Welcome back to another exciting episode of The Darin Batchelder Real Estate Investing Show! In today's episode, Darin is joined by the incredible Angel Williams. Angel shares her personal journey of navigating the challenges of raising a child with a rare genetic condition called Duke 15Q. With expensive treatments and limited residential options available, Angel and her spouse turned to the world of real estate investing to find a solution. They discovered the potential of multifamily properties and connected with Joe Fairless, a seasoned investor with significant assets under management. Together, they ventured into the world of multifamily real estate, finding opportunities for big returns through rehabilitating properties, increasing the Net Operating Income (NOI), and building wealth.
Angel also shares her experiences in residential real estate and highlights the tax benefits and potential for wealth-building in the industry. So, whether you're a seasoned investor or just starting out, join us as we dive into the world of multifamily and residential real estate on this informative and inspiring episode of The Darin Batchelder Real Estate Investing Show!
- 00:02:55 Limited knowledge and experience with stocks, preferred real estate investment because it's easier and more accessible.
- 00:06:02 Building wealth through owning assets, like real estate, provides leverage and tax efficiency. Starting small and gradually moving into multifamily properties is a common path.
- 00:07:57 Rare genetic condition called Duke 15Q, costly therapy.
- 00:12:53 House value depends on neighbors; multifamily complex challenges.
- 00:15:47 Valuation based on cash flow, not rent.
- 00:20:56 Benefits of multifamily investing: full-time staff, immediate maintenance, convenient leasing.
- 00:23:13 Leasing and maintenance handle repairs and issues.
- 00:28:29 Consider due diligence on people you work with. Some deals may have challenges while others are good. Passives should understand the situation before criticizing sponsors. Occupancy rates differ between residential properties and larger syndications.
- 00:32:11 Struggling with mortgages, church helped during holidays.
- 00:36:40 Chaos turned lucky with help from Kenny.
- 00:39:25 Recon before making any investment decisions.
- 00:44:06 Free tier, VIP subscription for $17/month. Access to prerecorded & live content.
- 00:48:32 Love giving back, ripple effect, helping others.
Episode Table of Contents
- Angel Williams' Journey in Building Wealth Through Real Estate Investing
- The Potential of Building Wealth Through Multifamily Investments
- Overcoming Limiting Beliefs, Gaining Confidence, and Building Wealth
- Leveraging Tax Benefits
- Weathering Financial Hardships and Ensuring Stable Income
Angel Williams' Journey in Building Wealth Through Real Estate Investing
Angel Williams started their real estate investing journey after having a child with a rare genetic condition. The high medical costs associated with their child's care led Angel to explore ways to create financial freedom and stability for their family. This motivated them to get into multifamily real estate investing.
At first, Angel faced challenges in securing financing to purchase their first multifamily property. As a new investor without a proven track record, lenders were hesitant to work with them. However, Angel persisted and eventually found a local lender willing to finance their first acquisition.
Building Wealth and a Trustworthy Team
After purchasing their first property, Angel learned the importance of building a strong team. They made mistakes in property management early on by hiring the wrong management company. Angel says they learned to take time vetting potential partners and build a team of trustworthy professionals including property managers, contractors, attorneys, and CPAs.
The Importance of Recon in Real Estate Syndication: "Recon. Recon. Recon. Because It could be that you're with an operator that has 10 great deals, and you're the one bad deal, or it could be that that operator actually has 11 bad deals that looks amazing on socials. So just recon before you get into it because I know there's a lot of people that are aspiring syndicators that they've only got $50,000. It's it's like one shot. So make sure that you're getting with the team that you 100% know and can trust. Because if you've only got one shot, god. You don't wanna waste it. You do not wanna waste it."— Angel Williams
The Potential of Building Wealth Through Multifamily Investments
According to Angel, multifamily properties have many benefits for investors. They provide stable cash flow in the form of rental income. The units also appreciate in value over time as rental rates and property values increase. Angel focuses on renovating and improving their existing properties to force appreciation rather than relying solely on market appreciation.
Angel also utilizes commercial loans and financing tools like bridge loans. This gives them access to funding for new acquisitions without having to refinance existing properties. They highlight the power of leverage in scaling a portfolio over time.
Angel explains how multifamily real estate investments provide an opportunity for more substantial returns than single family residential investments. This strategy is similar to fix-and-flip, but on a larger, multifamily scale. Investors purchase apartment complexes, renovate and upgrade them, increase the Net Operating Income (NOI), and then sell the entire property for a profit.
Benefits of Multifamily Investments
The overall cash flow from a multifamily property may be comparable to a single family rental property. However, multifamily investments allow investors to deduct expenses and roll forward deductions, which significantly reduces tax liabilities.
