Setting Up New Markets

I've been questioned recently on the proper ways to invest out of state, in emerging markets as well as how we (and a few colleagues) established our residential investment base out in PA. Hopefully some of this info can be helpful to you.

The first step is to establish an area where you would like to invest. This completely depends on your own goals, comfort level, and your financial situation. A whole topic among itself, we'll assume you are already interested in an area, or have identified it as an emerging market.

1. Establish key relationships in your new market! This includes everyone, from your realtors, contractors, property managers, leasing agents, tenants and buyers, to the local postmaster, the building department, the Dunkin Donuts cashier, the economic development office and other government officials. Every single person you meet will give you a better feel of your area, and will influence the amount of success you achieve.

2. Keeping your eyes on your goals, set up (and write down!!) a strategy to make the necessary financial returns you require from your investments. This could include choosing the type of property, such as single family homes, multis or commercial, and determining your exit strategy (buy & hold, lease options, quick turnovers, etc.). How will you find these properties? How much will you pay for them?

3. Identify who the key players will be, that will help you within your systems you set up in your target market. Who will assist you in acquiring property? Who will manage the property? Who will deal with the local code enforcement office, or the tax bureau? Who will help you determine the accurate ARV?

4. Contact those individuals, and set up these necessary relationships. Ask yourself - how is this a win-win? Take it from experience - you CANNOT do this all on your own! And if you are, then start looking at all the money you're leaving on the table!

5. TAKE ACTION. Using your newfound relationships and systems, now is when you identify investment opportunities that meet your criteria, and execute on your strategies. You may have to tweak your systems as you go along. The important part is to take action: SHOOT FIRST, AIM LATER.

6. Continue to evaluate your market, identify opportunities, execute, and know when to move on. Whether your portfolio has grown large enough in that area, or you feel the market is about to change, you must recognize when it's time to change your strategy, move to a new market, or liquidate altogether.

As you can imagine, there's much more to it, but this is the bare bones. We at AA Real Estate take months of preparation in an area, gathering information, forming relationships, and setting up systems before we determine it's a good place for investment.

Right now, we've identified and are invested in 4 markets, with a few others being researched.

If we can help you further your investment goals with our established systems and experience, please don't hesitate to contact us. We've helped so many, and welcome many more on board with both our residential and commercial opportunities!

Lexington, KY: We still have a few slots available for accredited investors to jump in on the 222-unit deal, that's already been closed. If you know of anyone who is interested in learning about multi-unit investing, here is a great starting point for them! Returns currently averaging from 60% to 94%.

PA: We have some end of year deals coming down the pipeline - returns ranging from 45% to 110%, you do NOT have to be accredited to participate in these deals!

Reply or contact us today for details on either of these opportunities, so we can sit down and assist you in going over your investment goals.

We continue to update our website as well, so stay on the lookout! Contact us through our website at AA Real Estate Partners.

Until next time,
Happy Investing!

Nick Aalerud
AA Real Estate Enterprises LLC
Info@AARealEstatePartners.com
http://www.AARealEstatePartners.com

"The Service you Expect, with the Returns you Deserve."

My Past - Rantings of the Times

OK, so I started this blog before introducing myself - how rude...

My name is Nick, and I rarely share this story, so I figured why not do it online, when only the whole online community can look upon it?

Investing in real estate for me is a means to an end, and yet understanding how finances and investing works, and educating others, is my passion.

I started out graduating from Saint Anselm College in Manchester, NH, with a degree in Politics. Not even "Political Science", as they said they did not offer that degree - so it was Politics. I learned a lot there, about how government and society operates, but moreso I learned how people function and what influences decisions they make. This came into play later on in my career.

Not having too much of a future in Politics (I did not have the $$ to compete with all other politicians, as history has it that he or she who has the dough, always gets the office), I went into investment banking at Mellon Financial in Everett, MA. Here is where I learned about finances, investing and choices we make, that influence our financial future. I assisted in managing many larger institutional mutual fund clients (one of which I KNOW you have in your portfolio!), and saw how successful they all were during the great economic times, and how everyone sold off during the poor times.

Anyone ever played the board game Risk? I LOVE this game. Perhaps my skirting with Politics influenced it, but I would get together with some friends any chance I could to play - and I usually won. That is, until my "friends" decided I was the biggest threat, and would gang up to eliminate me first from the game. This happened in 2004, and prompted me to go into a light fit of playful depression, and I sat in front of my TV while they continued playing (this was 2AM on a Friday evening). I turned on the TV, and saw this guy claiming how he could buy houses for "pennies on the dollar", and I could order his how-to system for only $50.

