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March 5, 2024

Strategic Real Estate Insights for Serious Investors Featuring Charles Carillo [Ep193]

In this episode, we're excited to feature Charles Carillo, a real estate investor with a portfolio of almost 900 units. Charles not only navigates the complexities of property investment but also mentors aspiring investors. Today, he shares his strategic real estate insights on handling management changes, balancing coaching with investment, and international real estate dealings. We'll discuss the critical role property managers play in the success of investments. Plus, the savvy financial moves needed when raising capital for syndications. So for those looking to jump into the real estate arena, Charles offers a pathway to information and passive investing opportunities. Tune in to tap into his wealth of knowledge and discover actionable advice for your real estate investment strategy. Let's get started!

Episode Timestamps

  • 00:00 Charles successfully managed and sold multiple properties for profit.
  • 04:39 Wants serious people. Handles few clients at a time.
  • 09:59 Initial Zoom call outlines clients' situation, connects them with CPAs and attorneys, sets up ITIN, LLC, EIN, etc.
  • 14:50 Seeking new investors is crucial for raising money, especially for first-time property projects.
  • 18:04 Asset management involves vetting property managers, considering their impact on property success and how they handle operations.
  • 19:43 Discussion on strategy, goals, and reporting for increasing leads and managing property turnover.
  • 26:47 Anticipates increased transactions due to lower interest rates.
  • 30:57 Wealthy people moving to Florida for jobs. Eyeing real estate markets cautiously. Not interested in Midwest markets.
  • 35:35 Real estate investment challenges in Southeast Florida, difficult to raise money.

Episode Table of Contents

  • Charles Carillo’s Strategic Real Estate Insights
  • Navigating Strategic Real Estate Insights as an International Investor
  • The Significance of Property Management in Real Estate Deals
  • Strategic Real Estate Insights on Market Selection and Investment Focus
  • Strategic Real Estate Insights and Future Outlook

Charles Carillo’s Strategic Real Estate Insights

Charles Carillo’s Strategic Real Estate Insights
Photographer: sk | Source: Unsplash
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Selective Coaching Program

Charles Carillo has developed a strategic approach to coaching that emphasizes a personalized and focused mentorship experience. By limiting his coaching engagements to a small group of 2 to 4 individuals at any given time, Charles ensures that each mentee receives the attention and guidance necessary to truly benefit from his wealth of knowledge in real estate investing. This selective process is not merely about limiting numbers. It is a deliberate effort to work with individuals who demonstrate a serious commitment to learning and applying the principles of real estate investment. Charles's method underscores the importance of quality over quantity in mentorship. Aiming to cultivate a deep understanding and practical application of investment strategies among his mentees.

Strategic Real Estate Insights on Filtering Serious Inquiries

The conversation between Charles and Darin highlighted a common challenge experienced by seasoned professionals in real estate. The "pick your brain" inquiries that often do not translate into serious engagement or follow-through. To address this, Charles has adopted a practice of charging for consultations. A strategy that serves as a filter to identify those truly invested in pursuing real estate investing. This approach not only ensures that Charles's time is well-spent. It also fosters a more committed learning environment for the individuals seeking his expertise. Both Charles and Darin recognize the transformative potential of mentorship in real estate and believe in its power to create a ripple effect, where the success and growth of one individual can catalyze opportunities for others. This philosophy drives their advocacy for mentorship as a critical component of professional development in the real estate sector.

Navigating Strategic Real Estate Insights as an International Investor

Navigating Strategic Real Estate Insights as an International Investor
Photographer: Austin Distel | Source: Unsplash

Establishing a U.S. Presence for Investment

Charles shared insightful details on how international investors can effectively participate in the U.S. real estate market. One of the critical steps involves the creation of a U.S.-based legal entity. Typically a Limited Liability Company (LLC), which serves as a vehicle for investment. This process requires international investors to obtain an Individual Taxpayer Identification Number (ITIN) from the IRS, mirroring the Social Security Number (SSN) used by U.S. citizens. After establishing an LLC, these investors then proceed to open a U.S. bank account under the company's name. This simplifies the investment process and financial transactions within the United States. This setup not only streamlines the management of their U.S. assets but also aligns with regulatory practices, ensuring compliance and facilitating smoother operations.

