Education
How can Iron Age Investments (IAI) help you?
Plain and Simple…
Most of our investors are busy professionals that frankly do not have the time nor expertise to take advantage of growing their assets in the field of real estate.
You work hard and have cultivated your own skills or businesses to grow your capital. At IAI we use our skills to continue to grow that capital for you and your families, while educating you along the process.
Investing in real estate offers a unique blend of advantages:
- Portfolio Diversification
- Rental Income
- Tax Advantages
- Wealth Generation
Real estate can be a resilient asset class, providing financial security and wealth-building opportunities for investors. Real estate is also riddled with pitfalls, and it is easy to make mistakes, especially when you are first starting out.
RE investing should be taken as seriously as any other investment asset. Before putting skin in the game, there are lots of facts and analysis that need to be done to have a successful outcome.
Why do we care about your RE Education journey?
Your success is our success!
We want to continue to build a COMMUNITY of hard-working and like-minded professionals who all help each other achieve common goals. We would all like to be on the path to financial freedom. That means less time at work and more time doing the things that matter to us most.
We don’t just want to build a community of “investors” or capital for “our projects”. That limits the potential good investment opportunities for all of us.
We want our community to fully understand the ABCs of what makes a good RE investment opportunity. When more people understand even the basics, they will quickly know when a deal is good or worth passing.
The more educated people in our community, the more opportunities that we may all have to network and share in the growth of those opportunities. It’s an abundance mindset.
“Our collective strength exceeds that of individual efforts.”
More than just our investors bringing capital to the table, if our investors want to learn along the way we are here for you. From the vetting process to the overall execution and management to ensure a successful outcome. We will all continue to learn by doing. We want our community to be as active or passive as you want to be, but without education, it’s hard to know the good from the bad.
What will we teach?
IAI is not only here to help you with your direct investment needs and helping reach your financial goals. Yes, we would love for you to become an investment partner with us on our deals. But part of our DNA is that we believe that if you want to learn about real estate, you have the right to be taught by people who will help you learn what you need to know, not just bluster about their own experiences. At IAI we are here to help educate you on understanding the fundamentals of Real Estate finance.
While we will teach you basic Quantitative Analysis:
- Capitalization rates
- Intrinsic Value
- Operating Expenses (OPEX)
- Net Operating Income (NOI)
We understand that the spreadsheet is very important, but it only tells part of the story of any potential investment.
There is a process to fully understand how to take qualitative data and quantify it. What is the feeling of the neighborhood and block the property is on, age and property condition, tenant class, median income, market saturation, historical vacancy, leasing commissions, zoning, property management rates and duties, how close is the property to outdoor access, shopping, school districts, etc.
Understanding how all these factors will directly affect the financial outcome of your project is not an easy task. There must be market research done, time and effort will have to be committed before you get the accurate information you will need to make an informed investment decision. IAI will be here with you to help you diagnose all the data. Over time and only if you want to, you will be able to ask all the right questions and seek out all the right information on your own.
The basics of real estate investing are easy.
Based on: What is your maximum gross revenue? What are my monthly or annual operating expenses? In each market and specifically with any individual property, how do I calculate the value based on the NOI?
How you get the correct answers to these questions is the hard part.
This is what we will teach you.
Understanding your Risk Tolerance
Before making any investment decisions, it’s crucial to assess your risk tolerance—your ability and willingness to endure potential losses in exchange for potential returns. Each investor has a unique set of financial goals, time horizons, and risk appetites that influence their investment strategy. By comprehensively understanding your own risk tolerance, you can make informed choices that align with your financial objectives and comfort level. We encourage you to evaluate your risk profile carefully and consider how it matches with the investment opportunities available. This self-awareness will help you navigate the complexities of the market and work towards achieving your long-term financial goals with greater confidence.
Understanding the Risk of Your Investment
All investments, including those in real estate, inherently carry a degree of risk. For passive investors, it is crucial to understand how the risks associated with specific real estate opportunities align with your individual risk tolerance. To effectively manage potential risks, consider starting with smaller investments to gain insight into the market dynamics and assess your comfort level. As you become more familiar and confident, you can gradually increase your investment, ensuring it remains consistent with your risk profile and financial goals.
Why is it so hard to copy someone else’s successful record?
The same reason it is hard for many RE professionals to keep a consistently positive track record.
Timing, debt, interest rate, and changing market demographics Simply put,
What worked 10 years ago doesn’t necessarily translate to success today
Does BIGGER always equal Better?
Lets consider where you are in your journey
Bigger is Not always better when you are still trying to understand and learn about new real estate markets. Where is the best location, what is the best asset type (SFR, STR, MF, Commerical) to invest in? When you are making your first investment in a new market you haven’t invested in before, it often is best to start small, even with a single-family or du-plex rental property.
WHY?
Investing in the right Single Family Home rental market is a beneficial investment type for two reasons:
Single Family Homes drive RE markets
When home prices appreciate and mortgages go up, it pushes more individuals and families to rent instead of buy. The more renters in the market, the higher rents will go. Without homes being pushed out of the “affordable range” based on local population income levels, then the overall RE market in that area will remain relatively low.
If home prices are not going higher in a market, rents on apartments in the multi-family investment segment will certainly not be appreciated either.
Tracking local population demographics, job growth, and overall market trends should help you identify markets that are appreciating and have increased demand. Looking up financial data on single family homes in various neighborhoods in markets with all the correct macroeconomic data will be the best indicator of the health of the overall RE market you are looking to invest in.
Single family homes will always appreciate faster in a market with strong job growth than apartment rents will rise.
If your home value stays stagnant, and rental prices of the home aren’t increasing, often this is a sign that the overall market prices are not increasing as well. Assuming you can increase apartment rents in value-add projects is hard when you don’t have any practical experience in leasing units in that market. Owning an SFR or du-plex first, getting a feel for the market will give you a much better understanding of supply and demand, and if making a larger investment is the right move.
What is the difference between “Value-Add” and “Speculative” investing?
Trying to understand the difference between a “Value-Add” investment and a “Speculative” investment can be hard to decern as a new investor. When reviewing lots of opportunities, it’s good to understand the difference. Both investments can be very lucrative, or end up not so great, but the types of investments are very different.
Value-Add
The investment sponsor, such as IAI, will directly affect some portion of an existing property, increasing NOI or real value to it.
Example: Purchasing an apartment building and renovating apartment units. IAI buys an older multi-family building and decides to renovate both the inside and outside with the goal of increasing the rents from their current levels to a higher market level.
The exterior facade would be spruced up, some new branding and a name change w/ new sign are completed. The interior units that were older and run down would also get a facelift. New floors, paint, kitchens and bathrooms would be remodeled and made new depending on the need of the units.
The goal of all of this is to create value.
If the rents were $1000 before the remodel, that goal post renovations are to be $1600. The value-added real estate investment must directly impact the gross revenue and the project’s NOI, like in this MF example.
Speculative Investing
means that with data and knowledge, you are purchasing a property that you believe will appreciate sooner or later based on all the facts available.
Example: Purchasing a house in a neighborhood that has continuously become more desirable. You have watched home prices in an area climb quickly or steadily over a period of time. Price increases could be because of gentrification of this location. New bars and restaurants or retail amenities are now opening making the overall area or neighborhood more desirable. A new company may have opened new offices providing more higher paying jobs in the area, pushing up the prices as more people with higher jobs move to the area.
There are any number of reasons why this appreciation in the property is taking place. A speculative investment is one that is utilizing information to make an investment decision but does not have the ability to directly affect the overall value of the property.