Passive Real Estate Investing: Recent Episodes
Expert Advice for Creating Wealth and Cash Flow through Real Estate Investing with inspiration by Robert Kiyosaki "Rich Dad" | A Smart Passive Income Alternative to the Stock Market, Dave Ramsey, Clayton Morris, BiggerPockets and Grant Cardone.
Take the guesswork out of real estate investing. Learn how BUSY PEOPLE like you can build substantial passive income while creating wealth for the long-term. Gain expert knowledge and advice on real estate investing as Marco Santarelli (of Norada Real Estate Investments) shares his strategies and valuable insights with a special emphasis on Turnkey (done-for-you) real estate investments. Discover proven strategies for making money with real estate in ANY market and how to avoid common and costly mistakes. If you’re looking for “bigger pockets” and ACTIONABLE advice on the road to financial freedom, then this is the podcast for you! With new episodes every week, be sure to SUBSCRIBE TODAY!
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question is kind of simple, but I feel bad for this person. Her name is Grace and she writes in and says, hi Marco. Thank you for your amazing podcast. It is very informative and educational. It's been a few weeks now since I started listening and I gained a lot from it. I am new to real estate investing and this is my first adventure. Not sure why she called it an adventure. I took some friend's advice and bought some vacant properties in Baltimore with a price range of 10,000 to $20,000 hoping to rehab and sell or rent out in the areas that are expected to grow. I don't have any real data, but it is possible in a couple of years maybe, but that was a year ago. Unfortunately or fortunately maybe I need to be educated first in brackets.I was not able to do any of that due to finances and other circumstances. Now since I started listening to your podcast, I thought it would be wise to seek advice before I go too far with it. The area will be considered a class D neighborhood. I think my question is how should I proceed now? Should I try to sell them as is even if I lose money and use the cash for a down payment for a turnkey rental property or should I try to rehab and rent out or sell the properties? Thank you for your suggestions and keep up the amazing work you are doing in educating everyone who is interested to learn kindly - Grace.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as web classes, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Residential vs Non-Residential Market Drivers See our available Turnkey Cash-Flow Rental Properties.Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.SUBSCRIBE on iTunesGrace, thank you for writing in. I appreciate the question. This is a difficult question to ask in a harder question to answer for two reasons. One, I feel bad for your situation and two, I don't actually have enough information to give you a complete answer but I'll make a few assumptions and I'll answer to the best of my ability.First and foremost, this friend that gave you the advice to buy these two vacant properties, is she really, are he really a friend? In some ways, I'm thinking that this is a way to uh, punish your enemy. But it really depends on what you bought because they could be two great properties with minimal work in a decent area, although I don't know if decent and D class neighborhoods go hand in hand in the same sentence. But anyway, you did what you did and you have what you have. So on the surface, this sounds like you made a mistake, but smart investors, intelligent investors, good entrepreneurs have the ability to turn lemons into ...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Samantha and she says, hi Marco. I am currently trying to study up on the real estate in San Antonio. And while your article helped me a lot with the residential areas, I was just curious about how the market looks with non-residential or is it the same?Great question Samantha. So there are a lot of similarities and overlap between residential and nonresidential or what we would call commercial real estate, but there are some differences. And so I will give you a quick overview here of what those differences are.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as web classes, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Buying Turnkey Properties With a 15-Year Mortgage? See our available Turnkey Cash-Flow Rental Properties.Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.SUBSCRIBE on iTunesSo there are plenty of forces that dictate the real estate market. Some of them being political, some of them being economic, some of them being psychographic, these are all influencers. Um, but those are the major ones.So these influences are better measured by what we'll call market drivers. And they are the underlying force behind the actions of a real estate market. So when it comes to commercial real estate, there are three key drivers. The first one being yield, the second one being business confidence. And the third one being the occupancy rates are what some people might look at as being vacancy rates. But let's begin with kind of a basic and define what a market driver is. Simply put, a driver is a principal force that is positively influencing a market. So when a market driver is present, there is likely to be a positive market or industry trend that's showing up. And when that happens, you see values go up and down because demand may increase or it could just decrease. But when a market driver is not there or it's there but weak, you have less force behind that market.And what ends up happening is that demand drops and you see prices drop along with it or the yields go down with it. And with commercial real estate yield determines market value. Now if you talk to some sharp real estate investors, they'll tell you that that's a good time to go into a market. It's the, you know that whole saying of BI-LO sell high or just buy low and keep forever. But when you're going in with low demand, the theory is that you can get a better deal. So let's just talk about these real quick. The first key driver being yield is simply based on income. When you are a commercial real estate investor, you want income from your investment.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Jim and Jim says, hi Marco. I'm one of your listeners in the Southern California market who has benefited from equity appreciation on my primary residence. I'm considering refinancing to use this idle equity in cashflow markets as a 60 year old. I'd like to accelerate the amortization on the newly purchased turnkey property. From a numbers perspective, would it ever make sense to purchase one of Norada's turnkey properties by putting down a greater down payment, say 40% and financing your investment over 15 years as a way of accelerating amortization.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How Lenders Get the Short End of the Stick See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesJim, good question, and thanks for sending that in. The first question, I guess you need to ask yourself and what I would ask you is what is your overall goal?It sounds to me pretty clearly that cash flow is your primary focus here. Cashflow overgrowth, because these are kind of opposite ends of the spectrum, although you can kind of target both of these at the same time, but really you have to give up a little bit on one to gain more on the other. Typically, let's just assume cashflow is your focus because that's what it sounds like, but you're also trying to achieve something which impacts your monthly and annual cash flow and that is going from a 30 year fixed rate mortgage to a 15-year mortgage to accelerate the amortization. When you do that, it increases the debt service and therefore less monthly cashflow, less annual cashflow. So these were kind of opposing forces if you will. So let's take a hypothetical example here and do a little bit of math. You don't need to write all this down.I'm going to kind of give you the numbers. It might sound like a lot, but I'll bottom line it for you here in a second. Let's just do the math on a $100,000 property because it's just an easy number to work with and easy to remember. Let's look at four scenarios. 20% down on a 15 and a 30 year and 40% down on a 30 and 15 year. And here's basically what it looks like. So 20% down is an $80,000 loan and these are all at 5% interest. So a 30-year mortgage would be 429 a month. If you did a 15-year amortization instead of four 29 it's six 33 it's a $204 difference. So that means your cash flow is $204 less per month going from a 30 to a 15 year. Now, what if you did 40% down instead of 20% down just because you had asked, so that means your mortgage is now 60,000 instead of 80,000 again, at 5% a 30 year fixed rate mortgage would be $322 per month.It's considerably different obviously.
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host, jumping in for now. Let's dive in. Welcome to the show once again, Aaron Chapman. And for those listening today that do not know who he is, Aaron, can you please take a second and let our listeners know a little bit about who you are and why I have asked you on the show so many times.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Real Estate Newbie! What Properties and Markets for a First Time Investor?Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Well, for one, I'm probably the guy, the name you'll hear on this show more often than the host themselves. So there is that. I've been blessed to be part of this show, probably, oh, maybe 10 episodes now, if not more, and a co-host on one. So I've been at what I do, which I help people finance, investment, real estate, and it's not just finance, the investment in real estate. It's help you set up and strategize and structure how to become a real estate investor. How to build out your, your portfolio with, with people such as Melissa. They're helping you on the vetting out the real estate itself and how to do it in a way that you, you can build that, that armored equity, if you will, and that the and really have something you can hand on to generations and still stay bankable.Too often folks will consult an attorney for one perspective, consult an accountant for another perspective, consult their their real estate contacts for another perspective, and then the lender. And they wonder why the lender can't get the loan done because they built all these rather intricate systems. Well, the more complicated your life becomes, the more complicated your banking, banking system becomes, or banking situation becomes. And we help ensure that that is not a problem. We've been lending to, to folks again since since I've been here since 97, lending to investors since 2001. I'm a real estate investor myself since 2001, I not only, you know, went through the cycles leading up to 2008, weathered the 2008 crash within my business as well as a personal crash that put me in a wheelchair, took my memory from me, took everything really from me.And I went to a, from a positive net worth in several million dollars to a negative net worth of 1.5 million credit score down to four 60. Had to crawl back from all that get back into real estate investing in 2016 and being able to successfully rebuild a, a, a portfolio, rebuild a business, make contacts all over the place such as Melissa and others, and then be able to help build, build my family trust that never existed in the history of my family that I'm aware of and holding companies and other entities. And we hold assets all over the country. And I've had ownership interest in over 200 doors,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Philip and he says, hi Marco. My name is Phillip from Southern California. I'm a millennial that is looking to create serious passive income through rentals. What kind of properties and what city would you recommend to invest for first-timers in real estate? Investing like myself, especially in these strange times. Thank you for providing us educational and informational content every week! - Philip.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Power of a DSCR Loan and How You Can Finance Rentals in an LLC See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesWell, Philip, thank you for your question. It's a good one. There's a lot of new investors out there. Some of them just call themselves newbies, but we all start with our first property and we all start at someplace in the beginning. And you living in Southern California are in an unfortunate circumstance being surrounded by very expensive property. So from that perspective, it doesn't make sense to invest in your backyard.However, good news. The good news is is that this is a very large country made up of over 500 metropolitan statistical areas or what is known as an MSA. And because of that, you have the ability to invest in any of those markets. Pretty much anytime you want, the question is what market and what are you looking for? And I think that's the basis of your question here is you're asking what kind of properties and what kind of market or cities should I invest in. And you're a first-time real estate investor. So you want to start off on the right footing and not make mistakes, or at least not costly mistakes in the beginning, but you want to have success and that's not hard to do just follow a simple formula.And so here's the formula and it really is a top-down approach. Think of it like a funnel. In fact, I talk about this in my 10 rules of successful real estate investing. And I believe it's rule number six, which is taking a top-down approach. So what do you want to do is not start with a property, although that is important, but you want to start with the market. So you want to find a market or look for a market or have someone help you find a market, decide on a market that is healthy. It has good fundamentals. In other words, you want to market that is not in decline. You want a market that has population growth and at the heart of it, all our jobs and job growth. If you have a healthy, vibrant economy in a local market, then you will have jobs and probably job growth. That job growth means that more people will move into that market and the population will grow and that increases deman...
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Welcome back to the show, Aaron Chapman. Once again, I'm so grateful to have you here to drop some major real estate lending knowledge. So for everybody that's listening out there, you probably know this name. And we have Aaron on here a bunch. So here we are. Let's get started. Welcome to the show.At this point, I should just have my own couch. I would think.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Kelliane, and she says, hi Marco. I just recently discovered your podcast and have been binge-listening. Thanks for the great content. I am an attorney turned entrepreneur who recently sold my eCommerce business. My husband is in medical device sales with a high W2 income. I am now launching a new consulting business and podcast. My husband and I are trying to also ramp up our real estate investing business. After exploring many options. We are most interested in passive real estate investing example, acquiring turnkey, single and multifamily, multifamily, syndications, and hard money lending. We are working diligently to do everything we can to create a passive income, minimize taxes, and achieve financial freedom within the next five to seven years.Great goal and congratulations on all that.Because of my husband's high W2 income, I would love to be able to qualify as a real estate professional to take advantage of the tax benefits. However, I don't see how this is possible. If we were to pursue the passive real estate investing strategies as mentioned above, do you have any insight as to how we can get the best of both worlds? Thanks, Kelliane.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to From 9-5 Stress to Passive Income Success (Adam’s Story) See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesWell, Kelliane, thanks for submitting your question. And this is a great question because we are all interested in building a business and, or increasing our income, lowering our taxes, or keeping them under control and of course, achieving financial freedom within the timeframe that we set out to do it. And so this is all great. Now let me begin by first of all, giving you a disclaimer, and I'm going to probably mention again later, I am not a tax advisor or a tax professional, and I don't give out financial advice. So I'm going to give you some perspective and commentary that will at least help put this together for you in your mind and get you on the right track. But ultimately I think you're going to have to consult with a good tax professional that is knowledgeable on the real estate professional classification. But let's talk about that first because maybe you won't even get that far and there are pros and cons and you'll understand why I say that.So let me, first of all, begin by saying that we all know real estate has an amazing ability to potentially provide tax losses and deductions with tax-free cashflow real estate is one of those investment vehicles where you can actually show a loss on paper, what we call a paper loss,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Welcome to the show, Adam, I am so excited to have you here today.Great. Thank you so much for having me, Melissa.Absolutely. So for you listeners out here, I have been talking to Adam for quite some time. We've been trying to get him on my calendar. Adam is a wealth coach and today he's here to share his story of financial freedom and everything from debt to investing, how he did it, where he's going with it. So first of all, Adam, can you please just jump in and instead of me reading out a long, boring bio about you, tell us a little bit about yourself. --------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Should I Diversify Into Multiple Locations?Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Sure, sure. Thank you for the introduction. I would say a brief bio about myself. I am a self-proclaimed finance nerd and I love kind of all things financial and I've basically swung pendulum all different directions from college until I'm now in my mid forties. So I've learned a lot of lessons along the way of both saving, being in debt, working on getting outta debt, different types of investments and, and really ba how, basically how best to invest and create results. So I've learned mistakes and how to correct those mistakes. I'm also, I have my beautiful wife, Emily. We've been married for almost 15 years and two great little kiddos who are both in elementary school.Oh, wonderful. You've got some littles. I'm jealous of those days. I'm getting ready to take my youngest to college.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.So today's question comes from Clay and generally his questions about diversification in multiple markets and he says, hello, Marco. Loved the podcast. Keep it up. Thank you. First question, we have five properties in New York state in the same city. The cashflow is great and reliable, mostly 10% cap rates or one and a half to 1.7% rent to value ratios, which I will explain in a moment. He's saying these are C plus to B minus neighborhoods. I'd like to buy 20 additional properties, but not sure if perhaps I would be better off diversifying away from the same city that I'm currently in, perhaps into Indianapolis or Memphis. For example. Money would not go as far and returns would be lower, but I'd be diversified.His second question here is all of my loans are residential. As all of my properties are for family or less. I have six loans currently but will easily surpass 10 if I am to reach my 25 property goal. In this case, would you recommend commercial loans? Everything I see and hear is 10 loans or less. It seems to be the magic number for residential above which you have to go commercial, which doesn't seem to have as favorable terms. I look forward to your answers. All the best, Clay.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Do you really need an LLC before buying your first rental property? See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesClay, thank you for your two questions and there's probably more buried in there if I was to really just think it through, but let's talk about the first thing here. I guess the first question that I would ask is what is your overall strategy?Are you focused on building a real estate portfolio strictly for the cashflow and focused on markets that will give you that? It sounds like what you have right now is producing very good returns. I don't know what the cash flows are like, but your cap rate and your rent to value ratio is very high. So that right off the bat tells me that you're probably in C class neighborhoods because it's hard to find a number of that high in better neighborhoods such as your upper B and eight class neighborhoods. And there's nothing wrong with that. Everybody has their preference and everybody has their strategy. So if you want to stay focused in your C class neighborhoods and you're, you're doing well and you're successful there, and maybe yourself managing these properties, so you have the ability to have your own personal control over the portfolio, that's great.You know, fantastic and keep up the good work. But if you want to expand, then what you're essentially doing by applying geographic diversification is in...
Do you really need an LLC before buying your first rental property? This is one of the most common questions I get, and today, I'm breaking down the pros and cons — when you actually need one, and how to set it up the smart and affordable way. The truth is, sometimes you do, and sometimes you don’t. Getting it wrong can cost you time, money, and stress. So let’s clear it up.I’m Melissa Nash, and I have built a 7-figure rental portfolio from my couch. Today, I’m walking through one of the biggest investor questions I get: LLC or no LLC?--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Can I Invest with Low Income and Poor Credit?Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Here’s the deal — I’m just going to shoot it to you straight. I think LLCs are a good idea. They help provide protection and help you run your investment like a business. But do you need one before you buy your first property? Well, it depends on the type of loan you’re using.If you're using a conventional loan — think standard Freddie or Fannie loans — you cannot close directly in an LLC. The property must be titled to your personal name, and lenders will run your credit and qualify you personally. However, after closing, you can do a quit claim deed to transfer the property into an LLC. You can do this any time after closing, whether it’s a day, two years, three years, or four years later. There are different reasons why you may or may not want to move that property into an LLC, but for the most part, LLCs are for asset protection.Now, the second type of loan you might be considering for a single-family investment property is called a DSCR loan — which stands for Debt Service Coverage Ratio. The rules are different here: you’re actually required to close in an LLC. That means you need to set up your LLC before you close. The lenders will still check your credit, but the title and deed will be in the name of the LLC.Let me share how I personally do this. First, I want to say that I am not a CPA or an attorney. I’m just sharing what I’ve done personally and what I’ve seen other investors do. Always seek out your own legal and financial counsel. This is not professional advice. Everyone’s situation is different, and everyone will tell you something different.Some attorneys will set up your LLCs and charge you upwards of $10,000. Yes, you heard that right. There are large packages out there with high price tags, and you have to decide what’s best for you. The way I do it is a little different. For asset protection and privacy, I open my LLCs in Wyoming. It’s also really affordable — I can open one for under $200. I live in California, and I would never, ever open an LLC here. They’re expensive to set up, expensive to renew, and just not worth it for me. Wyoming, on the other hand, is business-friendly, private, fast, and cheap. I can get an LLC and the incorporation documents in less than 24 hours. I love it.I use a company exclusively for all of my LLCs — they’re absolutely wonderful. Once you enter your information, they do all the work. They’ll email you your incorporation documents, and if you do it in Wyoming, it’s lightning fast. After that, go to the IRS website and get a free EIN number. You can also pay a company to do it for you, but honestly, it’s so easy and fast, you might as well just do it yourself.Once you have your incorporation documents and your EIN, go open a business bank account. Most likely, you’ll have to go in person — I haven’t found a bank that will do it online. Whether you’re at Bank of America, Wells Fargo, or wherever you bank, just take in your documents and they’ll set it up for you. Be sure to use the name and address of your LLC.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Welcome back to another episode of Ask Marco where I answer your investing related questions.Today's question comes from Aaron and he asks, hi Marco. I'm a big fan of your podcast and I've been doing my due diligence and research on real estate investing for a couple of months. Now. I really want to be a real estate investor, but my financial and credit situation is not good. Can I still be a real estate investor with low income and poor credit?——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to What Lenders Really Look For (and How to Avoid Last-Minute Loan Nightmares) See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesInteresting question, Aaron. Short answer, no, but don't be discouraged because I want to explain what you need and what you need to do so it just makes it tough. If you have low income, it might make it difficult to qualify for financing. Maybe there are loans out there. Again, believe it or not, that are asset based and they don't even look at your income. So you could literally have no income, no assets may be no job and qualify.Does that sound familiar? Sounds like history repeating itself from the a 2008 great recession. Remember the housing market crash of 2006 but that's not where we are today. That's actually not the case. So let me break this down for you. When it comes to real estate investing, you need what I call the three CS, the three CS, and that is cash, credit and competence. Let's break this down. The first thing you need is cash. So this can be a function of your income, but if you don't have enough income to save up the investible cash, the savings that you need for the down payments to purchase your real estate, then you obviously need to do something about that. So what do you do? Well, you need to focus on building your top line, meaning the revenue or income you get from your job, your profession, your business, whatever it may be.And if that's not easy to do because you have a ceiling that you can't get through, you're capped at an hourly wage or you just have limitations, then what you need to do is one of maybe two things. One is add additional streams of income, meaning another job starting up a small business or you need to increase what you're making. If you run a small business or you're professional, how can you build or scale your existing revenue and income and increase your cash flows? So the point is is you need to rapidly increase what you can save. Save as much as you can, as quick as you can do that, however you need to do that. So second job, third job, a scale your business partner with somebody. Whatever it takes,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Hey guys, welcome back to the show. And I have a special repeat guest with us today. Most of you know him, you know his name. His name is Aaron Chapman, and he is one of the best investor friendly lenders out there. So welcome to the show, Aaron.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Buying an Owner Financed PropertyOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Thank you. I appreciate a repeat back on here. I, I don't know how many times this is, but I'll take it and I'll keep coming back.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Alan and he says, hi Marco. I have seen on the MLS a house for sale with owner financing. I know houses on the MLS are listed at or near their max value and everyone says you make your money on the buy. My question is, would you pay full price for a house with owner financing if it meets the 1% rule and still makes some cash flow? Also, do you have to tell the bank about this owner financing deal when trying to buy another property using conventional financing? Thanks Allan.Thanks for your questions Allan.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Invest in Turnkey Rental Properties: Complete Guide for Out-of-State Investor See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesSo essentially your main question here is about buying an owner finance property. So let's break this down. So first of all, to your first comment, you don't always make money on the buy.I know a lot of people say that, but that comment is especially true for someone who is more of an active real estate investor, or let's just call them a flipper or someone who buys fixes and then keeps the property because you obviously want to get the best price possible on the front end so you can budget for renovations and contingencies and hopefully some equity in there, which is your forced equity, meaning the profit or the value that you build into the property. If you can find a nice rent ready property or a turnkey rental or a property that is essentially a performing asset, meaning it's leased and generating income, and you can get at a discount for whatever reason, great. Uh, and that's just a better deal because you're not only getting the property you want with positive cash flow, but you're getting some equity as a kicker on the front end, but you don't always make your money on the buy.In fact, if you look at most investments in prudent markets, you will find that the appreciation and equity growth in that property over time is really where you have your greatest gains. If you get that on the front end as a kicker, that's fantastic. Call that icing on the cake or a bonus, but your wealth has created over time as the equity grows in your property. I could do an episode on that alone, but I just wanted to comment on that while you brought it up. So your question about would you pay full price for house with owner financing? My answer is yes. It depends what I mean by that. Is the owner financing a first or a second? Assuming that it's a first, the question is how much of a first, is it a hundred percent financing, 80% financing, like a conventional mortgage where maybe they're only ...
