Optimal Equity Group: Ensuring Strong Returns for Investors w/Jarod Alexander
Watch on YouTube!
Or listen wherever you podcast!
Episode Description
Welcome to the Freedom Point Real Estate podcast! Today's guest, Jarod Alexander, shares how he 1) addresses common misconceptions that investors have, 2) identifies and vets firms and opportunities, 3) ensures strong returns and manages risk, and more.
Jarod Alexander is the founder of Optimal Equity Group which was formed to help educate investors on how to achieve strong returns by investing in real estate. Jarod’s responsibilities is to bring vetted opportunities to investors offered by experienced real estate firms with a proven track record. Jarod is a family man who is happily married with 2 amazing kids currently living in Phoenix, AZ. He is sales professional who has won numerous awards for his salesmanship and is known for his dedication to customer satisfaction. Jarod is passionate about helping others achieve their financial goals and believes that real estate is one of the best ways to do so. Jarod is a limited partner (LP) in 6 syndications totaling over 1,200 units in which brings experience and knowledge to recognize strong opportunities that may arise.
CONNECT WITH JAROD ALEXANDER!
Website: https://optimalequitygroup.com/
LinkedIn: https://www.linkedin.com/in/jarod-alexander-6383a0120/
Instagram: https://www.instagram.com/jarod_alexander2489/
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Understand the Importance of Operator Track Record
“A big factor for me is vertical integration and the operator’s track record.”
Investing in real estate syndications requires trusting your operator. Ensuring the operator has a strong track record and in-house property management gives them more control over the asset. This mitigates risks associated with third-party property management, which can reduce cash flow if not handled properly.
Tip #2: Invest in Emerging Markets
“We’re looking at Phoenix, Dallas, Houston, and Charlotte due to their population and job growth.”
Investors should focus on emerging markets with strong economic indicators such as population and job growth. These markets have a higher demand for housing, making them ideal for multifamily investments. Investing in these areas can lead to better occupancy rates and long-term appreciation.
Tip #3: Vet the Debt Structure
“Interest rates rising in 2022 made me pay more attention to debt structure.”
Interest rate fluctuations can significantly affect returns. It’s crucial to evaluate how the operator structures the debt, including the loan-to-value ratio. A well-managed debt structure ensures that your investment is protected from unexpected financial downturns.
Tip #4: Diversify Beyond Traditional Investments
“I quickly realized that multifamily syndications are a great way to diversify outside of the stock market.”
Syndication allows investors to diversify beyond stocks, bonds, and mutual funds. Multifamily properties provide a tangible asset with relatively stable returns. Investors benefit from both appreciation and cash flow, while spreading risk across multiple tenants.
Tip #5: Focus on Workforce Housing
“We’re investing in workforce housing, which has a broader tenant base.”
Workforce housing in multifamily syndications caters to a growing segment of renters, including millennials and retirees who prefer renting. This type of housing often has higher occupancy and less tenant turnover, creating a reliable income stream for investors.
Tip #6: Leverage Tax Benefits
“You still get to participate in the tax benefits with real estate.”
Real estate syndication offers significant tax advantages, including depreciation and pass-through deductions. These benefits reduce the taxable income of investors, making real estate an attractive option for those looking to minimize their tax liability while growing wealth.
Tip #7: Prepare for Economic Changes
“Interest rates staying high was unexpected, but we continue to base decisions on the numbers.”
Economic uncertainty requires adaptability. Investors should prepare for changing conditions, such as rising interest rates, by focusing on the fundamentals of their deals. Solid underwriting practices ensure that properties can remain profitable even in unfavorable economic climates.
Tip #8: Invest Alongside Experienced Operators
“I’m personally invested in these deals too.”
It’s essential to invest with operators who put their own capital into the deal. This alignment of interests ensures that the operator is equally committed to maximizing returns and minimizing risks. Transparency in operator performance builds trust with investors.
Tip #9: Prioritize Communication
“The operators I work with communicated well during pauses in distribution.”
Strong communication from operators is key during challenging times. Investors should look for operators who are transparent about the current state of the investment and any potential risks. Good communication helps investors stay informed and reassured.
Tip #10: Stay Educated and Keep Learning
“The journey has been a huge learning curve, but very rewarding.”
Investors should continuously educate themselves on real estate trends, risks, and strategies. Understanding syndication and multifamily properties will help you make more informed decisions and navigate challenges, leading to better outcomes in your investment journey.
