REIG Lorraine Beato | Real Estate Investing

 

Real estate investing is one of the top ways to turn a profit on your investment, but it can look like a daunting task. This episode’s guest has successfully pivoted towards investing and is ready and eager to share her knowledge. Monick Halm sits down to talk with author and real estate investor Lorraine Beato, where Lorraine shares her insights in real estate investing. She tells us about her experiences as both real estate agent and investor and talks about what you need to know in investing. This is a great place to start if you’re thinking of pivoting to real estate investing. Tune in to find out how!

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From Sales To Real Estate Investing: What You Need To Know Before Pivoting With Lorraine Beato

I’m super excited to have with me Lorraine Beato who is somebody that I’m finally excited to get to know because we have so many people in common. She is a long-time investor realtor, getting a transaction to the closing table is her specialty. She started with mortgage-backed securities trading all the way to investing both nationwide and internationally. Lorraine knows how to navigate some plex and intricate waters of real estate. In an ever-changing industry, you need to have someone on your side who understands all the facets of a business.

She wrote a book called Flip the Switch: from Real Estate Agent to Real Estate Investor. If you’re a real estate professional and haven’t started thinking about retirement or want to learn how to invest in things you sell every day, you’ll definitely want to check out her book. She founded the Atlanta chapter of WREN, Women’s Real Estate Network and has been featured in Yahoo Finance and Think Realty Magazine’s International Real Estate Rockstar edition. She’s also a current contributing author in All Things Real Estate for Think Realty Magazine. I’m very excited to have her. Welcome, Lorraine.

Thanks for the invitation for being here.

It is my pleasure. I’m happy you’re here. You started your career doing trading mortgage-backed securities and now you’re an investor and author. How did you get started in real estate investing?

I started in real estate investing in 2013. It’s something I had always been interested in. I was helping my girlfriend buy an investment property. She was doing fix and flips and we were buying at the courthouse steps and that piqued my interest. In 2013, we did a bootcamp with one of the gurus, the whole bus for paying the $30,000 and go do that. I somehow became their Atlanta point person. I didn’t plan on it. It’s because I had such an extensive background and I had also been an appraiser back in New York that I started posting comments or helping people with their deals in this Facebook group. I created an organic following and I didn’t even know what the word organic meant back then because it was like, “This is great, you’re building organically.” I was like, “What does that mean?” I also have been an agent. When people would run their numbers, I would be like, “Your numbers don’t work because of this and that.”

I started having people from the group reach out to me to buy fix and flips here in Atlanta. I worked with a total of ten investors at this point and I wouldn’t even help them. They never came into town. I acquired the property for them. I said, “Here’s what I think is a good deal.” I manage the renovation. I put the project on the market when it was finished. As I saw how much money I was making for them, I said, “We need to be doing this for ourselves.” It wasn’t until 2013 after we attended that Bootcamp that I learned what hard money was. I had never heard about hard money. I didn’t know what it was because that was always my thing, we don’t have enough capital to leverage and I didn’t have any private investors then. As I saw these guys with what they were doing and they all borrowed hard money on all of these projects and I ran and comp all of the numbers, I looked at my husband. I said, “This is something that we need to do.” That’s how we started because I had all the experience behind me. I just needed to take action and do it.

What was the first deal you did?

The first deal we did was a catastrophe. We bought a property on that bus work in San Antonio. We bought a property that was a foreclosure at the time, we put in an offer, it was bank-owned, the offer was accepted because we ran the numbers and I said, “This makes total sense.” If there’s one thing that I can share with everybody is to make sure that you know your numbers and that you have boots on the ground. The real estate agent that was there had run comps for us, we were out of town. It was a whirlwind weekend. You start at 5:00 AM and go until midnight.

When we came back, I ran my own comps and I couldn’t find comps to justify the number that the agent had given us. She had told us $250,000, $260,000. I was coming up about $225,000 to $230,000, that’s a big difference. We were in due diligence and we retracted our offer. A couple of days after we retracted our offer, the bank came back and said, “We’ll have them resubmit.” We resubmitted an offer of $20,000 less and they took it. That was the first one but the first contractor ripped us off, took our money and took all the materials out of the house. The third contractor was supposed to be our boots on the ground.