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Everywhere you look right now, people are blaming interest rates for why they're not investing. Rates are too high, it's impossible to cash flow. Maybe I'll just wait for the Fed to lower them.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT : Ask Marco - Should I Refinance our Rental to Buy More Properties?Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Now, let me stop you right there. Interest rates are not your problem. And in today's episode, I'm going to show you why high interest rates are just an excuse and the real problem that's holding you back from financial freedom. Now, here is the myth. High interest rates make cash flow impossible. And I know that sounds logical, but it's just not true. Yes, rates are higher than they were just a few years ago, but that doesn't mean that the math doesn't work anymore. Now, every single week, I see off market properties that hit my desk that are newly renovated or new construction.They are tenant ready and already have a local property manager in place, and they are cash flowing. And then the next thing somebody will say to me is, oh, it only cash flows $250 a month. It's not worth it. Well, here's what I say to that. You need to set your expectations and you need to think about what's actually happening with these properties. Okay? So first of all, you didn't fly out to the market. You sat there on your sofa or at your computer and you let somebody like myself handpick a property for you in an already vetted out market. You didn't hire a realtor or have to negotiate a deal, you didn't have to manage contractors or even handle a single renovation. All of that was done for you. So that alone literally saves you thousands and thousands of dollars and even more valuable, it saves your time.So let's do some math. Say you put down 20% on a rental property. So that's about, let's say on this property, I'm gonna give you an example of it a little bit later. It's about $30,000 down. Now this property cash flows $250 a month after all expenses. So that's $3,000 a year. Now remember that $250 a month, that is after all expenses are paid. So let's do some math. Say you're gonna put 20% down on an investment property, and I have a particular client who just did this on a property that we're pulling this math from, and that was about $30,000 down. This property cash flows about $250 a month after all expenses. Again, that is the profit, and you did nothing. You sat on your couch and bought this property. So that's about $3,000 a year.So now what you're gonna wanna do is take that $3,000 and you divide it by your down payment. That 30,000, this is a 10% cash on cash return. So let me say that again. This is a 10% return on the actual money that you invested. So you literally took that money out of your savings account, bought a done for you turnkey rental property. And so this is a return on the actual money you invested. So what if you had just left that same $30,000 sitting in your bank account? I mean, if it's Wells Fargo like what I have, you'll be making what 0.01% interest, basically nothing. So when people complain, oh, it's only $250, they're looking at it completely wrong because that is just the cashflow piece. And cashflow is only the appetizer. The main course is everything else that real estate gives you loan pay down.Your tenants are building your equity appreciation. The property grows in value over time, tax benefits, depreciation, write-offs, and incentives that put money back in your own pocket. And then of course, the last one we have is inflation.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Jade. Thank you very much, Jade. She says, excellent podcast. I wish that I'd found it sooner. As you mentioned, ignorance is expensive. We paid off most of our rental home, but we'd like to retire soon, which means we need more cash flow. We're considering refinancing the rental in order to fund the down payment of additional rental properties in a different state that have a better cash flow. Any thoughts on this? And Jay goes on to say we're nearing retirement age, so the thought of a refinance with a 30-year mortgage seems like a long time, but it would give us the best cash flow. What are your thoughts on this? Any other things we might want to consider? So this is a great question, but there's not enough information here to really give you a more specific or targeted answer, but I can answer it generally.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2019)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Invest in Leverage, Location, and a Little Memphis Magic See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesAnd here's what I would say. If you have a rental property right now that is mostly, if not entirely free and clear, so that means you have a mortgage on it but it is not paid off, that's fine. But if you've got a lot of equity that you can pull out through a refinance, which is essentially a cash-out refinance and there's no tax implication on that at the time than what you can do is you can take that equity and turn it into down payments on additional rental properties. And if you do the math, more often than not, what you will find is that the net income you have from that one rental property or rental property is typically increased sometimes considerably by taking the equity out and multiplying the number of properties you have from that one too. Let's say three, four, potentially even five rental properties.And so when you run the numbers, even though you now have increased debt service on that first rental and you now have debt service, meaning the mortgages on the additional rentals, you will find that if you add up your net cashflow from each of those rentals after paying all the expenses and after paying your debt service, that the aggregate total of those individual cash flows will be larger than what you have on that single rental. And this is a math question, all you have to do is just tick, sit down with a few assumptions, grab a pen pad and a calculator and just run those numbers. You could also go to our website and use our online tool. The cashflow analysis tool that's really attached to every single property just changed the numbers and you can see for yourself how this will pan out f...
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host Jumping in for now. Let's dive in.Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host, jumping in for now. Let's dive in. Welcome to the show, Robert. I'm so excited to have you here today.Well, Melissa, thank you. It is an absolute honor and a pleasure to be here with you. I have been looking forward to the opportunity for us to talk about real estate, and of course, we've worked together so synergistically over the past few years. Anytime I get to spend time with you, a lot of time, I feel like I'm the one doing the learning. So thank you so much for having me on.Absolutely. So, okay, our listeners are like, who is, who is Robert? Who are you? And one of the things that I like to do, instead of me giving the audience a recap about who you are, if you don't mind just taking the next couple of minutes and tell our audience who you are and who you serve.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Should I Invest in a Cheap Property?Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Well, I, I really appreciate the opportunity to do that. And I think the most important thing to say here is, you know, first of all, if you're tuning into the podcast here, listening to Melissa routinely, you're doing yourself and your family a tremendous service. Melissa and her team have forgotten more about real estate than I'll ever know. And, you know, the coaching that they provide, the sensitivity they have to investors' needs, whether you are beginning and want to get involved in the investing side of it, to all the way up to if you're an advanced investor looking to level up your game and 10 x it, I mean, Melissa is the person that you wanna go to along with her teammates, and it's just an honor to be here. As far as who I am, you know, I'm nobody. I am a kid who grew up in upstate New York in to what we call a a broke family.And a broken home money was a five letter word that was never spoken when I was a kid, or if it was, it was spoken in anger. And you know, growing up, I am a very, very typical guy who did everything that people told me to do that would make me successful. They're like, Robert, make sure you go to school and get good grades, Robert, make sure you engage in athletics and work really hard and excel at them, Robert, go to college, you know, get a good job. And I did that. I triple majored, you know, when I was an undergraduate at Syracuse University, Robert, get a good, safe, secure job with benefits. And I, I did that became a school teacher up in New York State there for several years. And then you had to get your master's degree, which is a New York State requirement.I did that. And the story may sound so common to so many of your listeners. I ended up going on a doctoral scholarship down to the Mid-South, down to Memphis, Tennessee. And I woke up one morning there and I had kind of put a pause on the doctoral program. After about a year, I was offered a teaching position in the Memphis City schools. 'cause I was a licensed teacher from New York State. And Melissa, I wanna say I was maybe a $48,000 a year earner. And I came out of my one bedroom, you know, $550 rent apartment on the railroad tracks back in 2001. And I thought to myself, man, I'm living paycheck to paycheck. I have a hundred thousand dollars in student loan debt. My credit card is maxed out. I've done everything everybody told me. But certainly there has to be more than this.Living paycheck to paycheck, living hand to mouth, struggling. And what are the words of my mentor, Al Plum said,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Well, I wanted to do an Ask Marco episode. I haven't done one in a little while, and I went to my folder where I get emails that come in from the website on the Ask Marco form.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2024)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Invest in Turnkey Rental Properties: Complete Guide for Out-of-State Investor See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesAnd one of the ones that came in just recently here was one that I used to get fairly often. I haven't seen it in a while, which is surprising given how much property values have increased over the last three to four years. And the question is basically this, should I invest in a cheap property? Interesting question. So the question came in from, I believe it's Yair, I'm not sure if I'm mispronouncing your name - YAIR, and Yair writes in and says, hi, I'm a 22-year-old looking to invest and you said at the end of your podcast that you're happy to help. Of course, we're all happy to help here. I currently have around $60,000 and I'm hoping to buy and then rent a property out. I have looked into Jacksonville and maybe North Carolina. If I could have a call or conversation with one of your team members, that'd be greatly appreciated.Absolutely. So y I've already emailed you back and connected you with my operations manager so she can connect you with one of our available investment counselors and you can have a conversation and then they'll help point you in the right direction. And we'll just answer whatever questions you have. And if it's something we can help you with, we will definitely let you know. Let's answer this question. Should I invest in a cheap property? Well, the first thing we need to do is define what we mean by cheap, because cheap can mean different things to different people. The thing we don't want to do is confuse cheap by absolute price. And the reason I say that is this cheap depends on where you're looking. It is relative to the market and it's also relative to the neighborhoods. So for example, if you were looking for a cheap quote unquote property in the San Francisco Bay area, that might be a six, seven, or $800,000 property.Whereas if you go to let's say Memphis, Tennessee, or let's say Indianapolis, Indiana, something that we will define as cheap might be a an 80,000, 90, a hundred thousand dollars property. So it really depends on the market and more specifically the neighborhood. You see, every market has a price range. There's the low end and the high end. So if you look at all the properties in any given market, you will see properties that start at a certain price and top out at a certain price.
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host Jumping in for now. Let's dive in.Hello everyone. Welcome back to the show. And today I'm doing something a little bit different. I have been getting the same questions over and over for the last 10 years, whether it's in my inbox or social media or webinars, talking to people on the phone, you name it. So I thought, why not just sit down and answer the top questions I get about turnkey real estate investing all in one episode? So think of this as your crash course in turnkey investing. I'm gonna give you the real deal, no fluff. This is not a sales pitch. Just honest answers to the questions that keep you up at night when you're thinking about getting started in real estate investing. So grab a coffee or if you're on that run or something like that and you can't take notes right now, then maybe you wanna save this one so you can come back to it.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Why Mortgage Interest Rates Don't MatterOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.'Cause You're definitely gonna wanna take notes when you get a chance. But let's go for it and let's dive in. Okay, let's start with the basics because I get this question pretty much every day for the last 10 years. It's kind of like Groundhog Day, I don't mind it, but let's talk about what is turnkey real estate because here's the thing, not all turnkey is the same. There is a lot of confusion out there about what turnkey actually means. So let me define how we do turnkey here and what it really means. So normally when you hear the word turnkey, you basically put the key in, turn, open the door and you can move in. Now that's where this is coming from. You know, realtors have said, oh, it's turnkey and that's what it means. It basically means rent ready or move in ready. But there is so much more to it.Now, this is a big disclaimer, I'm gonna say there's so much more to it. If you're working with someone like us here at Norada, we have the entire turnkey system. It's not just the property. And I think that term turnkey is thrown around so loosely, and to be honest with you, there's a lot of bad characters out there that kind of take advantage of people and use this word. So when I'm saying turnkey, I'm talking about the entire system. Now I personally have broken it down into what I call the three Ps, the property, the people, and the process. Now I believe that to have true turnkey, you have to have all three to have a good turnkey done for you rental process. So number one is the property, and that is a renovated property or new construction that meets our investment and renter standards with a pre-vetted rehab team that has warranties and a long history.Number two, it's the people and this is going to be the local team that is going to manage the property for you and also manage the tenant. Again, we do not want you to sit there 2000 miles away and manage a tenant and worry about, you know, getting them into the property and collecting rent checks and all that kind of stuff. No, we have a vetted out local team in place on every single property that we have. They are going to manage it for you and manage the tenant. Then we have the lender, and again, we introduce you to lenders and we'll kind of get into that a little bit later. And then the other part of the people is us working with us to help you define your strategy market and budget. And the last P is process. That is the system that makes all of this work seamlessly so that you don't have to do all the work yourself.You don't have to get on an airplane and hire out and deal with the contractor and rehab on your own.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today it's gonna be something a little bit more interesting because we're gonna talk about why mortgage interest rates don't really matter. And you might be scratching your head saying, well, how's that possible? If rates go up, that means my mortgage payment goes up, my cashflow goes down, and that is a big deal. Well, that may be true, but maybe you're being myopic or shortsighted, and we're gonna talk about that. So I brought my friend and trusted mortgage loan originator, Aaron Chapman, back to the show. Aaron has been a veteran in the finance industry since 1997. This, this guy's been around for a very long time, and he's been focused on real estate investors specifically. So he's not your typical mortgage broker or loan originator that does loans for homeowners. No. He does mortgage loans for real estate investors, and he has a big team. He's got 22 staff on his team that help him. And our clients obviously invest in real estate with mortgage loans specifically for building your portfolio.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2023)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Single-Family vs. Multifamily: The Pros, Cons, and What No One Tells You See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesSo with that, Aaron, welcome back to the show.Oh, it's good to be back, man. Like you said, it's been a while. I think we got five in the can right now, so it'll be number six for us.It’s probably the sixth episode with you. Yeah, you're you're definitely the top repeat podcast guest
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host Jumping in for now. Let's dive in.Alright, so you are thinking about investing in real estate, but the question is, should you go with single family or should you dive into multi-family properties? Now each has its pros and cons, and today we're breaking down both so that you can decide which one fits. Hi, I'm Melissa Nash and I've built a seven figure rental portfolio buying both single family and multifamily properties. They are hands off and long distance for me. Now I know both of these types of investments can bring in passive income, but they each come with their own set of challenges. So let's dive into what makes them tick. But before we do, I wanted to remind you that you can go to www.noradarealestate.com and there you will be able to see actual inventory that we are talking about today.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Investing Using Cash versus a HELOC (Line of Credit)Our team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.You can also download a free book about how to get started with Passive Real Estate Investing and you can also book a free strategy call with myself or one of the investment counselors here. So go ahead and go there. There's also a link in the show notes, so let's dive into it. First of all, I'm going to give you some of the pros to single family. Now, one of the biggest perks of single family homes is their simplicity. So you're dealing with one tenant and one property fewer headaches than managing multiple units. It's more straightforward and easy to understand, especially those new to real estate. Most of us have bought at least one house in our lifetime. Maybe it's the house that you live in right now or maybe you have been handed an investment property by accident. I hear that one a lot. So it's pretty straightforward and easy to understand because most of us have kind of done it already.Now, however, because we are smart investors who work smarter, not harder, we will be using a local vetted out property manager. So it's really them managing the property. But still buying a single family home is pretty straightforward. There isn't anything too crazy here with the financing or anything else like that. So again, a big perk, simplicity. Now another thing that I love about single family homes is they are more universally appealing. What I mean by this is if the tenant moves out, the pool of buyers is pretty decent. It's pretty big. Again, if you're buying in an area where there is high rental demand, there is always another renter waiting around or somebody who can buy the home if you decide to sell. So I call this the exit strategy. Reselling can be easier with a single family home, okay, because again, you can sell it to an investor or you can sell it to somebody who's going to buy it and move into it.Owner occupied. Now, single family homes typically appreciate, well, especially if you are buying in high demand areas. So a well located property might see faster equity growth compared to a multifamily property. So again, exit strategy with multifamily, your choice is basically, hey, I have to sell to another investor. So it might take more time to sell a single family. You've got a bigger exit strategy and people you can sell the property to. Now, another thing that I love that is a pro for single families is they're more abundant. Open up any of the marketing apps that you use and you know what I'm saying, there are a lot of options and it's much faster to get in the game. You can wait and wait and wait for the perfect multifamily and you can pass up on so many really great single families that actually c...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Thank you for joining me here today. Another great question, someone wrote in and asked me about investing using cash versus using a HELOC, which is a home equity line of credit or just simply a line of credit against your home or property. And the question came in from, well, it's actually two people by the looks of it, Jay and Julie working together here. I'll just read their email real quick and then address it.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2024)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How ONE Rental Property Paid for my Kid's College! See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesSo, they write and say, hi Marco, I love your podcast. And actually bought my first property with Norada. Well thank you. Thank you for all of your information. Informative episodes. I can't get enough. I recently lost my dear mom who was a very smart and savvy investor, and my condolences go out to you.I will soon be receiving a large inheritance of $650,000. Additionally, my two siblings and I will be inheriting a Bay Area home that is fully paid for worth at least a million dollars million. I've considered buying out my siblings for the home with the inheritance money, which would leave me with a debt-free home to live in and at least $1 million in equity. If so, I would plan to take the heloc, the home and equity line of credit and invest that equity into rental properties in better markets. Alternatively, we could sell the house, which would leave me with at least $1 million cash between the inheritance and home sale. I could then rent or buy elsewhere and use that $1 million to invest in rental property and better markets. I am tempted to buy my siblings out so I can have a Bay Area home to live in or rent out.Since acquiring a home in the Bay Area is so expensive and competitive, would you suggest this, is it feasible to take a HELOC and invest that 1 million of equity or is it wiser to sell the house and invest the cash? I also have to consider where I would live if I did sell the house, whether to rent, buy, or house hack. Ideally, I would stay near the Bay Area since my work is here. I know this is a long question and I thank you in advance for your time and expertise. Well, thank you for the question and it's a great problem to have, if you will. Anything I say here, of course is not financial advice. I did respond to you as you know, with some clarifying questions. Basically, I wanted to know if you were living in that same house or living elsewhere and you know, I assume that you had a place in the area, so turns out that you just moved into that home from elsewhere, probably renting elsewhere, but now you're living there.
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host Jumping in for now. Let's dive in.Today I'm sharing a personal story that's kind of a big deal and most people don't even know about this strategy. Now, I really wish that I had known about this for my older kids a long time ago, and it's how one single rental property is going to pay for my youngest daughter's entire college education. You guys. Yes, you heard that, right? So if you are a parent worried about rising college costs or a grandparent or an aunt and or an uncle or just somebody who's going to assist the parents paying for college, or honestly, if you're just looking for practical real estate investing strategies that goes beyond building wealth, well then this episode is for you. I am going to walk you through the exact numbers, the timeline, and most importantly, the four different exit strategies that we have available.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco: Asset Protection for a New InvestorOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Now, let me take you back about 10 years ago. My daughter was eight years old at the time, and like most parents, I was already thinking about college costs. My older kids were already in high school, and I was thinking about this, but instead of opening a traditional college savings account, I decided to try something a little bit different. Now, I found a rental property in Alabama through my network that we have here, and this was an off market deal, of course, because this is where you find the best opportunities. Now, this property was already renovated and it came with a local property management company in place. And by the way, I still use the exact same property management company today, 10 years later. So definitely finding a good property management company is gold. Now, legally, since my daughter was a minor, the loan had to be in our names, but this property was intended to be hers.It was going to be her college fund essentially, and it was just a little bit different than most parents choose. So let's talk real numbers because that's what you're here for. Now, we bought this property for about $60,000. Now, yes, at the time, that was a C class property. If you're looking to spend $60,000 today, I would mostly advise against it. It's probably gonna be a de class property. But anyways, that same property today is worth about probably 130 to $140,000 in 10 years. The property has essentially doubled in value through steady, consistent appreciation. Nothing crazy, it's just in a solid rental market in the south. But here's where it gets interesting. 10 years ago, this property was generating, I think it was about around $250 a month in positive cash flow. Now, when I say cash flow, I'm talking about after all the major expenses that you have to pay every month.So the taxes, the insurance, the property manager, and the mortgage. After those were taken out, I had consistently a positive cash flow right around $250 a month. Now today after years of rental increases, now some of them weren't every single year. Some of them we went a couple years without raising the rents, and then all of a sudden we would raise the rent in a bigger chunk. The property is cash flowing now between five to $600 a month. Now, that may not sound very exciting to some of you guys, but it's more than doubled the monthly income from this single property. This is just one property we're talking about. Okay? Now remember when I bought this property, I didn't pay $60,000 for it. I got a loan and I put 20% down on this property. So our initial cash investment was about $15,000, which is again, pretty awesome.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Well, I have a question today from, I guess a new real estate investor, and it is a common question I get about asset protection and there just seems to be a lot of confusion about this subject or just a lack of information out there. I've done a lot of podcast episodes about it. And so I think this is just a good and timely question and it seems to be evergreen. So let's hit it.——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2024)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The 5-Minute-a-Month Real Estate Strategy See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesNick writes in, he says, hi, Marco. I've been listening to your podcast and speaking with your team. I'm very close to pulling the trigger on my first investment property in Indianapolis. Nick, congratulations. It's the first one's always the hardest and the most exciting. I listened to the podcast from December of 23, I guess that's December 23rd, about asset protection.And my question is this, is it worth it for me to get the asset protection set up prior to getting my first property, or am I better off to just wait until I have a few properties? I will be setting up an LLC for the first property and we'll transfer title after closing. But I am more curious about the series LLC that was discussed in that podcast. I would like to get this right out of the gate, but I also don't want to make this complicated until I can get my feet wet. With all this, my goal is to have at least two to three properties by the end of the year. Thank you, Nick. Nick, congratulations. And I'm glad you're thinking about this in terms of goals and objectives, not just the fact that you got your first property. So congratulations. Well, now that I have read your question to December of 23, I assuming means 2023, so December of 2023.Okay, got it. Well, here's my response. Nick, don't complicate this question. It is a common question, and I get it quite often. The short, simple answer is this. You can set up your asset protection anytime before or after because it's simply a matter of transferring title out of your personal name when you close on the property and into the entity that you're using for asset protection purposes. Now, I'm assuming you're financing the property because if you're not using financing, you could close property in the name of an LLC or anything you want. There's no lender involved. It's the lender that wants you to close in your name personally, and then you have certain rights after the fact as far as whether you can transfer the title or not. Most lenders don't want you to and don't allow you to. The only exception to, to that by law is transferring it into a trust.
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host, jumping in for now. Let's dive in.Welcome to the show, Steve, I am so glad to have you here today.I'm glad to be here. We've known each other for a while and it's always good to catch up.Yeah, definitely. So I purposefully did not tell our listeners about your bio because I want you to introduce yourself. So if you don't mind, take a second here and tell us a little bit about yourself and let's dive into all the good stuff that I know you have to ready to share with us today,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.I have an exciting episode for you today because it's something that is actually very important. And it's the real perspective of looking at the returns on real estate and realizing how powerful it can be. So this episode is really about the REAL Returns of Real Estate Investing. You know, there's a famous real estate investing quote, and it goes something like this "Don't wait to buy real estate, buy real estate and wait."Now for most people. That just makes sense. In fact, it's probably common sense, you know, you buy and hold real estate and you increase your wealth over time, but really let's dive in and look at why the suggestion in this quote is to buy real estate and wait, why do you wait?——————————————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2020)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Florida Real Estate Opportunity Everyone Is Missing See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesWell, I'm going to illustrate that, but it's going to go way beyond that because what I'm going to show you in verbal format here is the power and the high returns that you can achieve investing in real estate, even in your first year. See, a lot of people don't believe that they can achieve returns in the 20%, 30% or even higher return on investment. I'm talking total return on investment in year one, meaning after 12 months of owning a property, it is doable. Very doable happens all the time. Of course, you want to make sure that you're investing prudently and wisely, not just going after highly speculative plays or being in very undesirable neighborhoods or investing in the war zone. You know, you just want to follow the suggestions, methods, and strategies that we talk about here all the time, not just on the show, but my investment counselors and what they talk about with you as our clients or prospective clients.I mean, we all essentially drink the same Koolaid and follow the same investment philosophies and strategies here. So they are sound, tried, true, and proven, and they work virtually all the time. So if you stick to that, you have a formula for success. Now let's talk about the real returns of real estate investing. Basically, there are three areas that generate returns for you as a real estate investor. And this is what makes real estate such a powerful investment. So the three dimensions of real estate as an investment are income, equity, and appreciation. And I know I've talked about this on and off over time, over the last five, six years, uh, in the acronym IDEAL and that is I.D.E.A.L. You can obviously see that three of those elements are in here, the income, the equity, and the appreciation.
