Heather Dreves is the Director of Funding at Secured Investment Corp and a fund manager that oversees the management of the Secured Investment High Yield Fund II LLC and the Circle of Wealth Fund III LLC, Secured Investment Corp is one of the fastest-growing real estate lenders and fund managers in the US.

Secured Investment Corp has created two private equity funds to fill the void left by uncooperative traditional funding sources. Investors have the potential to earn double-digit returns based on past performance. By connecting real estate investors who needed non-traditional funding with passive investors who were ready to earn higher returns on their investments, Secured Investment Corp created an opportunity to benefit both sides.

Heather enjoys lending money to self-employed entrepreneurs and their families. Watching people succeed in their business motivates her, and that’s why she and her lending team focus on transparency, mentorship, and making sure their people make their money back. She learned early on that focusing on the bottom line was not enough to sustain a business, and after foreclosures and property taxes caught up with many of her clients, she decided to change her approach.

 

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Passive Investing in Idaho Real Estate with Heather Dreves

 

Brett:

I’m excited about our next guest, she has over 15 years of experience in raising funds over $200 million. At one point she was a securities professional and has held her Series 63 license. She’s in charge and helps secure investment Corp out of Idaho. All things investor relations, and also fund management, and so much more. Please welcome to the show with me, Heather Dreves. Heather, how are you doing?

Heather:

I’m doing great. Thanks for having me. 

Brett:

For listeners to get to know for the first time would you give us a little bit more about your story and your current focus?

Heather:

My story started about 20 years ago, I was exposed to the private lending world which was extremely eye-opening, and did a little bit of everything from origination to servicing and quickly found myself in the investor relations role and really enjoyed helping people create wealth for themselves and their family. Better understanding and learning more about how to invest in alternative assets outside of your traditional resources like the stock market. It’s been a long journey, I currently hold a position as one of three fund managers, we currently manage two real estate funds that are high yielding, focusing around single-family residential, one to four-unit assets, and have long term relationships. I have clients I’ve worked with for 20 years, helping them in their families, investing in deploying capital through those types of assets, which also include the purchase of our notes. Pretty exciting. I love the investor relations side of things. That’s really been mainly my focus, over the last at least 15 years.

Brett:

Fantastic love that. We’re gonna be talking all things passive investing, and Idaho real estate where seems like all of California is flooding to that in Tennessee and Florida and Texas. But before we go there, Heather, I do want to take one other step back, I believe we’ve all been given certain gifts in this life. Some people call them superpowers, some people call them strengths, I believe their God-given gifts and be given to us to be a blessing and help to others. I’m curious, go back to maybe the college soccer athlete days or high school days and think about maybe one or two gifts that you believe you were given? How does that help how you help and bless people today?

Heather:

I think that’s important because I’m a firm believer in sports, both of our kids have paid played college sports. The reality is not most people are going to go play professionally. But I think what I did gain out of that, and the superpowers I have is leadership, being coachable, being a team player, and being able to communicate well. I think that really came from playing college sports, I actually went to college to be a teacher and quickly learned that that was not my forte to deal with children all day. But I had a gift for sales. Because of the great communication skills leadership and just team-building characteristics I had, investor relations was just an easy transition for me and I think that really has made me successful in my profession, is just being able to communicate and being transparent with my clients.

Brett:

You learn more about Heather Dreves at Secured Investment Group, SecuredInvestmentCorp.com, SecuredInvestmentCorp.com. I love that leadership coachability team player and also probably say grit too. If you’ve made college if you become a college athlete. It takes grit, determination and resiliency. I imagine those are your gifts as well. But let’s dive now right into the topic at hand, which is passive investing in Idaho real estate. Heather, what’s the biggest secret to passive investing in real estate with your company and particularly talk about Idaho as well?

