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Future Money Trends: Greeting and thank you for joining us at FutureMoneyTrends.com. I’m here with a good friend, his name is Lior Gantz. I met him several years ago through the Future Money Trends website. We ended up meeting in Carlsbad, California, and eventually we met in Hawaii as well. And he really sparked a spirit of entrepreneurship that had always been in me, but he really inspired me to better my life and to invest more in to entrepreneurship and investing. Again, these are things I was already doing, but being friends with this guy was like a breath of fresh air. Lior, thank you so much for joining us today.
Lior Gantz: No problem. It’s my pleasure.
Future Money Trends: Lior is the founder of a company called L & A Real Estate Solutions Providers. He’s doing something very unique in the states here. And I just kind of want to talk to you today, Lior, about the real estate market in general, what people can do to better their lives in real estate. Let me just start off by asking you what is a solutions provider in real estate?
Lior Gantz: A solutions provider basically is a new breed of company that is emerging right now, in these market conditions. What you had in the 80s and 90s was a wholesaling model, where an investor would basically mass market a particular pocket of the market – defined 30-50% discounted properties. That doesn’t work anymore. A solutions provider is a boutique operation catering to specific niches catering to the market. It’s a one-stop-shop for buyers and sellers to come in and find the best and most appropriate deals for them. So if you’re talking rehabbers, you’re talking discounted properties that are in popular neighborhoods where they can come in and fix and flip. If you’re talking a landlord, then we’re more in to high-yielding rental real estate in very good, stable, job markets. And if you’re a seller, on the other end, then what we’re talking here is getting the best out of your situation. There are all kinds of situations to individuals today. Some individuals don’t have any equity, they’re upside down, and they’re pre-foreclosures. Some of them are free and clear. It just depends. And that’s the whole purpose of a solution provider. You come in, and it’s like a home for you. We help with catering to your specific needs. We don’t mass market, we get to know you. We build a relationship, and therefore we tailor a solution perfect for you. So, I guess that just about sums it up.
Future Money Trends: That’s a good description. So for each individual listening to this, some people they might not know anything about real estate, they might have seen some infomercial or something, or maybe they’re a current real estate investor like you and I. What part of real estate investments, and what role do you think they should play, in an individual’s life? Lior Gantz: Well, it’s a good question because people like to jump in and dabble in real estate because it’s sexy, and it’s bricks and mortar. And it’s one of the ways that everyone is seeing that you can get wealthy out of. But usually for the individual it should be a secondary option, after owning what we call legacy stocks, or the best businesses out there.
I’m talking stocks like Microsoft, or Intel, or Coca-Cola, the big blue chips and buying them at the right prices. That should be the core of each individuals’ position and you can go back to any wealthy individual, and see that their stock portfolio was his main, core, investment. But then, real estate is a phenomenal way to leverage, as an individual, and use debt to your advantage. Diversified, obviously, put some of your hard-earned cash in bricks and mortar, and not just stocks or paper assets. But you need capitol and extra knowledge to do that, to get in to real estate. What you want to do is, you have to have the capitol and extra knowledge. That’s the blocking point for a lot of starting individuals, and younger individual who do not have the capitol to get going. What you can do though, is you can be creative and start off as a property locator or a Co-host, but that’s a whole other discussion. But that’s a great way to get your first checks going.
Future Money Trends: Lior, what are you seeing right now in the real estate markets?
Lior Gantz: OK, that’s an excellent question. There’s a bunch of things that are happening that are strange. Investors, usually, in real estate, they do not use cash to buy 100% of the purchase price. They use leverage, usually it’s 20-80%. They put 20% down and they leverage 80% with debt. People are now buying real estate for cash. You’ve noticed that, obviously I know you have…
Future Money Trends: Yeah, I know it’s all over California.
Lior Gantz: Yeah, and California is an expensive market on an absolute basis in the U.S. and it happens all the time. And that’s a very weird phenomenon. There’s a lot of foreign investing. Asian investors that are not even seeing the properties they are buying, and you know about that phenomenon. It’s an amazing occurrence. There’s changing job markets in the U.S. and the baby-boomers are migrating between states towards the better states to retire in, better weather, better health care, better facilities for them, and that’s moving the demographic by a huge margin. And what’s driving the market is the tough lending requirements mixed with low interest rates, which are bi-polar occurrences. Usually you want to have a soft landing requirement mixed with a low-interest rate, that’s what will create the appreciation. But now you’re seeing the tough lending requirements mixed with low-interest rates, and that’s what makes it easier for funds to borrow at extremely low rates and get in to real estate, where as individuals are finding it hard to do so.
