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Episode 42: Hunter Thompson – Passive Real Estate Investing for Cash-Flow

Hunter helps accredited investors invest in real estate primarily through mobile home parks and self-storage facilities. He aims to be diversified as much as possible. He saw opportunities in multiple markets, but they realized there was overlooked opportunities. He recalled watching bond markets back in 2010 and saw that global events were influencing his entire investment portfolio. This is what lead him to real estate investing.

He focuses on specific markets, that have cash-flow, and have good supply-demand equilibrium. His company invests in secondary markets that are often overlooked.

He uses a syndicated model which allows them to pool funds from multiple investors and work with a property manager as well as a sponsor/operator that works directly with the investors. As a passive investor with this arrangement your not dealing with the tenants in any way. This is similar to a privately owned REIT.

They use an operational agreement that outlines how things are managed, as well as a private placement memorandum which details the investment risk; the two combined are called a Private Placement Memorandum (PPM).   Investors ownership are structured via an LLC, and that company acquires the property any profits are passed through to the investor. These structures can vary, so you want to make sure you understand the structure and work with your legal council as necessary.

Mobile home parks are interesting in that they are depreciated over a shorter period of time. The shorter the schedule, the more deductions you can write off which results in higher cash flow.  It’s pretty astounding how much cash-flow you can derive along with a very significant tax write-off from depreciation.  Multi-family dwellings are a more competitive market, so depending on the economy and real estate cycle it may be harder to get good returns at this time in the market cycle.

U-Haul is an example of a value-added service to an existing storage facility as the facility can generate additional revenue streams by renting the trucks to the tenants of the storage facility.   This has been a straightforward way of improving cash-flow.

One can build significant wealth by using debt to purchase good cash-flow producing assets. You need a good knowledgeable team who can deliver.   This is why they spend the time early conducting detailed due diligence on these opportunities to ensure that they have the right team to execute the business plan.

Hunter has an amazing podcast that is dedicated towards real estate, and you can find it along with their ebook through cashflowconnections.com.

Talking Points From This Week’s Episode

• Discusses the benefits of investing in Mobile Home Parks and Self-Storage.
• Benefits of short depreciation schedules.
• Value-Add solutions to improve or expand offerings.
• Due diligence is an important part of any investment.

About Our Guest
Hunter Thompson is Managing Principal at Cash Flow Connections a firm which assists investors seeking passive cash flow focused real estate investments across multiple-geographic locations. They Manage website educational content, webinars, and articles. He is the author of “Rest Easy Real Estate” a short eBook that summarizes the low-risk cash flow focused investment philosophy.

Their goal is to help clients invest in passive cash flow opportunities that provide a healthy return on investment, without the headaches associated with the stock market’s volatility. They have analyzed and closed residential real estate acquisitions, hard money loans, bridge financing opportunities, commercial and residential syndications, mobile home parks, retail opportunities, and syndicated office space investments.

He has an extensive background as a fund manager of various Mobile Home Park Funds and a Syndicated Mortgage Fund that will purchase, service and optimize second mortgages.

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