Successful Primary Market Investing Strategies with Kathrin Rein
Is it possible to make a solid return by investing in primary real estate markets like Miami? Yes! Kathrin Rein joins us to teach us the strategies that she and her clients are using in the Miami, Florida area to invest in a variety of types of real estate. From raw land to cash flowing multifamily, there is money to be made in Miami real estate!
Lessons you'll learn today:
- What to look for in high end markets
- Success stories others are having with Miami area real estate investing
- Who you need to know to get started
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Kathrin Rein's Bio:
What's going on guys is passive wealth strategies for busy professionals. The show teaches you all about passive wealth generation by investing in real estate with a special focus on strategies that work well for busy professionals.
Today our guest is Kathrin Rein and we are talking about successful real estate investing strategies that she and her clients are deploying in the Miami area in other high end markets but she is a leading realtor in Florida specifically in the Miami area. She works with many investors and invests herself in that area. we're talking about these strategies because normally on this show, we talk about the middle of the road to lower end markets that are typically considered more affordable, so to speak.
Miami is an expensive high end market. typically cash flows are lower correspondingly in those high end markets. we're learning important lessons about six cessful strategies that people are using in the high end market of Miami, Florida. This is super important. If you're somebody who wants to go after that, and you're today you're gonna learn the advantages of investing in those high end markets. it's a great one, I learned a lot. My investments are all in more affordable types of markets.
Maybe in the future, I will use some of these lessons to invest in a high end market like Miami, Florida. For those of you who are new to the show I'm a real estate investor, a real estate syndicator, meaning I buy real estate with passive investors and split the returns. Happy to bring this interview to you today. Without further delay, here we go with Kathrin Rein. Kathrin, thank you for joining us today.
Kathrin Rein 1:48
Hi, my pleasure.
Great to talk with you. For those out there who don't know about you and what you do. Can you tell us about your business and what you do?
Kathrin Rein 1:57
My name is Kathrin Rein. from Southeast Florida, and I am a real estate professional. I do sell people real estate that brings them money and wealth. I've been doing really well. For all of my clients over the past, I would say eight to nine years.
I do have a real estate portfolio myself that I invest in and I buy and sell real estate. I think what makes me really unique is that I do go the extra mile for my clients and they know that I care about them, and my clients make a lot of money with the properties that I sell them.
I'm really good with numbers and good and analyzing. A lot of them have created passive wealth by buying real estate and it makes me really happy. When my clients buy and sell properties, I always feel it's my own money. That's how I treat my clients as if it was my own money.
Last year, the year before, I was the number one Single agent with Keller Williams in the whole state of Florida. I've been doing this thing, and it's just a big passion of mine.
Great. That's awesome. today, I want to talk to you, you're in a higher cost market down in southeast Florida. On the show, when we talk about real estate, we typically talk about some of the lower cost markets throughout the country where prices per unit are a lot lower than the higher end market of Florida.
I wonder how to get an understanding of what your clients are looking for investment properties and in that area, look for what strategies they typically pursue and like who the right investor is. let's understand that. So.
Kathrin Rein 3:44
Okay, I mean, it depends, again, on who the investors are and what they're looking for, right? I mean, we have the multifamily investors, we have the commercial investors and then we have the people that just want to buy for a really, really long term. 2030 years down. The line is an investment for the children to leave a legacy to them and to leave them land.
So , one of the things that we look for in the investments that I make is cash flow where, we buy at a price so that we're aiming to get cash flows. When you're buying at a very high price, you're generally not going to make any cash flow unless you're buying in cash.
Are your clients experiencing cash flow? Are they really looking for that long term appreciation? And then how are they dealing with that?
Kathrin Rein 4:32
I do have clients, most of my clients, they really do want to have cash flow. They are very focused on that and it depends obviously on the location that you pick, if you have more cash flow or less. it also depends if you pay cash or if you know how much you put down and your finance and your interest rate. I do also have a lot of investors right now, a lot of them from New York.
Just want to buy waterfront land and it doesn't really matter to them how the house on the land looks like as long as it's somewhat somewhat rentable, right i mean with a few updates and we might have to put 50 hundred thousand into it but they buy for the land because they bank on the lands going up in value because we don't have a lot of waterfront land anymore in South Florida and they bank on the land going up and those are the people that then buy as investment because they have the extra disposable income that they want to invest and put in a safe bank like real estate bank account for their children and the ones that are buying for investments and they obviously they need an analysis so I find them some either off market we do a lot of multifamily is mostly off market I did sell last year a lot of multifamily and the ones that I have and for example I had an $850,000 for blacks in Coral Gables, that when I saw like a 25 to one of my past clients, and that one generated around 8000 income a month, but it needed he needed some work.