Future Money Trends: Yeah, is there, at this point with the markets the way you’re describing them, how could the regular family, who maybe doesn’t have the perfect credit and is renting, how can they move to home ownership at this point with the scenario that you just described?
Lior Gantz: Well, that’s an excellent question and I’ll tell you the answer. It’s a huge, huge issue, and it’s right now just getting started, and that’s a niche called lease option. Basically, if you’re a family and you want to move to a better location in your city, better school district, better area, newer construction, and you can’t approach a lending institution to get approved for a loan; what you must do is become an expert, and find a lease option opportunity for you. But that’s a huge discussion right there, and I’ll just state the benefits of it. Lease options allow you to own a property today, but using only 10% or 15% down, and managing to pay the rest to the seller. So let’s say you’re a family and you found a great place. You approach the owner of the property, and you work out the lease with term. And at the end of the term, you get to own the property. But in the meantime he doesn’t care about your credit, as much as he cares about you having a stable job, so you can afford the monthly lease payment. And that’s an amazing way to get in to ownership again, and I encourage any listeners that’s listening to this, that has found it hard to own again, because you can’t afford the lending institutions, to take a look at it. I mean, it’s just a phenomenal way to get back in to ownership. And as a solutions provider, that’s some of the things we do. We get approached by common individuals all the time to help them find that perfect lease option all the time. It’s not that easy.
Future Money Trends: So what about, on the landlords on rehabber sites though. Like we talked about families and people trying to get in to a better school district. What if you’re just looking for a good deal? What would be your advice?
Lior Gantz: Ok, well the landlord’s are a huge part of the investor crowd right now, obviously because of the high yield in real estate. Rehabbers also make a huge part in that because there’s so many properties that have been left either vacant or foreclosed in bad shape, and are ready to get back to the market fixed and flipped. So the first thing I would say is you must have a great relationship with private lenders, and these are just individuals in your sphere, that are ready to loan you money with real estate being your collateral. And that’s how you would purchase the property. If you need to put any renovations in, you’ll need a good relationship with a hard money lender to loan you the money for the renovations. So you’re 100% financed with private and hard money, and then you can fix and flip it, give them back their interest, every body’s happy and you walk away making a pretty decent check these days, in rehabbing. If you’re a landlord, it’s just ridiculous. Some of the markets out there, they’re yielding 20-25% cash on cash returns. It’s a great time to be a baby boomer retiring with a capitol to put in to real estate. What you got to do also, is watch out in the auctions. It’s a very hard game to play, and if you’re just getting started you can get burned easily. So as a landlord or the rehabber, I would caution the listeners that are wanting to get in to that niche, because it’s a professional game. What you also want to do is maybe create some internet presence for you, and drive sellers to your website, and getting them to call you so you can sift through deals. That takes a lot of money and marketing because there’s tons of internet guys out there promoting their own businesses. Or you can approach one of the solutions providing companies that we’ve talked about before, and just skip the auctions, all the building the relationships with the hard money and the private money lenders, skip all that building your own internet space, and just approach them, and get constant flow of fresh deals. Because that’s what the solutions providers are designed to do, they find them for you so you can just go in there, and fix, flip, and move on to your next deal. So you don’t have to do all the back-end work, they do it for you. And you don’t pay them fees, they just make their own spread, so it’s a win-win situation. That’s the best advice I can give them. And obviously a good solutions provider company already has a list of private and hard money lenders that you can start working with, that they can recommend you. So it’s a really boutique operation for starting rehabbers and landlords.
Future Money Trends: Now where does the seller come in on today’s market as far as with this whole transaction? If you could just explain would they leverage a solutions provider to their advantage?