Additionally, there is potential for forced appreciation by increasing the NOI. Investors can make improvements to justify increasing rents or make changes to attract more affluent residents willing to pay higher rents. This manipulation of the NOI and resident profile adds another layer of profit potential.
Investors in Real Estate: "If they're buying 10, 20, 50 houses at a time, a 100 houses at a time, they're gonna pull investors in."— Angel Williams
Implementing a Multifamily Investment Strategy and Building Wealth
When evaluating a multifamily purchase, investors analyze the current NOI and market rents to calculate opportunities to increase income through renovations, improved management, and higher rents. The goal is to increase NOI substantially, making the property more valuable when it is sold.
Executing this strategy requires experience with multifamily management and improvement. Investors must budget renovations appropriately and follow rental market conditions to optimize returns. Though complex, multifamily investments offer experienced investors the opportunity for larger returns than single family rentals.
Overcoming Limiting Beliefs, Gaining Confidence, and Building Wealth
Angel describes their personal journey of moving past limiting beliefs related to investing in multifamily real estate. Early on, Angel had doubts and uncertainties about their capabilities and skills to be successful in the multifamily market. However, through lived experience in both residential and multifamily real estate spaces, Angel has progressively developed greater confidence in their investing abilities.
Angel emphasizes the significance of consistently pushing oneself beyond one's comfort zone and expanding skill sets in order to achieve success in any investment arena. By leaning into discomfort and taking on new challenges, Angel has been able to build expertise and self-assurance as a multifamily investor. They encourage others who may be held back by self-doubt to take small steps forward and learn through hands-on experience.
Angel reflects that while having some hesitancy when entering new areas is natural, it's important not to let limiting beliefs hold you back entirely. Through practice and perseverance, Angel has been able to move past initial reservations and gain the confidence required to thrive as a multifamily real estate investor. Their experiences highlight the benefits of embracing growth opportunities even when self-doubt creeps in.
The Impact of Neighbors on Home Value: "So when you have a single family home, the value of your home is based on your neighbors. So if your neighbors don't care about their house, and it looks like crap. Well, your house is gonna get crap value if it's the best house on the street."— Angel Williams
Leveraging Tax Benefits
Angel speaks about how real estate investments provide advantageous tax benefits that can help investors build wealth over time. He explains that fix-and-flip strategies where a property is purchased, renovated, then quickly resold for profit differ from longer-term wealth building in multifamily housing. With multifamily real estate, investors can make gradual upgrades and increase rents on units when they become vacant, allowing for 'forced appreciation' in the property's value. Angel emphasizes how real estate enables leveraging debt and gaining tax advantages that efficiently build wealth, even giving the example of renting out a room in your own house to generate rental income.
The Potential to Build Wealth Through Real Estate
Continuing the theme of real estate for wealth building, Angel details the leverage and tax efficiency benefits unique to real estate investing. Unlike flipping houses, holding multifamily rental properties over 3-5 years allows investors to slowly rehab units and raise rents to force appreciation. The rental income also generates tax advantages, and Angel notes how even renting out part of your own house can produce tax-advantaged income. Overall, he emphasizes how real estate enables leveraging debt in ways that efficiently build wealth through forced appreciation and significant tax benefits over time. The gradual rehabbing and rent increases on multifamily units enable efficient wealth building not possible with fix-and-flip strategies.
Weathering Financial Hardships and Ensuring Stable Income
Angel shares openly about a difficult period they went through stemming from owning multiple properties where some homes sat vacant. They describe struggling to afford basics like Thanksgiving dinner and Christmas presents during this financially strained time. Angel explains that they owned several single-family rental properties, and when some of those homes were sitting empty without tenants, the loss of that rental income made it hard to cover regular expenses. Having to still pay the mortgage, taxes, and upkeep on those vacant homes strained their overall finances.
The Power of Helping People: "I just like helping people. I mean, that's that's the part I like. That's my favorite part."— Angel Williams
The Importance of Self-Care and Saving
Despite the difficulties, Angel emphasizes the importance of taking care of oneself physically and emotionally during financial troubles. They advise making self-care a priority. Angel also stresses the value of saving money whenever possible as a financial safety net for hard times. Having some savings put away can help mitigate the impact of unforeseen financial struggles.
Desire for More Stable Income and Building Wealth
Given their experience losing rental income during vacancies, Angel expresses a desire for more stable and predictable income from real estate investments. They point to multifamily properties as an example, since having many tenants makes income more consistent even if one or two units are vacant. Angel aims to shift their real estate investing to opportunities that generate dependable cash flow month-to-month.