If that one was already fixed up, it would have been 1.2 million so I feel like he got a really good deal because it's needed about $100,000 of work, but he got it because he has really good cash flow right away.
For example, his parents bought it for him as an investment because right now we have very beneficial tax laws where the parents can gift their children without paying taxes on the gift and they saw the opportunity and took advantage of it.
Okay, so mean taking advantage of tax laws is great. That's what it's there for to be there for. Yeah, that's why we use it. So. Okay, so it sounds like this is that type of investing is usually for folks on the higher end of the spectrum with more cash to invest, probably higher income earners that are looking to maybe diversify their investments and get into real estate and , is it a priority for them to have cash flow? I mean, it sounds like the kind of the land speculators, if you will,
Kathrin Rein 7:22
and fairly dependent care. It means the ones that were waterfront there, I mean, those houses are three $4 million, and they went for 13 14,000 a month so you don't talk about getting it.
I mean, if you finance those, you have really negative cash flow. But those are people that pay cash and they for them, it's important that the rent covers the taxes and the insurance . There's nothing else that comes in so they really bank on the land. But, for example, that young gentleman that bought me the four Plex, he really wanted the income so he gets $1,000 every month. He doesn't have to work as much anymore.
Because he has that passive income. , I mean, you don't need to spend 800,000, you can also buy properties for 200,000. You can buy condos, I just listed two condos, close to the beach, and then one just under 120,000. The other one under 130,000. You can rent them out short term. they're both rented right now at 1300 a month. Those are pretty good deals too. it really depends on what you're looking for.
I know some investors that some investors that I deal with go through costs per door, that's very important to them. They don't want to spend more than like 150,000 per door. That's their rule. other people look more at I want to have at least an income per door of 2000 because I don't want to chase someone over a $900 rent check every month. It's a really different kind of investor that I'm dealing with, and it's really super important when I meet with them to find out what exactly is important to them because not everybody wants to have 30 doors and 30 times collecting rent.
Some people prefer to have only eight doors and more expensive properties.
Absolutely. I mean, it's a completely different management problem and you brought up something that I wanted to get to was the short term rental trend market, whatever how that is impacting your area and what folks look for when they get into short term rentals. let's talk about that. Let's get started with short term rentals.
Kathrin Rein 9:36
Sure. Um, the good thing is I used to be a short term rental agent before I got into real estate so I'm very familiar with the market and what I have to tell you and especially in Miami Beach, short term rental is in most areas illegal, and a lot of agents don't know about it or are not familiar with the rules, laws and regulations.
I've had a lot of clients that came to me after they purchased the property that they ate. had told them they can rent it short term and then they found out they couldn't.
You have to be extremely cautious and careful and speak to someone that's really knowledgeable about the laws. There are only a handful of buildings that allow short term rentals and if you rent short term you also have to pay certain taxes to the city you have to pay the hotel tax and you have to know the rules. that is very important and in other parts of Miami, it's a little bit easier to rent a short term like coconut grove you can rent it Coral Gables is a is not as easy but you just have to know the loss and I do have clients all the time that call me Hey Kathrin, I want an ocean from one bedroom. Short term rental allows 150,000 honestly I have to tell you, that doesn't exist.
If you're trying to find something like that it is almost like finding a unicorn and I've had a lot of referrals Especially from other agents from out of state because I do get a lot of referrals from other agents. they send me someone that has exactly those requirements. it's, it's hard for me to bring those people back to reality, but I rather do it in the beginning then disappoint them later.
Okay, so it's not the right fit for your market. I mean, for those folks today, do you send them to I don't know, Fort Lauderdale or another ?
Kathrin Rein 11:26
Well, you do. You can find that in Miami Beach. You just need it. , it's just a handful of buildings and they may send me like Zillow links, like what about this building? It says short term rental alone as the listing agent is probably not familiar with the laws.
don't sue me, and because I didn't disclose that to you. I always make sure to have an email from me saying that it's not allowed. I mean, basically, they can do whatever they want. If they own it, I just don't want to be liable because I don't like to lie to people.
