6 Steps to Real Estate Success

By Alan D Pollack

6 Steps to Real Estate Success is foundation level publication to help new and experienced real estate investors to the nuances and details of the industry. The 6 Steps are; Finding, Analyzing, Controlling, Funding, Managing, and Monetizing. In its simplest form, the funnel can only be modeled in the sequence of th

• Language: English
• Publisher: Delta Investment Group, Inc
• Release date: Jan 18, 2023
• ISBN: 9780578278339

Book preview

6 Steps to

Real Estate

Success

ALAN D. POLLACK, CCIM

Copyright © 2022 Alan D. Pollack. All rights reserved. No portion of this book may be reproduced mechanically, electronically, or by any other means, including photocopying, without written permission of the publisher. It is illegal to copy this book, post it to a website, or distribute it by any other means without permission from the publisher.

Alan D. Pollack, CCIM

1306 N. El Camino Real

San Clemente, CA 92672

Telephone [phone]

Fax [phone]

[e-mail]

www.DeltaInvestmentGroup,com

Limits of Liability and Disclaimer of Warranty

The author and publisher shall not be liable for your misuse of this material. This book is strictly for informational and educational purposes.

Warning – Disclaimer

The purpose of this book is to educate and entertain. The author and/or publisher do not guarantee that anyone following these techniques, suggestions, tips, ideas, or strategies will become successful. The author and/or publisher shall have neither liability nor responsibility to anyone with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in this book.

Disclosure

THIS BOOK CONTAINS REFERENCES TO VARIOUS INCOME TAX AND LEGAL ISSUES, INFORMATION WHICH IS NOT TO BE RELIED UPON WITH REGARD TO ANY SPECIFIC JURISDICTION, INSTANCE, OR WITH RESPECT TO ANY PARTICULAR TRANSACTION OR BUSINESS OBJECTIVE.

ALWAYS RETAIN OUTSIDE LEGAL COUNSEL AND ACCOUNTING ADVISORS. THE AUTHOR, ITS AFFILIATES, EMPLOYEES, ASSOCIATIONS, AND BROKERS ARE NOT AN ACCOUNTANCY, LAW FIRM, OR REAL ESTATE AGENCY WITH ANY SPECIFIC REPRESENTATION, AND THEREFORE ADVISES ALL READERS TO EMPLOY THE SERVICES OF APPROPRIATE LICENSED PROFESSIONALS IN ALL RELATED MATTERS.

THIS BOOK IS EXPRESSLY NOT INTENDED TO IMPLY ANY ASSURANCES WITH RESPECT TO THE NATIONAL OR LOCAL ECONOMY, REAL ESTATE APPRECIATION, PROFIT POTENTIAL, OR THE ELIMINATION OF THE ORDINARY RISKS OF REAL ESTATE INVESTING AND/OR OWNERSHIP.

Table of Contents

Since Then...

What Others Have to Say…

Foreword by James Mencini

Dedication

Acknowledgments

About the Author

About Us

How to Use This Book

Preface

Chapter 1 - Let’s Lay the Foundation

Begin with the end in mind. 

- Author of The 7 Habits of Highly Effective People, Dr. Steven R. Covey

Chapter 2 - Establishing the Metrics

Watch the pennies and the dollars will take care of themselves.

- Benjamin Franklin

Chapter 3 - Active vs. Passive

The journey of a thousand miles begins with the first step. 

- Chinese Proverb

Chapter 4 - Finding

If you know you close one out of ten, get the nine out of the way as fast as possible. 

- Zig Ziglar

Chapter 5 - Analyzing

Every one minute you spend in planning will save you at least three minutes in execution.

- Author, Crawford Greenwald

Chapter 6 - Controlling

Exert control over the variables that are within your control, and you’ll improve the odds that the uncontrollable variables will work in your favor.

- Executive Consultant, D.A. Benton

Chapter 7 - Funding

Money will always flow toward opportunity, and there is an abundance of that in America. [Our] best days lie ahead. 

- Warren Buffet

Chapter 8 - Managing

If you take care of the small things, the big things take care of themselves. You can gain more control over your life by paying closer attention to the little things. 

- Emily Dickinson

Chapter 9 - Monetizing

When it’s obvious that a goal cannot be reached, don’t adjust the goal, adjust the action steps. 