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host, jumping in for now. Let's dive in. Welcome to the show, Josh. I am so excited to have you here today. Now, I wanted to kind of let everybody know, I want you to do your intro and tell us a little bit about yourself, but just for a little bit for the audience here. Josh is a amazing contact and builder in Florida, and he has helped him and his team have helped many, many people in Florida. And you can give us all the numbers for that, Josh where we got into, or they rather got into a pickle with some builders who weren't necessarily the best builders, I would say. And Josh and his team were helping people, and that's how I met you. So I'm so grateful that I met you and your team, and I know you, again, have helped so many people. So if you don't mind, just tell us about yourself, Josh, you and your team, and tell us kind of where you're at, what you do, and why you do it.--------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: 7 Steps for Picking a Strong Real Estate MarketOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.—————————————————————————————————————---------------------------Throwback Thursday Episode (The episode originally took place in the year 2018)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Tax Strategies Your CPA Never Told You About (Real Estate Edition) See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesA Large And Growing PopulationLet’s talk about the seven steps for picking a strong real estate market. It’s a test. The first step is choosing a market that has a large and growing population. Population centers have upwards and downwards momentum. If a city is growing, it will likely continue to grow. A city losing population has a hard time stopping that trend. As a population center grows, the growth fuels itself. More people attract more people and the rate of growth can be dramatic. Currently, populations are moving away from small towns and towards larger urban centers. There is a highly educated entrepreneurial segment of the population that is moving from urban centers to small towns and telecommuting. In terms of total numbers of people, the safe bet is that bigger cities will keep getting bigger.I like to break those down into three tiers: Tier one, two and three. This is just a general guideline. Tier one is the largest metropolitan areas like Los Angeles, Chicago, New York, San Francisco. The secondary markets are the Tier two markets are pretty much the bulk of the markets out there. You'll find them in the Midwest and Southeast. They’re peppered all around the country. Tier three markets are the smaller, lower population, outskirts, large towns, small cities. Numbers change from market to market, but don't get fixated on whether it's a Tier three or Tier two market. You need to look at a lot of different elements such as whether the population's growing and the other elements. These are the facets you need to consider.When it comes to large and growing populations, there's a lot of free information on the internet that you can look up on population trends or housing trends. There are two big websites, which are the government websites which are the Census.gov and the Federal Housing Finance Agency, FHFA.gov. These are two sites that are chockfull of all kinds of information about every market all around the country. If you’re doing general searches online for population growth or population trends, just use the name of the city followed by those keywords, will pull up all kinds of information. There should be no shortage of data at your fingertips to look at what markets are doing, growing or shrinking.Diversity Of Employment and Job GrowthThe next factor is the diversity of employment and the job growth. Job growth for me is important because if you have jobs,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Alright everyone, I am excited to have two incredible guests with me today, Amanda Han and Matt MacFarland. These two are CPAs and tax strategists who specialize in helping people use real estate to save massive amounts in taxes. They're the authors of The Book on Tax Strategies for the Savvy Real Estate Investor, which if you have not read, you definitely should. They have been featured in so many different spotlights from Forbes Money Magazine, CNBC, and so much more. Most importantly, they have helped thousands of investors nationwide save serious money through proactive tax planning. All right, that was a mouthful, Amanda and Matt, welcome to the show and great to have you both here.Thanks for having us, Melissa. It's good to be here. Yeah.Excited to be here.Wonderful. So, as I was just saying before we hit the record button, I have, you know, introduced many, many clients your way. So I have been very excited to have you guys on. So again, thank you for your time today.Yeah, we're always happy to be you know, able to share our knowledge about, you know, how to use real estate to pay less tax effectively.
You know, real estate investing can generate some great returns if you know what you're doing, but many investors do not have the skills or education to make that start or grow their real estate portfolio and build those returns. You know, I often get asked the question, what is the best book or books on real estate investing? And I've compiled lists over the years. In fact, there's one on our website right now called the Top 10 Real Estate Investing books, but I'm going to be changing and updating that list. It's a little dated. There are several books on there that I definitely want to take off. They don't apply anymore, or they're a little too outdated. So hang tight probably by the time you listen to this episode, or maybe a few days later, you will have the updated list.In fact, I'm going to take the top 10 away and just refer to it as the best books on real estate investing. But I get asked this question, and this is why I want it to compile a list of the most important books on real estate investing and mindset. You know, the saying goes, "the more you learn, the more you earn" that is definitely true. So if you're going to read these books that I'm going to present today, you will be way ahead of most people, you know, real estate is an ever evolving industry. We know real estate is one of the best investments that you could ever make. And many people succeed, but some fail and most people never get started. The first thing you need to do is get your mindset, right? And once you have the right mindset, then you can form the habits that will ensure your success because with the right mindset and the right habits, you can acquire the knowledge and education that you'll need to take action and become a successful real estate investor.One that has created the wealth and passive income to live the life on your terms, which means financial freedom that ultimately leads to time freedom. That's what we all want, right?—————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2021)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to St. Louis Real Estate Gold Mine: How to Buy Cash-Flowing Rentals in 2025 See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunes So I've created this list and I felt I would give it to you in a way that breaks it down into several categories. I want it to break it down into the following areas, mindset, finance, and investing real estate investing for beginners, which is really from beginners to intermediate level investors and then real estate investing books to grow your business. So once you've gotten started to just continue to grow and scale books on property management and books on taxes, or more specifically on how to save and minimize your taxes. So that's essentially six categories. Now, keep in mind, this is not an exhaustive list. There are literally hundreds, if not thousands, but hundreds of books on real estate.In fact, if you don't believe me, just go to amazon.com and type in real estate investing or even just real estate. And you will see there are a lot of books and that's the problem. There are just too many books to choose from, and it's really hard to know which ones are good, great, or bad. And believe me, there are many bad books out there. The other thing too, to keep in mind is that if you don't like reading, or if you're a slow reader, you can get the audio book version of most, or probably all of these books that I have on the list today. So whether it's print or audio,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Taylor, welcome to the show. Let's start your story with how did you get into real estate?Well, first off, I appreciate you having me on. I basically been in it my whole life. There wasn't for me, it wasn't really getting into real estate. I grew up in real estate. So my dad started doing this in the late eighties growing up at the dinner table. We were talking real estate and deals and rehabs and strategies and that's just how I grew up in it. And then as I got into my middle teenage years, 15, he had me on rehab crews and I was rehabbing and gutting houses. And then I did that through college. And then before I graduated I got into property management and then I got my broker's license and just kinda went through from top to bottom or bottom to top, however you want to say. It just went through the whole process of learning how all this stuff works.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: 10 Rules for Successful Real Estate Investing RevisitedOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Amazing. So interesting because I surround my kids with real estate talk. Yeah. We're at the dinner table and I am doing everything I can to excite them about real estate and none of them have really caught the bug yet.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Well, you know, I wanted to go back way back to an episode I did in 2015. It was in June, and literally it was episode number two and I titled it The 10 Rules for Successful Real Estate Investing. And I thought, what, if anything, has changed from back then to today, eight years later. So I decided to record an episode and go back and revisit those 10 Rules for Successful Real Estate Investing in part as a refresher, because I think they're all very, very important and it's important to keep the fundamentals in mind. But second, I wanted to see if anything changed and what changed, and maybe talk about that. So if these are truly principles based rules, then nothing should have changed.—————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2023)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Good Debt vs. Bad Debt: The Strategy the Rich Use Every Day See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesThe times might have changed, but the principles stay eternal. And so that's what I want to explore today, those 10 rules, and see how they apply today and if anything has changed. So there's no need to go back to episode two, although you can go back and listen to it if you want. I'm going to cover the important salient points, the nuggets that you need to know and make sure that I touch on all the highlights today that I covered back then. And where did these 10 rules for successful real estate investing come from? Well, basically it just came from years of successes and failures through the acquisitions, the mistakes I made in those acquisitions, the good, the bad, and the ugly. Dealing with tenants, self-managing, property managers. I was dealing with the market ups and downs, the great recession of 2008. It was just all part of that.And these are the same rules that I still follow today that I shared back then that I shared previous to that, and that I've been using all along as my real estate investing journey evolved and matured and as I gained more and more experience. So this just didn't happen in one day, it just kind of came to be over a, a course of time. So these are 10 rules. There's probably 15 or 20 in total if I really wanted to chart them all out. And maybe one day I'll record another episode and continue beyond the 10th rule and, and talk about the next five or 10 or even 15 if there are. So for today, let's go over these 10 rules and see how they compare.So the first one is titled, simply Educate Yourself. Now it's number one for a very specific reason is, and that's this. It's because the greatest returns and the best investment you can make is in yourself and in your mind. This is why I always say that you should educate yourself because that kn...
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Picture this, you're 12 years old sitting around the kitchen table on a rainy Saturday afternoon. The monopoly board is spread out in front of you, and you've got that satisfying stack of colorful money in your hands. Your sister just landed on Boardwalk again and she's practically broke from paying rent to your dad, who somehow owns half of the board. Sound familiar? If you grew up before iPads ruled the world, chances are you spent countless hours locked in epic monopoly battles with family or friends. But here's what I realized recently that completely blew my mind. Most of us learned the wrong lessons from that game, and worse, we're still making the same mistake with our real money today. How many of you remember your monopoly strategy as a kid?FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Positive Trends in Build-to-Rent (BTR) Investment HomesOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.I bet most of you were like me, obsessed with hoarding cash. I'd sit there with my neat little piles of five, hundreds and hundreds feeling rich and secure. Every roll of the dice felt like a gamble because laning on someone else's property meant watching my precious cash pile shrink. But then there was always that one player, maybe it was your dad, your older brother, or that annoying strategic friend who took a completely different approach while you were there clutching your cash. They were spending every dollar they saved on properties, Baltic Avenue, they bought it, Oriental Avenue. There's too, even those cheap properties that nobody wanted. At first you probably thought they were crazy. Why are you spending all your money? But then something interesting started happening. Every few turns someone would land on one of their properties and another person, and then suddenly that player who had wasted all of their money buying up the board, was collecting rent from everyone else.They weren't stressed about rolling the dice anymore. They were hoping you would roll because every move you made was potentially putting money in their pocket. So looking back on that one thing that hit me really hard, monopoly isn't really about hoarding money. It's about creating systems that make you money so that you can sleep for the rest of the game. Now, here's where it gets fascinating and maybe a little uncomfortable for some of you. Most of us are playing real life with the exact same cash hoarding strategy that loses in monopoly. So think about it. We save our money in checking accounts, earning 0.01% interest. We are terrified to risk our money on investments. We feel rich when we see a big number in our savings account, and every financial decision feels like a gamble. Meanwhile, there's a smaller group of people following the Monopoly winners playbook.They're buying assets that generate passive income. They're not hoarding cash, they're putting it to work. They're building systems that make money whether they are working or not. The wealthy aren't just people who make more money. They're people who figured out how to make their money work for them, just like owning the boardwalk or Park Place. So here's the question that is going to drive today's entire conversation. Like I said at the beginning, what if everything you've been taught about money is actually the losing strategy from Monopoly? What if being financially responsible, saving every penny and avoiding all risk is actually keeping you broke? What if the real path to wealth isn't about how much you earn, but about how many properties you can acquire that pay you rent? Of course, I'm gonna talk about this today. So we are going to break down exactly how the monopoly min...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.—————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2024)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Five Profit Centers That Make Real Estate the Most Powerful Investment See our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesI wanted to talk about the trends in the BTR or Build-to-Rent space. These are essentially investment homes or rentalthat are occupied by tenants owned by investors and in some cases, property managers or investment companies that own a large, large portfolio of these new construction rental homes or investment homes. In the United States, the build to rent or BTR space and the Build-for-Rent, also known as BFR, these are terms that are used somewhat interchangeably, but they have nuanced differences and this is an important thing to note because I'm talking primarily about BTR, Build to Rent. So BTR specifically refers to the development of either attached or detached homes that are intended to be rentals. So you have a tenant and an owner. So often these will have shared amenities, but often and most often will have single ownership. BFR or Build for Rent, however, generally covers a more broader range of commercial real estate projects. And those are intended to be leased rather than sold, but they're intended to be leased to owner and user occupants when they're completed. So the build for rent could be a cluster or a community that is owned by a parent holding company, an investment company, even a property management company. What you see with build to rent BTR are properties that are typically owned individuals or small groups. So a build to rent home can look like a traditional home and often does. It's a suburban style family home. It can encompass a wide range of building plans, but this doesn't exclude duplexes or row homes or small lot homes or even horizontal apartments. mean, this is a term that's also used in the industry where you have a tight cluster of professionally managed, freestanding single family residences. Then they call them horizontal apartments. So anything from a single family home, which is the most typical on up to row housing and horizontal apartments qualifies under that build to rent space. And it's a pretty exciting space. It's been a growing trend over the last few years to see rental properties come out of this new construction space and investors gobbling them.So build to rent that industry has been the fastest growing segment of the single family home construction space for a number of years. And if you stop to think about it with mortgage rates now, you know, exceeding six, six and a half percent, just depending on when you listen to this, that compounded by the fact that we have a limited supply of h...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.You know, you'll often hear people say that they don't like real estate because if you look at the long-term returns of the stock market seem to be a better return overall. Well of course when they say stuff like this, they are leaving out a few important things, a few key things because they're looking at real estate as being a very one-sided or one dimensional asset, and that's not the case as it is with most other investments like the stock market. First, when people say the stock market, what they really mean is something like the S&P500 or the Dow Jones Industrial Average.These are not the stock market, rather they are indices filled with some of the leading companies in the us. You'll often hear that the stock market makes returns somewhere from seven to 8% or 9%, 10% annually. And this is really based on the index returns rather than the market itself. Second, while a seven to 10% return is good annually for the average person, it is not a good return or even a great return for the professional investor. And when you stack up the returns from real estate against the stock market, they often only factor in that one profit center in real estate, and that is appreciation or capital appreciation, or you might just call it capital gains.—————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2023)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Redefining Risk: Smarter Strategies for Out-of-State Real Estate InvestingSee our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesThe reality is, is that there are four ways you can make money with real estate that when you add them all up together make for a considerably higher return than the stock market.And these profit centers are the reason that real estate is one of my favorite investment vehicles. And I'm gonna throw a bonus profit center in there today. We will call it the fifth profit center, which I'll talk about here in a minute. But at the end of the day, you have to understand that real estate is multifaceted or multi-dimensional. It is not just one rate of return. You have to look at it holistically and look at each of those returns together to really understand the true power of real estate and what it can deliver for you as an investment. Now here's a quick word of clarification as I talk about this, realize that I'm talking about investment real estate, not property that you buy specifically to run a business or more specifically your personal residence. And as I've talked about in previous episodes, your home is not an asset.It may be to the bank if you have a mortgage on it, but it's technically not a asset. It doesn't generate cashflow or income, it puts money in the pockets of your county for prope...
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Today I am going to be going over a question that I received from a client of mine. Now he is a new investor and he's buying an out-of-state rental for the first time. Now they are very excited and in education mode, they are doing all the things that they're supposed to do. Now, I helped recommend this market and particularly this team that they're investing with because I know that they do a really great job on the renovations and property management.So the question that he asked me recently, now he's already signed the sales contract, he's going through his due diligence and he asked me, is there something that I should be looking for as far as risk factors? So that is what we are going to dissect right now.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Power of Owning Just ONE Rental PropertyOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.I'm gonna tell you what I told him. Now, I've been doing this for a long time over a decade, and I've owned a lot of properties in a class areas. I've owned properties in what you would call D class war zone, and I've owned properties in C class, B class, I mean basically every you know, type of property in six different states. And you can have a bad tenant in an A class property. You can have a bad tenant in any of the different neighborhood grades. You can also have a really good tenant in any of those grades. I had a tenant for seven years in what I would call a D class or war zone type area, and she was the best renter I've had, and I would gladly take her back to any of my properties. So how do you as an investor look at different types of risk and what your risk levels are?So if you can't necessarily define it by neighborhood grade, because this example is a perfect example of that, how else can you limit your risk in an investment property, especially when you don't live near it? In fact, most of my clients and most of my properties, 90% of my portfolio is in another state. So how do we define that? First, we have to start with define your risk. Now, everybody has different risk tolerances. Some people would define risk as tenant risk. Some people would define risk as major rehab needed on a property. Some people would define risk as not enough cash flow, they want more cash flow. So first of all, you have to think about the types of things that would keep you up at night. I call it the sleep factor. If there's something that's really going to stress you out when you're buying a property far from where you live, what would bother you or what would make you stay awake at night and think about.So everybody has different reasons based on their experience. As you become a more experienced investor, you're going to add things or take away things from that list. So that is where I am coming from when I am answering. So I have helped over 2,500 investors buy properties and I am an investor as well and have a good size portfolio at this point. So my definition of risk might be a little bit different than one you're thinking about as a new investor because the way that I look at my portfolio today is all of my properties support each other similar to a stock portfolio. So when you look at a stock portfolio at any given time, you can have one stock that's doing better than another. Now is that reason to sell one of your stocks because it's not doing well? No, the same goes for real estate.Now, at different times, you're gonna have different things going on with your properties. And one thing that I know for certain, most likely, I won't say a hundred percent, but I will say pretty darn close to certain, at some point you will have a vacancy and at some point you will...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Well, I wanted to take a little bit of time this Saturday afternoon to record a relatively quick episode on the power of owning just one rental property. You see, a lot of investors discount the impact that having or owning one single rental property has on their life and their future, especially their financial future. They just simply discount it and either don't do anything or they don't get started, or they just don't look into it any further. I believe that everyone should own at least one rental property. Owning real estate simply means that you have an income generating asset that will continue to generate income virtually forever. Unless you destroy the property, burn it down, or sell it, you'll always have this income producing asset that will work for you as long as you maintain it.—————————————————————————————————————Throwback Thursday Episode (The episode originally took place in the year 2024)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Tap Into Hidden Retirement Funds to Build Wealth with Real EstateSee our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunesIt will constantly generate income and generate wealth for you and your family and your generations for many, many years to come virtually forever. So of course, you know you'll have turnovers, which means you'll have some downtime from time to time, but that's normal with income producing real estate, any kinda real estate. When you have a tenant and a lease, you will have vacancies and you will have downtime. But don't focus on that. That's a minor fact and course of business in owning income, producing real estate. But think about this, if you purchase the property and you use leverage, which is what 99% of real estate investors do, and you leverage your investment capital and you have a mortgage, let's just say you don't pay the mortgage off for 30 years, at some point you'll pay it off. Some people pay it off early as as little as seven years.But regardless of when you pay it off, once you pay off that mortgage, your rental income becomes pure profit, of course less the expenses on the property. You have some maintenance and you have property taxes. And, and if you don't self-manage, you'll have property management, but you will have some expenses. But once you pay off that mortgage, that rental income coming in is practically pure profit. It's just income for you. So the fact is, is that your first property can lead to significant cash flow and appreciation and tax savings, but that is not really what sets you free. All that is powerful and wonderful. But the truth is, is that most people who want to invest in real estate, they never get started. They educate themselves, they learn about it, they want it,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. What if your retirement account could do more than just sitting there growing slowly and collecting dust? Well, today's guest, Amanda Holbrook, is here to blow your mind and your limiting beliefs about what your IRA can actually do. Amanda is a certified self-directed IRA professional and total ninja when it comes to helping everyday people unlock the full potential of their retirement funds. And I'll be honest, I learned a few things in this episode that totally surprised me, especially when it came to finding money that I didn't even realize I could use for my own next rental property. If you've ever thought I want to invest, but I don't know where to get the money, then this episode is the one you need to hear. And Amanda's not just talking about theory either she's an investor, a busy mom of two, and even her kids have self-directed accounts. So you guys, I am so excited we are gonna jump right into this conversation with Amanda Holbrook.-------------------------------------------------------------------------------FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Single-Family vs. Multifamily Rental PropertyOur team of Investment Counselors has much more inventory available than what you see on our website. Contact us today for more deals.Welcome to the show, Amanda and thank you.Thank you. Thanks for having me. Much appreciated. I'm excited. It's been a while since we had like our gal chat. We were just, you guys didn't get to hear all the dirty tea that we spilled before we started today. I'm just joking. But no, this is great. It's a phenomenal topic. So relatable to so many folks here. So thank you again for putting it all together. You're the best.Absolutely. Absolutely. The last time I saw you, I'm embarrassed to admit it was, I wanna say seven years ago, right?In person, right? Like that's when in person, person saw each other, like in person. And you know, we've like talked and emailed and it's six degrees of separation in this world, you know? But yeah, when I saw your face pop above the screen, I'm like, gosh, that's so long.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today I want to talk a little bit about this ongoing question and debate, which I see asked all the time and bantered around by many investors, both beginner, newbie, seasoned, and professional. And that's the whole question of whether I should invest in single-family homes or should I invest in multi-family rental properties?---------------------------------------------------------------------------------------------------------------Throwback Thursday Episode (The episode originally took place in the year 2015)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to From Crisis to Opportunity: A Deep Dive with Richard DuncanSee our available Turnkey Cash-Flow Rental Properties.SUBSCRIBE on iTunes So this episode was sparked by an email I got from a person named Tim and Tim writes in and he says, I wanted to make money with rental properties. Grant Cardone feels it's safe money to purchase multiunit properties, which has a lower default rate than single-family units. I'll address that in a moment, but I'm open to hearing what you folks think is the best way for a beginner investor, like myself, to look into this.Tim, thank you for the question. So, although this is not an Ask Marco episode, I did want to take your question and turn it into more of a full fledged episode, because this is actually a good question. And it's a good thing to take a look at. So let's analyze this, first of all, I'm going to say that there's no right or wrong answer. One is not necessarily better than the other. Although I have a somewhat biased answer to the question of whether I should invest in single family or multi-family, but it's not just a personal bias. It's really based on what I'm about to talk about here today. I think there is a slight edge in single family rentals than there are on any type of multifamily, even fourplexes. Although I love single family, duplex, triplex fourplex, because of the financing, which is completely advantageous. You can lock in 30 year fixed rate, conventional loans or financing that you can't do on commercial properties, which by definition, according to lenders is anything that's over four units.So let's get into all this. So let's begin by talking about the advantages of multifamily properties. The first thing that investors think about when it comes to multiunit or multi-family properties, those that are five units and above, which could be 50, 500 or more, is that you can scale faster. And there is some truth to that. And this is the big thing that Grant Cardone talks about and, you know, love him or hate him. I know Grant he's been on my show. I've been on his ask the pros show a couple of years ago. You know, the whole thing about scaling faster is that you can complete one transaction and end up with, let's say 20,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Welcome to today's episode. I'm thrilled to have a special guest with us here today. A true expert in Florida real estate investing and a proponent of building family wealth through strategic investments. Our guest is not only a successful builder specializing in built to rent properties, but also the author of the number one Wall Street Journal bestseller, The Family Board Meeting. This book has helped countless families take control of their financial future by encouraging open communication and long-term planning. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Truth about Property InsuranceSo today we are going to dive a little bit about that book, but we're also going to be talking about the myths of Florida real estate investing. Please join me in welcoming Jim.Thanks for having me, Melissa. Good to see you.Wonderful to see you as well. I've been wanting to do this for quite some time. Yes.Well we've been working together quite a long time now.Yes, we have. Talking about this book has been on my to-do list for a bit now.Good, good. Looking forward to it.Let's dive right into it. In your book, the Family Board Meeting, it's all about building family wealth. So can you tell us a little bit more about the concept behind the family board meeting? And then the second part to that is gonna be real estate, obviously, but the first part is how did you come up with this? Where did this concept come from?Yeah, you know, I had a lot of things happening in my life. Oh gosh. Now going back almost 15 years ago, it was 14 years ago. And there was a time in my life where 2011 I was coming out of, of those difficult oh 8, 0 9 years where I had survived the real estate crash. But it was not easy. And, and now I was running two real estate investment companies that were doing well that survived the crash, but we were still licking our wounds and bringing things back together. And it was also at this time that I was just about to adopt two children and I was donating a kidney to my father. And so I got hit with a lot of outside of real estate work experience. And it just changed the way I looked at Family Life, Melissa. And, and what it did was I wanted to be, have that balance of being successful in business and successful at home. And I also realized, wow, if I didn't have my real estate in place, I could never do these things, these important things like adopt children and donating kidding to my father. So it it, it got me thinking at a deeper level of, well, how do I break that curse, that curse of we all hear, the first generation makes it, the second generation spends it, the third generation is left cleaning up the pieces. I don't want that. I'm first generation wealth and I want it better for my family.I love that so much. And I personally do resonate with that a lot. I have those same kind of thoughts because we're building these real estate portfolios for many reasons. Most of us. It's not just all about ditching the nine to five and create enough cash flow to leave your job, but it's more financial security long term. And then after that generational wealth, we're passing this down to our children. And like you said, how do we teach them these concepts so they don't just all of a sudden inherit it and decide to go take a nap on the beach every day or throw it all away and sell it all. That's my biggest stress and worry is, okay, they inherit this and then they fight with each other and who gets what and or they just all decide to just sell it off. And all that hard work is like gone. So how does a parent like myself, where do we start?You know, one of the most important things to start with is involvement because there's been so many times, Melissa,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.On today's show, we're going to talk about the truth about property insurance. We get a lot of questions from investors about where to get insurance, how much insurance, how high their deductible should be, what's covered and then there's the always confusing question about replacement cost versus actual cash value, which seems to be debated in perpetuity online in real estate forums. I wanted to bring my insurance agent on, a guy named Joshua in Missouri where I'm buying properties right now. I asked him a bunch of questions about property insurance, what's the proper coverage, how to compare different policies, how much deductible is enough, etc, etc. It's really not as confusing as you might think, but it's important to understand what you're looking at and how to compare one policy to another policy.Without further delay, we're going to get him on here in just a moment. But before I do, I wanted to talk about a listener question that came in recently. The question was, "Can I put my property in an LLC after I close with conventional financing?" The short answer is, yes, you can. After you close escrow on your property and you take title, you can do whatever you want with your title. In other words, if you want to take it out of your name and put it into your LLC, for example a holding LLC, a limited liability company, you're more than welcome to do that.Now, keep in mind that lots of mortgage documents, most mortgage documents have what's called a due-on-sale clause. Technically speaking, if you do transfer title out of your name, when you have a mortgage on that property and you put it into another entity, you technically breached or triggered that due-on-sale clause. What that means is that if the lender wanted to, they could accelerate the loan and demand that the loan is due in full and payable immediately.Now, I've never seen that happen. I've heard of it happening. But I think to be quite honest with you, it is extremely rare because at the end of the day, if the lender is getting a payment every month like clockwork from you, they're not going to care anything about whether you're holding title in your name or in an LLC. They may not like it but they're not likely going to accelerate the loan because it's just too costly and too much of a risk for them to try and do that knowing that they’re going to get monthly payments as opposed to try and collecting the whole amount of that mortgage balance from you.If you close escrow on a property, you could put it into a trust, you could put it into an LLC. You're free to do what you choose to do with it. Just keep in mind that there is this due-on-sale clause in the document, but you can hold title in any entity or trust that you choose. Many investors do this. It's not really a prudent thing to hold title to your rental portfolio in your name. It's a bit of an exposure. It's like having a target on your back saying, "Look, I own all these assets." If you ever get into a lawsuit, it's pretty easy to find out what you own and then a sharp attorney can try and go after that stuff. Hopefully, I answered your question. If you have any other questions you want to submit for ...