I want to give them full disclosure and I want to keep them as clients as for me, not just one transaction it's been like a lifetime relationship with my clients and I, I just it's not worth for me to get one check to lie to someone.
I think that's that's good, that's a good way to look at it. Now you're talking about these buildings where short term is allowed and not allowed. You're saying laws. Is that a matter of law? Or like an HOA regulation? Or what is the specific restrict
Kathrin Rein 12:32
question law? Sometimes it's both. the HOA has their rules, and then the city has their rules. it has basically a map in Miami Beach and what areas it's allowed and it's not allowed. Even if it's in the area allowed and the HOA doesn't allow it, you can rent it but even if the HOA allows it in the area, you cannot rent it short term.
there are a bunch of buildings that are all spam. Finish around, especially around Lincoln both having condo docks, no regulations as far as the length of rental, but the area doesn't allow it. , even if you're allowed from the building, you can rent it and they find some really steep on the first occurrence.
I mean, I don't want to put an amount right now because the laws might change in the future, but it was five digits. That was the first and well I can say 22,000 is right now as of 220 20. The first violation if you get caught doing short term rentals in that area, that's not allowed.
Wow. I think and the same
Kathrin Rein 13:37
people, people that rent to short term being kicked out by the police. that being pretty strict. The city has people that are looking at all those Airbnb ads and yeah, they've become strict because their hotels don't want to lose their clients to Airbnb rentals. , it's a fine line. I can understand both sides. I went the other day to it.
Chamber of Commerce a meeting.
Unknown Speaker 14:04
And it was
Kathrin Rein 14:05
it was all about short term rentals. It was very interesting and I think they're going to change the laws a little bit to make it a little bit more liberal. But you'll have to understand both sides if somebody lives in a condo and they like to enjoy life , their privacy and their quietness, and then the next door neighbor rents the unit short term with party people. No, I mean, not everybody comes to Miami's party but
yeah, if you're renting that you're getting an Airbnb in that area. The odds in your party are pretty high. All right,
Kathrin Rein 14:37
but if you do work with a few buildings in Fort Lauderdale, well, there is especially like a few buildings in Hollywood in the Hollywood area, and this is very normal for people.
Okay, so one of the things that some folks do in certain areas to get around this short term rental regulation is they limit the rentals to 30 days, then that typically when there's a short term regulation in certain areas, they might say anything less than 30 days, something like that. Yeah. Is that a fact?
Kathrin Rein 15:11
Well I feel like if you put the 30 days it gets out of control because people get creative. They put a contract in for 30 days, but then they just stay a week. I think if you really don't want an issue, a short term rental, you should do six months or longer. It's I can't take sides because I have clients on both sides. I understand both.
Unknown Speaker 15:36
Yeah, no, I understand that.
Kathrin Rein 15:38
It's a never ending issue in Miami Beach. Never Ending discussion. People suing the city to the city suing the people it's, yeah, you had actually one of my listings.
We had a tenants that rented it in the past and he the tenant, then suck rented a sublet it is short term and my owner got fine but we were able to show them we had a long term contract and I think they waived the fine but I mean now I need to put it specifically in every lease although it says in the lease contract that is not allowed to sublet it but I'm putting it again in both letters no short term rental is allowed.
If you sublet short term you have to pay the fine because I mean they're not , normally they don't pay the fine the owner has to pay the fine and then the deposit doesn't cover it. It's $22,000
Wow, yeah, I've met short term rental people that in certain areas they might know that there could be a fine but they say yeah, they're not gonna get me in the fines gonna be 200 bucks, so I don't care, enough money but 22 grand I mean, that's enormous. That's why
Kathrin Rein 16:48
they increase it, but to speak about something positive because I don't want to focus on the fun is a few really cool buildings. One of my clients bought one, one bedroom, two blocks. From the beach, and I think he bought it for like 185,000 a few years back, and he gets like five 6000 a month and rental income is incredible.
then I had those units in Edgewater, which is just on the base side of Miami. the one bedrooms would render five 6000 a month and they were only to purchase they were like 250. really good price.
I'm honestly, I'm honestly surprised. I mean, it sounds like they're more cash flowing opportunities there than I had expected. Mm hmm.
Kathrin Rein 17:34
Yeah, you just need to look, so that you can find a good opportunity in any market.
That is the way to look at it. I also wanted to ask you while we're here we're gonna right now we're recording this in April of 2020. During the Coronavirus, shutdown and everything and , in most areas of let's be real, we're going to see an impact on real estate unfortunately. What are you expecting? And what about Folks expecting in Miami, to change over the next couple months to a year.
