REI INK

WORD OF THE DAY: Phlegmatic

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[fleg-MAD-ik] Part of speech: Adjective Origin: Greek, 14th century Definition: Having an unemotional and stolidly calm disposition. Examples of Phlegmatic in a sentence “Patrick’s phlegmatic temperament means he doesn’t anger easily.” “Some people mask their emotions with a phlegmatic exterior.” About Phlegmatic This word originates from the Old French “fleumatique,” which derives from the Greek “phlegmatikos,” meaning “inflammation.” Did you Know? The phrase “stiff upper lip” is British, but the phlegmatic philosophy is actually rooted in Ancient Greece. The Spartans developed a strict culture of discipline that sparked inspiration for the English public school system.

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SES Risk Solutions and Latchel Partner to Curb Rising Property Insurance Costs for SFR Property Managers and Landlords

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New program leverages innovative technology, underwriting expertise, and buying power to deliver an exclusive property insurance solution As the SFR industry continues to grapple with rising costs and compressed margins, SES Risk Solutions and Latchel have partnered to create a unique program offering designed to curb the cost of property insurance for investors and property managers. The partnership leverages Latchel’s innovative emergency maintenance technology, the buying power of a property manager’s portfolio, and SES’s proprietary technology and underwriting expertise to deliver an exclusive property insurance solution to Latchel customers. “We’re very excited about this partnership with Latchel because we are able to go beyond just achieving purchasing convenience,” said Scott Phillips, SVP, Strategic Partnerships and Digital Integrations, SES Risk Solutions. “SES is committed to forming strategic partnerships that drive actual tangible value to residential property managers and investor clientele of all sizes.” SES identified Latchel’s service offering as a game changer for property managers to offer their investor clients significant cost savings to insure their properties. Latchel’s proprietary emergency maintenance technology significantly mitigates and reduces potential damage to a property from an emergency maintenance event. SES demonstrated how this service reduces the overall risk profile used to price property insurance and thus create an exclusive program with lower rates than what would be independently accessible to the open market. “SES has created one of the most innovative insurance solutions to enable third-party property managers to create new revenue streams while increasing their landlord retention,” said Ethan Lieber, CEO of Latchel. “Latchel has always aimed to provide maintenance automation solutions that create new revenue streams rather than being a cost, so the benefits that SES offers hits the bullseye for Latchel customers. It is the perfect enhancement to the emergency maintenance expertise that we already deliver.” About Latchel Latchel is the only platform that combines revenue-generating resident amenities with maintenance software that empowers property managers to deliver unbeatable customer service. Latchel’s services allow property managers to save time, protect their assets, and improve resident and vendor relationships. About SES Risk Solutions SES is taking insurance out of the dark ages and utilizing digital integrations to allow property managers and landlords to access market-leading carriers. Whether you are an enterprise-level investor or just getting started, SES simplifies the process of purchasing insurance through instant quoting and online policy administration. With rising property values and interest rates, the residential rental property industry has seen a massive shift in the market’s needs and available technology. SES’s 30-year history with market-leading carriers combined with key partnerships in the space enable SES to provide tailored enterprise-level coverage and below-market rates to REI clients of all sizes. To inquire about partnering with SES or for details on the Latchel partnership, email Partners@Ses-Ins.com or call (657) 261‑2470.

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‘Shrinkflation’ hits $1 million homes, down 397 square feet since 2020

