. If you do not have any corresponding increase in income that you are hoping to do when you do the value-add, then your cash on cash is going to go in the toilet. Your investors are going to say, “hey what the heck did you do?” And the whole thing will look terrible. 

The only time I like to use value-add, interest only is when we're talking about a value add property. You see it on bridge loans and on rehab loans. 

There's an exception to every rule and in this particular case. The...

Working 35 straight days at a time on an oil rig can really wreak havoc with your life. But transforming into a truly passive real estate investor is like something you only see in a Hollywood script. Not for this week's guest. Meet Travis Watts, the man, the myth and the guy who now probably gets manicures on a regular basis. Good to be him. Learn how in today's episode. 

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From Working 98 Hours A Week To Becoming Financially Free with Travis Watts

While working 98 hours a week, Travis realized that isn't sustainable for the rest of his life. He'd always been a self-educator and understood that real estate investing could be his ticket out. Travis had tried purchasing single-family homes, flipping homes, and even vacation rentals but if he wanted to have the passive income he was chasing those strategies...

This is the first financial measurement that I look at when doing a cash flow analysis. By understanding the Debt Coverage Ratio, I know whether I did the analysis correctly or not. That's why I call this number my "Sleep Number"

Now, I'm going to tell you how I teach Debt Coverage Ratio when I'm in the class. It's expressed as a ratio between the net operating income and the mortgage payment. 

When I put the numbers into the cash flow analyzer and I've got it all in there correctly, I go to the cash flow analysis tab, and scroll right down to the DCR. That's the first financial measurement that I even look at because that tells me whether I can make this a deal or not. It tells me whether the price of the property that the broker told you was way out of whack. It tells me whether my offer price is way out of whack. 

Just by understanding the debt coverage ratio, I know whether I did the analysis correctly or not. And that's why I love the DCR. 

This is how I teach...