Heather:

I think the important thing to understand is I’d love to take all the credit for the success of our funds, but we have a massive team behind us and I talked to clients all the time that want to invest in real estate wanna lend their own money and what they don’t understand until they start really diving into it is how much work it is whether you’re acquiring in hard assets that entails going out finding the deals, negotiating the deals, most of my clients are high net worth individuals with full-time professional jobs. They don’t have the time to do that. Or if they’re lending their own money out, there’s the due diligence process to what’s the asset worth, does this borrower have the ability to repay and exit the loan. I think one of the benefits to working with us as we do that for you.

We have a massive team behind us, we have an acquisition team that literally dials every day, all day lists of distressed sellers off-market deals, and those are opportunities that as a fund member, you have the benefit of benefiting from the returns of that, but you don’t have to do the heavy lifting of it. We have put together this team that we built for 10 years, we have a loan origination team that is really filtering through the deals, we have an underwriting team, we have a legal team that makes sure that everything’s compliant, and that we’re in a first lien position. Really, just when you’re working with us, you have access to that team. I really think that’s important to understand because it does take a lot of time and resources to find those types of deals, whether you’re lending the money out or buying the hard assets. We don’t promote looking for deals of the MLS market, we are looking for off-market deals, that’s where your best opportunity and your highest profits are. It has required us to build this team behind us to do that.

Brett:

We’re looking at your, your website. Now, by the way, that’s SecuredInvestmentCorp.com, it says to invest in the heart of American real estate, the nation’s best real estate lending platform and the ability, to invest passively in mortgage notes. Also, real estate deals with one to four units. Would you kind of break down what that looks like. if you can share, I know past performance is not a guarantee of future results, but some of the returns that some of your clients are experiencing.

Heather:

It probably helps to tell a little bit about how we got started 10 years ago, when I came on board, I came from another private lender. I joke that I did what I called dialling for dollars. That meant that we had borrowers coming to us that we’re buying investment properties, we would do our due diligence on them. I on the other side of the business had clients that wanted to deploy their capital through these notes, and we would match them. Essentially, we would have a deal come out of underwriting, I would get on my phone, start calling my clients and have money to deploy.it worked great, but it was a little bit clunky, it takes time to move money around. We work with a high percentage of our clients that use self-directed IRAs and tax-deferred accounts. If anybody’s worked with those types of custodians, those take time. We quickly evolved after the first year I was here and said, how could we do this better, where we can, we can assist our borrowers and our brokers and get those deals funded for them.

But on the other side of it, we could give our investors enough time to do their due diligence, we want them to feel comfortable with it. We created our first fund, and this was for accredited investors only, you had to have a million dollars in net worth or your income standards had to qualify and the minimum was $50,000.so we quickly started raising capital. I say this because I have two different types of clients, I have people that want to be very passive, they like the real estate backed assets, they like investing in things that are in Idaho, but they don’t necessarily want to take some of the risks and the things that come along with buying a note. Because the reality is, there’s no guarantee that someone makes their payment. I tell people an as a note buyer, there’s a huge opportunity, our notes are written with no more than 70% loan to value. There’s a massive equity play in those notes. But the caveat that comes along with that is if those people don’t make their payments, as a note buyer, you have to be prepared to let us start foreclosure on them.

There’s cost and time involved with that the funds were a nice option, they’re still getting the benefit of the notes because the notes we sell are the notes we fund on our fund, but they don’t have some of the headaches that come along with that.it was a very nice transition and a nice opportunity to say, if the notes aren’t something that you want to be as active with the fund is a nice option. Quite honestly, I have people that do both. They diversify they want to be a little more specific where that note is that they’re buying. Maybe it’s a location state or specifics about the borrower, and then they want to passively invest with the fund and earn their yield. Really, for me, it’s like understanding what my investors are looking for. What’s their appetite, how risk-averse are they? What kind of yields are they looking for and then we can back into what’s the best option for them.

Brett:

That’s amazing. What’s the average LTV on these first positions that you’re taking? I imagine there are only first positions.

