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SHOW NOTES FOR EPISODE 521: FINDING INTERNATIONAL INVESTORS FOR YOUR REI DEALS
International investors are dying to invest in U.S. real estate deals. But how do you tap into this multi-billion dollar resource? In today’s podcast episode, real estate investor, syndication operator and podcast host Charles Carillo shares how he was able to grow his personal real estate portfolio from a handful of single family and small multifamily properties to hundred-unit plus apartment buildings through syndication and international investors.
What You Will Learn
- How to attract foreign investors to you deals
- Why international investors can be the best investors
- As a passive investor, who is the most important people you MUST vet? It may not be who you think!
- Why your first syndication’s passive investors should NOT be friends and family
- How syndication can accelerate your portfolio building goals
- Why networking is a key factor in syndication success
About Out Guest
Charles Carillo
Charles Carillo is managing partner of Harborside Partners; a real estate syndication firm, and has been actively investing in multifamily real estate since Charles also hosts the Global Investors Podcast where he interviews professionals about investing in US real estate.
More About Charles
- Originally from Connecticut
- Moved to Florida in 2012
- He grew up the son of a real estate investor
- Real estate was his “second education”
- His father had 100 plus rental units and mixed use properties
- His father self-managed the properties with a small team – was more “hands-on” and didn’t have a third-party manager
- If things did not work out, his dad would step in to collect rents or deal directly with contractors
- His dad was real “old school,” met with other investors, had “back of the napkin” type deal transaction meetings
- Dealt with some loan brokers
- Didn’t do real estate syndications but did other type of syndications (oil), but the investment didn’t go well
- It was more difficult to carefully vet operators back then – it was more like a country club, word-of-mouth type like screening
Started an Online Payment Processing Business
- Charles started an online niche payment-processing business
- Worked a lot with international accounts
- Spent 2 to 3 months out of the year in Eastern Europe – he had partners and clients there
- Started sharing with those clients and partners about his real estate investments and they were very interested
- They started asking him how they could do real estate investing
- He wasn’t familiar with their laws so he couldn’t help
- But he shared how it was done in the U.S.
- They were very interested in the great returns he got on his investments
- He eventually merged his business with another similar business his brother had run for years
- He’s still involved but has set up systems and processes where he can have others do the actual transactions
- He maybe spends 2 to 3 hours a week on that business
Becoming a Real Estate Investor
- Charles started buying multifamily properties when he got out of college (his dad sort of pushed him into it)
- He bought a three-family property around 2006
- He rented out two floors
- He lived on one floor with a roommate
- He bought another property in 2008
- Bought another property in 2009 bought another property
- Commercial mixed-use property
- Sitting on market for 4 months
- Price was at 40% of it’s previous sales price a year before
- He offered at 32% and got it for cash
- Renovated and got it fully rented in 90 days
- Commercial on bottom floor
- Used as his office for years
- Residential on top floor (90% of square footage)
- He couldn’t get loans for the property – banks weren’t lending on it
- Years later, was able to get a mortgage – he likes long-term fixed debt to reduce risk
- In 2012, he moved to Florida where he focuses on larger property syndication deals
- 75 unit plus
- $5 million plus purchase prices
- His other properties, up north, are managed by property managers
First Syndication
- In 2018, he first invested in a syndication as a passive investor as an LP (limited Partner)
- People were interested in investing with him but he didn’t really have a vehicle to plug them into
- He came to the realization that, really, the only way to grow his business significantly was through syndication
- Otherwise, he’d keep buying 5-7 unit properties and the opportunity to scale that with outside investors would not yield enough to be worth it because the bulk of the money in a syndication goes to the investors
- He knew he had to look for more sizable deals to be worth his time
- Later, he came in with a couple of groups of investors who were investing in Florida
- There are a number of properties in Florida, the smallest of which is 57 units
Started a Podcast
- He had been investing for 13 plus years where he never utilized passive investors
- When some of his European partners involved in his online payment business wanted to invest in his real estate projects, he figured out how to do that
- So he decided to launch a podcast focused on foreign investors investing in U.S. real estate
- This became his niche
- 50% of his listeners are foreign
- Most U.S. syndicators spend their time looking for U.S. Accredited Investors
Finding Investors
- As his podcast grew, so did his foreign investors list
- 1/3 of his total syndication investors are foreign or abroad, the other 2/3 are U.S.
- Most of his investors abroad are from Eastern Europe and Hong Kong
- His foreign investors are more open to all types of international investment opportunities, not just U.S.
- He’s found that, as a result of Covid, more investors are open to moving to other locations globally
- This his stirred an interest in international investment
- He likes to present a variety of asset classes on his show for his listeners
- Regarding legal issues with international real estate investing, he often refers his listeners to attorneys who specialize in these areas
- He deals with both passive and active investors
- Many foreign investors don’t really understand a typical value-add strategy – they have different expectations some just want a good ROI, others look at investing as a good gamble
Biggest Investor Mistakes
- People starting out as new investors, like to get their first deal funded through friends and family – this makes Charles cringe
- The reason this concerns him is that when you start syndicating, there is still a lot to learn
- You aren’t going to know everything, you are going to learn through example
- You don’t want to “experiment” early on with people you are very close to
His Biggest Success
- He’s always looking for deals!
- Even though the market may not have many good deals, don’t stop looking
- Always keep reviewing potential deals and continue to study and learn about the market
- If you say, “I’m not going to look at deals until this (bla, bla, bla) happens in the economy, you may buy
- Sometimes he “hits a single or a double” but, nonetheless, he is still moving forward – they can’t all be home runs
Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years
- First, figure out what your goal is
- For example, if you want to invest passively so you can enjoy life more…
- You will need to find a good syndication
- You’ll need to carefully vet the property
- More importantly, though, you’ll need to look very carefully at the operator
- You also need to look at the property management company they are using – that’s not often talked about
- Because they are the ones who have to implement most of the operator’s plan
- They are KEY to the project’s success!
- If you are going to take the active route or are still vetting from a passive position:
- Buy a property in a good area
- Buy in a quiet area
- Look for a wave of gentrification
Current Business
- Still looking for new deals that will be:
- Good value-add propositions
- Lighter rehabs
- Also looking at building a new smaller multifamily apartment project
- 30-35 units
- You have many different options with ground-up projects
Rap-It-Up
- Favorite real estate book: Art of the Deal by Donald Trump
- Favorite business book: The 80 20 Principal by Richard Koch
- Most valuable web site for success (other than your own): CNBC.com (look for news on residential real estate)
- Favorite app: Trello
- Favorite quote: “Focus is power.” – Tony Robbins
- If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to launch your real estate investing business? I would start a real estate podcast on how I lost everything.
How to Reach Charles
- For Free 30-Minute Phone Consultation: ScheduleCharles.com
- His Website: CharlesCarillo.com
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