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Market share of $1 million-plus homes more than doubled during the pandemic More than twice as many $1 million-plus homes were sold this spring than in the spring of 2019, with Portland, Austin and Riverside seeing the biggest jumps. The size of $1 million homes shrank the most in Phoenix and Nashville since 2019, but they expanded in St. Louis and Minneapolis. Hartford, Connecticut, is where $1 million goes the furthest, buying 4,873 square feet.  Sales of homes costing $1 million more than doubled over the past three years, but as with many products in the grocery store, buyers are getting less than they used to, according to a new analysis by Zillow®.  Million-dollar homes are getting smaller. Homes that sold at or near $1 million contracted nearly 500 square feet, from a peak of 3,021 in the middle of 2020 to a valley of 2,530 in early 2022, according to floor plan data for Zillow listings. Home size bounced back before July and is now 2,624 square feet, down 397 square feet from the 2020 peak. “Buyers with seven-figure budgets shopping for homes during the pandemic were doing so coming off the longest period of economic growth in U.S. history and with the help of historically low interest rates,” said Anushna Prakash, economic data analyst at Zillow. “Sales for expensive homes soared while buyers in the heat of competition accepted smaller layouts.”  The typical home in the $1 million range shrank in nearly every major metropolitan area. The largest declines are found in Phoenix — down 1,116 square feet from 2019 to 2022  — and Nashville, where these homes lost 1,019 square feet. Floor plans grew in just two major metros: by a closet in Minneapolis (36 square feet), and by at least a room and a half in St. Louis (406).  Overall home sales were elevated during the pandemic, but have slowed in recent months as affordability challenges have pushed many buyers to the sidelines. The recent move of the market toward rebalancing has shifted competition away from mid- and high-tier properties, and back to the most affordable homes. Sales for homes priced at $1 million or more rose from 43,421 in the second quarter of 2019 to 90,110 in 2022, a new record volume. These once-rare digs also constitute a much greater portion of the total market. As home values skyrocketed across the country, the share of single-family homes that sold for $1 million or more has more than doubled, moving from 2.7% in 2019 to 2.5% in 2020 to 6.4% now.  Portland led major metros in sales volume increase: The number of $1 million-plus sales soared by 253% since mid-2019. Austin, where home values are up 71% since mid-2019, saw sales jump by 220%. The only metro that witnessed a decline in the volume of transactions with a $1 million-plus price tag was Boston, where the share fell by 32%. Boston and other major East Coast metros had relatively low appreciation over the past three years compared to other regions.  Portland, Austin and Riverside are where sales of $1 million-plus homes have risen the most since 2019. Sales rose the least in San Jose and San Francisco, and fell in Boston.  One million dollars in San Jose will buy just three bedrooms, two bathrooms and just shy of 1,400 square feet of living space — about $715 per square foot, the highest amount among major metros. For context, a typical single-family home in San Jose was valued at over $1.5 million in July. Far from an exclusive membership, homes costing $1 million or more are the norm in the San Jose area, comprising 72% of the country’s most expensive market. Those looking for the most bang for their million bucks should head to Hartford, Connecticut, then to the Midwest. Among the 50 major metros included in the study, Hartford has the lowest price per square foot at $205, followed closely by Indianapolis, Oklahoma City, Kansas City and Cincinnati. Though options in that range are limited in these areas, it’s hard to deny the opulence afforded by the expense, with square footage upward of 4,500.

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UNIN 11 | Probate Properties

Recession-Proof Real Estate Investing: Getting Creative With Probate Properties With Al Nicoletti