Being a real estate professional, I had said to her, “How much do you want to manage the project for us?” I’m an agent. I know even if not managing, checking on a project is above and beyond, that’s what you’re going to do as a listing agent or a buyer’s agent. She said, “I have a listing. I’ll be the buyer’s agent. I’m good.” She never checked on the project for us. Needless to say, what was supposed to be about an eight-week renovation took fourteen months with hard money. The first contractor after taking all of the materials out of the house like the hot water heater, all the door, he took everything, he then put a lien on a property and we had to hire an attorney because we weren’t there. It was the one deal we lost money on, we lost quite a bit out of our pocket by the time you take all of those extended periods hiring an attorney. First of all, it was not good.

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You’ve gone into the question that I asked because when things don’t work out well, we learn the most. What did you learn from that? What would you do differently?

I try to do everything that I possibly could. That’s why I asked, “Are you sure you’ll be our boots on the ground?” We did everything we thought that we could. Vetting the contractor better, my husband had vetted him but clearly, it was not enough and came to find out afterward because my family jokes that I’m like an FBI agent. I then found out because I couldn’t figure out why the contractor was trying to cash our check. It was December 23 and I’m like, “Why is this guy trying to cash a check on a Saturday night?” Come to find out that his son had committed suicide. I’m sure that the money we gave him paid to take care of burying his son. Having your boots on the ground and you have to go check on the project, that was the other thing.

My husband and I were working full-time. We didn’t have the time to go back and check on the project ourselves. That is my biggest thing, when people say that they want to invest in other markets, you need to make sure you have boots on the ground that you trust, pay them because although I tried and I was willing to do so, she said it was okay. Pay them to make sure that they’ve got your best interests at heart because I think that’s the hardest thing. The contractors and being out of state, you don’t have boots on the ground that you trust.

What is great is that you did not let this first experience keep you from trying again and getting back in the game. What was your next one and what got you to try again?

For the record, by the time it was all said and done, we lost about $60,000 out of our pocket. That is a lot to lose.

For those reading, real estate can make you a tremendous amount of money. It’s the number one way to build wealth in this world, 90% of millionaires become so through real estate but you can lose a lot of money if you don’t do things right. What was the second thing that you do?

We had done one before that, it was also out- of-state but we did that one in cash and my daughter was our boots on the ground. The one that we do after that was very small. I like little brick bungalows, that’s my niche here in Atlanta. We did a 2 one and my husband’s like, “I don’t’ know.” Everybody was like, “It’s a two-bedroom. It’s only a 2 one and it needs to be a 3 two.” I said, “I have a good feeling about it.” This was a property that was listed. It wasn’t probated, we bought it and we were in and out from the day we closed on it to buy it to the day we closed on it, to the end buyer in 78 days.

It was a little press. We bought it for $49,000, we put in $36,000 and sold it for $128,000. Real short holding cost, the contractor got in and out and did what they were supposed to do even they took a little longer than they were supposed to but we sold it on the first day. It was a young couple. What I try to do is like most major markets, there is a lack of affordable housing. I took what was there, I tweaked a few things, we didn’t do an addition but we did a nice renovation and all the agents that showed it. This one, in particular, said, “I want to write the offer in the house because I staged my properties. I’m going to write it because we don’t want to lose it because it is beautifully done. Everything else that we have looked at in this price point looks like a rental.”

That’s my niche, 900,000 square foot brick bungalow. I did a higher-end property a few years ago at this point but those are the ones I like because you’re getting someone in there where it’s their first home. The last one I did was a single mom and she took her fourteen-year-old daughter to the closing. She was so excited to have a backyard. That’s why I do what I do. It’s great to make money but it’s also about impacting communities.

Are those in Atlanta?

Real Estate Investing: When people say that they want to invest in other markets, you need to make sure you have boots on the ground that you trust. Pay them to make sure that they’ve got your best interests at heart because that’s the hardest thing.