Being in my ultra-sensitive state as it were, I picked up the phone and ordered my very first "readable seminar" on Tax Deeds and Liens from John Beck. In this package, I learned... that I was very good at filing these items in my dusty bookshelf, after I'd only read through them for 20 minutes when they first arrived. I did however, see a quote on the "Quick Start" page:

"If you're serious about investing, call this number: 800-XXX-XXXX."

And I did, and then got suckered into my very first phone "bootcamp." This "bootcamp" was THE most expensive thing I'd ever purchased, including all my cars up to that point, and for some reason, I knew real estate was the key to wealth even then. So I got my 6 credit cards out, and maxed 2 of them by paying the $6K for the bootcamp.

Did I get what I paid for?

Well, I have to say, they forced me to learn how to gather public information, market, and help people facing foreclosure learn their options (well, one I explained options to, the other 24 of them called to yell at me to stop mailing to them). However, one piece of homework changed my life. They assigned me to read the book, "Rich Dad, Poor Dad" by Robert Kiyosaki.

Upon reading this book, I became infatuated with all of his material, and quickly became a student (and large profit center) for him and his company. I took 6 months to read everything I could get my hands on about real estate investing, including online, books at B&N, magazines, and news articles.

I now had invested over $8K in my education (which at the time, was an UNIMAGINABLE amount of money!), and had not ONE DEAL to show for it.
I tell the story often in my circles about the famous shampoo bottle. I'm losing a good amount of hair now, but at the time, I had a good head of hair, and I made the promise to myself while in the shower (I don't blame you if you're unable to imagine it) to have at least ONE deal in the works by the time this bottle had dwindled.

Some time passed, and I still found myself reading, and not DOING. I knew education was vital, and I thought that "I'd do a deal after I felt comfortable." I realized that may never happen.
So I analyzed myself, and realized I still was not comfortable getting into a deal without someone there to ensure I didn't screw up, or lose more money.

I then came into contact with a gentleman out of state, who one of my colleagues told me was a straight-up guy, who was making him lots of money. This gentleman used other peoples credit, to purchase homes with the strategy of selling them as lease option deals. I did all the appropriate background checks, and 2 months later, I found myself excited to be closing not one, but 5 deals with this partner, who also was going to be the property manager (being that I was 1000 miles away). Shampoo bottle was near the bottom - I had succeeded!

Alas, time tells all. After 3 months, this "partner" got his upfront money on the deals, and all of a sudden, neither myself or my colleague heard from this guy again. These houses now sat, only 2 occupied, and neither tenant making payments. Not having any experience in property management, lease options, or even having my tenants contact information, I was pretty much toast. I had to learn how to prepare short sales for 3 of these homes on my own, and then attempted to deed the other 2 back to the bank; however, the mortgage company not being too organized, lost all my paperwork and their vocal authorization to take the deeds back meant nothing. These now show up as foreclosures on my credit report.

This all happened 3 years ago, in 2005. Having no credit and no money left, I stuck my head in the sand and all of a sudden became one of those people in denial. Ironic that I at one time, was trying to assist these very people.

It took me a while to realize what had happened, stand back up, and continue my real estate education and career, this time, without money or credit. All these gurus said it was possible - was it? Well, I thought I was as good a candidate as any, so I gave it one more try, and spent the last of my money on more education and creating relationships.

Looking back on it, I learned so many lessons, the biggest one being - never give up. It's a cliche that rings true for everyone.

Now having completed millions in real estate transactions, and now with 2 offices (Chelmsford, MA and in PA), my business has grown with me. I never stop learning, and the best thought was to look back and see that everything happens for a reason. Without that experience, I may have never taken the first step and TOOK ACTION. I also may never have revised my business model to be so conservative, so that I may have as successful a business as I do now, servicing my investors and sharing the wealth with them.

I welcome others to enter their experiences here should they wish, be they good or bad, as we all have had both. I also will be using this blog as a post for deals as they come up, but I am very curious as to others' experiences.

Until next time,

Nick A.

President, AA Real Estate Enterprises LLC

http://www.AARealEstatePartners.com

Thanksgiving Newsletter

With just a day to go before Thanksgiving, I think to myself how grateful I am to have been able to meet so many wonderful people, like you, in my time as a real estate investor. Real Estate is not just about "sticks & bricks," as many call it; it's all about people and relationships.

That said, thank you for being a part of AA Real Estate Partners. Whether we have assisted you in growing your IRA over the past year, or we helped you grow in your own real estate strategies and goals, or even if we just had one moment together, meeting at a function... this business is just not the same without you.

I figured I'd wish everyone off into the beginning of the holiday season with one great article, which talks about how apartment buildings may prove to be the best investment opportunity in 2009. A few of you may have already seen this, but it's truly well done.