  Things aren’t exactly breezy in the real estate market right now, so you have to get creative when it comes to investing. There are niches out there that are relatively untapped and yet are virtually immune to recession. Probate properties is one of these niches, and this is what Al Nicoletti specializes in. In this conversation with Tim Herriage, Al talks in detail about the journey he took in real estate and how he eventually found his niche in probate properties. He also tells us crucial things any investor who’s thinking of giving probate a try should watch out for. Tune in and learn how creative thinking can get you success in real estate even when inventory is at an all-time low! — Watch the episode here   Listen to the podcast here   Recession-Proof Real Estate Investing: Getting Creative With Probate Properties With Al Nicoletti I’ve got my good friend Al with me. Thank you for coming in. I love It. I’d love to let you start off. Tell the audience a little bit about yourself. I could go through a whole thing, but I’ll keep it concise a little bit for you. From Miami, I played violin for fifteen years. I’m a natural musician. When I was in music for that long, I wanted to know what I was going to do with my life, like make money. I knew music wasn’t going to get me to that next level. I had to make a lot of decisions. I picked law school, of all things, not medicine or anything like that. I was going to take that and I was going to do some entertainment law thing. I had no idea where it was going to go. Law led me down a path to real estate because when I got out of law school, passed the bar, took my first job, and it was with a real estate attorney, my first mentor. At the time, we were doing foreclosure defense and dabbling in a little probate. We weren’t as heavy as I am now, but we were getting into a lot of that stuff. I saw for the first-time closings, titles, and foreclosures. A few years after that, I moved to Jacksonville and I had a job up there. That’s when I started my role in the whole probate real estate world. I went from musician to lawyer, marketer, speaker, podcast host, and all the above. It’s been a wild adventure ever since. I’ve been so impressed by your energy level. I’ve never seen anyone bring it and then you bring it more, and then you never stop bringing it. Do you sleep? That’s what a lot of people ask. They’re like, “When do you sleep? You’re constantly working. We see you on Facebook and Instagram. We can’t get you off our feeds.” Yes, I sleep. I make sure that’s something that’s important that you get that rest because you got to keep up that energy level. You are one of the guests that whenever I saw your name come across as a booking, I thought, “I can’t wait to hear this guy’s bottom line up front.” Every week, I asked the guest to help me deliver what I call the bottom-line upfront. When I used to brief generals in the Marine Corps, we were taught to never bury the lead. You got to get the most important thing conveyed in case the general has to get up or you get mortars coming in, or whatever. Take whatever it is you’re thinking about and pour it into the audience. Things that you’re seeing or observing in the market nowadays. Things they should be thinking about, should and shouldn’t be doing. Are you with me? I’m ready. Bottom-line upfront, go. In a market that’s tough right now where inventory is at an all-time low, it’s so important to reevaluate strategies in real estate that you weren’t thinking about before. Whether you were doing wholesaling before and now you get into land or short-term like Airbnb, it’s important to evaluate the market you’re in right now. What’s really important is realizing the niches out there like probate that can provide an opportunity for you in the market because probate’s one of those niches that are recession-proof and pandemic-proof.   It is a constant niche. When all-time low inventory is happening right now, you have to be able to look at other things and creative opportunities that exist out there. Maybe it’s not buying the whole house. Maybe it’s buying the partial interest and maybe you are able to find a way to creatively get around that because there’s so much opportunity out there that there are deals everywhere, but it’s a matter of how you make it and get creative that makes the difference in your game. You said foreclosure defense. When was that? That was in 2016. You did a little probate. You went from music to law school to entertainment law to foreclosure defense, and then you found probate and it’s stuck. What was it about probate that attracted you to it? There was an opportunity in the market with real estate. There are so many properties that are out there that are under people’s names. What I discovered was there were probate opportunities where somebody owned the property, but the heirs can’t sell that property without probate being done. What I recognize is there was some issue where you can’t sell it. We had to find a solution to that situation. That’s where I found that opportunity. Thousands of properties out there were able to come in and find a way to solve it. That solution and that overcoming issue to help heirs to help the situation and to offload the real estate, something about that made me tick. It exploded from there. I had Kurt Carlton on, the Founder of New Western Acquisitions. One of the interesting things that he said is we’ve got to

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UNIN 14 | Investment Insurance

Investment Insurance: Do’s and Don’ts For Your Real Estate Business With Corey Maxwell