 

Everything else we’ve ever done has always been in Atlanta because my husband said, “If I can’t drive to it, I’m not doing it.”

You can invest out-of-state, you live where you want to live. That’s where the numbers make sense but you were someplace where the numbers made sense. You could make money in your backyard, why not?

If you’re going to invest out-of-state, just know that you need to get out there. I don’t care what anybody says. That was our downfall. Had we gotten on a plane, gone out there a couple of times, it wouldn’t have gotten to the point that it did.

You definitely have to check on your things. Even if you’re investing out-of-state, out of their market, plan to visit often especially in the renovation. Even if you have somebody there who’s doing it for you. If you’re lucky to have somebody like Lorraine who is on it, I’m sure your investors felt comfortable.

Every week, I was at their projects 2 to 3 tables almost, I was managing 5 projects at one time. It was almost a full-time job. They did, they’d get a report with pictures and updates with what was happening or video because I knew what happened to me and I wanted to make sure that didn’t happen to anybody else.

You might have already answered this but, what was your biggest mistake and what did you learn from it?

I would say that was it. That was our biggest mistake, not personally checking on our own project that’s why we’re looking at investing out-of-state again. If we do that, it will be something and now things are different than they were for my personal family, my husband lost his job due to COVID. If he needs to go hop on a plane now and go check on something, he can. That’s the biggest thing, you need to put your own eyes on your project.

Before we hit record, we were chatting and you’re talking about having to pivot. You were saying you had been doing a lot of flipping, you pivoted doing some different things. What have you pivoted into? How did you decide when to pivot and how?

I was pivoting out of sales in 2020, that was my plan. I had met with someone who going to be a business partner in January and I was going to pivot out of selling real estate. I’ve done this for a long time, I’ve been licensed since 1988, an appraiser and loan officer for a while. I didn’t do sales until we moved to Atlanta. It’s time to grow. I had started talking about someone else’s book and I was starting to have real estate agents approach me and saying, “I didn’t know you taught real estate agents how to fix and flip.” They were DM-ing me on my Instagram and I thought to myself, “I don’t but I can.” I had several people say, “You should your own book.”

Prior to COVID, I had gone to a CE class for real estate agents with a law firm. I was the only agent that showed up. We went through everything. They have three hours to cover and I’m like, “I already have that. I’m good.” We started talking and I told them about what I was doing, I was having agents reach out to me and the way my whole flip and switch started was the law firm reached out to me and they said, “Will you teach a class for us on your flip the switch?” I said, “Sure, absolutely.” I’m going, “I’ll figure it out.” I did that. I thought I did horribly, I had two friends in the audience and they’re like, “ This was amazing.” When I got done, I started having agents coming up to me saying, “This was great. You just put the pieces together. I never thought of this or that.”

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That prompted me along with a conversation that I had with a very good friend of mine who around the same time had said, “I’m tired of selling real estate.” She’s had back surgeries. She said, “My back’s killing me. I’ve shown these people 50 houses and I can’t be in the car anymore but I’m going to have to sell houses until I’m 70 and you know I’m going to be 60 soon.” I thought to myself, “Why? “Why do you have to sell houses for so long?” She’s like, “I have no retirement.” That was the clincher for me. Those two things combined, I wrote my book and launched it on April 1, 2020. It’s on Amazon.

I had some speaking engagements set up and that was the route I wanted to go, to empower agents, understand that they need to have a plan B. The first sentence in my book is, “The real estate landscape is changing.” Who knows COVID how much it was going to change and all the virtual stuff we had to do. It was realizing more that no one is out there telling real estate agents or teaching them how they can build wealth, passive income or a legacy through real estate, through the product that they sell every day. I did that and that was the path that was going to go down and then COVID hit, my husband came home and he’s like, “I just got laid off. Crap.”