Welcome to Passive Real Estate Investing. You guys, I have an amazing episode for you today. I've got Aaron Chapman here with me today, and we just got done having the most interesting conversation with Richard Duncan. And I'm not gonna spoil anything for you guys 'cause I definitely want you guys to tune in and listen. But there are a few takeaways that I just wanted to mention upfront. Number one, not only is Richard a beautiful storyteller, but his explaining things that are the unexplainable to me, what's going on right now in this country with the tariffs and what to expect. He breaks it down so eloquently that he had me captured. And so I was really invested in the way that he tells the story in this episode. So what do you think, Aaron, what is your takeaway from our conversation with Richard?Number one, it was an absolute pleasure to have a conversation with a guy like Richard that I've been hearing over the years on podcasts and, you know, subscribe to his, his newsletter, if you will. And to hear his take on what's going in the background to really get into those deep explanations and also, you know, kind of understand what his philosophy is on the potential outcomes was really, really cool to have. But what I think was the best we could possibly get, and I know it's towards the tail end of it, no matter what you listen to guys at the tail end, he agrees with what we've been talking all along. Real estate, real estate, real estate. Get hard assets, hard assets that can create a return for you. It's unbelievable. There's a lot of hard assets out there, but you're not gonna make returns on them.You're not gonna get third parties to pay for them for you real estate's that space. So no matter what the outcome is of the tariffs, no matter what the outcome is it globally, as far as the economies are concerned, where we, where they're gonna be in a, in a true recession, not the mislabeled recessions or the fact that they've changed what a recession meaning is, which a matter of where do you want to focus your own personal energy and attention and your personal assets. And I'm gonna just continue to stay what I've been saying. Let's go after the real estate, find the deals. The deals are still out there. It doesn't matter what the interest rates are, it doesn't matter you being focused. And this is just another proof of that.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: The Pros and Cons of Self-Managing Your PropertiesWelcome to Passive Real Estate Investing. I'm Melissa Nash and I am here with my co-host Aaron Chapman. You might recognize his voice and his name as he has been a part of this podcast for at least nine years now. He is bringing his 27 years in real estate lending, studying of markets, bonds, and mortgage backed securities. If there's one thing he that he knows it is while the markets move, opportunity never disappears, it just shifts. And we have a third voice on the podcast today. We are also joined by Richard Duncan, a leading voice in economic analysis to help us decode the current environment for real estate investors and beyond at a global macro level.So welcome to the show, Richard. It is a pleasure to have you here today.Thanks, Melissa. It's great to meet you guys. Thanks for having me.Absolutely. So Aaron, I'm gonna have you handle a lot of the questions for Richard 'cause I know you're dying to get into the weeds with him and we're about to learn some pretty big things here. Before we do that, Richard, if you don't mind, can you give us a little context on your background and what got you so interested in global macro economics. Most people pick careers that they're interested in. So how did you go down that path?Okay, so I, I grew up in Kentucky, went to Vanderbilt and had the very good luck of not getting into law school,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today we're going to talk a little bit about the pros and the cons of self-managing your rental properties. Some people do it. Some people love it. Other people hate it, and they just want professional management. I actually know real estate investors who invest from thousands of miles away. Do it well, do it successfully, but it's their thing. And it's not for everybody. Maybe you have to have thick skin for it, but it's really not that bad. I've actually, self-managed a few properties I prefer not to. I would much rather spend my time elsewhere and do other things like find more deals and negotiate more deals, work on my business and do whatever else I enjoy doing. So we're going to talk a little bit about that today with my guest, Steve White, it'll be an interesting conversation.We went for about 30 minutes talking about the ins and outs of managing your property. Now there's a lot of information out there and there's a great book we're going to mention during today's interview. So stay tuned for that. And I actually suggest listening to it right through to the end. It's not a long episode before we jump into that. Let me just quickly give a thank you for all the reviews that we receive. We receive actually a lot of compliments and reviews, both on the podcast, which is well past a thousand five-star reviews on iTunes. And that's just the United States. There are every country has its own set of ratings and reviews that you can't see unless you're in that country or you're actually signed into an iTunes account based out of that country. So whatever you see on iTunes is always local to the country, but thank you for all of those and as well, a lot of reviews online, which I greatly appreciate it.Those are not so much about the podcast. Those are actually about my team at Norada Real Estate Investments and what we are doing to help other real estate investors invest successfully in passive real estate investments in the different markets that we have around the country. So something we've been doing for over 17 years now, we were arguably the first nationwide turnkey rental property provider in the country. There was only one other, but they're really not around anymore. They've kind of morphed into other things, but again, thanks for all the reviews and the ratings that you guys have shared greatly appreciate it. So love to hear the success stories and speaking about success in case you didn't notice the quote, we put a quote in our weekly newsletter, and if you haven't subscribed to that weekly newsletter, I suggest you do. I just go to our website and fill out any form on the website, whether it's the membership form or download of the report, you'll be added to that weekly distribution list.And we put a quote in each and every newsletter, and they're usually really good. This week's was from Howard Schultz and it was a very simple, short one. It's “Success is best when it's shared.” And I truly believe that I think anybody who success should pass it along, share that knowledge with other people sometimes pay it forward. You know, this podcast, there's no cost for it. It's free and look a lot of the content. Well,
Hey everyone, and welcome to Passive Real Estate Investing. I'm Melissa Nash, your guest host jumping in for now. Let's dive in. Do you think that you need to hustle for 40 years to become a millionaire? Well, think again today I am talking to Sam Dogen, AKA, the Financial Samurai, who walked away from Wall Street at 34, negotiated a severance and build a seven figure portfolio by thinking differently. In his new book, millionaire Milestones, he shares the simple mindset shifts and action steps to build real wealth without giving up your life to do it. This just might change the way that you think about money forever. Let's get into it. Welcome everybody. Today's guest is someone whose name might already be on your bookshelf or in your podcast queue. Sam Dogen is better known as the Financial Samurai. He is one of the original voices in the financial independence movement. And after a successful career on Wall Street, he made a bold move. He retired at 34 and started writing about personal finance in a way that actually made sense for real people. Since then, he has built an audience of millions, authored a Wall Street Journal bestselling book by this, not that, and his newest release Millionaire Milestones, Simple Steps to Seven Figures. And it's all about helping people take care of their finances the right way with practical, actionable steps. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: What Questions Should I Ask New Property Management Companies?Sam, I am so excited to have you here today and welcome to the show.Hey, good to meet you Melissa, and thanks for having me.Absolutely. I am so excited. So now, I was telling you a little bit earlier before we hit record, I was recently in Miami and I got an advanced copy of this book so that the timing was perfect to be able to read it on the airplane. But before we go there, before we dive into the book, I would love to hear a little bit about your early days. Who was Sam before the Financial Samurai and what made you walk away from that traditional career so early on?Yeah. Well, I grew up overseas in multiple different countries 'cause my parents were working in the US Foreign Service and I just started seeing the dichotomy between the very wealthy in Malaysia when I was in middle school and the poor and all the wealthy people were entrepreneurs and businessmen and women. And so I decided, hey, I think it'd be better to be rich than poor. So I decided to study economics, study finance, and go work on Wall Street because I thought it was very fascinating to be able to click some buttons to make some money
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Henry and he says, hello, Marco. Your podcast is the best. And I look forward to new episodes every week! Henry. You are awesome. Thank you so much. I appreciate it. So Henry's question is he says, my question is in regards to choosing a property management company to work with in a given market while choosing a market to invest in being teamed up with a great property management company is imperative. What are the sort of questions that you would ask a property management company when considering to team up with them? What sort of information is the most important to receive from them?Thank you very much – Henry.– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2021)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Investing Secrets: Questions to Ask Your Out-of-State Property ManagerGive us a Rating & ReviewHenry, I appreciate the question. A great question, because your property management team is critically important. In fact, I have said many times that you live and die by your property manager and they really play into your success pretty darn heavily. So you want to make the right choice. So if it's not a company that you are familiar with or working with or someone that you know is working with and they come highly, highly recommended, then essentially you are on your own to do your own due diligence in the market that you're investing in. There's literally a laundry list, a long list of questions that you could potentially ask. Now here's the problem with a lot of the lists that you can find online that may be anywhere from 25, 30 questions on the low end to I've seen lists of a hundred questions or more, well, guess what, if you were to get on the phone and try to ask a property manager a hundred questions that will take an hour to two hours long, that may be no bueno. In other words, you're probably not going to have that much time from somebody.Not that they don't want to answer your questions. It's just, that is a pretty big investment of time. So what you want to do is pair it down to some core questions and then do some research online to just look into their reputation. And what do you want to see is that they are mostly good or clean? Not that they have tons and tons of bad reviews and more specifically bad reviews from landlords. Not so much from tenants because when tenants get upset, they tend to go online. They tend to complain and if they have something bad to say, yeah, they want the world to know if they have something good to say, they're not going to take the time to bother and, you know, go online and put a five-star review. In most cases, whether it be Yelp or any other website, bigger pockets, um, you know,
I'm Melissa Nash, real estate investor, mama of four, and the creator of a seven figure rental portfolio. Built one property at a time, and now I help other investors do the same. This is about designing a life that you don't need a vacation from. This is her real estate life and your freedom story starts right now. I will be your host for today's episode. Let's get into the good stuff. Hello, Michael. I am so glad to have you here today.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: How To Build A Powerful Credit ProfileHi, Melissa. How are you?I'm doing great. How are you?Great, great, great, great.Wonderful. So for everybody listening who does not know this voice and who is Michael, you have helped thousands of investors build wealth with rental properties, especially in the indie market. And I know my listeners are going to get so much out of your experience. So for those of you tuning in who have not met Michael yet, he's been an entrepreneur for over 20 years with a serious track record in real estate, stock market investing and building multiple streams of passive income. True. He has been a part of 1100 real estate transactions, worked with clients using everything from IRAs, 10 31 exchanges, and has helped investors from all over the world build cash flowing portfolios, portfolios. And if that isn't enough, he is a husband, an adventure racer. We'll have to talk about that. Yep. A speaker and just an all around wealth building machine. And before we get into all of that, wow, let's give a warm welcome to Michael.Thank you. Thank you. Thank you. Thank you. It's almost if I wrote that. No, I'm kidding.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.There was a quote that once said, “If you don't take good care of your credit, then your credit won't take good care of you.” Why is your credit score and profile important? Your credit profile determines whether you get loans, the rates you pay and the types of loans that you can get. Your credit determines a lot more than the loans you can get and the interest rates you pay. Insurers use credit to set premiums for your auto and homeowners coverage. Landlords use them to decide who gets to rent their properties. Credit also determines whether you can get business lines of credit that can be in the millions of dollars and can be used for some of your real estate investing strategies. Since credit has become such an important part of our lives, it pays to keep track of your credit profile and understand how your actions affect it.On this episode, we're going to learn about the differences between your credit score and credit profile and the importance of it all in every part of your personal and business life.– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2019)This episode is part of our Throwback Series and may include references to older content such as webclasses, events, promotions, or links that are no longer active or available. While the conversation and insights still hold value, please note that some information may be outdated.Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Why Financial Literacy Is So ImportantGive us a Rating & ReviewIt's my pleasure to welcome Merrill Chandler to the show. He is the CEO and Chief Strategist at CreditSense. He has been an influential player in the credit restoration industry for many years. He has co-founded numerous successful credit restoration firms around the country including Lexington Law. Unsatisfied with the results of his credit repair alone, Merrill used his extensive knowledge of credit reporting and credit profiling to invent and dominate the credit profile optimization marketplace. Since 1997, Merrill and his staff of advisors have assisted real estate investors, business owners, entrepreneurs and savvy consumers nationwide to create fundable tier one and even 800 plus credit profiles. Merrill, welcome to the show.Thank you very much, Marco. I love being here.It's great having you here because I met you a couple of years ago. I heard you speak a couple of times. You're an engaging speaker. You know your stuff about credit and credit profiles. There's a difference between credit scoring and credit profiles as we're going to learn. You became an expert in this whole area of credit profiling. Can you give us an overview of that journey? Where did you start? How did you get here?I started or co-founded Lexington Law, which is the largest credit repair law firm in the country. While I was there, I was exposed to tens of thousands of credit profiles, befores and afters. Being the puzzle guy that I am, the dot connector, I started noticing certain things when we would delete accounts or we'd ...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.You know I love this quote from James W. Frick. He said, don't tell me where your priorities are, show me where you spend your money, and I'll tell you where they are. So today we're going to talk about financial literacy and why financial literacy is so important. So first of all, what is financial literacy? Well, financial literacy is the education and understanding of various financial areas, including things such as managing your personal finances, money, borrowing, and very importantly, something I talk about all the time investing. But in the United States, in America, we spend literally billions of dollars helping our children master reading, writing, and arithmetic. And then we send them out into the world lacking the basic skills to prosper in life. Things such as understanding personal finance and economics. Did you know that in the US more than one in six students do not reach the baseline level of proficiency in financial literacy?– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2019)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Real Estate Investor’s Wake-up Call: Why Waiting is Costing You MillionsGive us a Rating & Review Nearly a quarter of all millennials spend more than they earn, which is unbelievable to me. And 67% of generation Y have less than three months' worth of emergency funds. And that's scary because all you need is one car accident or medical emergency and you're essentially bankrupt. So there are only seven states in the United States that require standardized testing today for personal finance education for high school graduation. And those seven States are Colorado, Georgia, Michigan, Missouri, Oregon, Texas, and Utah. So that means that 43 other States plus DC don't have high school courses and testing requirements. So every two years, the council for economic education and we have a website, you can go and look this stuff up. It's pretty interesting. So the CE or the council for economic education, they conduct a comprehensive look into the state of the K through 12 economic and financial education in the United States.And they collect data from all 50 States and the district of Columbia. So in their most recent survey in 2018 they show that there has been little increase in economic education in recent years and no growth in personal financial education. So since 2016, not one single state has added personal finance to its K through 12 standards. Only 22 of those states require high school students to take a course in economics. Only 17 of those states require high school students to take a course in personal finance. And ever since 2014 there has been no change in the number of states requiring standardized testing of economic concepts of any kind. So the consequence of not addressing financial literacy in students graduating from college is really daunting amounts of credit card and student loan debt. Today, student loan debt in 2019 is higher than ever before. Americans own over 1.5 $6 trillion in student loan debt.
Welcome to the Passive Real Estate Investing podcast. Where today, surprise, you're hearing a slightly different voice. I am stepping in for the host seat today. I am Melissa Nash, and I've been behind the scenes here at Norada for over a decade as a senior investment counselor, helping investors like you figure out where to buy, how to buy, and how to build that desired passive income portfolio so that you can create more financial freedom. And I'm not just here talking the talk. I've built my own seven figure portfolio of single family rentals, raised four kids while doing it. And yes, I am that mom teaching my kids how to run cash flow numbers at the dinner table. I am all about freedom, generational wealth, and showing busy people how to build real estate empires from anywhere.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco - Real Estate Investment StrategiesNow, today's episode is a treat. If you've been listening for a while, you'll probably recognize my guest's voice. He's a lender who has helped me buy my very first property, and now he is here today. He is someone who I trust, respect, and honestly, I just love talking to him about wealth building. He's one of the most experienced investor lenders in the biz, and someone I am very lucky to call a friend. Welcome to the show, Aaron Chapman.Melissa, what is happening?Nothing much. I'm just excited to get into it with you today. Where are you at? I, I see you're kind of sitting in a cabin.I'm at my place in Missouri, so I'm in the office part of it. So there's two cabins on the place. One used to be a church back in the, I guess it was probably used to the church in the early late 19 hundreds. And so the pastor moved it here, was an 18 hundreds cabin. Same with this one. This was his paint studio. The other was the little chapel. I took the chapel and turned it into my living quarters. And then this is my office. So now we have brick and mortar in the state. Well login, if you will. And I lease it back to the firm for business. So in reality, this was a, a force to have it to keep business going. But with me acquiring it and leasing it back, now I get a revenue off it that pays for it. So now I have seven acres in the Ozarks, two cabins, a kickass deck, and, you know, deer stands. And a bridge. And a waterfall. And it doesn't cost me anything. Well, it does. Oh my gosh. Update it. But they cover the paint
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Cornelius and he says, hello Marco. My name is Cornelius excellent podcast. I'm currently just dissecting real estate investment tips and information in an effort to someday soon begin my investing journey. I've been listening to your podcast and have found it to be extremely informative and helpful. Well, thank you Cornelius.In episode two zero five you were mentioning the different types of real estate investment strategies. My question is, is there a difference between buy and hold and buy and hold turnkey properties? Thanks for all your insight, Cornelius.– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2020)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco – 6 Tips for New Real Estate InvestorsGive us a Rating & ReviewThanks for the question. I will give you a a good but broad answer to this question because I'm actually thinking about doing a full episode on the different types of real estate investing strategies, which we'll go into more detail than what I'll cover here today.But it also encompasses many other types of quote unquote strategies because some people confuse strategies with tactics and sometimes they confuse strategies with things that are really not investing, which I'll explain here in a minute. So generally speaking, there are two broad camps, if you will. There's the active and the passive side, and I've titled this podcast passive real estate investing because we focus on buy and hold strategies to create wealth. So the way to look at this is like having two buckets, the active strategies, if you will, our business strategies with emphasis on the word business. The passive side of this is the wealth building strategies with emphasis on the word wealth building. So here's what that looks like on the active side of real estate investing. Those strategies are typically your fix and flip. You're fixing hold and you're wholesaling. So what those mean are essentially fix and flip.That is a business. You are in the business of finding properties that need work, doing those repairs, getting involved, in other words, rolling up your sleeves and you're doing the work where you're managing people that will be doing the work and then ultimately reselling them for a profit. In other words, you're buying low and selling high. That's the whole idea of buying, fixing and flipping property. But that's a business activity. It's not exactly investing because you're not generating cashflow or streams of cash. You're building chunks of cash. And there's nothing wrong with that if you put that chunk of cash to work, but that's a fix and flip business. Now, if you are doing that and you're buying, fixing, and holding, well now you're converting an active activity, a business strategy, into a passive investment, which is a wealth building strategy. And there's nothing wrong with that.Many people do that. If you've got the ambition, the knowledge, the understanding, the time,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Welcome to another episode of Ask Marco where I answer your investing related questions. If you are new to this podcast, remember to click that subscribe button. So you never miss another episode of this great show. I want to teach you how to create wealth and passive income with real estate, so you can achieve financial freedom. That is the ultimate goal because that leads to time freedom. So I guess you could say time, freedom is the ultimate goal. It's not about the money and it's not so much about having all the money in the world and being rich or wealthy. It's really just to live life on your terms and enjoy it with your friends and your family and be able to do what you want to do with it, which is a good segue into today's question, which comes in from Lucy, and Lucy says, hi, Marco, I'm a 30-year-old woman living in Buffalo, New York, looking to purchase my first rental property next year. I'm having a hard time understanding the real estate lingo and therefore get discouraged from pursuing this venture.I think Lucy, we all have this problem, even with more experience under our belt. You're always learning in this industry. There are things that are going to come across that are just new and you have to look it up, whether it be something related to cost segregation or a negative amortization loan. I mean, these are things that you don't normally hear day to day. Anyway, you go on in your email to say which educational resources would you recommend besides your very helpful podcast that can break down the real estate buying process in layman's terms.Thank you, Lucy.– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2021)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco – How Do I Start Investing With a LOW Salary?Give us a Rating & ReviewAll right, Lucy. Thanks for submitting the question. Great question. I think there's a lot of people who are looking for either tips on getting started, or just, how do I begin investing in real estate?So here are five or six things I would recommend for you and anyone else listening to this as far as getting started or strengthening your existing position because maybe you're not exactly a newbie, a beginner, maybe you've already purchased one or two properties, or maybe you have 5 or 10 and you still feel like you're just beginning and you are still green. My first rule of my 10 Rules of Successful Real Estate Investing is to educate yourself. And that applies regardless of whether you are a beginner or a seasoned real estate investor. So I'm just going to recommend three books. Now I'm not specifically recommending these three books because they are the be-all and all, or the only place to start. It's just three that I know are very good. And even if you just read one of these, you will be much further ahead, but this will help to build that real estate lingo and understand the real estate investing process, the parts, how they fit together, and what to look for and what to avoid.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.Today's question comes from Max. He says, hi, my name is Max and I was wondering what kind of strategy you would use given my financial position. I am turning 25 and finally moved out of my parents' home from New Jersey to beautiful and cheap Memphis, Tennessee. I make $35,000 per year before taxes and my rent and utilities are about 900 a month. I also have about $25,000 saved up in my bank account. I budget every cent that comes in and out of my pocket and saves as much as I can after taxes, food, and rent. I'm only able to save about $400 a month. I'm thinking about buying my first property now but I am a little hesitant given where the housing market may be headed. What would you do if you were me, please? Thank you - Max.– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2020)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to 2025 Housing Market Predictions for Real Estate InvestorsGive us a Rating & ReviewOkay. I think you have two comments or questions in here that need addressing. Overall what you're asking is how do I start investing with a low salary? So first and foremost, given what you're saving, that's great. You know, if you're saving $4,800 a year, it's gonna take you a little while to get up to 18,20 $22,000 to make up enough for a down payment on a good quality rental property and probably a B class neighborhood. Um, because that's what it's going to take. Somewhere around 18 to $25,000 is what you're looking at on a per property basis. And typically we're talking about middle of the road, middle-class bread, and butter housing, three-bedroom, one and a half, two baths. Now first and foremost, the thing I want to say is that if you've got $25,000 saved up, that's great before you deploy those funds into an investment and leave yourself with nothing in savings or on the side and cash.The first thing I would do is make sure you have some reserves for yourself for emergencies in case you lose your job or you have to move or you get transferred or you have an unexpected expense come up, be it. You know with your car, a medical emergency, you know you always want to have reserves for yourself personally before you spend every last cent you have in savings for an investment. You just got to put yourself first. Your income is okay, it's just on the low end. Of course of the spectrum that you are on and you could do better. So how do you do that? Well, it's going to be challenging to cut your expenses, especially if there's not much to cut. What you want to do is increase your income. You want to focus on the top, not so much the expenses.Focus on income. So how do you increase your income so you have more to save and you can save faster? Well, there's really two basic ways to do that. The first would be to change your employment. In other words, get a new job or a promotion where you are earning more.