Heather:

No, we don’t do any seconds. Our average loan devalues 65%.

Brett:

What percentage of the deals have you had to foreclose on?

Heather:

Under 2%?

Brett:

How many deals have you guys done?

Heather:

We average about 45 notes a month in originations. We’ve got really good volume. They’re all short term notes, no more than 24 months, but the average term is 12 months.

Brett:

What’s the liquidity? What’s the average percentage on those notes? Then what’s the liquidity of your fund? Is there a time period people must stay in?

 

Passive Investing in Idaho Real Estate with Heather Dreves

Passive Investing in Idaho Real Estate: “I talked to clients all the time that want to invest in real estate wanna lend their own money and what they don’t understand until they start really diving into it is how much work it is whether you’re acquiring in hard assets that entails going out finding the deals, negotiating the deals.” – Heather Dreves

 

Heather:

That’s a really good question. Average returns on the notes that you could expect are eight to 10%. Our accredited investor fund has paid out 10 to 11% for the last seven years consecutively. The tie-up period on the fund is just 12 months.

Brett:

What if you had to get out 11 months what happens?

Heather:

We don’t have the ability to do that if it is written into our PPM or Private Placement Memorandum that it is 12 months and we don’t deviate from that.

Brett:

8 to 10%.for non accredited, accredited 10 to 11. Curious is the 10 to 11 higher risk, or what is it about that that gets that extra?

Heather:

What you have to think about is in our fund, we diversify our fund. What I mean by that is, we take 75% of our fund balance, and we lend that money out to other real estate investors. Those are people that are mainly fixing and flipping. There’s revenue and profit generated through origination points and interest payments. The other 25% of that fund is invested in hard assets quarterly in Idaho and Spokane, Washington. We go out, we have an acquisition team, as I mentioned, we go out to identify projects to invest in. Some of our returns on that are 20 to 30%.that’s what really juices our yields, and gets us to that 10 to 11. The notes are just the interest payments that the borrowers make. Unless you foreclose, and you potentially take a property back with maybe 3020 to 30% equity, your yields could be higher, but that’s not our goal. Our goal is to help borrowers pay to exit the loans, and then they come back and borrow from us again. That’s a little bit higher yield.

Brett:

Very helpful. Thank you. To clarify, are you doing all lending? Are you doing some ownership to I don’t know if I caught that? Are you actually buying some properties too? Are you only just lending to people who are buying?

Heather:

The 20? The other 25% of the fund balance is properties that we buy on behalf of the fund.

Brett:

What’s the strategy there? Like how long you are the average hold? What’s the average purchase price? Fix and Flip, is it a long term rental?

Heather:

Mainly, we have been focusing on fixing and flipping in the affordable housing market space. You have to keep in mind, that you folks from California will think this is nuts. But our average purchase price and resale of a house are probably $250,000.it is our goal to get in and out of those as quickly as we can we actually have our own contracting crew on staff. That way, we don’t have to wait on subcontractors and those types of things. I’d say the average amount of time we stay in a deal is about, I’d say 90 to 120 days, approximately like right now we’re coming into winter, we have snow here, it’s crazy out. Obviously, home sales, slow down a little bit through the winter. I’d say on average 90 to 120 days. But we’ve had houses that we bought and sold in 10 days that we wholesale. What we do as a fund management team, is we look at what’s going to be most profitable, sometimes it’s more profitable to wholesale in other times, it’s better for us and more profitable for the fun to go in and rehab it. I will tell you we bought a couple of duplexes lately as these markets are shifting, the rental market has also gotten really hot here too. Again, we run our analysis, what’s going to be most profitable? And then that’s how we move forward with our strategy on the fund.

Brett:

Very well said, Thank you so much for sharing that. How many houses have you guys like fixed and flipped in total?

Heather:

This year, we fixed and flipped 110 houses.

Brett:

Just this year alone and how long have you guys been flipping houses for now?

Heather:

8 years?