Let’s shift back into selling homes. That’s what I did. It’s still the path that I’m on. I am working on a few other things. I have started mentoring people one-on-one, I don’t have a course, I don’t consider myself a guru but I think it’s important and it’s going well so far. I’ve got some things planned for the rest of 2021 just had to get some stuff out of the way. The other thing COVID taught me was to leverage and build a team because I learned that since I’m a solo agent, I’ve always been a solo agent but if I had a team or built up a team, I could then step a little bit to go focus on some other things and still have the team producing where it’s not all on my shoulders. That was a very valuable lesson because I never wanted to build a team and now that’s something I’m starting to work on.

What are you most proud of?

There are two things. I’m most proud of my girls. I have two amazing girls, one’s finishing up her last year in law school, the other one just graduated with her Master’s. The other thing that I’m super proud of is the renovation that you touched on in the beginning. It was a renovation that I did in Europe, not that long-distance but I had family there. That was the furthest project that I had done. I inherited my grandparents’ house on my father’s side in Portugal, it’s a two-family villa. Renovating that and keeping the legacy of my father and that lineage in place is huge for me.

Talk about managing from your way, how did you do that?

Two places that I hadn’t seen since I was eight years old. When I was little, we used to play out in the front yard and because it was what we would call here duplex, it was always rented. I had never even been in the downstairs to two-level villas. My mom would ask me questions. I’m like, “Mom, I never saw the place. You didn’t send me pictures, you keep forgetting I didn’t see the place.” Luckily my cousins there and he would send me pictures and I picked out all the finishes. There were some things we needed to do like fill in the crawl space or some structural things because the property hadn’t been touched in about 60 years so it had a lot of deferred maintenance.

A lot of it through Facebook Messenger video chat and pictures online going to Google Portugal. I’m like, “This is the tile that I want. This is the feel and the look that I want.” To going to Sherwin-Williams, picking out paint samples, sticking them in the mail and saying, “This bedroom is this color, the kitchen’s this color.” It was truly a collaboration. When I got to go a few years ago, I haven’t been back. We were going to go in 2020 and to see it all done was amazing because I hadn’t been back in many years. My plan is to turn it into an Airbnb and I didn’t have time. We had to go there and take care of legal paperwork because it was in probate for many years because it was still in my grandparents’ name and everyone was deceased. My father and his brothers were deceased so it took us a very long time to get that done and there’s a ton of red tape. It’s my family legacy so it’s very dear to my heart.

To what do you attribute your success?

A lot of hard work. I don’t know how to stop. I feel like I’m always going 24/7 and I’m trying to work smarter, not harder. I’m very persistent. We’ve been through a lot of trials and tribulations the last several years as far as we’ve all been healthy, which is a blessing in and of itself but work-wise with my husband. When we moved to Atlanta from New York, he was mostly mainly the provider. A lot of challenges with that but still managed to get both my girls through college with minimal debt. I worked as much as I could, whatever it was. I’d be doing real estate and I’ve been working retail in the evening or the weekends.

REIG Lorraine Beato | Real Estate Investing

Flip the Switch: from Real Estate Agent to Real Estate Investor

I’m a hustler, I always have been. I think that comes from the work ethic of my parents. I’m a first-generation American and they have that, “When we come to the United States, we’re going to work hard and we’re going to achieve the American dream with getting a house.” My biggest supporter is my husband and my girls that are now 24 and 27. When I doubt myself, they’re always the ones telling me, “You can do this. Why are you getting in your own way?”

Isn’t that wonderful to have that support behind you? I’m also a first-generation American so I can relate. What advice do you have for a woman who’s just starting out in this field?

My biggest thing is to go out and do it. I know that it’s a male-dominated industry. Don’t be afraid. I’ve talked to some women, I’ve been on some panels, they’ve come up afterward and being the only woman, oftentimes I’m sure as you have been on a panel and they’ll come up and they’re like, “You showed me that I can do this.” I think you have to have a confidence level and get familiar. What I tell a lot of people sometimes is go through Home Depot, go see what things cost. Take a walk and familiarize yourself with stuff, find another woman investor if you can find one. Talk to them and ask them how they started, see if you can reach out to them. I didn’t follow women investors, I followed male investors, it didn’t matter. Learn as much as you can and once you get that confidence, there’s nothing that can get in your way.