  The market is about to shift, and you have to be ready. Investment insurance is one way to do that. In today’s episode, Tim Herriage chats with Corey Maxwell, Co-Managing Partner of Birmingham Insurance Group. With volatile market conditions, you must start thinking of ways to protect your business and assets. Corey is here to share his wisdom on how you can do just that. Plus, he gives valuable insights on what you should and shouldn’t be doing for your business to succeed. Don’t miss the golden nuggets from this episode, and tune in to get practical tips and mindset strategies that will position you for success. — Watch the episode here   Listen to the podcast here   Investment Insurance: Do’s and Don’ts For Your Real Estate Business With Corey Maxwell I have Corey Maxwell. Corey, welcome to the show. Thank you, Tim. I’m glad to be here. I’m so glad you’re here. I can’t wait to talk about fishing and college football but first, why don’t you tell our readers a little bit about yourself? I am one of the Cofounders and Managing Partners at Birmingham Insurance Group, BIG Insurance. We specialize in insurance for investors and property management companies. We take care of folks all across the country, 50 states. We’re also investors. We’re in the fight every day like everyone else is. We look forward to learning and growing along with everyone else here. Full disclosure, in December 2021, when we met, we entered into an agreement for me to sell REI Choice Insurance to you at BIG. You’re my partner, you and Jason Henderson as well. I like to get that out there. I wanted you to come here, Corey, because you and Jason are investors and have been involved in hard money and other businesses. We all operate the largest real estate investor-focused insurance agency in the nation. There are some others out there but I’m going to call us the largest. We’re the largest non-exclusive. Every episode, I start with the Bottom Line Up Front. Imagine when I was in the Marine Corps, I used to brief generals. They always said, “You don’t bury the lead. You have to lead with the bottom line up front.” If the general has to get up and leave the room or if there’s a mortar attack, you’ve got to get the most important thing. I’m going to give you two minutes to tell the readers the most important things that you see happening in the real estate market, industry and businesses and then some things that you think they should be doing and anything you think they should stay away from or not be doing. I appreciate the opportunity to share some ideas. In the marketplace, a lot is going on. Everybody’s paying attention to the midterm elections and inflation. Quite frankly, there are several things that I would recommend and focus on. First of all, being, “Don’t follow my path.” When it comes to achieving your goals, focus on your true self. Authenticity is key.   You can’t fake it but you can fake it until you make it. Be yourself. Go all in. Many people have too many opportunities. I’m one of them. Instead of getting analysis paralysis, find something that’s working and stick with it. Be committed. When I say be committed, be fully committed. Focus your attention, accomplish your goal and then you can move on to the next task or opportunity. I also made a note to remind myself, as well as everyone else, to find a mentor. Learning it on your works but it’s one of the reasons why franchises like McDonald’s, Chick-fil-A and others that are well known make it a whole lot more often than mom-and-pop shops. Find a mentor, somebody that can show you the loopholes, opportunities and shortcuts. It saves you a lot of time, heartache and energy. The two number one things I would focus on are tied for first. Be ready because the market is about to shift as inflation continues to hover at highs and the mortgage business has slowed down at a pace faster than any other time in the last several years. Foreclosures are about to start back over again and people are going to lose their businesses. Be ready, have your money in order and go get them. There’s a lot to unpack there. Let’s dive into that. I’ll throw the hard part out there first. You said, “Don’t be like me.” What are we referencing there? Everybody has wins and losses. If you are going to be successful, you have to be willing to try but more importantly, to fail because failure is where the best lessons come from if you’re paying attention and you are willing to learn from the process. What I recommend is don’t follow my path but more importantly, find a mentor, somebody who has already been down this road, is familiar with the bumps and the turns and who can tell you to brake, accelerate, hang a left and right. You and I both have been in the ditch at some point in our lives. The last thing we want to do is get back in that ditch because, in the best scenario, we’re going to have to winch ourselves out. At the worst, we’re going to smack a tree and game over. Many people that are successful attempt to pretend as if they were never unsuccessful. They forget the challenges that we all make it through. It’s not the challenges we encounter. It’s the challenges we make it through. It’s those challenges that make us good business people, parents and spouses. It was interesting you said, “Fail but pay attention.” That’s a powerful combination of words to me because often we fail but rarely do we pay attention to why we failed. Corey, talk a little bit about some of the things you see going on in the marketplace. It could

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UNIN 13 | Real Estate

Making Connections And Recognizing Opportunities In The Real Estate Industry With Zach Coppinger