Brett:

Now let’s dive into California. I have to show I kind of teased that all of California is moving to Idaho. What are you seeing there? Are things slowing down? Are they about the same as they were a year ago? Are they speeding up? Kind of gives me the flavour of Idaho local real estate and just flex and I’m sure there are other states too. They’re moving to Idaho. But what’s your take on that?

Heather:

We’re at the top of Idaho. we’re in North Idaho, which is actually right next to Spokane, Washington. If you basketball fan Go Gonzaga. We’re right next to Spokane. Both of these markets are very hot for what we call people transplanting here. We have seen home sales cool off a little, but prices have not come down yet. I will tell you, Idaho is like the dream for people to move here. Prices are just off the charts. There are not many places where you can go buy five acres, build a house and, and not have neighbours right next to you. The Idaho Idaho market is still really, really hot. So is the Washington market. We’ve specifically bought in both of those two markets. I don’t, we don’t anticipate that that is going to slow down anytime soon. People are looking to get out in big cities, people can work remotely. Now they’re not required a lot of times to go into offices. They have the ability to move out of state, and it still continues to be a very, very hot market. Boise is also a great market that’s southern Idaho, which is about five hours south of us.

Brett:

What’s the biggest difference between Coeur d’Alene, Idaho where you’re at in Boise.

Heather:

Boise is a much bigger city, there’s a lot more opportunity for employment there. Coeur d’Alene seems to be more people that are retired people that are making very good money on their homes than they’re selling in Seattle and, and California, they have the ability to come here and pay cash. You have a lot of more retired folks, in my opinion here than Boise does. There are a lot more job opportunities there. But again, we have a lot of very professional people moving in this market that are working remotely or even travelling for that matter they’ll go back and, and travel to Seattle three, four days out of the week, and then they come back home on the weekends. So

Brett:

Thanks for sharing that, by the way, to learn more about Heather Dreves at SecuredInvestmentCorp.com. It’s SecuredInvestmentCorp.com. We’re gonna shift to the part of the show where we’re talking about Capital Gains Tax Deferraland all things like 1031 Exchanges and the short time periods and all these things. My experience is sometimes people in real estate, feel frustrated with 1031 maybe even wanting to sell a primary home in Seattle, but there’s huge capital gains tax, but they don’t know how to get out and invest with SecuredInvestmentCorp.com without getting hammered, and so they feel trapped, or they’re selling a business or cryptocurrency. But I’m curious what have you found when it comes to frustrations with Capital Gains Tax Deferral, and or the 1031 Exchange?

Heather:

It’s interesting, we work with a lot of high net worth dentists, we’re in quite a few groups and, and a lot of those clients are in our funds and buying notes. What I found with a lot of them, unfortunately, our fund is cash flowing fund. Like we’re just turning that money over and over. For people that are selling, practices, for example, and they’re looking to repair or replace their income. Our fund is great for that because it has cash flow. The fund also has the ability to reinvest their earnings so they can roll their earnings back into their equity, and they can grow those accounts. Most of my high net worth individual clients that I work with are doing that through tax-deferred strategies like IRAs, and 401 K’s. We don’t work a lot with people with 1031 exchanges, just because our fund doesn’t have the benefit of that. I will tell you we are exploring syndications right now for self-storage, and larger multifamily. I believe we will in the next 12 months have the opportunity for that. But my experience has mostly been with self-directed IRAs, self-directed 401 K’s that are more tax-deferred or tax-sheltered accounts. That’s how those people have gotten around that.

Brett:

Excellent thanks for sharing that. Like likewise, we work with dentists, in fact, just closed the deal in New Jersey for a dental practice owner for like 30 years built up his business. he’s facing a huge capital gains tax and his wife and he is trying to make sense of this. They have no basis and hundreds of 1000s of dollars in capital gains tax. They were able to use a unique strategy that most people just don’t even know about. It’s called a Deferred Sales Trust, to sell them for all the tax. Now they can invest it into passive real estate deals, hard money lending, they can go into active real estate deals, all tax-deferred without using a 1031 exchange and so anyone’s listening to this right now.