I’ve only ever had one contractor who had an issue talking to me as a woman. He will talk to my husband but he wouldn’t talk to me. I’m like, “You’re talking to the wrong person because I’m the one running these projects because my husband was working full-time.” Know that and treat everybody the way you want to be treated. That’s a big deal. I’m multilingual so that also helps me. When I would go to a work site to go look at one of my projects, a lot of the workers here are Latino of some sort and I speak Spanish. I would always make it a point just because that’s who I am. I’d ask them, “How are you doing? How’s it going? This looks great or can you fix this for me?” I never had an issue with anybody fixing anything for me if I thought that it didn’t look right because I treat them with the same amount of respect that I expect to get back.

What do you wish you’d known at the beginning that you now know?

How to leverage more. I’ve learned a lot about leverage and I think that stopped me a lot in the past. For me, that was huge. As I’m sure, maybe you can relate to being a first-generation American, you don’t talk about money, you don’t ask anybody about money, you don’t go to somebody and say, “Do you want to be a private investor?” For me that was huge, learning how to leverage other people’s money and being comfortable having that conversation, which I still have a hard time with because there’s my mom and my dad in the back of my voice like, “You don’t ask somebody about money, what do they have or would they like to invest.” For me, that’s the biggest one.

That’s an issue that a lot of people have. Before we get into our famed end of show trinity, which is a brag of gratitude and a desire, what is the best way for people to connect with you to find out more about what you do?

I’m pretty easy to find. Being an agent, I am Lorraine Beato everywhere. I have my website, it’s LorraineBeato.com. I’m, @LorraineBeato on Instagram, on LinkedIn, on all of the social platforms. If someone wanted to reach out to me, feel free to DM me on any of the platforms or shoot me an email at[email protected]. I’m not hard to find.

Now it’s time for our trinity. What is one thing you’re celebrating now? What’s your brag?

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My brag now is my daughter who graduated with her Master’s, working a full-time job and completing her Master’s in eighteen months. That’s my biggest brag now.

You’re bragging that you’re the mama that raised her.

I’m the mama that raised her but she also worked her little tooshie off to get there and graduate with honors. I’m excited for her.

That’s not a brag about you.

A brag about me is I have gone international. I switched brokerages in February because I saw an opportunity that was presented to me. I brought on a brokerage firm in Brazil and I now have a team in Brazil and I’m working on Portugal next, that’s my brag.

What’s one thing you’re grateful for?

I am very grateful for my family and the support that I always have from them and my health. Grateful that no one that I know personally was affected by the pandemic.

Last but not least, what is one thing you desire?

One thing that I desire now is to further build out my real estate team that I’m in the works of doing and grow internationally further.

Shall your desire be or so much better than you can imagine. Thank you so much, Lorraine for being here. You can connect with Lorraine, her email address is [email protected], you can connect with her there. Connect with me at REIGoddesses.com where you can connect to our socials, blog, show, our investor club and connect with the thousands of amazing women from all over the world. If you want to be able to connect with women investors as Lorraine was talking about, to have that support, come to our website to find that. Subscribe, like and come back next time for the next episode. Bye.

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About Lorraine Beato

REIG Lorraine Beato | Real Estate InvestingThinking outside the box and getting a transaction to the closing table is my specialty. With over 25 years in the industry starting with Merrill Lynch in mortgage-backed securities trading all the way to investing both nationwide and internationally. Lorraine knows how to navigate the sometimes complex and intricate waters of real estate. In an ever-changing industry, you need to have someone on your side who understands all facets of the business.

If you’re a real estate professional and haven’t started thinking about retirement or want to learn how to invest in the thing you sell every day, check out Lorraine’s book on Amazon – Flip the Switch from Real Estate Agent to Real Estate Investor. Lorraine also founded the Atlanta Chapter of WREN (Women’s Real Estate Network), has also been featured in Yahoo Finance and Think Realty magazine’s International Real Estate Rockstar edition. She is also currently a contributing author on all things real estate for Think Realty Magazine.

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