- Chinese Proverb

Chapter 10 - Get Into the Flow

What you can do is often simply a matter of what you will do. 

- Author, Norton Juster

Chapter 11 - How to Balance Risk and Reward

Progress always involves risks. You can’t steal second base and keep your foot on first.

- Author, Frederick B. Wilcox

Chapter 12 - Truth or Consequences

I don’t think much of a man who is not wiser today than he was yesterday.

- Abraham Lincoln

Glossary

Index

Since Then...

What a time in the history of the world and, more specifically, our industry. We felt it would be a great opportunity to document some of the changes in the past 10 years and comment on the current state of affairs during COVID-19; however, before we share our notes and opinions of the current climate, maybe a little recap of the market since 2011.

Since the downturn of the market of 2007-2009, thereafter entitled as the Great Recession, the general state of the real estate market has been positive and growing in value and stability. Although the commercial markets suffered for a prolonged term, primarily for the lack of commercial financing or higher qualifications, in fear of the markets continuing to recover, these aspects of the slower commercial markets actually recovered faster than expected and appeared to normalize during the period of 2014-2016. Certainly, there are dozens of reports, expert opinions, and historical tracking that may support or add questions to this observation. However, the pre-COVID period was a good window of opportunity, expected to recover.

Another observation was the proliferation of the wholesale and fix and flip markets in the non-commercial markets, primarily in the SFR, townhouse, and condo markets. You didn’t have to be in the business to be exposed to the noise on TV, reality shows of Fix This House, Property Brothers, Flip or Flop, and a dozen other titles offered on Saturday mornings or 2am on the major networks. Although this provided a new generation of opportunists and even a platform for new investors, who may never have even written a real estate purchase contract, began flipping houses with assignments and other no cash, no credit attempts to control real estate. This proliferation of new or reinvented investors, although well within the scope of a capitalist market, has created some artificial market lift or value comparable and expected to normalize during a shake out of single deals investors.

Although interest rates are usually fluid and change with the announcements from the Feds, interest rates, for the most part, have been the lowest in decades, and for periods of time, have been in the mid 2% range for FHA/VA and other special programs and encourage owner/occupant buyers to take advantage of long term financing. Some qualifications have cushioned the lower rates, with a lower debt-to-income (DTI) ratio. However, for most owner/occupant buyers, the climate is favorable.

For a number of years, we’ve had the great pleasure to build the business model that provides a near endless stream of opportunities, insomuch our model has always been directed to a value-add opportunity first and foremost. However, backed by our exclusive Alternative Program model, it provides a solution for those sellers that need to sell while providing a forum for Rent to Own (RTO), Lease with Purchase Option, seller carry and loan wraps, along with legal and structured financial solutions.

One of the highlights of the past decade was the successful launch of the www.FindMeDealsNow.com, a sophisticated internet deal scraping software designed to focus on deal and transaction activity, for an immediate buyer/seller engagement. The premise of the software is that Not all leads are good deals…however, ALL deals start off as a lead, and therefore, the process is simple: Click the Line, Open the Ad, Make the Call, Write the Deal…Done!

During the recovery period post the recession of 2008, we became very affluent and successful in hosting the fix and flip business as a prelude to the Alternative Program options. Our buyer base is diverse and active in both single and multiple property purchases and provides a regular and predictable pipeline of opportunities.

Last, with the continued and growing needs of affordable housing, we’ve taken advantage of the incentives offered by a variety of housing, government, and tax credit programs to build new construction under Measure JJJ in 2017, under the Transit Oriented Communities (TOC) and other city based programs. This allows a density bonus in the proximity of rapid transit, bus and rail, suggesting that those properties within the immediate communities may not need the parking dedication, and, therefore, that square foot designation be better used for occupancy and square foot floor coverage area (FAR) benefits. This is an accelerated business opportunity at the beginning stages of addressing housing in high demand areas and investor opportunities not seen in the past.

We want to take this opportunity to thank all of our clients, business associates, family members, and customers for your continued support and encouragement and look forward to the future together.

Alan

What Others Have to Say…

A great resource for the beginner as well as the seasoned real estate investor. Alan is able to give the reader a good big picture investment overview along with a detailed follow-up as to how the game is played.

—John Lembeck, Managing Partner, Citivest Realty Services, Inc.