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And I first of all just want to make a quick apology for taking a break. I was deeply involved with a number of projects here for a while, and it took me away from a lot of the things I normally did and the podcast being one of them. So I am now slowly but quickly getting back on track to recording a regular weekly podcast episode. We'll still have our Throwback Thursdays, and I'm looking at some other ideas to introduce into the show. Also, have a great guest coming up here in the next couple of weeks. Haven't interviewed 'em yet, but it will be pretty interesting episode.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Can I Get a Better Deal Buying “All Cash”? The Pros and ConsSo for today, I wanted to take a look at the 2025 housing market and what I see as predictions, if you will, or what may be coming up.I don't have a crystal ball, nobody really does, and I say this literally every year, but let's break down what 2025 has in store for real estate investors. Will interest rates drop? Will home prices stabilize? And where are the best opportunities for growth? If you're a seasoned investor or you're just getting started, this episode is perfect for you. It's gonna give you some insights to help you navigate the market. So stick around as we discuss mortgage rates, rental demand, regional hotspots and investment strategies to help you maximize your returns this year in 2025. So let's begin with where the market stands now, before we look ahead, let's review some key trends that were shaping the market as we entered into 2025. And so we're a little bit into the year now, but if you look at mortgage rates, they remain pretty much elevated. You know, we were spoiled for years with interest rates, mortgage rates specifically in the threes and 4% range.Now they're currently hovering, depending on what you're looking at, the type of loan and, and the location that you're in. At mortgage rates that are somewhere around 6.5 to 7%, I mean, there's a wide spread, six to 7.5%, but regardless, they remain elevated in the 6.5 to seven, seven point half percent range. And you know, they'll probably stay that way for a little while. The Fed has slowed interest rate hikes. They were dovish for a while, and now they just seem to have taken their foot off the gas pedal. I think this is gonna be temporary, but I do foresee mortgage rates coming down a little bit more as the year progresses and then into the new year as in 2026. So I don't expect them to go up, but I do expect them to come down slightly and moderately. But you know, these high borrowing costs, they're still impacting investors because now you have to underwrite your properties knowing that your debt service is gonna be more expensive than it was, let's say two years ago.And that's okay. There's deals out there all the time. Like I say, it's not about when to buy investment real estate, it's about where to buy it. There's always deals out there every single day of the year. It's just about the markets, the areas, the neighborhoods. And of course, you know, different conditions like, you know, sellers who are looking to offload property because they're just done with it or they're moving on or they're doing a 10 31 exchange or maybe they're a distressed seller, whatever the case is, there's, there's all kinds of deals out there all the time. Now, investors who are using leverage need to be more strategic about their financing. So again, you have to factor in the fact that mortgage rates are higher by two to 3% more than maybe when you were first looking at acquiring rental properties a couple of years ago 2, 3, 4 years ago.The numbers were so different, but you also have to keep in mind that rents have also appreciated through inflation considerably since 2020...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.The question here is an Ask Marco question submitted by someone by the name of Conrado. I hope I pronounced that correctly, but because it's such an in-depth question, I wanted to expand on it.Conrado writes in and he says, hi, Marco. Loved the podcast. Very informative with the right level of information, especially for investors starting like me, my situation is the following. I'm looking to buy my first investment property soon, looking to deploy $200,000 of my portfolio to start investing in real estate. My goal is to reach 10 units in 10 years, buying one per year. That's a great goal.My question is, should I buy cash to get the better price upfront and refinance this first property when you're from now to raise cash for the second one or should I finance this first one with 20% down and save the cash to finance the second one year from now? I feel like if I buy cash I could get a better deal in this case. How easy is it to refinance to raise cash one year from now to buy the second one? Thanks and great job with the podcast.– – – – – – – – – – – – – –Throwback Thursday Episode (The episode originally took place in the year 2020)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco – Ready But Slightly Hesitant to InvestGive us a Rating & ReviewOkay, so thanks for the questions Conrado this is a very good question and I think a lot of people think about this because when you talk about buying a property all-cash, a lot of people are under the belief falsely or otherwise that you can get a better price or a better deal if you come to the seller with an all-cash offer. And so let's define that for those people who don't understand what all cash means.An all-cash deal or an all-cash offer is one where you are purchasing without financing, meaning the seller is getting all cash from you, not from a lending institution.So look at this way. Regardless of whether you're financing a property or not, the seller is always going to end up getting quote-unquote all cash because the funds are coming from one or more places, but at the end of the day, their proceeds from that sale is going to be all cash. They don't really care where the financing or funds come from, although they might care if it's being financed because that typically takes a little bit longer from your perspective. You're either coming to the table, the closing table with a down payment, a percentage of the purchase price or 100% of the purchase price. And if you're purchasing with 100% of the purchase price, that's typically what they refer to as all cash. Now, why would you want to purchase all cash? The idea is is that if you come to the closing table or approach a seller saying, Hey, I'm going to purchase your property all cash and you think you're going to get a better price, that may be true, but a better price typically comes from two main situations or conditions.One is when you are in a buyer's market,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today's question comes from Phil and today's episode, I titled Ready but Slightly Hesitant to Invest. Phil says, Hey, Marco, love your podcast. My primary goal is to invest in real estate to earn passive income. Just finished reading Rich dad, Poor dad, great book by the way. I feel like I'm ready to go. But taking action is the hardest part. My wife and I live in San Diego. We own one rental property worth about $550,000 we only owe 250,000 excuse me, 215,000 on this property. So my plan is to do a cash-out refinance and potentially sell within two years to avoid capital gains tax. We moved this past year in 2019 I hope to start an LLC, a limited liability company this month, and obtain the cash to start investing. I would like to use Norada as a turnkey property provider if the resources and properties you offer are as advertised. I'd love to invest between a $100 to $150,000 using Norada. Generally speaking, I'm slightly hesitant to fully trust anyone who's trying to sell me something. No offense, any advice for me with my plan? Anything you'd say to someone like me who was on the verge of picking up the phone to call Norada. I'm a huge fan of yours. Thanks for your time - Phil.Throwback Thursday Episode (The episode originally took place in the year 2020)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Ask Marco – Getting Clear on Investment GoalsGive us a Rating & ReviewPhil, thank you for the email and thanks for your trust and thanks for being a podcast listener. I'm glad you're a fan. Um, that's very flattering. So here's a number of comments and thoughts for you. So first of all, action is the hardest part. You know, you mentioned that it's taking action. It is, it is for a lot of people, especially for something new and something that is as big of an investment or purchase as rental property. So my suggestion, at least this is what I do for myself and I know it works for a lot of people, is there's that old saying, how do you eat an elephant?One bite at a time.Just take whatever that project or task is however large, and just break it down into smaller and smaller and smaller pieces. I call them bite-sized pieces. Something that is ridiculously easy to take action on because that tiny little step builds some confidence and momentum. And then once you have that momentum, even if it's literally just taking a pad of paper and a pen and just jotting some stuff down, but just taking that baby step if you will, helps to build a little bit of forward momentum. And that's what you need because that will allow you to take that next tiny little baby step. And I know it sounds ridiculously simple and oversimplified. But trust me, starting is the hardest part is that step even of journey of a thousand steps starts with that first step. So if you take that first little step, it will help.Secondly is related to that is to take small steps. Don't try to jump or leap. You know, you can't run before you walk and you can't walk until you crawl and you can't crawl until you start making these little, you know,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Throwback Thursday Episode (The episode originally took place in the year 2020)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Investing As A Working ProfessionalGive us a Rating & ReviewHello again my friends and welcome to another episode of Ask Marco where I answer or at least try to answer your investing related questions.Today's question comes from Michelle and Michelle says, hello. I've been listening to your podcast for a couple of months now and I think in one episode you said you help people figure out a clear plan for real estate investing. Question Mark, I want to do this, but my ideas are scattered and this real estate investing stuff can be really overwhelming because there are so many options and all of these rules to follow. I can relate because we all start there, Michelle, but you will find that it gets easier as you go. Believe me, she concludes by saying, if I could get a chance to speak to someone about my goal so that I can have a clearer understanding of what I want to do and invest in, that would be great. If not, do you know of anyone that does? I really want to do this, but I want to know somewhat what I'm doing.Okay. This is a great question and this is actually a very common question, especially for people who are just getting started, knew what some of us call newbies, but essentially your green behind the ears and you're trying to get clear on all this stuff that just looks and seems and sounds overwhelming and you just want to get clear on your investment goals. So for a lot of people it's really just finding the right direction, just knowing what direction they need to go in and just someone to be a compass for you, point you in the right direction and then you will figure it out and learn what to do as you go because you're going to have the tools, resources, the education and the team of people around you to help you get there.And it's just a matter of first pointing in the right direction, facing the right way, and then starting with little baby steps and moving forward. And then you'll find that you'll feel more competent and confident and you'll grow and you'll start to take bigger and bigger action steps. So the bottom line here is in what I'm saying is to educate yourself because your confidence is equal to your competence. And if you don't have the competence level right now to give you that confidence, then it all starts with my first rule of my 10 rules of successful real estate investing, which are posted on both of our websites. And that is to educate yourself. The more you learn, the more you earn. You've heard that saying before, it is very true because when you start to know what you need to do and what to look for and what to avoid, you can't help but to start taking action steps that will propel you in the right direction and get you to do the things you need to do.So educate yourself because again, your confidence is equal to your competence and then you will find that that will magnify and accelerate as you start to get successes under your belt.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.As a busy professional, it’s unlikely that you have hours to spend sifting through markets and properties and looking for that so-called “best deal” or even your next deal. Being time poor, which probably describes most of us, shouldn’t prevent you from growing and multiplying your hard-earned money. You don’t have to do it yourself. If you’re a busy professional or you’re just thinking about investing but don’t have the time, then you need the right team and you need the right mindset and you need the right guidance. Let’s talk about that with my next guest.Throwback Thursday Episode (The episode originally took place in the year 2018)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Mindset Matters! Leveling Up Your Life Through Real Estate InvestingGive us a Rating & ReviewIt's my pleasure to bring on Lane Kawaoka to the show. Lane is a full-time civil engineer and a real estate investor from Honolulu, Hawaii. He has a portfolio of eleven single-family homes in places like Seattle, Birmingham, Atlanta, Indianapolis and Pennsylvania. He's also a partner in a syndication that controls currently over 1,300 apartment and RV units. After Lane’s parents got duped with their 401(k) in the stock market, he's made it a mission to help people get off the corrupt Wall Street roller coaster and focus on main street investments with safer higher returns that benefit the American middleclass. Lane, welcome to the show.Thanks for having me.It's great having you on. You and I seemed to have very similar investment philosophies and I love the work that you're doing and the articles that you write. I thought it was a good time to get you on the show and pick your brain a little bit about what you've done and how you've progressed as a real estate investor, especially from the state of Hawaii. You're investing literally thousands of miles away. Let's start the show off by learning about you. Tell us about your background and how you’ve got started investing in real estate. I started on this linear path that a lot of people start on. They’re told to go to school, study hard, get a good job. I went to college to get an engineering degree. I graduated and I started working in the day job as a construction supervisor and went headfirst into that. I didn't know anything else. I saved my money to buy a primary residence to live in because that's what everybody told us to do. I bought a house and because I was traveling around and pretty frugal with my money, I was never home because I was traveling all the time for work, which a lot of times, when you're in that new job, you're the guy that travels all the time.I started renting it out and the rent is for $2,200 a month and the mortgage is $1,600 a month. I was 22, 23 at the time. That was a lot of beer money and I was like, “I’ve got to do this again and again and again.” I didn't know anything about in Seattle. That was A-class building and I didn't know anything about cashflow or this 1% rule or rent evaluations or whatever. That got me motivated to save money because I had a reason to ...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Warren Buffett once said, “Until you can manage your mind, do not expect to manage money.” Warren Buffett is correct. Without the right mindset, it would be difficult to become a successful investor. Getting into the field of property investing, your mindset matters and it plays a very important role in leveling up your life. Paul Thompson used to have a corporate day job but now he's a full-time real estate investor who lives to help others find their way. When Paul realized that the perfect time to start investing was never going to come, he simply switched his mindset and jumped in. Now, he's doing three deals a month and is able to help himself as well as others build wealth and passive income with cashflow. Paul tells his personal story of securing twenty plus deals in his first eighteen months of investing to serve as an inspiration for everybody else.Warren Buffett once said, “Until you can manage your mind, do not expect to manage money.” Getting into the field of property investing, your mindset plays a very important role. You need to think like a successful person in order to gain access. People are largely driven by their subconscious and typically, they’re consciously unaware of why they think the way they think or feel the way they feel, such as being angry or being happy. I'm guilty of this from time-to-time. This is influenced by many factors such as our environment, past events, education, memories, values and attitudes, past decisions, and beliefs, but mindset matters. This is the most important concept.Warren Buffet is correct. Without the right mindset, it would be difficult to become a successful investor. Whether you listen to financial gurus or trainers or entrepreneurs, they all say the same thing, that your mindset contributes 60% to 90% of your success. Only the actual number varies here depending on who you ask, but the rest is mechanics and knowledge. Do you think that great investors such as Warren Buffet or even Donald Trump think differently than most other people? I’ll bet money that they do and I would think you agree with me here. A study was once concluded that if all the wealth in the world was taken away from everybody and distributed equally to all the people in the world, it would probably take less than ten years until exactly the same people who had no or little money before would be poor again and the same people who were rich before would all have their wealth back.One of my goals is to learn from some of the people that are very successful out there. I want to talk to a wide variety of people, from the most high profile people such as one of my most recent guests, Rich Dad Advisor, Ken McElroy, to some of the youngest ambitious entrepreneurs in the early years of their real estate investing journey. My next guest may not be all that young, but he’s certainly doing well with his real estate investing. He’s got a great mindset for success after making the decision to leave corporate America for something bigger and more rewarding. Let's hear what he has to say about mindset and real estate investing success.Throwback Thursday Episode (The episode originally took place in the year ...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Throwback Thursday Episode (The episode originally took place in the year 2016)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: How to Beat InflationGive us a Rating & ReviewWe hope you had an awesome start to your New Year. I want to take a moment to wish all of you and your families a very happy new year. At the beginning of a new year, let us revisit and refine our investment goals. As you know, our focus here is to educate, motivate and empower you to become better real estate investors. We can’t wait to share them with you as the weeks go by. What goals have you guys set for yourselves in this coming year? What do you want to accomplish? What habits do you want to change?It should be no surprise that successful people had to do things differently to get where they got to. They work hard. They make good decisions. They stayed motivated and they focused on what was important to them. That can be you. The will and the belief in yourself is very important. Here are some things that I’ve listed out that successful people did. It should be no surprise that successful people had to do things differently to get to where they got to. They worked hard. They made good decisions. They stayed motivated and focused on what was important to them. That can be you too, if you believe in yourself.Here are some things that successful people do that can help you achieve your goals as well. I’m going to list thirteen things that successful people do differently. Hopefully, you can adopt this into your own routine and make this year your best year ever.The first thing they do is they create and pursue SMART goals. I know you hear this time and time again at the beginning of every year about goal-setting and achieving goals. Let’s break this down and look at what smart goals are. Successful people are objective. They have realistic targets in their mind. They know what they are looking for and why they are fighting for it. Successful people create and pursue SMART goals. SMART is an acronym. What that means is goals are specific, measurable, attainable, relevant and timely. Let’s break these down and see what each of these mean.A general goal would be something like getting shape. But a related specific goal would be to join a health club and work out three days a week for the next 52 weeks. A specific goal has a far greater chance of being accomplished because it has defined parameters and constraints. That’s a specific goal. The M in SMART refers to measurable. There must be a logical system for measuring the progress of a goal. To determine if a goal is a measurable, simply ask yourself a question like, “How much time? How many total? How will I know when the goal is accomplished?” Things like that. When you measure your progress, you stay on track. You reach your target dates and you experience the exhilaration of achievement that spurs you on to continue efforts required to reach your goal.The third letter in SMART goals is A, attainable. To be attainable, a goal must represent an objective toward which you are both willing and...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Today I wanted to take a different topic and talk about that. No guest, just me talking about some of the stuff I've been talking about recently on some presentations I've done about inflation and promissory notes more specifically, I had put together a presentation titled How to Earn 15% Interest and Beat Inflation with Promissory Notes. So I'm not gonna be talking about promissory notes today. I am gonna talk about inflation, what it is and how you can beat it. There is essentially a formula and some definitions I guess you need to know in order to calculate whether you're getting ahead or behind the inflation game. So let's start with this. I like these two quotes. So the first quote is by Ronald Reagan, who was a popular, famous, great Hollywood movie star back in the day, but he was also the US president from January, 1981 through January of 1989.So he said that “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” And although that's pretty graphic, I think it paints a picture of what inflation, you know, might be doing, not necessarily to you physically, but in terms of your, your wealth and your purchasing power, or in other words the cash or the savings that you have. Another great quote I love is by Milton Friedman and Milton Friedman was an American economist and a statistician who received the 1976 Nobel Memorial Prize in economic sciences. Super smart guy, great books, great articles, just a very intelligent, cerebral person that makes economic things very easy to understand. But such a simple quote, “Inflation is taxation without legislation.” He's basically saying that inflation is robbing you or stealing from you, like Ronald Reagan was saying, but you didn't ask for it.You didn't vote it in, you didn't want it, you didn't request it, nobody votes for it. But you know, it's just kind of brought upon us whether through monetary policy and what, you know, the politicians in the Federal Reserve decide to do, or it's brought on because of supply and demand dynamics. You know, the constraints, supply chain, bottlenecks, whatever it may be. You know, that's price inflation as opposed to monetary inflation, but it's inflation nonetheless. So inflation is taxation without legislation and what he's referring to is what the politicians are doing with monetary policy and printing, printing money and bringing that currency into existence and putting it into our economic system.So I get ahead of myself here. So a couple things I want you to take away today is, you know, why is inflation a wealth killer? How do you beat high inflation? And what my favorite inflation hedges are, there's four main inflation hedges that I have. So let's dive into that. Hopefully you'll get some good takeaways from this today and maybe I can help you point your compass in the right direction.Throwback Thursday Episode (The episode originally took place in the year 2022)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: The Wealth Creation FormulaSUBSCRIBE ON ITUNES | Stitcher | Podcast Feed
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy.Throwback Thursday Episode (The episode originally took place in the year 2016)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: How to Choose the Best Market for Your Real Estate InvestmentSUBSCRIBE ON ITUNES | Stitcher | Podcast FeedGive us a Rating & ReviewOur show is about creating substantial passive income and creating wealth for the long term. That's the subject of today's episode. It's wealth creation, or more specifically, the wealth creation formula. Have you ever wondered how the rich keep getting richer, while broke people stay broke and the middle class continue to shrink? This isn't a mystery as it may appear when you examine the specific differences on how broke people, the middle class and the rich spend their money. This is such a simple concept, yet it's so profound. I believe I finally understood this concept on a train ride from Rome to Florence, Italy. I had picked up a new book called Rich Dad, Poor Dad by Robert Kiyosaki. Once I started reading it, there was no putting it down. What was made clearer to me at the time is how the rich spend their money. What I'm going to explain to you today is why the rich keep getting richer, the broke keep getting broker and why the middle class remain stressed out.Before we start, it's important to understand some common financial terms. The reason is many people misunderstand their real meaning. The terms that you need to be familiar with are the following: Cashflow, which is the money that you bring in. Expenses is the money that you spend. Asset is somewhat of a confusing term because most people are familiar with the traditional definition of an asset, which is something you own or have equity in. However, Robert Kiyosaki introduced us to a new definition of an asset in his Rich Dad series of books. Robert defined an asset as something that pays you, and that's the definition I've adopted and the one that we'll use here. Liabilities, is defined as those things that cost you money. A typical example is one's house, which is often viewed as an asset, but it can actually be a liability. Anything that costs you money is a liability, not an asset. If you have a mortgage on your house, it's an asset to your bank because it pays them every month. However, a house or other property can also be considered an asset under the right circumstances. If that property generates income, like a rental property, and it pays you a positive cashflow every month after all expenses, then it would be considered an asset. Just remember that an asset has to put money in your bank account. Cashflow is the money you make, while expenses is the money you spend.Let's take a look at how broke people spend their money. Keep in mind that my definition of a "broke person" are not those that are destitute. I'm referring to that large portion of our society that live paycheck to paycheck and never seem to have any money. In fact, they often have to borrow from Peter to pay Paul, run up credit cards and they find themselves with more month leftover at the end of their money.
