By: Shmuel Shayowitz

A couple reached out to me at the request of their friend. They already owned a home, and with their current low rate mortgage, they certainly weren’t calling about a refinance. They were reluctant to call because they didn’t want to “waste my time” with a general real estate question that wasn’t business related to me. When I assured them that many of my conversations are not strictly mortgage-related and I am happy to help with any general personal finance or credit matter, they began to open up…

As usual, I am changing various facts to protect their identity, but the core premise always remains true. They were considering investing, for a second time, with a real estate investment fund but were in disagreement about whether to do it or not. This was a small company that raised money from private individuals and gave out a quarterly distribution based on their investment. The company recently approached them to reinvest, but the wife thought the real estate market would be weaker over the next few years, and the husband thought it would be stable, and a worthwhile opportunity for them. They wanted to know my opinion of the real estate market and if they should consider the investment. After hearing them out, I asked if their only concern was about the general market trend, and they confirmed it was.

Before I could reply with my thoughts, I told them I had a few questions of my own. I asked them if they knew the particulars of their first investment and if they could share it with me. They made a $75,000 investment two years ago that was “locked in” for five years. They receive $1,250 every three months. They knew the specifics of the property and recognized it was a successful venture for the company and had the property rented immediately without issue. Based on what they had seen from the initial investment, they were comfortable with the company and were willing to invest with them again, except for their concern about the general real estate market.

They trusted this company so much that they really didn’t get any new details about the new investment. I asked if they ever calculated their payout as a percentage. They did not. I wondered if they knew where the new property being purchased was located. They did not. I asked if they knew how much that first property was worth today, and they said it was worth “at least” $100,000 more. I described that it was difficult for me to give my opinion because real estate is a very geographically based endeavor. I explained that it would also be crucial to know what type of property it is and what their plan was.

Despite classifying themselves as inexperienced in real estate investing, they knew a lot about their local marketplace and gave many examples of properties they knew of. We discussed short-term and long-term opportunities, “return on investment,” and “building equity.” It didn’t take them long to realize the return on their initial 75k investment was less lucrative than they thought. They also quickly recognized the significant appreciation of value of the first property. We discussed the different types of real estate investing available to almost anyone depending on their level of interest, involvement, and availability. We also talked about some other non-real estate investment considerations.

I invited them to join me at the first-ever Kosher Money live event, which is being held on Tuesday, February 28th, at the Young Israel of Lawrence-Cedarhurst. (visit KosherMoney.org for more information). There will be a variety of guest speakers and panel discussions on “Maximizing Your Money,” – with a keynote speech by Naftali Horowitz, managing director, and senior portfolio manager at Morgan Staley wealth management. I will also be there talking about how some people can make money investing in real estate in ways they never considered. For those who can join, it’s sure to be highly informative and worthwhile. The good news is that Kosher Money, in partnership with Living Lchaim and Living Smarter Jewish, plans on doing these events in many locations over the coming months!

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at Shmuel@approvedfunding.com.

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