And of course, if you have not yet taken that step to rebuild your IRA from the huge blows it took from the stock market this year, we'd be VERY happy to grow it back using our commercial investment strategies, allowing you to own a piece of a large apartment building, in an emerging market in the U.S., without EVER dealing with tenants!! Imagine being able to travel to GA or NC, and have it all be tax deductible, while you walk the grounds of your new investment...

We'd love to make it happen for you.
Contact us through our website at www.AARealEstatePartners.com .

Report Rates Apartments as Best Investment Opportunity in 2009

Source: MULTIFAMILY EXECUTIVE News Service
Publication date: November 3, 2008

By Rachel Z. Azoff

Real estate experts expect financial and real estate markets to bottom in 2009 and then falter for much of 2010, with continued drops in property values and additional foreclosures and delinquencies, according to the 2009 Emerging Trends in Real Estate report, released this week by the Urban Land Institute and PricewaterhouseCoopers.

But there are a few bright spots in this rather gloomy forecast. At the top of the list: Apartments are the best opportunity investment next year, according to the report, which includes interviews and survey responses from more than 600 leading real estate experts, developers, lenders, brokers, and consultants.

"Even though there is a lot of doom and gloom in terms of the fundamentals, interviewees really believe that 2009 is a great time to buy," says Susan Smith, director in the real estate business advisory services group at New York City-based PricewaterhouseCoopers. "The No. 1 buy is apartments. One of the main reasons why is interviewees see a very diverse economic and demographic demand for apartments, especially for transit-oriented housing."

Warehouses are also a popular property pick, as they tend to offer steady returns despite economic declines, Smith says. The office sector, which fell in the middle of the road, had a delayed reaction to the economic crisis but will continue to feel the brunt of the pain for some time. Retail is the least-preferred property type, due to the dramatic decline in consumer spending in the past few months.

Looking ahead to 2010, expect to see some turnaround in all market sectors. "The good news will probably outweigh the bad; right now, it is the reverse," Smith says. What will 2011 bring? The respondents are banking on a recovery.

Market Snapshot

The report offers a snapshot of markets to watch next year, with Seattle and San Francisco taking the top two rankings. Washington, D.C., landed a third-place spot, while New York City, which took the No. 1 spot last year, slipped to No. 4. "New York is an established market, and there's a lot of demand there but there is a lot concern due to the city's exposure to the financial markets," Smith adds. Los Angeles took fifth place.

Top opportunities in each of these cities:
o Seattle: The city has slowly been climbing its way to the top of the list. "It's become one of those gateway markets that investors like," Smith says. The market is a strong buy for apartments and the No. 1 buy among industrials in the Puget Sound ports.
o San Francisco: The city ranks first for development and homebuilding and is a leading buy for apartments and offices. Foreclosures should remain in check.
o Washington, D.C.: The seat of the Capitol is ranked as the "ultimate hold market when the economy struggles." Downtown office vacancies should remain below 10 percent and apartments will lease "no matter what." Expect a strong outlook for retail due to above-average employment, but office vacancies are expected to continue in northern Virginia where further declines in condos and home prices are expected.
o New York City: The city is suffering job losses and office vacancies due to the Wall Street meltdown. Hotels are expected to continue attracting tourists due to the weak dollar.
o Los Angeles: Downtown Los Angeles will likely benefit from the influx of condo and apartment projects under developments. "It's almost impossible to lose money on apartment investments if you have a five- or 10-year investment horizon," one respondent said. Hotels are faring well, but homebuilders in San Bernardino and Riverside continue to struggle with the housing collapse.

Top 10 Tips for 2009

1. Investors should sit tight; opportunities will surface at significant discounts.
2. Invest in maturity defaults, construction loans/bridge loans, or take mezzanine positions and equity stakes in properties.
3. Invest in REITS as they will lead the market's recovery.
4. Focus on global pathway markets, including 24-hour coastal cities.
5. Staff up asset managers, leasing pros, and workout specialists; separate good assets from the bad.
6. Retrench on development, and reorient to mixed-use and infill.
7. Go green; cutting energy expenses is likely to be a priority.
8. Buy or hold multifamily; hold office; hold hotels; buy residential building lots, but be prepared to hold.
9. Purchase distressed condos in urban areas near transit.
10.Focus on neighborhood retail centers with strong grocery anchors and chain drugstores.

Source: Emerging Trends in Real Estate report

Until next time,

I wish you all the best during the Thanksgiving Holiday!
Take a day to relax - you've earned it.

Nick Aalerud
AA Real Estate Enterprises LLC


"The Service you Expect, with the Returns you Deserve."