Successful real estate investing relies on several factors, but as the old adage goes, “location, location, location” is top of the list. But “location” is a broad term, and evaluating the right place to invest your dollars in real estate means identifying the right market in both the macro and micro senses.On today's episode we talk about the factors that make up a good market for your investment dollars.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.Throwback Thursday Episode (The episode originally took place in the year 2016)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Make Better Decisions Using Neighborhood Info for Real Estate InvestorsSUBSCRIBE ON ITUNES | Stitcher | Podcast FeedGive us a Rating & Review Tom is a leading tax and wealth expert, a speaker, and a Rich Dad Advisor to Robert Kiyosaki, author of Rich Dad Poor Dad. Tom is best known for making taxes fun, easy and understandable, and is the best-selling author of Tax-Free Wealth. He specializes in helping investors permanently reduce taxes, and that’s the reason I wanted to bring him on the show today. Tom, welcome to the show. Hey, thanks so much for having me. It’s great to be on your show.It’s my pleasure to have you. I’ve been actually looking forward to this episode because taxes are one of those things that nobody likes to think about, nor do they like to pay it. It’s been said that taxes are the largest single expense, in fact, that’s a quote from Robert Kiyosaki. I think it’s timely to have you here on the show in January, and I’m pretty excited to talk to you.I’m always excited to talk about tax. As we were talking beforehand, I am, first and foremost, a tax nerd. I absolutely love tax, I love the tax law. I was actually doing a little research the other day, and I think the Bible has 800,000 words to it, and the tax code, just the law, no ruling, regulation, anything else, has over two and a half million. There’s this famous quote from Albert Einstein saying, “The most difficult thing in the world to understand is income tax.” I just like that quote because it makes me feel good about myself, but I do recognize that it is something that people, like you say, taxes are bad word, it’s a bad thing. But there are so many opportunities to reduce your taxes, that if we can turn it into a good word, then we now have just a lot more money to use to invest and build our wealth.We’re both very big on education, and I’ve read your book in 2012 when it came out, your book Tax-Free Wealth. One of the things you say in there is that, taxes can make you rich or make you poor, it’s your choice. Let’s start off by talking about what tax-free wealth is. How do you describe that to people?Tax-free wealth is really a function of understanding how the tax law works and what it really is. Most people look at the tax laws, and in fact, most tax advisors look at the tax law as, this is the government out to get us, and it is completely the opposite. I’ve been a student of taxes for over 35 years. What’s really clear to me is that, there’s only one line in the tax law that actually raises revenue. There’s a line that says, basically, all income is taxable unless we say it isn’t. Then there’s about 29 pages of charts and tables that tell us how much to pay on that income. The rest of the tax law, the rest of the two and a half million words is an instruction guide on how to reduce your taxes. Once we get that in our minds, then all of a sudden … if we’re looking at this as, if I understand this,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.Throwback Thursday Episode (The episode originally took place in the year 2016)Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: 5 Strategies to Benefit from InflationSUBSCRIBE ON ITUNES | Stitcher | Podcast FeedGive us a Rating & ReviewMake Better Decisions Using Neighborhood Info for Real Estate InvestorsWe have a very special show for you today. I have Dr. Andrew Schiller on the show from NeighborhoodScout. That product is something we use a lot in addition to many other tools. I've been wanting to get Dr. Schiller on for three or four months now because he's a very, very smart guy who aggregates a lot of data and has a tool called NeighborhoodScout.com that's been around for many, many years. It's just chockfull of information. When we talk to investors, a lot of times, we go from talking about the market to talking about the property. Although there's consideration and thought about the neighborhood, it seems that many investors skip over the neighborhood as if it's just something that is attached to the hip of the property. Really, a lot plays into the decision of what you're investing in because of the neighborhood: the demographics, maybe crime, schools, the percent of owner occupied homes, the number of people with college degrees, whether they're white-collar, blue-collar workers, income levels and all that kind of stuff. Where do you get that data? It's peppered all over the internet. You can go to many different websites and pull some of it from here and some of it from there, Bureau of Labor Statistics, the different government websites. But there's no one website or one place where you can get all that data. One of the websites that we like to use is NeighborhoodScout.com. There's a lot of that information, not everything but a lot. It's just one of the tools in the toolbox. On today's show, we have Dr. Schiller talking about his company, the product, how they're aggregating data and how you could use this tool to help you make better decisions in your investing, whether you're purchasing a turnkey property or whether you're purchasing a distressed property, you're going to be fixing it up to keep it or fixing it up to flip it. At least you have a better understanding of what you have and what you're dealing with. It's my pleasure to welcome Dr. Andrew Schiller to the show. Dr. Schiller is the founder, CEO and Chief Scientist of Location, Inc. He's responsible for inventing the search and neighborhood matching algorithms that powers NeighborhoodScout.com. Andrew, welcome to the show. Thank you, Marco. It's a pleasure to be here.I'm happy to have you here. I've been thinking about getting you on the show for the last three or four months. I've been dealing with a lot of other issues and I've been very, very busy so I haven't had the time to bring you on. The reason I wanted to bring you onto the show is because you have an impressive tool that I've been using for a number of years. I've been a subscriber of yours for a number of years. I actually use it for my own investing and our company us...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy. Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Some of today’s most common real estate investing questions.SUBSCRIBE ON ITUNES | Stitcher | Podcast FeedGive us a Rating & ReviewToday, we are going to be talking about the exciting subject of inflation. Now, before you turn this off or shake your head and wonder how inflation can be exciting, keep listening because you will find out that inflation is actually your friend. You will see how it can be profitable for you in real estate. Let’s just lay a little bit of background here. The American economy has been bumping along pretty much since 2008. We haven’t really had a real economic recovery. Real estate markets have seen some activity here, especially in the last three to five years. We’ve seen considerable appreciation in many markets. But outside of the real estate sector, the economy has been relatively sluggish. This has forced the government to step in with various monetary policies that have done nothing more than create pent-up inflation. Some people are seeing it. We do have a bit of a deflationary environment, so you do see prices in some things like oil, recently, gasoline, technology coming down. But for the most part, if you look at your daily expenses, energy, housing, food, various consumer goods, those prices have been going up, so we do have an inflationary environment. At the same time, we have government policies that are creating pent-up inflation that we haven’t seen fully bloom at this point in time. The fear is that in the years to come, that could bring on rampant inflation.I am not a big fan of these government policies, the quantitative easing, the money printing that the Federal Reserve has been on, let’s call it a massive binge, since 2008. Inflation is just one of those things that are a reality. Now, when investors hear the word inflation, in fact, when the general population hears the word inflation, for many, it just sends shivers down their spine. They just hear inflation and they just think that everything is going to be more expensive. That it’s eroding their savings. It’s going to make saving for retirement even more difficult. Those things are generally true, but that doom and gloom is not all that inflation is about. Inflation is much more than that. If you are on the right side of the equation, you can benefit from inflation. At the end of the day, inflation’s effects are pervasive and they’re very subtle. Most people don’t realize that inflation is eating away at their purchasing power every year, but it is there. What you do is see a shrinking pay check. You see your purchasing power of your income get eroded, and that just translates to increasing costs for gas, energy, housing, food and other essentials. Let's dive in and take a closer at inflation. Let’s define it and look at the cause and effect and how you could benefit from inflation as a real estate investor.Inflation normally results from government policies that create inflationary pressures. What does that mean? The result of inflation can best be described as having more money...
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and I have one of my great, great investment counselors on with me today. His name is Oliver, Oliver Fu.Oliver, welcome to the show.Thanks so much, Marco. Great to be here.It's great to have you back on. It's been a while since I had you on.
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.Get your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How will the legal settlement by the National Association of Realtors affect real estate investing?SUBSCRIBE ON ITUNES | Stitcher | Podcast FeedGive us a Rating & ReviewToday's show is very important. It's about choosing the right neighborhood and how do you go about doing that. This is an important topic.A lot of people talk about neighborhoods and how they qualify them or grade them, but classifying a neighborhood by type varies from investor to investor. In fact, what many investors refer to as a grade is typically nothing more than a subjective description. Although most people will have a pretty general idea of what is being referred to, in my experience, it is usually nothing more than a qualitative rather than a quantitative description. The fact is, is there's no formal definition out there of what a neighborhood type or neighborhood grade is.In fact, if you go back to episode number four where I talk about turnkey real estate investing and turnkey real estate investments, even there I have talked about there not being a formal definition of what turnkey real estate and real estate investments are. Everybody has a different idea or definition of what that might be. In an effort to level the playing field and define what that is, I've gone into some detail about that in episode four. If you haven't listened to that, be sure to take a listen.With this ambiguity, we've, over the years, developed a somewhat proprietary but simple grading system that we use to grade all of our investment grade properties. To help you better understand this, I'm going to go over a basic overview and describe each of the neighborhood types and the grading system and what it means so you have an idea of what it should mean in case you don't know. If you have your own idea, I'm sure this is going to be fairly similar to your existing model or paradigm of neighborhood grading.Hopefully, this will help you to better understand how to look at a neighborhood and grade it or put it into some sort of spectrum in order to compare one neighborhood from another and what may be a good choice versus what may be a bad choice. Ultimately, this comes down to what is your investment criteria. If you know what your goals are, you have a strategy, you've defined what your criteria is, finding the properties that fit that criteria to meet your goals becomes infinitely easier.Let's begin by describing the low income neighborhoods. These are typically what we call C and D grade neighborhoods. These low income neighborhoods generally have a large portion of their residence on government assistance. For example, the section eight housing program. The ratio of renters to owner occupied homes in these areas are often greater than 50% and more often they're as high as 80%. A C grade neighborhood would probably be 50 to 60, 70% tenant occupied. A D grade neighborhood would be as high as 80% or more. These are general metrics but it gives you pretty good idea. I do find that there is a pretty strong correlation in mos...
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. I'm glad you're here today with me. I went digging in my folder of Ask Marco questions. There's a bunch of 'em. I don't know
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.Today's show is about turnkey real estate investing. This is a topic that's near and dear to my heart. I started investing out of state in late 2003 and I've seen the good, the bad and the ugly. Back then, turnkey real estate investing wasn't really a subject matter or term that was kicked around too much by real estate investors. People would talk about passive real estate investments, rent ready real estate investments, turnkey real estate investments. It was loosely defined and it was a general understanding of what turnkey meant. It wasn't a topic that had that much attention.It does today. In fact, it's a hot topic. It's gained great popularity over the last ten years, especially over the last three or four. Today, it sees a lot of interest and controversy in real estate forums as well as other venues like real estate clubs. If you missed our last episode, be sure to listen to How to Access Unlimited Mortgage Loans with Minimal Qualification CriteriaPlease give us a RATING & REVIEW (Thank you!)SUBSCRIBE on iTunes | Stitcher | Podcast FeedWhy is this important? First of all, I want you to understand what turnkey real estate investing is as well as what a turnkey real estate property is. These are two different things as far as the way I look at it. I'm going to break that down for you today. You need to understand what it is and what it isn't in order for you to make better decisions. That's my second objective today, is to help you make smart decisions when it comes to passive real estate investments or turnkey real estate investments.Let's break it down into different definitions and get a good lay of the land and then we can connect all the dots. This will hopefully educate you to better understand this particular area of real estate investing. From there, I'll give you five point system that we use to compare turnkey providers and turnkey companies. You can use the same system in order for you to look around and decide on who you want to work with and who's the better choice for you to help you achieve your goals and your criteria.Regardless of where you choose to invest, there are two opposite ends of the investing spectrum when it comes to your involvement and required resources. On the one end, you have the do it yourself model or the do it yourself investment style, what I call active real estate investing. This is essentially a business where you're active involved, rolling up your sleeves, maybe getting your hands dirty.Do it yourself real estate investing puts all the risk and responsibility squarely on your shoulders. Typically, that involves everything from sourcing the property, acquiring it, funding it, renovating it, maybe managing it, selling it and coordinating literally every step in the process. Of course, it's not likely you'll be involved in every single piece of that process by yourself, but you will be involved to some degree every step of the way. This is the most time consuming and often stressful option. But for some, it's what they enjoy.Do it yourself investing also requires the largest number of resources. It requires the greatest amount of time,
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Interesting topic today. Don't get thrown off by all the acronyms in the real estate industry. It's full of acronyms. Today we're gonna be talking about something called a D-S-C-R loan. Don't worry, if you don't know what that means, you're gonna want one. You're gonna love it. It's not for everybody, but it is definitely a powerful, powerful leveraging tool. If you're looking for mortgage financing, to start your real estate portfolio, grow your real estate portfolio, and expand and leverage what you have. To summarize what we're gonna talk about today with my returning guest, Aaron, is a mortgage loan product that will allow you to buy rental income, residential rental income properties with a very light, relatively speaking, very easy qualification. That means that you can get these loans and as many, theoretically, an unlimited number of these types of loans with a very, I'll say it, easy qualification criteria because it's really not you qualifying or your income qualifying.In fact, you, it's almost like a no documentation loan. It's the property that's qualifying. The only thing you need to prove at the end of the day, as you'll find out in this interview, and I'm kind of like letting the cat out of the bag to some degree, but we're gonna dive a little deeper into it, is you'll need decent credit. The better your credit, the better the rate. But just decent credit. And of course, the down payment, if a down payment's required, and it usually is, but down payment capital. So your reserves or your asset is the down payment capital to invest and, and just decent credit, credit score, credit profile, the rest of the qualification predominantly comes down to the property itself. And of course we can help you here with that at Norada Real Estate Investments. That's what we do.That's what our team will help you with. Our team of investment counselors, we're gonna counsel you, guide you, hold your hand, figuratively speaking, to invest in the right markets. The best markets with income producing rental real estate. And these properties, a lot of them, if not most of them, qualify for this type of mortgage financing. So it is a good alternative and sometimes a better alternative to your traditional financing. Your Fannie Mae, Freddie back mortgages known as conventional financing. There is a time and a place for each type of mortgage financing. And if this makes sense for you, which it can, and at some point it will. It's not, I think a matter of if it makes sense. But when it makes sense, then this is something that can help you build and scale and grow your portfolio. And we have a lot of investor clients that invest in rental properties through our network, through Norta real estate that end up using this type of financing.In fact, in my conversation with Aaron who I'm interviewing here today, he was saying that about 60% of his mortgage loan financing right now are these DSCR loans. So you would think it's the other way around, or the majority would be conventional, which is usually the case. But today, for whatever reason, a lot of the loans being written are these non-conventional type loans called DSCR loans. And the terms are very similar. Sometimes they're even better. So anyway, not to steal too much thunder from our interview. I'm gonna jump right into it. I hope you enjoy it. If you have any questions, reach out to my team of investment counselors here at Norada Real Estate. You can go to our website at noradarealestate.com. And of course, if you have questions about real estate or investing in general, go to the home of the podcast at passiverealestateinvesting.com. That is it for me. Let us jump right into the interview with Aaron. So I hope you enjoy it. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.Well, today we're going to talk about something, a little different something you probably have noticed over the last maybe three, four years is there have been more and more investment properties that have been coming to us and through our network that are new construction, they are not your typical turnkey real estate investments. And what I mean by that is properties that are newly refurbished or renovated into like-new condition. And that's really what a hundred percent of our inventory was for the longest time, especially since the great recession because there was all this new inventory that was coming out of the market and our property providers in the different markets would take that inventory. They would acquire it, renovate it, make it into like-new condition and then provide it to us.So you, as our client could build a portfolio of these great properties in great locations that have cash flow well, as inventory continued to get tighter and tighter over the years, especially over the last three, four years, maybe longer. What we've been seeing is more of this trend that new home builders have been picking up on and capitalizing on, which is what we've referred to as the B2R space or the build to rent. And it's essentially new home builders, building a property, specifically designed for investors on the acquisition side. But the business model is they take these properties and they rent them. They're not living in them as homeowners. And so one of the states, Florida is one of those states where you see a lot of this build to rent product. And it's a great profitable, lucrative model where we see a lot of price appreciation. There's never a guarantee with appreciation. Just keep that in mind, but we've been seeing a lot of price appreciation over the last few years. You still see good cashflow and you see warranties and other things. If you missed our last episode, be sure to listen to Ask Marco: LLCs, Bank Accounts & Umbrella Policies...Please give us a RATING & REVIEW (Thank you!)SUBSCRIBE on iTunes | Stitcher | Podcast FeedSo what I wanted to do today is bring one of our trusted providers from the Florida market. And I say Florida in general, not a specific market. Why? Because Wagner who I'm bringing on here in a second is one of those people who we work with closely to bring us product in different cities within the state of Florida on that new construction side. And so with me today, I have Wagner. Wagner, welcome to the show,Marco, thank you very much for having me. It's always a pleasure and an honor to work with you and to be here once again with you and your listeners.Well, it's great having you on, I know we've had this conversation a number of times about bringing you on and talking about new construction. You know, it's interesting. Cause what we were talking about is actually spotlighting one or more markets in Florida and having a market spotlight. And I think what we just decided to do is table that as a new episode separately, and we'll probably cover the Ocala market in Florida, which has been on fire for a long time. It's just been a solid market. But for today,
Hello my friends, and welcome to another episode of Ask Marco on the Passive Real Estate Investing show. Well, I'm glad you're here. It is late October. Halloween is coming up. The national elections Federal US elections are coming up in less than two weeks and there's a lot going on and we're on the home stretch. Wrapping up 2024, what will 2025 hold for us? Who knows! Hopefully mortgage rates will come down. They've come down a bit, then they bounced back up. Now it's just a matter of time, I think before they come down a little more. Who knows? I'll give you my predictions in the coming weeks. In the meantime, I went to my Ask Marco folder and I pulled out one, maybe two questions. This is a really good one and I have to apologize to Christopher here. It's a couple months old.You've probably figured out some of this stuff, but they're really good questions and I thought it would be good for the listeners as a whole. So if this is not timely for you, I apologize. I've got a backlog of email of all kinds, but I try and get to as many of these as I can.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Retire Early with Real Estate – Chad CarsonAnyway, Christopher writes in and he says, hi, Marco. First of all, thank you for all the time and effort you put into your podcast. I went back to the beginning episodes in 2015 and started listening a year and a half ago. Well, thank you. Fast forward to today. I got in touch with Melissa at Norada Real Estate and she coached me through the entire process and was extremely helpful. Well, I'm glad to hear that. She's great. My whole team is great. They're all wonderful. I just closed on my second rental property in Tuscaloosa, Alabama, so, and that's great.You've got two properties under your belt. Great start. And I love the momentum, so keep going there. Christopher, I was just listening to your May 22nd episode and it talked about setting up an LLC and opening bank accounts once you've acquired the rental property. This is my next step and I'm a little bit unsure how to proceed. Now, this is true for many people who are getting started or in some cases actually have a small portfolio and they've never really stopped to set up separate accounts or even LLCs to hold title to their properties from an asset protection perspective. I do talk about this on the show from time to time, and it's both a big topic and a small topic all at the same time, but it is certainly an important topic. So Christopher has four questions here and I'll just kind of break them down one at a time.His first question is, what is the best way to go about opening an LLC and ensuring I have proper asset protection? I understand it's easy to open an LLC, so is this something I can do myself and then contact the title company to transfer the deed or should I be using an attorney or other service? Well, the answer is, it depends. There's no right or wrong answer here. It just depends on, on your level of comfort, your level of understanding, your required expertise. I myself, have opened many LLCs on my own self-serve through one of many online services, and I will probably just drop a link in the show notes for you or for anybody who's listening to this episode for that for one of the services I use. But for me, it's just convenient to have everything managed in one place. And it covers everything from the setup, the annual maintenance, which is very little, but the annual maintenance basically the annual filing that you have to file with the state or refile with the state just to keep your LLC active and open and in good standing.And then of course, if it's not in your home state, you'll need the service of what's referred to as a resident agent. This is sometimes an attorney or a law firm or a firm set up and appropriately licensed in that state to be your resident agent. Basically,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.So what is it like to Retire Early with Real Estate? Well, that is what my guest and I are gonna talk about today. And he has authored a book called Retire Early with Real Estate, a really good book. It's great, even if you're a seasoned investor, but it's good for everybody from newbie on up. And, you know, the whole concept of retirement is something that we think about and entertain and probably retirement means different things to different people. But regardless of what it means to you, I think at the end of the thought process there at the end goal is really time freedom that financial independence and financial freedom provides you or affords you. And so that's the conversation I'm gonna have today with my asked Chad, who again, wrote the book Retire Early with Real Estate, and we're gonna dive into some of the concepts that he talks about within the book.So it was a great interview. I hope you enjoy it. And if you like the episode, if you like the podcast, of course, you know, by all means, leave a rating and review on iTunes or whatever platform you're using. And with that, let us get straight to our interview. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to 7 Strategies to Expand Your Real Estate PortfolioSUBSCRIBE on iTunes | Stitcher | Podcast FeedAll right, well, it's my pleasure to bring on one of my favorites, Chad Carson, to the show, Chad is an active real estate investor. He's been investing for a long time. He's an entrepreneur. He lives in Clemson, South Carolina, if I'm not mistaken and when he's not investing, he's out traveling and he's with his wife and his two kids. He's probably playing pickup bass at ball and he's hiking, and he is learning something new. I mean, he seems to be a perpetual student, which I admire because I know Robert Kiyosaki that way. And I certainly am that way, but he also writes and teaches other people about investing in real estate. And he does a really good job about it. I've been listening to him and reading stuff on his blog for a number of years now on and off. And I think he does a fantastic job. So he's focused on what he says, what matters the most. And I agree with him on that. He is also the author of a great book, which I happen to be holding in my hand here, Retire Early with Real Estate. Great read with that, Chad, welcome to the show.Marco, thank you so much for having me as honor to be here on the show.Well, it's great to have you on, I think my audience are gonna resonate with everything you have to say. And I think we have a great topic today, which is essentially based around your book. So I'd like my audience to get a better feel for, you know, who you are and kind of how you got onto this real estate investing train. So why don't you share with us anything you'd like to add to what I covered, but how did you get started and what was your WHY. Cause I think that's a really big thing to focus on.Sure. Well, the, the very beginning for me was a little unorthodox. A lot of people have a full-time job and then they get into real estate best thing on the side.