  The real estate industry is broad and is divided up into different specialties. With that, you have a lot to learn to see how it works and strategies you can execute to build your portfolio and succeed in the real estate world. Listen to this episode as our guest, Zach Coppinger, shares valuable insights into building your network and recognizing opportunities in the real estate world. In today’s market and economy, you should know which things you should focus on regarding investments, so Zach gives an overview of what you can do to keep your business moving forward. He also discusses how you can manage labor and material costs. Tune in to learn more about the marketplace and how to attract potential clients. — Watch the episode here   Listen to the podcast here   Making Connections And Recognizing Opportunities In The Real Estate Industry With Zach Coppinger I am joined by a good friend of mine, Zach Coppinger. Zach, thanks for coming in. I appreciate it. Thanks for having me. Zach, tell the audience a little bit about yourself. I got my start in real estate investing by buying houses for you back in September 2013. It was a while ago. I started buying single-family houses for you. I ended up going out and doing my own thing in 2014 and 2015. I have pretty much stayed in the single-family space since then. I focused on building up a rental portfolio early on. I pivoted in 2018 and 2019 to focus a little bit more on the owner finance and note origination business but still holding those. I simultaneously built the rental and the note business and still trying to stay pretty narrow with those two business strategies. I am proud of you. My wife is more proud of you. Zach, I like to start each week with something we call the Bottom Line Upfront. Just imagine someone riding around in their car. They queue up for the show, get out, get gas, and cannot find it when they get back in. In the Marine Corps, when we brief the generals, they always say, “Do not bury the lead. You lead with the most important thing up front in case you get mortar rounds.” I am going to have you talk to the readers and talk about the things in the market, the economy, and the real estate cycle nowadays that they need to be focused on, thinking about, they need to be doing and avoid. Take two minutes and give them the bottom line upfront. This marketplace now, over the past few years, has allowed investors to get pretty lazy with numbers. You could have overbought the house, over-rehabbed the house or gone over budget, and you are fine if you held it for five months. You ended up appreciating 10% and 15% in that time. It allows investors to get pretty lazy with numbers. You keep winning whenever you go into those scenarios long enough, and you start to feel pretty comfortable. You can just keep doing and repeating it. Getting a grasp on your numbers again, having real ARVs, real rehab budgets with updated pricing with material issues, in our personal business, we have seen materials go up. The contractors have tried not to put their labor up too much because they submit a bid. We push back a little bit and say, “It used to be 30%, 40% less. There is going to be a tail in labor pricing going up as well as the material pricing.” With this marketplace, we are starting to see a bit of a plateau with numbers in most asset classes, as far as pricing and single-family. I would say getting a good grasp on the real ARV, the real rehab, not assuming that the market is going to work you out of that. It is because the market is a little bit unknown. It seems very difficult to predict that it is going to keep moving up at the pace that it has been. Right in line with that, having a little bit of a cushion in case you missed it. There are a lot of sayings out there, “Cash is trash.” You are losing money if it is just sitting in your account. Inflation stated rate might be 7%, 8%. We feel like it is a little bit more. Losing value on that money is just sitting in your account but providing you the platform to not lose your business in case you miss a deal. How much liquidity is enough? It is personal for each person. What we try to do is about 10% of how much money we are borrowing. If we borrow $5 million, we try to keep $500,000 in cash reserves. It is a comfortable position that we found and allows us to float 6 to 8 months of paying out debt service without any money coming in. To sum it up, have a good grasp of your numbers. Do not think that the market is going to get you out of a sticky situation moving forward and maintain a comfortable amount of liquidity. Make sure that a comfortable amount is calculated. Try to have some basis for why you are doing it, whether it is just being able to service debt for a certain amount of time if you have no money coming in, being able to go over on your rehabs and still be able to pay your guys and get rid of the property. The property might sell for a little bit less than you anticipated.   There is a lot to unpack. The first question is that you are not new in the business by any measure. Like you said earlier, you got into it around 2013. It has been up. Where do you get the information you need to plan for the unknown? I am a pretty conservative guy by nature. A backstory a little bit. I

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