Lior Gantz: That’s a great question. Usually in the past the seller would have nowhere to go. He would either get an agent and work towards the listing. He will put it on the MLS and he will get his fee; but that’s in the good days where you can just sell real estate easily in the bubble base of 2000-2006. You probably know what I’m talking about, you would just list properties and somebody would snatch it. That’s not the kind of market we’re in today, and good agents are hard to find. Good real listing agents are hard to find. They work on commission so it’s a hard balance that you’ve got to play with them on the evaluation of your property. And they do not care about the tailoring of a solution for you, they just want to sell it within their time frame, which is six months. Maybe you only have a week, you have to liquidate. So they can’t work with you and build that relationship for you, obviously because they’re working other deals as well. Selling a FSBO (for sale by owner) forget about it, I wouldn’t suggest it to anybody. It’s a heart attack trying to do it on your own. What you can do is, you can approach a solutions provider, and you can boil down you situation with them. They can get to know your equity situation, your needs, what’s your issue. I mean what is your pain? Why are you trying to sell, what’s going on with you? Are you trying to relocate? And they would find the perfect buyer for you. I mean, it depends on the situation, that’s the whole point behind the solution provider model. They are what you would call a tailored solution. So as a seller, my first suggestion, find a service provider. You have nothing to lose, go over the situation with them. They do not charge any fees for boiling down your situation and giving you some good advice. And then either work more, or do something else, but the bottom line is it’s just a perfect way to know what’s going on for you.
Future Money Trends: It’s very good, what you’ve just described. I mean I love hearing about people who are thriving in today’s economy by providing solutions, and inevitably that’s what entrepreneurship is about – providing a solution to help people, and it’s the best way to make money. It’s a win-win. Lior, on a personal note, what are you doing with your own money right now?
Lior Gantz: Well as I told you the core positions that I like to take my capitol and run with is the blue chip companies, that you can find that are in buying territory, and that’s going away now. In 2008 until last year, you can find more of them and buy something that’s called a legacy position in them, and never let go. Kind of like what Warren Buffet has done throughout his career, to compound his wealth by about 20% a year, which is an amazing compounding rate. So I would suggest getting to know the good companies out there, and I know you’re doing a good job of that as well. A great job of that in your digest, and I follow you very closely, and I know that’s something near and dear to your heart as well. I would also say that some money should be put away in cash and precious metals. The precious metals just for protection, more of insurance for a very rough time that might just happen. Cash for opportunity, and that’s very important. Lots of investors are shying away from creating a cash position because they’re afraid of inflation. But as inflation comes, it’s not like an overnight event, you’re going to know about it, and you’re going to start diversifying your cash. But on the other hand, not having a cash position is putting you at risk for bad times of deflation. So putting a cash position in there is an important thing. I can just state that I’ve just read a Warren Buffet interview recently. He keeps $20 billion in cash for opportunity. Now just think about that number for a bit, let it draw on your mind. And the last thing I would say is put some money in to real estate, but get educated first. It’s not like buying a paper asset with a brokerage account. You need to know how to manage real estate, you just need to have a power scheme in play where you’re investing and that takes more time. But it is one of the best ways as an individual to leverage, because you’re using the renter’s payments to decrease your financing. I’d say it’s brilliant in that way.
Future Money Trends: Yeah, I know. I love rental property. Just the whole concept of somebody else paying off the mortgage, and the cash flow, the hard asset. Just love it. Lior, if listeners want to contact you, where should they go?
Lior Gantz: Well I would suggest first going to our business Facebook page. You go on Facebook and you just click “L & A Real Estate Solutions Providers.” If you’re a rehabber, I would say go to our landing page for rehabbers which is bargainfixnflip.laresp.com . That’s LARESP, short for L.A. Real Estate Solutions Providers. And obviously we’re going to be found on your YouTube channel I’m hoping. If you’re a landlord, go to our rental-cash-cows.laresp.com and if you want to sell, go to winwinsell.laresp.com. But it’s all going to be down there and I’m sure anybody would find us online. We have a good presence and hopefully we can provide value to your listeners.
Future Money Trends: Lior, thank you so much for your time today, and I look forward to talking to you many many more times on a personal level, as well as seeing you hopefully somewhere out there where it’s sunny, warm, and the water is crystal clear.
Lior Gantz: (laughing) Thank you very much.
Future Money Trends: Alright Lior, you have a good day.
Lior Gantz: Thank you, you too.