Alan has been in the real estate game for over 25 years. When he talks, you should listen.

—Jim Shute, J.W. Shute Int’l

I have been working with Alan for a little while now. What impresses me the most about him is his diligence and how hard he works. His knowledge of real estate and ability to network with what seems like every real estate agent in the state of California is amazing to me. I look forward to working with him for a very long time!

—Juan Jones, Acquisition Analyst, Tarek Buys Houses, LLC

Working with Jim and Alan is always a pleasure.  Their vast experience in the real estate industry is apparent whenever you have the pleasure of working on a transaction with them.  After closing several transactions with them I can say with confidence that they are true professionals who always give 5 star service to their clients.

—Matthew Miller, Founder, Fair Trade Real Estate

Working with Alan and James was a home run. They delivered on their promise to bring a ready and qualified buyer, kept in close communication throughout the transaction, and successfully closed on a fantastic property. It was a true win-win for all parties. I applaud their work ethics and am happy to recommend their real estate group.

—Brittany S, KW

James Mencini and Alan Pollack (Delta Investment Group) are some of the best real estate brokers working in the business.  Very few brokers have the investment knowledge and experience to source properties that truly make sense to an real estate investor.  I have closed multiple transactions with these guys, and their professionalism is unmatched.  Anyone will be hard pressed to find any real estate brokers that are as hard working as these two.

—Tommy Y. Senior Acquisition Associate  

Alan and James rank on the top of my list as the most professional, understanding and first-class agents in the business. They were both exceptional prior to the sale, during our escrow and throughout our entire transaction. They were able to deal with a very complicated and challenging situation with kid gloves and had the patience and tenacity to see all sides in order to complete the sale and close the deal successfully. I highly recommend them both and look forward to another transaction with them soon. Simply put, Alan and Jim, you both rock!"

—Nedra J. Broker Associate, Engel & Voelker  

Alan, you and your company, the Delta Investment Group were a pleasure to work with on the Sale of my listing on Beach Road. We had a few hiccups, but through consistent ‘old school’ communication and negotiations, we made my Seller happy, and we were able to close successfully. I look forward to possibly working with you and your team again real soon. Thank you for all your efforts.

—Joy C., Broker/Property Manager

James & Alan are an absolute pleasure to work with! We’ve worked together on a couple of transactions and they were on top of everything from start to finish. You won’t regret working with the Delta Group.

—Brian Tella, CA Licensed Agent

Alan’s 20+ years of experience in the Real Estate field translates into easy to understand concepts in his new book 6 Steps to Real Estate Success. He has an amazing passion for the industry and he wants to share it with everyone. Each chapter is filled with valuable insight to give the novice investor the best opportunity for success.

—Riachard Bash, CA Licensed Agent and Business Consultant

Alan is very generous with his robust knowledge of the commercial space and always willing to mentor and share his expertise!

—Diane Mills, eXp Realty and Marketing Professional

Alan & James know the fix and flip/investment business better than virtually any other brokers I have worked with in my 23 years in real estate.  I recommend them wholeheartedly & without any reservation.

—Matt Battiata, #1 Individual Agent for eXp Realty Worldwide for 2020 & 2021.

Worked with Alan Pollack and  James Mencini in the past. If you ever have the chance to do a transaction with them you won’t regret it. They both have years of experience in Residential and  Commercial Real Estate. We look forward to doing business with the Delta Investment Group.

—Lisa and April Lamborghini- Moussette, Lamborghini Real Estate Group

I recently completed a transaction where I represented the seller and James and Alan of Delta Investment Group assisted the buyers.  The process was smooth thanks in large part to James and Alan and their attention to all the important details.  The entire process was win-win" and I look forward to our next escrow.  Well done!

—Dan May - Realtor, Broker Associate, Keller Williams Advisors - Santa Monica

"As a retired airline pilot and active real estate Broker for over thirty years, I have done business with Alan over the past decade and have found him to be extremely educated in the commercial, residential, office, retail and multi-family real estate sectors. He is a leader in the development of affordable multi-family units in the greater Los Angeles area, and the go to guy in the Transit Oriented Corridor Sectors. His last book was a great read and very informative. I’m sure his new book will become a must read. Capt. T. Gäst, Ret.it

—Thomas Gast, Sr. Asset Manager, InvestorHaus-South Lake Tahoe, CA

Alan truly is invested in every one of his transactions, pushing to get the best deal for his clients not only at acceptance but throughout the entire transaction.