Hello, my friends, and welcome to another episode of Passive Real Estate Investing. And this is going to be another Ask Marco episode. I was going through the questions submitted from you, our listeners, and found one I thought was short, sweet, and actually a great question. And that is really the question of how can I expand my real estate portfolio. So before I jump into that, just wanted to remind you all, if you haven't subscribed to the show, remember to do so. It only takes you a few seconds, and that way you never miss a future episode. And I love the questions that you guys send in. I do apologize that I can't always get to every single one of them, at least not in a timely manner. I wish I could clone myself and be able to just respond to questions all day long. That's actually something I enjoy.It's fun and I like teaching. So anyway, the show is heard in dozens and dozens of countries all around the world. The majority of our listeners are in the US, Canada, the UK, Australia, basically those types of countries and nations. And we've got tens of thousands of listeners all over the place. And I really appreciate you being here and listening in. I try and keep the episodes relatively short between 20 and 40 minutes. It just depends if I have an interview with a guest, but usually when I do a monologue or an Ask Mark episode, I try and keep it to 15, maybe 20 minutes. It's relatively quick, easy to digest, and it, I can give you the main information, the main points for whatever I'm talking about.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: How to be Your Own Bank, Multiply Your Money, and Invest in Real EstateSo today, Pravin, I think is how you pronounce the name Pravin, and asked me a basic question of - How can I expand my real estate portfolio?So the question was, hi there, first of all, thanks for the podcast for real estate. I currently have a couple of rental properties, but I want to expand my real estate portfolio, so I need some advice. I have one property in California and one in Alabama. Well, congratulations on your two properties and hopefully you will keep growing that portfolio. And so let's answer your question about strategies to expand your real estate portfolio. So I was kind of considering, you know, how I should answer this question and I just kind of broke it down and wrote myself a few bullet points here. There are some major strategies, not worth talking much about what I'll call minor strategies. They're really just focused on improving cash flows, expanding geographically, optimizing your property management, increasing the properties value through value add, you know, just networking with other people, focusing on maybe some off market properties rather than MLS listed properties.These are, you know, these are just all ways for you to find out about more deals or increase your cash flows, which can be reinvested. So, you know, I mean that I think is a given, I almost wanna say it's common sense, but I want to talk about the major strategies, the things that provide the biggest leverage points, the greatest amount of movement. So let's talk about seven of them.So the first one is what I call Maximizing Your Leverage. And I'm gonna break this down into a couple of different categories. So what I mean by maximizing your leverage is how do you get the most out of the least of your investment capital so you can acquire more property with the least amount of capital while still preserving your cash flow, and of course, keeping that equity. And that's what mortgage financing is all about. But let's let's look at that first.So Mortgage Financing is really just maximizing other people's money, which in this case is the lender or a lender of some kind with the highest but the right amount of financing. So rather than spend a hundred percent of your investible capital in acquiring prop...
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy. And I'm a little excited today because I've got a friend of mine on who is also a very knowledgeable strategic financial thinker. I guess that's what I'm gonna refer to him to. You like that, Tom? Yeah.Well, Tom Laune is a guy who I've known for years. He is the creator of the Bulletproof Wealth Strategy, and I'm going to let him explain that I understand what it is, and it's rather interesting. He's also a leader in guiding investors to become their own bank. And don't let that turn you off. When you, you know, hear about being your own bank, especially if it's foreign to you and you don't understand what that actually means, because imagine this, what if you were able to save your money and save that money?Not for the sake of just saving money, but for the sake of being able to leverage it, to use it, to multiply it and take that those savings earn on it, leverage it into investments, have the liquidity of being able to tap into those savings control it control not only the finances, the money that you're saving, but also control your destiny and have an insurance policy on top of that. Think of it as a kicker. At least that's my description of it. And that's the way I think of it. So I'm not going to steal Tom's thunder. I'm going to let him dive into this a little further. So with that, Tom, welcome to the show.Thank you, Marco. I'm excited to be here. I've been really looking forward to this. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Building Wealth One House at a Time with John SchaubWell, great. Yeah, we've been talking about this actually literally for months about coming on the show and talking about whatever you want to call it. You know, whether you refer to it as the infinite banking concept or the Bulletproof wealth strategy, something that you created, you trademarked and you own or something different, but you have an interesting background. So the first thing that comes to mind is like working with the band REM, which is w you know, a great band. I used to listen to them for forever. Why don't you share some of your background because it's very interesting. And then take that and kind of segue into how you got into this area of finance.Sure. That's very cool. Well, I was in the music industry for 29 years and I sort of, uh, so, so I started, um, way back just by trying to record bands that I was in and I recognized that these recordings were coming out terribly. So I ended up going to college and working on a degree, actually three degrees, one in recording engineering, one in film and video production and one in electronics technology. And when I graduated with those three degrees, I really started learning what I was doing in that field. And the way I did that was through mentorship. I ended up being an assistant to guys who are really, really amazing engineers. And that is how I had such a long career in the music industry. And I got to work with just ridiculously talented people. I mean, I got to work with Stevie Ray Vaughan. I consider one of the best guitar players of all time. Um,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.So my guest today, a guy named John has been in real estate for a very, very, very long time. He's one of the OGs and he's been through multiple recessions multiple tax law changes. He has seen interest rates as high as 19 plus percent. And of course the more recent historically lows of 3% or so, but he has been around for a very long time and he has purchased many properties. He's also helped and coached dozens and dozens and dozens of people. In fact, if I'm not mistaken that number is actually well into the hundreds. He lives in Florida, and he has been using all kinds of strategies in terms of buying hold. He focuses single family homes, although he has invested in apartment buildings and pretty much everything else. But what is his favorite?It's the basic building block of residential real estate, the single family home and what he likes to talk about and what he has proven and help many people do is build wealth one house at a time. And that is the title of his book. So I hope you enjoy today's interview. And with that, let us go straight to the interview and let's see what John has to tell us. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Freedom at Risk: How to Protect Your Personal & Financial Freedoms with Tony LopesIt is a great honor for me to welcome John Schaub to the show. John is the author of a great book that I bought many, many, many years ago called Building Wealth, One House at a Time. And doesn't that ring a bell to you listening to of the show because that's what we do all the time. We're buying real estate and building our portfolio one property at a time. It is a great book. I suggest you pick it up. He also has a follow-up to that book called Building Wealth in a Changing Real Estate Market. He has prospered through the years through at least three recessions that I know of. He's gone through multiple tax law changes and, and he's seen interest rates ranging from a low of about 3% to a high of about 16% in his 52-year career as a real estate investor. So with that, John, welcome to the show.Thank you, Marco. I am honored to be here.It's great to have you on you have so much experience. I mean, more than literally anybody I know, and I know a lot of people in real estate, it'll be interesting to kind of get into your mind and just get some perspective, especially having seen everything that you've seen. Why don't we start off by you sharing a little bit more about yourself other than, you know, the little bio that I have here, just so people have some perspective as to the breadth and depth of experience that you have in real estate investing.Okay. Happy to when I was in college, back in the sixties, I, I took real estate courses and got my license while I was in college. And my senior year, I managed a little apartment building and a guy came along one day and wanted to buy it. So I sold it to him. So I made a commission my senior year in college and I made $5,000 commission, which was a lot of money in 1970. I had friends good friends in law school at that time. And they were irrigating starting jobs as five ...
Hello my friends and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli and I'm glad you're joining me today. If you are new to the show or have not subscribed remember to do so. It only takes you a few seconds to subscribe to the show and you'll never miss another episode. Well I have an interesting guest today and kind of an interesting topic for at least for a lot of people but it's often misunderstood and it's a topic about not just personal freedom and financial freedom but what freedoms are at risk. Our freedoms perhaps have been, I hate to the word stolen because it's such a strong word and we live in such a quote unquote free country. But the reality is, that a little at a time, some freedoms are being eroded, slowly evaporated, and many of it is almost unrecognizable. And when you start to learn more about that, you'll start to see that things are constantly changing. And it's not that we are necessarily getting more and more freedoms, but they are being controlled or constrained.And my guest today is one of those people that talk about this in a very clear way and in an interesting way is really what it is. So today, know, my guest, Tony, had a conversation with me, a great interview about how we are losing some of our personal and financial freedoms. And in his book, he talks about this chapter by chapter, just a little bit about how that is happening and also how it's affecting us. But the good news is, is you can do things. You can do things to stop that erosion or that decay and take control of the things that you can control. So the bottom line is it's never too late or even too early to plan and take control of what you can control. In other words, your personal freedoms and your financial freedoms. So today we're gonna chat about things like, the education system and education in general, the cultural and societal issues revolving around, you know, personal financial freedoms, the politics of it, not political, but the politics that impact you, the economics and the monetary system. So it's really a show about personal finance and the freedoms that are there for us to build our future, both financial and personal, I think you'll find it an interesting conversation. It was, I wouldn't say a long interview, it was about an hour, but it's one of those topics that could go on for hours and hours and hours. So anyway, it's about 40, 45, maybe 50 minutes of great content. I hope you enjoy it and would love to know your thoughts. And as always, if you have any comments or questions, you can email those to me at passiverealestateinvesting.com. There's always a link there to either ask questions or submit comments, and I appreciate you doing that. All right, well, enjoy today's show.It is my pleasure to welcome Tony Lopes to the show. He is a first generation American, a real estate professional. He's a bestselling author, he's a coach, and he's a speaker. He's an amazing person. You're gonna love him. I'm really looking forward to this interview today. His investments in understanding of the markets and economics allowed him to retire at the young age of 44. Think about that. How would you like to retire at the age of 44, or have retired at the age of 44? That's an incredible feat. What drives Tony is sharing his knowledge and experience that he loves to share and enjoy doing the things he loves to do, which is create financial freedom, teach people about financial freedom, write about it. That's why he's a speaker, an author, a coach. It's really what my understanding, is drives him. So, with that, Tony, welcome to the show.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: 5 Reasons Why You May Want to Self-Manage Your PropertiesMarco. Thank you so much for having me on. This is gonna be a lot of fun.Well, I had a lot of information in my mind about you and in front of me,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.Well, I have an exciting show for you today. Why? Because I get a lot of people asking me and my team. Should I self-manage do you have a property manager that I should use or should I just manage it from afar? Well, the reality is, is that a very large percentage of investors out there in real estate actually self-manage. And so it's not an uncommon thing, even though for years, we've been talking about completely turnkey investment properties, which means that they are professionally managed. That is a great option for many people. However, for many other people, they are better off self managing. They will make more money and there's other benefits. And that's what we're going to talk about today. So I don't want to steal any thunder from my guests who happens to be Dana Dunford.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Six Critical Factors That Could Have A Big Impact On The Economy (Richard Duncan)And she is the CEO of Hemlane and they are a technology enabled property management platform stay tuned and don't tune out from this because this is very interesting. I've actually checked them out and I'm actually considering trying them out myself to self-manage quote unquote, one of my own properties, but she is a strong advocate of purchasing properties anywhere, which is basically aligned with our philosophy because the best investments are really not always in your backyard. Dana previously worked at apple on their worldwide financial planning and analysis team, which is very impressive. And then she worked at nest in business development. And for those of you are not familiar with nest, they are a home tech company that was acquired by Google for $3.2 billion. So they are not a small company. She received her MBA from Harvard business school, very impressive. And in her free time, she is an avid question, paraglider and a skier. Dana, welcome to the show.Thanks so much for having me Marco.Well, I've gotten to know you a little bit better here over the last week or so in other conversations. And I'm very impressed with as a company and as a service and never really understood what the name was or what it meant. But now I know because I actually read it on your website, but why don't we start off with hem lane? You can fill in the gaps on my introduction about you. So if you want to share more about yourself, do that, because I think that actually ties into Hemlane and how that got started.Great. So I'll give you a little bit of background on myself and my co-founder who is equally just as important in this equation and then how that relates to Hemlane. So both of us were out there helping manage properties that weren't in our backyard, like Marco said the best investments aren't there and doing it haphazardly through, you know, trying to find a service professional, to go out and do the plumbing all of the way to no following up with the tenant to remind them that rent is due. And really there wasn't a solution out there for us. And when we looked at the market, it was like, do it yourself,
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today I have a returning guest. This is his third time on the show, Richard Duncan. He's an amazing guy, famous economist, and he writes some incredible books. Every once in a while, I like to do an episode on economic trends and what is going on in the global economy and how that impacts you as an investor, even though you are an individual here living in the United States or wherever you may be. But everything that happens on the world stage has an impact on you. Whether it be interest rates, whether it be the labor market, whether it is, you know, quantitative tightening or easing the impact of protectionism on interest rates, even the stimulus that has come out of many events in the past, including more recently covid and what happened, you know, since March, 2020.But even the events prior to that, as far back as the housing crisis of 2006, 2007, which led to the great recession of 2008. I mean, all these have an impact both immediately and the trickle effect from that as the years go by in terms of inflation, housing prices, commodities, and you know, the cost of goods, whatever it may be. So I think this is a very interesting topic and you know, it's not something you want to necessarily listen to all the time or every day or every week, but every once in a while it's good to have a lay of the land and understand what's happening big picture wise, because that ultimately trickles down. And when you see the big picture and the trends that are going on on the world stage, you can better understand what you're doing and what you're investing in or make better decisions in terms of what investments you should be focused on getting into or getting out of.And so I want to share this interview I did with Richard today, and I think you'll enjoy it. It was a little long, but bear with us. Everything was understandable, but the audio wasn't all that great all the time, only because he happens to be an American living in Thailand. And sometimes the internet connection there is a little bit flaky or sketchy. And that's not a criticism, it's just the way it is. We cleaned it up as much as we could, but overall it came out great. So enjoy it and thank you for listening and remember to subscribe if you haven't done so already, because it only takes you three seconds and you'll never miss an episode. So enjoy the show. Well, it is my pleasure to welcome back one of my favorites. I've had Richard Duncan on the show twice now as far as I remember.And this is the third time. Lemme tell you a little bit about Richard. Richard is the author of 4, 5, but at least four books that I know of on the global economic crisis. Well, that's actually one of his books. But he's got four books on the global economic crisis, including the International Bestselling book, The Dollar Crisis, which forecasted the global economic crisis of 2008 with extraordinary accuracy. His latest book, which is what we talked about about two years ago on the show, is The Money Revolution, How to Finance the Next American Century. Very interesting book. I highly recommend it. So Richard has served as the Global Head of Investment strategy at ABN AMRO Asset Management in London. He's worked as a financial sector specialist for the World Bank in Washington DC and he is headed the equity research department for Solomon Brothers in Bangkok. He's also worked as a consultant for the IMF in Thailand during the age of Crisis. Now he publishes a fantastic newsletter, a video newsletter that I'm a subscriber to called Macro Watch, and it can be found at his website richardduncaneconomics.com. So plenty of information there, I suggest you go and check it out. I think you'll like it. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to TBT: Cash-out Refinance Strategy QuestionsRichard,
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy.This is a quick Ask Marco episode. I've been getting a number of questions related to cash-out refinancing, and some of these are strategy-related questions. So I've put two or three of them together here that I will attempt to answer and cover as best as I can.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to AMA: Does it make sense to withdraw IRA funds early for a down payment on a rental property?So before I do that, I'm sure everybody has been watching the real estate news and seeing what has been going on around the country in terms of price appreciation, tight markets, multiple offers situations, and just how incredibly on fire real estate has been in the US and I'm talking in general terms here, obviously it's market by market and very much market specific, but we are just seeing an incredible here this year. We will probably close out again. This is on average the year with over a 16% average annual nationwide home price appreciation.This is more focused on new construction than existing sales, but the existing home market has also been just as strong if not stronger. And I'll have more information on that in coming episodes. I don't have that data in front of me, but I don't think the next two years, 2022 and 23 are going to be as strong in terms of price appreciation. And when I say strong, I mean, as crazy as what we're seeing here, but everything is incredibly strong. Existing home sales have been strong, existing home values this year, just from one of the indices I follow has just broken 20% year over year, which is unbelievable. The month of supply out there, meaning the amount of inventory in the resale market is a whopping low 2.6 months worth, which means that if there was no new inventory, the existing demand for that would basically take all the inventory off the market in two and a half months.So again, we're living in crazy times and interesting times, but I will have a little bit more to say about the US housing market health and the pulse of it, as well as some single-family rental stats in an upcoming episode today, I want to just focus on some of the questions that I've been getting in terms of cash-out refinance. And so I'll cover two, maybe three of them here they're related, and there is some overlap, but the scenarios are different. So I thought it would be interesting to just talk about that. So the first question comes from Casey and Casey writes in and says, hello, thanks so much for all the great content and resources I've been listening for about a year now. And I, your show, I'm learning so much. I worked with Melissa and recently closed on my first investment property.Well, congratulations. And I'm glad to hear that you are building your portfolio. It was a great experience and I'm excited to continue growing my portfolio with Norada. My question is how do you decide when it's time to do a cash-out refinance on a property? What factors should I consider other than making sure I can cover my expenses? And third, do I wait until I can pull out my original investment? In my specific situation,
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. I'm glad you are here. If you are a new listener and you haven't subscribed, do that right now. Subscribe to the show so you never miss an episode each and every week. And welcome. So this is a show that I've been doing since 2015, I believe I started in June, so I can't believe it's been nine years. In fact, that doesn't even seem right. It just time flies so fast. But I enjoy doing the show. I get so many emails, great feedback. I don't always have the time to get back to everybody and every email, but I do my best. Maybe I need an assistant to help me with that part of it. But yeah, I do like the questions and the comments and the feedback and the ratings and reviews.They're all wonderful.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to 10 Ways to Lower Your Taxes as a Real Estate InvestorSo first off, let me just read a quick email, short paragraph that I got from someone and then I'll dive right into a great question I got from another listener that I think applies to a lot of people. And it's, even if it doesn't apply to you right now, it's something that's good to know and understand. But first of all, I got a quick email paragraph from a lady named Theresa. She was just talking about real estate investing in general, and she said hi there. And she's, you know, opened up with her niceties and she said, I came across your podcast and your real estate investment approach makes sense to myself and my husband. We previously subscribed to Grant Cardone's membership and found his high stakes multifamily building investments aren't really the approach we wanna take. I happen to know Grant, good guy, very smart, very sharp, very aggressive, and a very successful person.Nothing bad to say about Grant, it's just his approach and investment style and
Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we're doing something a little different. We're going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you've been with us since the beginning, which goes back to 2015, or you're tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it's six months ago or six years ago, is just as relevant today. So sit back, relax, and let's rewind the clock for this great episode. Enjoy. Well, we have a very exciting show for you today, and I have a very special guest, you know, we all love paying taxes don't we? Actually, that's not true. I'm kidding, we don't. But the reality is is we all have to pay taxes at some point in time, whether it's now or in the future, but wouldn't it be great if you could defer, eliminate, minimize, reduce, or just put them off forever and you can, there are ways to minimize your tax impact. So today I'm bringing on a very special guest. His name is Mark J Kohler. He's got some amazing books out there. I thought I'd put together my own list of tax saving strategies and just kind of throw it out at Mark and see what he has to say.He's got his own list. It's probably much larger than mine, but, uh, let me tell you a little bit about mark and then I'll let him chime in and fill in the gaps that I've missed. But Mark is a best-selling author. He's a national speaker. He's a radio show host. He's a writer, a video personality for entrepreneur.com and he's also a seasoned real estate investor. He's a senior partner in two firms, a law firm, as well as a separate accounting firm. And I will admit and openly tell you full disclosure that I am a client. Mark is a personal and small business tax and legal expert, and he helps clients build and protect their wealth. And that's the key thing here. And I'll just wrap up here by telling you he's got three amazing books that I've read. And I started reading the many years ago. One is a great title, Lawyers are Liars: The Truth About Protecting Your Assets. The second one, and the follow up book to that is what your What Your CPA Isn't Telling You: Life-Changing Tax Strategies. And lastly, The Tax and Legal Playbook: Game-Changing Solutions to Your Small-Business Questions, which is fantastic with all that. Mark, welcome to the show.Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – Cash-out Refinance Strategy Questions See our available Turnkey Cash-Flow Rental Properties.Please give us a RATING & REVIEW (Thank you!)SUBSCRIBE on iTunes | Stitcher | Podcast FeedThank you. And gosh, I just am grateful to be here and I'm so excited to hear your top 10. You know, I was like, you got to top 10. Okay. Let's see. I want to see if maybe I'll get a new one for my top 10. So this is going to be good. We’ll collaborate. I’m excited about it, Marco.You and Matt are very, very seasoned at what you do. And honestly, I've learned a lot from you guys. So I wouldn't be where I am today, if it wasn't for you and Matt, your partner. So I appreciate everything you guys do. And you know, just to shout out to you, anybody listening to this really should subscribe to you on YouTube and listen to your podcast and follow you because really you put out such great advice that anybody listening to this, even if they're not a client can really take it and run with it and do something and help themselves.Well, thanks. And on that note, current event, justice week, it rocked our world is the Democrats finally came out with their proposed t...