If you’re a dentist and you’re considering selling your practice or dealing with veterinarians, optometrist car dealerships, cryptocurrency owners, high-end primary homeowners who did an $8.3 million deal in Palo Alto. A primary homeowner who was moving to Nevada, and he was faced with huge capital gains tax and he’s like, I can’t even sell unless I can defer the tax. He was able to actually sell and defer the tax whereas 1031 doesn’t work for a primary home. But a Deferred Sales Trust does work by the way if anyone wants to learn more about that they can go to CapitalGainsTaxSolutions.com, that’s CapitalGainsTaxSolutions.com. But I’m curious Heather, for people who are coming to you, or they if they’re not doing retirement plans, IRAs, or self-directed IRAs, or self-directed 401K’s type of thing? How are they just paying the tax on the sale of the business? And then showing up? I mean, what’s been the typical fact pattern there?

Heather:

That’s a great question. We actually work with an attorney’s office out of New York that does exactly what you’re talking about, sets up these tax-deferred trusts. A lot of them will filter their earnings through that. A lot of them is that dentist, I mean, unless they had IRAs and 401 K’s that they set up years ago, most of the bulk of their wealth is in their practice or cash. So some of these groups that we’re involved with, are really educating those types of professionals on how to set that up ahead of time when they start getting into that industry. But unfortunately, some of the folks that are at retirement age, are ready to sell their practice, and they didn’t plan ahead.

A lot of them, we are pointing towards this attorney that has helped them set that up. Then once they get that organized, and do their planning, then they’ll come back to us and we can look at what would the fun be better for you, even if, even if they’re more growth-minded, or cash flow they can do either that option is there. A lot of them like to buy the notes too, because once they retire, these are people that have worked five days a week, and they want to replace their time with something, the notes are a nice option too because we’ve taught them how to do their due diligence, go through the checklist, we’re very transparent, we give them the entire underwriting package. That’s been a nice option for them to they’re still able to deploy capital, but also give themselves something they’re educating themselves about.

Brett:

Absolutely love it. Fantastic. Thanks for sharing, Heather. With that being said, are you ready for the lightning round?

Heather:

Yes.

Brett:

All right, knowing what you know now, if you go back to your 25-year-old self, what’s the one golden nugget, he’d make sure to tell yourself to do?

Heather:

Invest in real estate sooner.

 

Passive Investing in Idaho Real Estate with Heather DrevesBrett:

Very good. What’s the number one book you’ve gifted or read as he would recommend the most in the past year,

Heather:

I have read Atomic Habits, which is a great book, I’ve actually sent that on to my kids to read.it’s just always a good reminder habit are very important. Being able to even break bad habits is an option. But you have to have rituals.

 

Brett:

Fantastic. The next thing is our Rich Dad Poor Dad part of the lightning round. Imagine you read the book, maybe you have, I’m sure you have Robert Kiyosaki. What’s your best-kept secret that you try to implement as a, as a rich dad poor dad strategy? What would you like to share with our audience here?

Heather:

One of the things that until I was in private lending, I didn’t realize, I grew up in a very traditional family, my, my family wasn’t extremely wealthy, but we also weren’t wanting for anything. But I always assumed that you had to have the cash to be able to invest. that’s not the case, my husband and I have flipped multiple homes, we bought rentals, using private lending, to get to our goals. I think that’s something that everybody needs to become more educated about, is just because you don’t have $200,000 in your account doesn’t mean you can’t invest in that piece of real estate. There are options out there. I don’t think enough people know about that. I really do believe strongly in creating wealth through real estate.

Brett:

Beautiful. I couldn’t agree with you more. Second, the last question, what are you most curious about right now?