—Joshua Varela, Partner at Golden Coast Loans, San Clemente, CA

Foreword

The purpose of this book is to help those who want to learn more about standards in the real estate investment process and make changes in the patterns they may be currently using to improve or change within the economic nature of real estate. Over the past 30 plus years, I’ve seen everything from the rise in the foreclosure markets, accelerated unemployment, and the economically challenged climate, so having seen several cycles, it has been a great benefit to see a document like this to learn from the past, not make the same mistakes that others have experienced, and have a working manual for all phases and stages of real estate investing.

For over ten years, my partner, Alan Pollack, and I have evaluated and tracked over a billion dollars of real estate assets from failed banks, FDIC and sponsored participation, rise and fall of interest rates, and relative market changes to those factors, and the explosion of house prices that in many cases have become unaffordable to the working class. We have been a collaborative partner in many fix and flip cycles, seen them come and go, and initiated a steady flow of business by taking advantage of the 6-step process. So, from someone who does it every day, the funnel is paramount to effective time and money management.

Due to our extensive knowledge in this sector, we are often sought after for advice and updates on the real estate market. We have found ourselves mentoring and training both inexperienced and seasoned real estate brokers, opportunity investors, and those seeking to cash in on putting deals together as buyer brokers or consultants.

Based on our knowledge and experience, Alan felt compelled and driven to write this book to give the novice, the seasoned veteran, or just the inquisitive reader an idea of how to build a real estate business, invest in real estate, or just take advantage of others who have not only done it, but also document what works and what may not be based on the mission and objectives. Interest rates for certain are at historic lows and will surely be on the rise, right? Whatever the answers to these questions, the information contained in this book can help you understand that 6 Steps to Real Estate Success is a valuable tool for all cycles and situations in real estate investing.

This book may help you change your belief system and encourage you to search out the golden opportunity of cashing in on real estate while the time is favorable or even when it is not. With that vision, there is a new opportunity for wealth building using real estate as a hedge to the changing economy and opportunity investor.

I trust you will find substance and direction in the chapters to follow as much as we have enjoyed sharing our experiences and success in this new, yet familiar, frontier.

James

Dedication

This book is dedicated to my late father (Jack), who instilled in me a foundation of Do your best, be proud of your work, do it right, and do good. Although my father passed on some time ago, his teachings and my respect for his honor are with me every day, and I’ve been blessed with his presence forever. To my mother (Blema), who was a strong woman and taught us manners and how to be respectful to everyone; Open the door for a lady, stand up when introduced, pick up your trash, and remember that people notice what you do, so do your part to be a good person.

Acknowledgments

I’d like to extend my personal thanks to the many friends, family, colleagues, business affiliates, and clients who have welcomed my opinions and expertise in a changing market and shift in paradigm.

A special thanks to my business partner, James Mencini, who has been my peer and super-fan through all of our endeavors and challenges. His continued support, appreciation, and unwavering championship have been extremely motivational for me.

A special thanks goes to the colleagues I work with every day, and I may not acknowledge all of them, so my apologies in advance if I missed any of them. In particular; Jim Shute, John Lembeck, Daniel Gehman, Alistair Waddell, Chuck Salas, El Juan Jones, Nedra Jenkins, Al Marshall, and my other friends and colleagues who provided incentive and encouragement to see this through to the end.

A huge thanks goes out to my family – and especially my big sister, Susan Pollack, PhD, who is more than accomplished in her vocation, education, family, instructional practices, and encouragement. Her patience for proofreading and helping to edit this manuscript is beyond measure. Also, I want to thank my other brothers and sisters for their great support and encouragement. I’m hopeful that the writing of this book will provide an added inspiration for them to share their experiences and knowledge with the world.

And special thanks to Sara McIntosh for her patience and expertise in editing the draft and Donna Kozik for providing the constructive objective to the final edit. For me, the start was easy. It was ambitious and had a purpose. The end was always in sight. But the middle – the editing portion – was the heavy lifting, so having Sara and Donna there to move things along helped bring this idea to the finish line.