Challenges with International Funds and Investor Relations

Discussing the complexities of dealing with international funds, Charles highlighted the challenges that can arise. Such as delays in transaction times when transferring large sums of money across borders. He recounted a specific incident where a real estate deal was jeopardized because the funds from foreign investors did not arrive in time, forcing a costly extension. This story underscores the importance of planning for potential delays and having contingency measures in place. Furthermore, Charles provided valuable advice to new syndicators on the significance of building robust investor relations. He cautioned against relying heavily on commitments from large investors and advocated for raising a financial buffer. This approach mitigates the risk of funding shortfalls and ensures that the project can proceed as planned. Even if some investors retract their commitments.

The Significance of Property Management in Real Estate Deals

The Significance of Property Management in Real Estate Deals
Photographer: Tierra Mallorca | Source: Unsplash

Strategic Real Estate Insights on Property Management Relationships

Charles Carillo emphasized the pivotal role of property management in the success of real estate investments. He highlighted the necessity of building a strong, transparent relationship with property managers. This relationship is critical as it enables investors to receive detailed and timely reports. These are instrumental in making informed decisions regarding asset management and leasing strategies. Good property management can significantly affect the performance of a real estate asset by ensuring efficient operations, maintaining the property's condition, and enhancing tenant satisfaction. This in turn affects occupancy rates and rental income.

Strategic Real Estate Insights on Leveraging Expertise and Detailed Reporting

Darin echoed Charles's points, noting the immense value that comes from leveraging the expertise of property managers. He concurred that a competent property management team could provide insightful recommendations and strategies to maximize the property's income potential and value. The discussion underscored that detailed reporting from property managers enables investors to track the property's performance closely, identify trends, and adjust strategies as needed. These reports are essential for effective asset management. Allowing investors to plan renovations, marketing efforts, and other initiatives to keep the property competitive in the market.

Real Estate Market Forecast: "I think if people are holding on thinking that their property that's in tough situation right now is gonna improve with, say a half percent rate drop this year or 3 quarters, whatever people are saying, I don't think that's gonna happen." — Charles Carillo

Charles's Background in Multifamily Investments

Charles shared that his journey into multifamily property investments began in 2006, inspired by his father's engagement in the real estate sector. Growing up with a firsthand view of the challenges and rewards of real estate investment, Charles developed a keen interest in the field. This background provided him with a solid foundation and understanding of the industry, guiding his investment strategies and decisions. His move towards multifamily investments was a strategic choice. Recognizing the potential for stable cash flow and long-term value appreciation in this segment of the market.

Challenges in Tougher Neighborhoods

The conversation shifted to the specific challenges associated with managing properties in tougher neighborhoods. A reality Charles was familiar with through his father's experiences. Charles and Darin discussed the complexities of dealing with maintenance issues, ensuring safety, and managing rent collection in such areas. They agreed that investing in properties located in challenging neighborhoods demands a distinct investor profile. One that is prepared to actively manage these challenges. This type of investment often requires more hands-on involvement and a strategic approach to tenant management. Underscoring the importance of having a skilled property management team in place to navigate these difficulties effectively.

Strategic Real Estate Insights on Market Selection and Investment Focus

Strategic Real Estate Insights on Market Selection and Investment Focus
Photographer: Lena Taranenko | Source: Unsplash

Importance of Market Specificity

Charles Carillo emphasized the critical role that choosing the right market plays in the realm of real estate investment. He pointed out that not all markets are created equal. And understanding the nuances of each can significantly impact the success of an investment. For Charles, the attractiveness of a market is not just about its current performance but also its potential for growth, stability, and the quality of life it offers to residents. This nuanced approach to market selection is a testament to his strategic thinking and depth of experience in real estate. By focusing on markets with strong fundamentals, Charles positions his investments for long-term success, mitigating risks associated with volatile or oversaturated markets.