Kathrin Rein 18:05
Okay, this is just my personal opinion I have to say that and this is not like an advice because I don't want to get sued by people by putting my opinion out there
Kathrin Rein 18:17
so I feel
I'm really busy. I slowed down in the beginning a tiny little bit but I sold last week for houses. I got today two more listings today. I got over this last month, like probably 10 listings. I have several properties on the contract. I really, really fine tune my video skills and I have a lot of virtual open houses going on and I'm very successful with it. Like people can look at the properties from the couch and people love it. I kind of changed my mindset. I'm really proud of that. I feel That's, it depends how long this all takes, right? I think you're going to be out of this pretty soon. I feel a lot of agents have gotten out of business at that time, because they need to find a real job they can't afford to. I'm glad about that. Because I can gain more market share and all the mom and pop shops, people that sell like two houses a year, they're probably going to go back to, I don't know, selling furniture or working where they were working before. , um, as far as interest, I do have a lot of buyers right now that are looking and the inventory is extremely low. For whatever reason, some sellers think that it's not a good time to list and they're holding off. I think it's like, it's not the smartest thing to do because right now people are looking and there are serious buyers out there because who would look right now only the people that have to move. by being right now on the market, you have a huge advantage because it's not a lot of inventory. I think I made an offer the other day on a $2 million house with my buyers they had five offers and today my people were paying cash and we didn't get the house so and I can't find anything else for them nothing on the market so I started looking off markets it's, it's just crazy. I think that a lot of buyers are just waiting for more inventory and once this is over, there is going to be a lot of inventory on the market too and a lot of buyers so it might get a little bit crazy. I think it's actually going to be heating up the market. I don't think it will affect our market much to be honest with you. The only thing that I think will be effective is the condo market. Because after this I don't think a lot of people would want to be in a condo anymore.
Oh yeah, due to proximity to other people.
Kathrin Rein 20:48
I've had a lot of people that lived in condos find it. I found them a single family house during this time to rent because they didn't want to be in a condo. the condo market Might be a little bit effective, but single family, I think it's going to be hot. that's just my opinion. I'm prepared. I'm prepared to take market share. I see this as a huge opportunity for someone that is out there. I'm just trying to keep my clients posted on what's happening in the market. I do weekly market steps videos, and I can't wait for For this we'll
get rocking, rolling.
Nice. I love that mentality. I love your mindset. That's great. I hope we do get out of this before. anything bad happens, but it sounds like nothing Bad happening yet so that's definitely
Kathrin Rein 21:42
besides all the people dying.
I should say the real estate market.
Kathrin Rein 21:49
Yes, yeah. Honestly, if it wasn't for it for the sad reason we have this kind of locked on right now. I love this right now because I did this past week. In Nine, eight or nine open houses, and I didn't go to any property, I was over Chow, and it's very time saving. I find this very efficient.
Nice. I like that. Right now we're gonna take a quick break for our sponsor.
Great. First one, what is the best investment you've ever made? Other than in your education,
Kathrin Rein 22:28
other than in my education?
That's this. That's the asterisk.
Kathrin Rein 22:33
So I can say, getting into real estate.
We'll take that answer get into real estate but how
Kathrin Rein 22:43
I had real estate agents that told me Kathrin, You're so smart and good with numbers you should get into real estate and I'm like real estate. to me like the most boring thing ever and I'm glad I did.
Because I started to really absolutely love it. I think the investment aspect, if it's a property that I'm looking for myself for, or for my clients, that gives me a lot of pleasure, like I look at the numbers and can tell you within five seconds if it's a good investment or not. I just love that. then if you look at I mean, real estate is kind of something that has to do with education. But I got really lucky because I started right away with Keller Williams and I feel the company has provided us not just with tools, how to sell real estate, but also how to get passive wealth, and how to acquire it and how to keep it. they really emphasize that a lot since I started and I don't think I would be where I'm at right now.
I mean, I came to this country with $700 in my pocket, and now I could really retire just from the passive income. I'm getting My rental properties if I wanted to, but I don't want to. it has given me a huge opportunity and I feel it's really hard to find a company that is , so interested in having the agents being wealthy and I saw that even more now during the crisis with all the things that they offered it was fairly phenomenal so I got really lucky to to align myself with the right company.