About the Author

Alan_1_whiteBG (2) Alan D. Pollack, CCIM

Alan Pollack is the founder and President of Delta Investment Group, Inc. He has been a licensed California real estate broker since 2002 and a former registered representative in the securities sector. Prior to the market downturn of 2008, Mr. Pollack specialized in commercial, NNN, and tenants in common (TIC), participating in over $50 million of placements.

Beginning in 2003, he provided 1031 safe-harbor parking strategies as well as lifestyle-change and estate-planning strategies for his clients. His strategies are well suited for retirement portfolio balancing of self-directed IRA/401k as well as for passive real estate investing. During the 2009-’10 market change, Mr. Pollack provided a transparent and equitable process of bringing off-market, unlisted, distressed assets to the public market. He works with direct buyers, funds, and REITs to acquire discounted commercial and asset pools and tracked nearly $1 billion of distressed assets in 2010. His analytical tools include Strike Point Calculator© and Monthly IRR© for profit and risk calculations. He is a member of the San Diego Board of Realtors® (SDAR), National Board of Realtors (NAR), Realtor®, has completed all courses and holds a designation of CCIM, certified commercial investment manager, holds a CAR property manager certification, and is a member of several local, regional, and national exchange and professional organizations.

Mr. Pollack has recently joined the association’s certification and designation committee. He received his bachelor’s Degree from the University of Wisconsin-Milwaukee and completed postgraduate Pre-Law studies at LaSalle University. He resides in Oceanside, California.

About Us

Delta Investment Group, Inc. has been in the commercial real estate broker business since 2001, specializing in Buyer Broker relationships including 1031 strategies and Tenants in common. Due to the distressed asset market unfolding in 2008, more clients favor unlisted, off-market assets over the traditional retail income deals with the potential to purchase at sub-retail, wholesale, and sub-wholesale price points. Taking advantage of relationships in the market with both direct and vetted sources, Delta Investment Group now provides a proven system for investors to acquire non-retail, value-add assets across all commercial sectors, in particular fix and flip opportunities, multifamily developments, and custom acquisitions. With a solid process of written procedures and an industry system in place, Delta can orchestrate the most complex of asset offerings, including direct and non-direct vetted acquisitions and value-add dispositions, through both cash and syndication structures.

With the passing of legislation Measure JJJ in Los Angeles in 2016, the TOC (Transit Oriented Community) provides high density, affordable housing incentives to be merged with market rate opportunities. Delta has modeled acquisition-to-disposition strategies to provide its investors a timeline of participation and exit points to best meet their investment objection, under a Reg D 501(c) and 501(b), TIC, or 1031 exchange requirement.

How to Use This Book

After years of evaluating deals, notes, properties of all asset classes, and buyer and seller trends, in addition to conducting an ongoing assessment of the current real estate climate, I decided to journal some of the deals I’ve seen – some that worked, some that didn’t. As my three-ring binder grew with research, articles, e-books, profiles, and just about anything I could get my hands on to read (and save), I decided it was time to share the wealth.

In January 2010, I was asked to sit on the advisory board of CREDAA (Commercial Real Estate Distressed Asset Association), and my role began to change: I discovered that I was a sought-after advisor on topics related to the current real estate climate. As such, I was invited to participate in panel discussions, and my company’s inventory began to grow even more.

With the company’s heightened visibility and activity levels, I would find myself mentoring dozens of consultants, agents, brokers, deal finders, receivers, and other professionals on a one-on-one basis. Even bank executives would contact me to discuss the pulse of the market. This was both a curse and a blessing. Sometimes, the training would involve as little as a question-and-answer or two. At other times, engagements would evolve into long personal meetings, countless emails, and article drafting to address the more common situations in the real estate market. I became a teacher and an advisor. All of these events have led up to my writing this book.

The purpose of this book is to share with you many of my real estate experiences over the past several decades and to serve as a training tool for those who are asking, What’s going on? and How can I get a piece of the pie? in the current or changing economic climate and real estate market. The purpose became more prominent, to offer a manual to use, no matter what the economic climate or phase of the market was going though, and offer more of the basics to follow those changes on an ongoing basis.

