The REvision Group

11/24/2021

"Only by giving are you able to receive more than you already have." – Jim Rohn

Jim Rohn was an American entrepreneur and author. He not only created one of the most famous Thanksgiving quotes about money, but he lived it as well. Born on a farm in Idaho, Rohn started life with a limited understanding of business. After quitting college, he attended a lecture regarding entrepreneurship. He used the information to work for various companies and eventually turned his skillset into an advantage.

During his life, Jim Rohn mentored several people. He also wrote numerous books regarding wealth and philosophy. With each step, he made sure to provide sound financial teaching as well as motivational support. Rohn demonstrated that giving was indeed a grand opportunity to receive happiness.

10/27/2021

Using Depreciation as a tax advantage for owning Commercial/Residential real estate:

Investment Properties Depreciation Requirements for Tax Deduction

Real estate can only be depreciated if it meets all of the following four requirements:

1. An investor must own the property, even if there is a mortgage on the property. For example, if Investor B sublets the entire property from Investor A, B could not claim a depreciation expense because he does not own the property. On the other hand, Investor A could depreciate the property because he owns it, even though he is renting the entire property to Investor B.

2. Real estate must be used for a business or income-producing activity, such as rental property. That is another reason why Investor A can take the depreciation expense and Investor B can not.

3. Property is expected to last more than one year. The building itself, along with capital improvements such as appliances, a fence, or a new roof, is expected to last much longer than one year and is depreciated accordingly.
- The more than one year rule for depreciation is also the reason why fix-and-flip real estate investors generally cannot claim a depreciation expense because the property is held for less than one year.
- Another exception to the one-year rule is developers. Lots and the homes built on the lots are considered stock in trade by the IRS and cannot be depreciated by the developer, even if the subdivision takes more than one year to build and sell out.

4. Property must have a determinable useful life. That is why repair and maintenance costs are expensed the same year they are incurred as immediately deductible expenses.

Residential real estate, such as a multifamily property, has a useful life determined by the IRS of 27.5 years. This is also why land cannot be depreciated because the land is never used up and has a useful life that theoretically goes on forever.

10/20/2021

Here are 4 trends that are contributing to the strong real estate market for the Multifamily asset class:

Multifamily Trend #1: Strong Demand
After a sluggish 2020, the market looks strong, according to RealPage.

Rents in multifamily housing markets have climbed 10% in 65 of the 150 largest metropolitan areas.

The occupancy rate went up to 96.9% in July 2021, surpassing the previous record of 96.5% in 2000.

Vacancy rates. This is the percentage of unoccupied units in a multifamily property. New Hampshire has the lowest vacancy rate at 1.9%; California, Nevada and Montana are tied for 12th at 4.7%; Rounding out the bottom: Alabama at 12.3% and North Dakota at 14.1%.

Asking rents are up! The list prices for rent are up for new leases in local hot spots like Phoenix at 15.7%; Riverside/San Bernardino at 14.8%; Las Vegas at 13.6%.

Multifamily Trend #2: Student Housing Packed With Promise
Picture a college classroom packed with students. The instructor asks: “How many of you prefer to live on campus?” Most students would raise their hand. That explains why the vacancy rate for student housing is 2.6%. According to a survey conducted by ReGenerations among 18-to-24-year-olds:

Only 2% prefer to attend college online only

72% said in-person is the best way to earn a college degree
360 scenes, apps like Panoskin let you add still photography, videos and 3D floor plans.

Multifamily Trend #: 3 Younger Renters
Younger generations prefer to rent. One of the many reasons is the high price of buying a home, which reduces their options. In California, the third largest state in America, the median price of a home in 2020 was $600,000, nearly 88% higher than the national median.

In 2021, numbers show the median price for a home in California has shot up to $725,000. The hefty price has convinced Millennials that buying a home is beyond their reach. On top of that, we haven’t even tallied the other costs of owning a home, like the 20% down payment, maintenance, repairs, insurance, property taxes, home association fees.

Multifamily Trend #4 Remote-Work
Working from home went from being handy, to a health precaution, and now everybody’s into it.

63% of employees prefer working from home

4.7 million people work remotely at least half of the time in the U.S.

How To Ride The Trend
Upgrade your wireless service. A recent survey among rental residents found that 92% would be interested in high-speed internet access as an apartment feature, according to the 2020 NMHC/Kingsley Apartment Resident Preferences Report.

Aside from wireless service, you can transform a community center into a co-working space for business, a sense of community and creativity. This space would include hot-desking, whereby desks are used by different people at different times. Promote these remote work amenities to prospective residents or promote certain units as “living/working units.” Learn about a few other ideas for remote-work amenities at multifamily properties.

10/13/2021

Three trends to look at for the upcoming 4TH quarter and beginning of next year in real estate investments!!

1.) Taxes Are Going Up: The fact that taxes are likely going up came from many tax advisors and investment managers. Everyone is planning for this, transactions are being closed this year vs. the next, etc.

2.) Income & Short Duration: Due to rapid changes in taxation, the pandemic, and opportunity sets there is more demand for short duration 1-2.5 year investments and investments which get your initial investment off the table and back to you quickly or have a strong income component to them so you are not locked up fully for 7-10 years with no dividends along the way.