Heather:

The market, where it’s gonna go probably the same thing everybody else is, we are seeing housing markets cool off. I don’t personally think it’s going to be as bad as 2008. But as a fund management team, as a real estate investor, and as a private lender, I do believe there’s going to be a lot of opportunity coming up when I mean, as we know, foreclosures have forbearances have been lifted, and there is going to be a lot of inventory. I’m curious how much. My question is how much is the market going to decrease? And I think that’s dependent upon geographics. I don’t think that every state is exactly the same. But I’m curious how deep those discounts are going to be?

Brett:

Very well said, if you had a crystal ball, we’re going to start seeing an increase in these foreclosures, is it 12, 24 or 36 months? What’s kind of you if you had?

Heather:

I think, six months from now, you’re going to start to see those on the market, and that’s going to start to affect values.

Brett:

Very well. Thank you for sharing that last question. After all your success helping the people you’ve helped build wealth, and everything else that you’ve accomplished, how do you stay centred in your values? How do you stay encouraged to charge forward to reach new heights?

Heather:

I continue to educate myself by reading books. I’m constantly taking care of myself physically exercising every day. Just staying true to myself and my core values being Tran transparent on missed having great follow through with our clients. I think that’s really what has made me successful in this industry and just, treating people the way that I would want to be treated and putting our clients first and then the success comes.

Brett:

Fantastic, Heather, for our listeners who want to get in touch with you, would you remind them one last time what’s the best place for them to find you.

Heather:

You can always visit our website at SecuredInvestmentCorp.com You can get information about both of our funds on there. Then also all of our notes are also uploaded there. You can get quite a bit of information and then obviously if you want to explore the Notes Further, we have full due diligence packages on there so secured investment corp.com would be your best resource.

Brett:

Heather Dreves, thank you for being on the show and also want to encourage you to keep using the gifts and talents of your leadership accountability team player, being a team player to help more people create preserve more wealth in real estate. I also want to thank our listeners for listening to the episode of the Capital Gains Tax Solutions Podcast. As always, we believe most high net worth individuals and those who help them they struggle with clarifying their Capital Gains Tax Deferral Options. Now having a clear plan is the enemy and using a proven tax deferral strategy such as the Deferred Sales Trust, the best way to exit your highly appreciated business commercial real estate, save afield 1031 Exchange, Cryptocurrency, Primary Home so you can defer the tax and create and preserve more of your wealth. If you want to learn more about that you can go to CapitalGainsTaxSolutions.com where we have our mastermind going on right now it’s a Free Mastermind every Friday at 10 am. Pacific Standard Time 1 pm. Eastern, where you can join me, my team members, my business partners, my some of my clients. Some of some folks are looking at this for the first time trying to learn about this thing called a Deferred Sales Trust. We’d love to have you as a guest come to check us out go to CapitalGainsTaxSolutions.com to Register. If you’re listening to us on expert secrets, eXpert CRE Secrets Podcast as well we appreciate everyone out there and we wish everyone well.

 

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About Heather Dreves

 

Passive Investing in Idaho Real Estate with Heather DrevesHeather Dreves is the Director of Funding at Secured Investment Corp and a fund manager that oversees the management of the Secured Investment High Yield Fund II LLC and the Circle of Wealth Fund III LLC, Secured Investment Corp is one of the fastest-growing real estate lenders and fund managers in the US.

Secured Investment Corp has created two private equity funds to fill the void left by uncooperative traditional funding sources. Investors have the potential to earn double-digit returns based on past performance. By connecting real estate investors who needed non-traditional funding with passive investors who were ready to earn higher returns on their investments, Secured Investment Corp created an opportunity to benefit both sides.

Heather enjoys lending money to self-employed entrepreneurs and their families. Watching people succeed in their business motivates her, and that’s why she and her lending team focus on transparency, mentorship, and making sure their people make their money back. She learned early on that focusing on the bottom line was not enough to sustain a business, and after foreclosures and property taxes caught up with many of her clients, she decided to change her approach.

 

 

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