The book has been designed to begin with the basics: a description of the market, explanations of the terminology used, and a discussion of notes and deeds – some of which is almost elementary. But learning the terms, use of language in the industry, strategies, creative structures, and problems with assessing and managing troubled or distressed assets is necessary in order to save time and money in the end. Most of the time people waste in the process of real estate investing is due to what they don’t know, so I wanted to educate readers on the basics first.

The beginning of the book is for fundamentals and a common platform of where to start. The funnel was almost an immediate illustration of the repeatable process and designed to contain step-by-step directions on preparing to invest in real estate, and the later chapters deal with what not to do, since knowing what to avoid is just as important – if not more important – than knowing what TO do. The book finishes with risk/reward balance, FAQs, a glossary of terms, and an index to make it easy for you to find or review specific information.

I hope you will learn from this book and use my collection of experiences and advice as an ongoing guide to help you become prosperous and wealthy.

To your success,

Alan

PREFACE

Why this book?

Over the course of years, even decades, it’s no surprise that the market has changed; however the foundations have not. Going back to the beginning of time and ownership of land, the desire to own or control is a foundation of our basic being. So, having invested the majority of my life in real estate and the various aspects of that industry is the basis of this publication. I suspect that there are hundreds of books, audios, PhD documents, CDs, and other media that had I found them earlier, rather than later, may have saved me hundred…even thousands of hours of education, not to mention an undisclosed number of financial challenges, so the objective is to roadmap the foundations that can be broken down into elements and checks and balances of real estate investing.

In a minute, there will be an illustration of the process that will provide the checks and balances of the mission and objective. Again, the mission was to simplify and provide milestones to take a pause in the process and double check the work.

1. Finding can be synonymous with an idea or direction, say the art of the opportunity

2. Analyzing can be synonymous with the science of the opportunity

3. Controlling can be thought of as moving off the line into a plan of action

4. Funding is another way to move into the process of action

5. Management is the execution of the plan

6. Monetizing is achieving the goal

This book was not written with the intent to coach or mentor institutional investors. They usually have more means and resources than the individual or non-institutional investor and may even have the disadvantage with internal objectives that may differ with those of the non-institutional investor. The elements, however, are the same. The intent here is for more hands on and directed toward action takers, not differences of opinions.

For the single investor, small family entity, closely held corporation or partnership, all the way up the Family Office level, this book is the roadmap to steps in the process and helps to eliminate the false starts, missteps, and pitfalls associated with successful real estate investing.

What is the objective?

1. Make money

2. Preserve capital

3. Build equity

4. Protect assets

5. Diverse investments

6. Balance portfolio

7. Protect Assets

8. Retirement

9. Quit job

10. New career

11. Leverage knowledge and resources

This may be hard to believe, but life is not perfect. Don’t get me wrong, I’m a positive-minded person and attempt to overcome the obstacles before they become an issue. However, the reality is there are going to be bumps in the road, so to minimize their impact, better to be open and knowing of the potential before they become mountains in the way.

So, the reality is, there are going to be detours, setbacks, hurdles, and unforeseen challenges, but the good news is that by knowing ahead of time about most of the common challenges, you can avoid them and think like a pro.

There are only 3 Key Success Factors in a basic business model:

1. Reliable…is it real and not a waste of time and money

2. Repeatable…make sure it wasn’t just an accident, or a one-time deal

3. Predictable…yes, it has to close. You usually know this at the beginning

The point is, anything else that does not fall into these 3 Key Success Factors is an accident and nearly impossible to duplicate or build a business process.

More details on that later.

Since we don’t have the copyright on these words, we can’t put our trademark on them, and I’ve seen many a guru borrow our mission, but this is our goal, and we live by the image of their actions.

Now, let’s get real. We’re human and have had our own setbacks.

No. 1, I have a rule. You’ll get the idea. I never do business with a contractor who says they have never gone over budget or have always brought the project in on time…unless they have only done one. Then, meeting those two objectives was an accident. Truth be told, it’s going to happen that there will be budgets that don’t finish to the penny and there are going to be timelines that miss the mark. However, anticipating that it will occur allows for the cushion that minimizes disaster.

Begin with the end in mind.—Author of The 7 Habits of Highly Effective People, Dr. Steven R. Covey

Chapter 1

Let’s Lay the Foundation

As the title implies, laying the foundation in any undertaking is a key to getting off to the right start. If we were to expand on the famous words above by Stephen Covey, "Begin with