Then as far as investments since we're talking about real estate, I own one of my properties. I got an A really really good deal. I feel it was listed below market value and my husband always sees those deals because I don't have time for my own deals. I care about everyone else, but not always. There were agents on our own deals. He found this property and it was a hot property. They had a lot of offers on it and he put in a cash offer and he bought it on a hard money loan, but he refinanced it four months later. it appraised for 50%. More so at a really good deal, and then the tenants lease was up. We were able to raise the rents, we have a 13% return on it and the lease goes up every year.
I forgot two or 5% of like a several year lease, it's a commercial property. That is one of my best assets. After I got that, I got rid of a few other ones and I'm in the process of finding different properties that give me a better return. Like one of my single family homes right now I'm closing on it in a week, because I have like 300,000 equity in it and it gives me zero return like the mortgage is 3500 or minus 3500. it doesn't make any sense to keep it so I'm looking for a different investment. I do that every few years.
Keep repositioning. I like it. On the other side of that we had the best investments. What is the worst investment you ever made?
Kathrin Rein 25:56
I bought a flip good price. I think we bought it at 520 and sold it at 920 4000 more. But I partnered up with someone that I barely knew. that was supposed to be a general contractor. I did not keep an eye on the expenses, his budget was 80,000. he spent, he spent everything so we closed on it with zero profits.
That has taught me to be very careful who I partner up with, extremely careful, not just some stranger from the street, and be too careful, if I do that, I need to be 100% in and watch the expenses because I just trust it too much. it's just I mean, I didn't lose so that's a huge blessing. I didn't lose and I learned a lot during the process. But if you put like so much work into this property and walked away with nothing
Ouch. That hurts you. You walked away with nothing and last time and but yeah, the lesson. there's some that happens.
Kathrin Rein 27:07
I mean, I didn't lose. That's a positive thing for me. It was a learning process.
Yeah, absolutely. My favorite question here at the end of the show is what is the most important lesson that you've learned in business and investing
Kathrin Rein 27:19
location is extremely important. I feel sometimes it's worth to spend 20% more on a property just because the location is phenomenal or a plus, even if the return is a little bit lower, even if the rents are a little bit lower. Or if the property needs a little bit of work, because you can change a lot of things on a property but you can change the location. I've always bought in prime locations and I don't regret ever buying in prime locations.
I know a lot of people they they want their 10% return and I'm just not a person that wants to collect their rent with a gun and my name Me, in Miami, you have to if you want a 10% return you are you have to be extremely like I couldn't go to collect the rents I would have to hire someone.
I rather have a little bit of a lower return and be in a prime location. , and I feel on a long term, it's it's, it's the best. then the other thing. The other thing that I've learned is you can be somewhere in five years investment wise like you never imagined. I could have never thought that when I started my first property in 2012. I never imagined having so much wealth through real estate. It's just one step at a time and you can do it. You don't need to have crazy income. You just need to be really resourceful. You need to be free.
Skip vacations for a few years and put it towards a down payment. you just do it piece by piece. Once you have more equity in property, you can cash out and buy another property. I feel by being in the business I've learned by being with the right company, I've really learned how to do that. That's a huge blessing. I I don't know what I would do in life without this knowledge now. I'm really grateful.
Great. Well, I appreciate everything today's teachers about your market and the strategies your investors use and many of your experiences. If folks want to learn more about you and they want to get in touch, where can they find you?
Kathrin Rein 29:43
Yeah, I'm everywhere. If you Google me, there's a lot of my videos I have on YouTube channel. Beautiful Miami. My website is beautiful Miami. Oh, the site no the site okay.
I'm on my website. my email [email protected] . But if you just Google my name Kathrin Rein, I'm all over the place. I'm also on Facebook, just reach out if you have any questions, and I'm always happy to help others and to mastermind and connect other people, and I'm here.
Nice. Well, I appreciate it. Once again, all the lessons and thanks for sharing your information. If folks want to get in touch, they definitely should. Thank you for joining us today. Awesome. Thanks for having me. Great to talk with you. For those of you out there tuning in. Thank you for listening. If you're enjoying the show, please leave us a rating or review on Apple podcasts. It's a very big help and helps other people learn about the show. If anyone who could use a little bit more passive wealth in their lives. Please share the show with them and bring them into the tribe. Thank you for tuning in. Once again, I hope you have a great rest of your day and a great week. We'll talk to you on the next one. Bye bye