3.) Meeting in Person: While meeting in person is required less than ever for closing small to medium-sized investments, nothing beats a strong in-person relationship and introduction. So allocations right now seem to be going to those who are excellent at using digital tools to close deals, but also to those who are aggressively meeting in person - while those who use some digital platform but aren't very fluid in it, are not making the same progress. Many report growing faster than ever before during COVID.

We need to be flexible to prosper in the coming 12-18 mos!

10/06/2021

CAPITAL RAISING SECRETS By Michael Friedman, President, Millennia Housing Capital Ltd.

For the last 29 years, I have been raising capital for my own companies. I have discovered the fundamentals that seem to hold true for most capital transactions. In the next few issues of the newsletter, I will be sharing some trade secrets to help you get the most out of your own investments. First: The “TRL” Test, TRUST. This is the most important. Simply put, the person you are investing in must do what they say they do. Usually, they have several references that can attest to their competence and trustworthiness. Their reputation should be impregnable. RESPECT. You, the investor, are looking for a true expert in the field. Ask yourself if the business plan shows preparation, contains realistic underwriting and aims towards conservative and achievable results. LIKEABILITY. This trait is not often discussed or understood, but I’ve found it to be vitally important. The investor needs to “like” the person and consider them relatable, even outside the realm of the deal. Some may dismiss this trait as “not so important,” but I have found often, that this is an x-factor that moves the deal forward. Basically, it’s essential that both parties feel good about working together.

09/30/2021

Leading real estate expert discusses trends for the near future that we believe are the key trends:

The strength of the apartment market

- The apartment market is HOT. Demand is far outstripping supply.
- In most cities, apartment rents have surged beyond pre-COVID levels as demand has already absorbed excess supply.
- There is a lot of capital coming out of the office and retail sectors attracted to the multifamily and industrial sectors.

Build-for-rent's time to shine

- The single-family rental (SFR) and build-for-rent (BFR) sectors are following a trajectory in terms of growth and tech development that is similar to the trajectory of the multifamily sector coming out of the S&L crisis.
- In many markets, BFR rent appreciation is outpacing apartment rent change.
- There is a wave of people entering their prime home buying years. BFR communities can capture those households that want the perks of owning a detached home without the financial commitment.

A look into the future

- With excess supply absorbed and activity humming, expect to see apartment supply ramp up again in 2023–2025.
- All rapidly growing metropolitan areas are hot residential rental markets, especially those in the Carolinas, Florida, and Texas.
Investor activity will follow the migration of people. The demographic that was previously drawn to the hustle and bustle of urban cores is now maturing and moving to suburban locations.
- Jeff believes the inflation seen today is going to be more permanent than transitory given stubbornly high housing costs and the migration of people from high-cost areas to lower cost areas.
- Increased construction efficiency in the form of modular, offsite construction would be great for the industry. However, these improvements are capital intensive and there are many regulatory obstacles, and so that transition will take time.

09/22/2021

If you are on the capital raising side, you will know how competitive it can get! Here are 14 ways to stand out and be unique from others looking to find capital partners:

1. Focus your investments on one niche area that you already know well or can grow to become a relative expert in.

2. Identify a niche that investors you go to would understand but nobody ever offers them a chance to invest in

3. Identifying investments which are hyper secure but still have decent returns (but remember to never offer nor claim your investment is a zero-risk investment)

4. Performance fee only structures

5. Equity bump as the only fee, meaning you get a larger equity piece for putting the deal together but no fees ongoing or every year

6. Structuring investments which are fun, enjoyable to use, but also protect capital and grow it over time

7. Create an experience during due diligence, if you are a helicopter pilot take them on a ride to see the asset, if you have a ranch, take them there, if you own a private jet, or enjoy adventure trips build relationships on those.

8. Identify what investors you have deep access to constantly, and listening to exactly what structure, fees, and types of income/risk/deal parameters they seek so you can design something just for them

9. Have a sharp one liner combined with a short 3-4 minute video from your founder so you cut through the inbox and pitch deck clutter

10. Only raise capital from those who have created all of their wealth in the niche the asset or deal is in

11. Create your own local investor club or investment community and leverage your expertise to create a community

12. If you have the permission and relationship in place to, use SMS text message communications to get past inbox clutter

13. Have a sense of humor while also having institutional polish – investors want to invest in those they like, trust, and enjoy spending time with all else equal. Many times relationships are built on soft skills during the first interaction.

14. Conduct tax diligence on how your investors could complete your investment in a way that protects some capital gains or income from taxation, most ignore this and most investors want it.

09/10/2021

Single Family Rentals are the hottest new real estate asset class. The desire for people to live in a house, as opposed to apartment living has grown significantly, since the Great financial recession. With the current Pandemic, and last year's social unrest in the urban areas of the US, the trend for suburban or inner ring suburbs or rural single family rentals has created a high demand for land and opportunities.

Here are some simple facts about the industry:

In the last six months, the single-family rental (SFR) market has experienced a growth of billions of dollars in new capital. This stems from the reaction

07/29/2021

We are very excited to announce our new partnership with Tauro Capital Advisors!

12/21/2020

The REvision Group wishes you and your loved ones a safe and happy holiday season this year! 🎁 🙂 Make sure to check out our latest newsletter, "2020: A YEAR WE WON'T FORGET."

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