Florida's Continued Attraction: "There's still wealthy people moving to Florida, and where wealth comes in, jobs come in and, you know, whole trickle down things." — Charles Carillo

Value of a Robust Ground Team

In his discussion, Charles also highlighted the indispensable value of having a robust operational team on the ground. This aspect of his strategy underscores the importance of local knowledge and expertise in managing real estate investments effectively. Charles understands that the success of a property investment extends beyond its acquisition. It includes day-to-day management, tenant relations, and the ability to navigate local regulatory landscapes. A strong ground team ensures that these aspects are handled efficiently. Allowing for the optimization of property performance and ultimately, maximizing returns on investment. This approach reflects Charles's commitment to not just investing in properties, but investing in people and relationships that make those properties thrive.

Personal Preferences and Work-Life Balance

Beyond his strategic approaches to real estate investment, Charles shared his personal passions for traveling and playing golf. These interests highlight the lifestyle flexibility and freedom that a career in real estate can offer. His ability to indulge in his passions is a direct result of the thoughtful and successful execution of his investment strategies. It demonstrates that with the right approach to real estate, individuals can achieve not only financial success but also a fulfilling work-life balance. This part of the conversation serves as an inspiration for aspiring real estate investors. Showing that it is possible to build a career that supports both professional ambition and personal fulfillment.

Strategic Real Estate Insights and Future Outlook

Strategic Real Estate Insights and Future Outlook
Photographer: Benjamin Davies | Source: Unsplash

Evolution of Real Estate Market Practices

Charles discussed the evolution of real estate market practices, particularly focusing on the complexities of "due on sale" clauses and how property ownership strategies have changed over time. He noted that in the past, real estate transactions were often less formal, with properties frequently changing hands based on verbal agreements or simple contracts. This informal approach allowed for more flexibility in ownership transfer but also introduced a level of uncertainty and risk. Charles highlighted how the landscape has shifted towards more stringent legal frameworks and documentation, aiming to provide clearer protections for both buyers and sellers.

Optimism for the Real Estate Market in 2024

Looking ahead, Charles expressed optimism about the real estate market's prospects in 2024. He speculated that if interest rates were to decrease, it could lead to an uptick in transaction volume. This potential shift would be particularly beneficial for investors who have been cautious or holding off on purchases due to the higher interest rates and market volatility experienced in recent years. Charles's outlook suggests a belief in the resilience of the real estate market and its capacity to adapt and thrive even in the face of economic changes.

Navigating Real Estate Investment Strategies: "So when people come, they listen. I kinda want to spread not just what I'm doing, but what other people are doing. Because there's so many ways of making money in real estate. I think that, people kinda get set into one way and kinda have to figure out what your goals are, what your resources are. And then you make your decision on what's the best, you know, best route." — Charles Carillo

Property Preferences and Market Attractiveness

In the conversation, Charles also delved into his property preferences, advocating for investment in newer properties over older ones. He reasoned that newer buildings typically come with fewer complications, such as maintenance issues or outdated infrastructure, which can be common in older properties. Additionally, Charles emphasized the importance of wealth distribution and job opportunities in determining a market's attractiveness. Markets that attract wealth and generate job opportunities tend to be more dynamic and offer better prospects for real estate investors. Both he and Darin concurred on the significance of working with seasoned operators when exploring growth markets or venturing into regions like the Midwest, where local knowledge and experience are crucial for success.

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Where To Find Charles Carillo

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Darin Batchelder

Wealth creation through real estate provided me with a new passion to get the word out and let others know that they have an alternative to investing in the stock market.

If I can inspire and educate just one person to take action that results in life changing wealth creation then the work to launch and grow this podcast is well worth the effort.

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