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. While I picked a couple of good questions today from the list and kind of a mixed bag, but I think it'll resonate with a lot of people. And one of them is a mistake that I made in the past and I know I've talked about this multiple times on the show. It's worth repeating because I think if you don't consider where you invest specifically the location, the neighborhood, you could be stuck with a problem. And I'll explain that here in a minute, but I believe the name is Maduri.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How do I know when to sell my property?Maduri writes in and he says, hi Marco, I'd love your show and look forward to new episodes. I find the Ask Marco Set particularly insightful. Hope you can help me with this. I purchased a fixer upper in Detroit on the east side in a C class neighborhood.And remember I kind of grade neighborhoods As a's Bs, C's, and D's and D's are kind of like the worst of the worst. They're, you know, what I'll refer to as war zone type neighborhoods. Purchased it for $40,000. We did extensive rehab, or in other words, rehabilitation and spent over $50,000, new kitchen bath flooring, mechanicals, et cetera. I tried selling it on the MLS after renovation, but there were no takers. I priced it on par with the market. So I went ahead and placed the tenant in for $1,300, which I have a comment about $1,300. I have tried marketing it as a turnkey rental to buyers, subscribed to some mailing lists, paid $1,000 to market it via this site. Still note takers, couple of interested folks bargained down the price and after agreeing to a price and sending them a purchase contract, they backed out.I have now have it up on Zillow for sale by owner. I am not looking to hold it long term. What other options do I have to sell it? I am assuming I need to reach out to investors in the area. I have posted it on Facebook, et cetera. I'm located on the West coast and did all of this remotely. Congratulations, by the way, you know, a lot of people don't think they can do stuff like this, but you can if you have the right team. Any words of advice, what do companies like Nora do to help promote turnkey sales? What do you do when inventory sits and doesn't sell? Okay, Madi, interesting situation and good question. And the reason this resonated with me is because when I first started investing, essentially full-time back in 2003 and really into 2004, Detroit is where I cut my teeth.And so I was doing all kinds of stuff there. I was buying distressed properties, fixing them up, flipping them, buying distressed properties, fixing them up and holding them. And I dabbled with different areas, but I started in what were essentially C-Class neighborhoods because it was cheaper and I thought cheaper was better because it was something I could afford. But the reality is, as I discovered, the hard way is that cheaper is not necessarily better and often isn't. And the reason for that is because when you're in these cheaper neighborhoods, you're not getting a better deal. And it doesn't mean that you're gonna have a great investment or rental just because it's more affordable to you. You have to put things in perspective and you have to understand that there's a reason why these areas are cheaper. There's little to no retail market there. If there was, there would be a lot of sales activity and a lot of buyers.And, and the fact that you have a lot of buyers means that there's higher demand, which tends to push the prices in the area up and you just have, you know, more quote expensive properties. But that also has to happen in areas that are more desirable or highly desirable. So those two things go hand in hand. The more desirable a neighborhood, the more demand there is for that neighborhood. Therefore,
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. If you're new here or if you are relatively new here and you haven't subscribed to the show, remember to do so. It only takes you a few seconds. Just click on the link or the button and you will never miss a weekly episode of our show. Today. I wanted to grab a question from the pile of Ask Marco questions and I think there's some really good ones that have been coming in recently. So I appreciate the questions. I'll try and batch some of them and some of them I'll just take individually. But Kelly wrote in not long ago and was asking a question about whether or not to sell their property or when to sell their property. And the question is basically this. I have two properties in Baltimore and I have been cashflow negative for one year.It's been difficult and nerve wracking knowing I've paid over $20,000 in the last year to simply hold these two properties in the last six months. It has been especially hard and I've been paying both mortgages at $2,000 a month. I have had damages, turnover, squatters, you name it. I keep hoping that things will turn around. I've been trying to learn about return on equity ROE, but it's not clear to me what percentage is too low and for how long I should wait. How do I analyze whether to sell my properties? What is the tipping point in holding versus selling? Thank you so much Marco.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to 12 Strategies to Boost Your HappinessAlright, Kelly, well I appreciate the question. It's a great question. I've got obviously some questions for you based on what you just described, but it doesn't sound like to me you purchased these in good neighborhoods. I'm obviously making an assumption here and I don't know for sure, but given the fact that you've had damages, turnover and squatters followed by you saying you name, it tells me that you've probably purchased in some less desirable or sketchy neighborhoods.What I'll classify as typically lower grade or C minus type neighborhoods. I'm not judging or being prejudice or anything like that. It's just if you grade your neighborhoods as ABC's and D's and A's being the premium prime areas, the most desirable, you know, certainly above the median price of an area or a market, your C's and your D's, your D's would be essentially war zone C's would be your lower income areas. Some of them are fine and profitable, producing good cash on cash returns, but also a lot of C areas are going to be areas that are not so favorable. You know, higher crime, just not ideal if you will, but everybody needs a place to live and you know, we pick and choose where we live and we live where we can. So let me give you some ideas and thoughts about what you've got going on.I can't really, really tell you whether to sell them or not or what you should do. None of this is financial advice, but deciding when to sell rental properties involves considering one or more factors. And often these are both personal and market driven. So here are some points and some ideas food for thought, if you will, to determine if and when is the right time to sell. And you know, keep in mind it's hard for me to give you very specific type of information without knowing more specifics in your situation. I'm not gonna dissect what you have, but I'll give you enough that you can figure this out on your own. Okay, so the first thing is basically considering market conditions. Properties generally appreciate over time, especially if they're in good or or very desirable areas. But if you have a property and its value has increased significantly since you bought it and you believe the market is peaking, then it might be a good time to consider selling.I'm gonna describe selling here in a little more detail before I'm done. When I say sell,
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Thank you for joining me today. If you haven't subscribed to the show, remember to do so. Just click the link or the button that says subscribe takes you a few seconds. And that way you never miss an episode every single week I try to put out one episode every week. Sometimes I shoot for two and they're typically short episodes, they're not very long. And I try and cover topics such as real estate investing, finance, personal development, and anything I think might be of interest to you. Today we have one of those sort of off topic topics and I would like to call this one the 12 Strategies to Boost Your Happiness. And although that doesn't sound like it's directly related to investing or real estate, it actually is directly related to your success and investing and happiness and productivity and everything you do.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Where and How to Buy Investment Properties after Losing Everything in the 2008 RecessionSo, although it might not sound like it's related, I believe it really is related directly and indirectly. And I think that your happiness plays a significant role in how well you do with your goals and your investing and everything you do. And that level of success that you get from your accomplishments plays right back into your level of happiness as I'll talk about briefly here today. So I think it is a circular something or other feedback loop, that's the word I'm looking for. So as you accomplish goals and feel fulfilled and do the things that you want to do, that leads to more happiness. But at the same time, your increased happiness also fuels everything that you're doing and allows you to do what you do better. So I guess the most basic question to ask is what is happiness? And I'm not sure if anybody has like the perfect definition for it.I, I could go to Webster or something like that and look it up and I'm not gonna going to do that here today. But happiness I think can be seen as both a temporary emotion or it could be seen as a longer term state of mind. And that is going to be shaped and often shaped by a variety of factors. Those could be things like your personal values, it could be your social connections like your friends and family. And of course life circumstances and things happen. Crap happens all the time. And I personally, just to be completely honest and fully transparent here, I myself am going through some hard times right now on every level in work, one of my other companies, I'm going through a pivot and it's a very difficult one 'cause I'm dealing with a lot of investors and there's a lot of email and paperwork and legal factors and all kinds of stuff going on.And it's just a mountain of stress and it's all for the good. It's, it's a giant hurdle or hump that I have to get over in good faith and for everyone's benefit and to protect the company. But it's been a very, very stressful, difficult time for me. On top of that, I've got all kinds of things going on in my personal life from a renovation that's taken forever and I've lost money on and dealing with contractors that have been failing me to my mother who actually had a heart attack about three weeks ago. And I'm just coming back right now from visiting her, spending about eight days with her post procedures. So I'm happy to say that she's doing reasonably well. She gets tired all the time, but it's not fun to know that your mother just had a heart attack and had to go to the ICU and be dealt with there.So, you know, life has circumstances that can affect your happiness and stress levels. But the bottom line is happiness is a complex and multifaceted emotion. It often describes a state of wellbeing, of contentment, of fulfillment. And it can be both a fleeting feeling,
Hello friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing show. Well, I have an interesting question today from a guy named Shane. Before I jump into that, just wanted to remind you if you're new to the show or if you haven't subscribed yet in the past, please remember to do so. It takes you three minutes, you never miss an episode. And we've got all kinds of great content covering all kinds of topics, but mostly about real estate and of course investing and finance. So remember to subscribe if you haven't done so already. So today I'm actually recording, not from my regular office, but from my home office. So hopefully the audio is coming out well. I do have my professional microphone here, but there is always noise around.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Investing in Squatter Scourge - How Squatters Can Steal YOUR Property So Shane writes in and says, hi Marco. I found your podcast a couple of weeks ago, and I have been listening for hours each day while I am currently building our home.I am in my fifties and my wife and I have been married for 28 years, and we feel like we have made sound investments in the past 12 years since we lost our home and all of our investments during the 2008 recession. Well, I'm very sorry to hear that. I have so many questions about what to do with our current and future investments that we are thinking about diving into. Since listening to you and your guests on your very informative show, I've already purchased three of the books you've recommended. I'm trying to learn as much as possible so as to not make the same mistakes as before 2008. I'm a general contractor and know how to do pretty much anything on a home, whether new or an existing remodel. To flip, we are debt-free and wanted to buy some homes or multi-unit housing to rent out with some money we are receiving from an investment using a 1031 exchange, we will have two homes as our personal property and are going to do nightly rentals with the existing home we currently live in after we finish our other home.Okay, interesting idea. I have a company that will take care of the 1031 exchange, but my wife and I are wondering where to buy real estate and do we buy multiple inexpensive properties or just pay cash for one property for rentals? I assume you mean a more expensive property versus multiple inexpensive properties. And then Shane goes on to say, do we buy near us or should we buy an existing home or multiplex somewhere more inexpensive than where we live? Do we apply for a HELOC, like a home equity line of credit on our personal property and buy more homes or just try to stay debt-free with our home? We know we only have 180 days to transfer it to another property and he's referring to the 1031 exchange here to another property and didn't want to go into more debt unless you think it would be beneficial to do so for our retirement.My vivid vision is I would like to purchase as many rental properties as I can in the next 10 years so we can retire and follow our vivid vision and do service projects for people that can't help themselves even more than we already do. Now, I feel like I can't buy as many rental properties as I would like to unless we take on debt for the properties. I have disliked debt since 2008 and never want to lose my portfolio again with an exclamation mark. It made us strong and resilient and taught us to pay cash for everything, but we are up for suggestions now that we can invest in other things. Thank you, Shane.Great email and thank you for the questions, Shane, this is great. So you've got a lot to unpack in here, so let me do my best to address and answer as much as I can.So first and foremost, thank you for being such a loyal listener that it's a huge compliment, very big compliment. I really appreciate that.
Well, hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. I am trying to catch up on my few weeks of taking a break from doing podcast episodes. And so now I'm going full tiled here. I have an interesting guest today. It's kind of funny. Long ago when I started investing full-time in real estate in 2004, I was buying in not so great areas, and I learned a lot. I cut my teeth on some of these less desirable neighborhoods, if you will. And I, I quickly had an issue come up where I was having squatters in my properties. And believe me, it was no fun having squatters in my properties. They're a pain in the butt to deal with, but it's a, it's a fact of life and it's still exists today. And I actually never even thought about it since then.But then I got connected with George McCleary and apparently he's,
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Glad you can join us here. I apologize for being several weeks behind in my recording schedule. I've been traveling quite a bit and I've also been dealing a mountain of tasks with the various business and ventures that I'm involved in. That is slowly correcting itself. I am an impatient person, generally speaking, so I don't like when things move slowly, but as one of my colleagues tells me all the time, he says, you just have to be very patient. Things take time to unfold and work themselves out. So patience is one of the most important things you can stay focused on right now. And so I'm trying to do that. And, even though I work a 12 hour a day, I'm taking little breaks to keep my sanity.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Investing in Florida… Market trends and new construction opportunities.Anyway, I wanted to talk about the trends in the BTR or build to rent space. These are essentially investment homes or rentalthat are occupied by tenants owned by investors and in some cases, property managers or investment companies that own a large, large portfolio of these new construction rental homes or investment homes. In the United States, the build to rent or BTR space and the build for rent, also known as BFR, these are terms that are used somewhat interchangeably, but they havenuanced differences and this is an important thing to note because I'm talking primarily about BTR, Build to Rent. So BTR specifically refers to the development of either attached or detached homes that are intended to be rentals. So you have a tenant and an owner. So often these will have shared amenities, but often and most often will have single ownership. BFR or Build for Rent, however, generally covers a more broader range of commercial real estate projects. And those are intended to be leased rather than sold, but they're intended to be leased to owner and user occupants when they're completed. So the bill for rent could be a cluster or a community that is owned by a parent holding company, an investment company, even a property management company. What you see with bill to rent BTR are properties that are typically ownedindividuals or small groups. So a built to rent home can look like a traditional home and often does. It's a suburban style family home. It can encompass a wide range of building plans, but this doesn't exclude duplexes or row homes or small lot homes or even horizontal apartments. mean, this is a term that's also used in the industry where you have a tight cluster.of professionally managed, freestanding single family residences. Then they call them horizontal apartments. So anything from a single family home, which is the most typical on up to row housing and horizontal apartments qualifies under that bill to rent space. And it's a pretty exciting space. It's been a growing trend over the last few years to see rental properties come out of this new construction space and investors gobbling themSo built to rent that industry has been the fastest growing segment of the single family home construction space for a number of years. And if you stop to think about it with mortgage rates now, you know, exceeding six, six and a half percent, just depending on when you listen to this, that compounded by the fact that we have a limited supply of homes. And as I've talked about many times, a sustained high demand for new homes, well homes in general, but a sustained high demand.for housing, new home buyers would require a six figure income to afford a median priced home around the country. Again, market specific, but this is typically what we're seeing. So more and more people are moving into this space for home ownership, not specifically as an investment, but just as a place to live.
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and today I wanted to bring back a friend and a property provider, a multi-city builder in Florida, and someone who used to live in.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco: Exit Strategy for Turnkey RentalsSo Jim, welcome back to the show.Marco. Thanks for having me. Always good to be back.Well, it's great having you on. We've had some conversation before this recording about what we want to talk about and we thought we'd focus on Florida, the market trends in Florida, what's going on in terms of real estate investing in Florida new construction, maybe new construction compared to newly refurbished properties and all kinds of good stuff. So you and I don't really know what we're gonna title this episode yet, but
Hello friends. Welcome to another episode of Ask Marco on the Passive real Estate Investing show. Interesting question here today, the person who wrote it in titled it Exit Strategy for Turnkey Rentals, and I'm gonna keep that title. It is a comment and a question related to it, but not entirely, but I'll explain as I go. So this person, I'm not exactly sure their name. They, they left it generic, I think is, it says Jersey. But anyway, the question's about the returns and the exit strategy for buying or investing in turnkey rentals. So they or he has four or five questions in here. I'm gonna just break 'em down and take 'em one at a time for the sake of simplicity rather than reading the whole thing.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco: Asset Protection for a New InvestorBut they write in, say hello. I would like to have your honest opinion if exit strategy really works with turnkey investments you sell, obviously I know you're going to say yes.Here are the reasons I don't think it will work or fetch positive inflation adjusted returns. Okay, so let's break this down one question at a time and I'll give you my my honest feedback. So the first bullet point here, or the first numbered item is turnkey. As in turnkey properties is bought at a premium. It takes years to build real equity. So my comment to that is this, I wouldn't say they're bought at a premium at all. The properties that are sold as turnkey rental properties are sold at or below fair market value. And the reason I say that is because each and every single one of them is gonna have an appraisal done at the time of purchase. 99.9% of our investors buy with financing Fannie Mae, Freddie Mac financing, conventional financing. And so there's a requirement to have at least one appraisal done by a qualified third party appraiser that you have no choice in.It's, they're randomly assigned, and that appraiser is his, their, their job is to justify the purchase price and make sure that you're you know, well, they're not trying to make sure that you buy it at the right price. They're basically saying, this is the market value. It's up to you to, to decide whether you move forward with the purchase or not. However, I will tell you that most all the properties come in at or below fair market value. So you're not buying at a premium. If you're buying turnkey and it's truly turnkey, which means that there are no capital expenditures and, and little to no deferred maintenance items, there shouldn't be, then you are buying at a fair price. It'll be at or below fair market value if you get a discount on it, which happens somewhat frequently because of the the volume we deal with and the providers we work with.You might be getting a little equity bump right from the get go. So $150,000 property might be purchased by you at $140,000 price, and that's a, a $10,000 discount in equity terms. So your comment about buying at a premium is not true. It's not like it's overpriced or inflated you. What you might be thinking is what if you are buying and fixing and then refinancing your own property where you're buying it at a distressed price to fix it up, get some equity in it, then you refinance the property and you have a little extra equity or an equity kicker because you bought it distressed and took the time, energy, money taking on the risk of fixing it up into a, like, new condition with the risk of it going over budget, which means now you, you, you'll have less equity at the get go than you had before because you had to put more money into it.So it can go the other way. If you're an active real estate investor, you can choose the route of finding distressed sellers or distressed properties or trying to find a real deal, meaning you're negotiating and negotiating hard for something that is turnkey or something very close to turnkey.
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing show. Well, I have a question today from, I guess a new real estate investor, and it is a common question I get about asset protection and there just seems to be a lot of confusion about this subject or just a lack of information out there. I've done a lot of podcast episodes about it. And so I think this is just a good and timely question and it seems to be evergreen. So let's hit it.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Insights from Studying the Rich: The connection between wealth and property. (Part 2)Nick writes in, he says, hi, Marco. I've been listening to your podcast and speaking with your team. I'm very close to pulling the trigger on my first investment property in Indianapolis. Nick, congratulations. It's the first one's always the hardest and the most exciting. I listened to the podcast from December of 23, I guess that's December 23rd, about asset protection.And my question is this, is it worth it for me to get the asset protection set up prior to getting my first property, or am I better off to just wait until I have a few properties? I will be setting up an LLC for the first property and we'll transfer title after closing. But I am more curious about the series LLC that was discussed in that podcast. I would like to get this right out of the gate, but I also don't want to make this complicated until I can get my feet wet. With all this, my goal is to have at least two to three properties by the end of the year. Thank you, Nick. Nick, congratulations. And I'm glad you're thinking about this in terms of goals and objectives, not just the fact that you got your first property. So congratulations. Well, now that I have read your question to December of 23, I assuming means 2023, so December of 2023.Okay, got it. Well, here's my response. Nick, don't complicate this question. It is a common question, and I get it quite often. The short, simple answer is this. You can set up your asset protection anytime before or after because it's simply a matter of transferring title out of your personal name when you close on the property and into the entity that you're using for asset protection purposes. Now, I'm assuming you're financing the property because if you're not using financing, you could close property in the name of an LLC or anything you want. There's no lender involved. It's the lender that wants you to close in your name personally, and then you have certain rights after the fact as far as whether you can transfer the title or not. Most lenders don't want you to and don't allow you to. The only exception to, to that by law is transferring it into a trust.You can transfer any of your personal assets, including property into a trust, and that should not affect your mortgage loan or, you know, impact the lender in any way. They're, they're not gonna be suspicious or it won't raise red flag. It's not supposed to. And that's the Garn-St. Germaine Act in case you're wondering. Now having said that, you can set up your asset protection anytime you like. Most investors like to have that set up beforehand just for the sake of having it done all at the same time and getting it off your plate. But there's nothing wrong with having it set up beforehand and then providing that information to the title company before you close so they can transfer the title into your LLC after you close on the purchase. But that happens the same day, and normally it happens minutes after you close escrow on the purchase itself.So once all the docs are signed, you're officially closed, you've taken title and the deal is done, and then five minutes later, the title company can create a, a deed of some kind to transfer the title from you to your new LLC or whatever it may be. Now, having said that, I don't know a lot about the,
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. And welcome to part two of my interview with Dolf De Roos. We went for a little over an hour, so I decided to cut this interview into two equal parts of about 30 minutes each, so that way you can just consume them separately, quickly. And of course, do it back to back if you want to. Anyway, let's jump right back into that interview. I hope you're enjoying it as much as I am, and we will see you on the other side. Enjoy. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Insights from Studying the Rich: The connection between wealth and property. (Part 1)To my question about, you know, insights you've learned about studying the rich people, is what you're saying, basically mindset, like mindset is a significant part of why the rich are rich.Absolutely. It's not just that you need a slightly different mindset to get rich, it's that when you observe the rich, they operate from a slightly different mindset.Can you describe that? Can you, can you kind of describe it a little bit for people who are not familiar with, like what is the mindset that they have that I should be in?Yeah. So they're willing to forego current pleasure in order to have long-term gains. So, you know, don't just when you've got enough money together, go on that trip or buy that car or, or have that you, whatever it is you want fancy stuff. You know, getting an 85 inch LCD tv, I know they're getting cheaper and cheaper, so it's harder for me to say you shouldn't get a tv. But I do often tell people, if you want to do really one in life, take your TV and toss it out the window. If you wanna save some money, I'm all for saving money. Open the window first, but get rid of the tv. And full disclosure, Michael, I do have a tv, but look, weeks go by that I don't turn it on because I think that TV at some level does rot the brain.It is a script, writer's fantasy, all these programs to lure us in to watch long enough so that we stay there for the ads, because that's how they make their money. If they show that enough people have watched the ads and they can get revenue. So a a way of looking at it is when you get on a plane, it's not universally true, but in general it's true. In the back of the plane and the economy class people are watching movies and they're, you know, they're, they're playing games and all that sort of thing. And then in the middle of the plane, in the business class, they're reading magazines. And in the front of the plane in first class there's a large for element of people reading books. And I don't think there's a one-to-one correlation between watching movies and being poor and reading books and being rich.Not at all. There are, you know, we can give examples of, of where this isn't true, but in general, people who have done very well are avid readers. And that's why I'll say one of the attitudes that the rich have is their, they're willing to read. And it comes back to what you said way at the beginning, mark. It's just another way of saying we've gotta educate ourselves. You educate yourself by reading a book in general, whereas by watching a movie, you entertain yourself and there's so much shock and horror and murder and mayhem on movies these days that often they don't enlighten you. They don't give you United Man, I could adapt that to get an extra bit of passive income. Whereas by reading a book, you can, again, you spend that same $30 in three hours reading a biography by reading a biography, whether it's an autobiography or written by someone else.You can condense the essence of someone's entire life into three hours and pick out all the good bits. Why would you not read biographies? And yet most people don't. Book readership has gone down in the last 15 years. We've gone from 46,000 bookstores down to just over 6,000 and the numbers are still dropping.
Hello and welcome to another episode of Passive Real Estate Investing. As you know, I'm your host, Marco Santarelli. And it's great having you back on the show. Well, today I have a very, very special guest, someone who I've known for a very, very long time. I refer to him as one of the OGs, you know, the original real estate investors from way back when. And I don't want to date him, but he's just got so much content and so much knowledge and helped so many people. He is actually been the mentor and influencer for so many other great people that we all know and love in the real estate industry. So, before we get to my guest, I just wanna thank every one of you for making our show Passive Real Estate Investing, one of the top rated and top ranked real estate and investing podcasts out there.We we just get a lot of email every single day from people who want to be on the show or asking questions or wanting to do something with us. And it's it's very flattering, but we just don't have the bandwidth to do all that. But I wanted to thank all of you, our audience for helping make this show what it is. And based on that, remember to subscribe. It takes you like two or three seconds to click that purple subscribe button and just make sure you don't miss a weekly episode. And having said that, if you are feeling up to it, I welcome those ratings and reviews. So I read every single one of them. So please, you know, don't hold back. Let me know what you think. Well, let's jump in with our guest today. This is someone who I've known about for, I'm gonna say 20 plus years.I have his book on my bookshelf. It's been there, it's one of my original real estate books, believe it or not. His name is Dolf De Roos, and many of you probably know who he is or know of him. He's a very successful international real estate investor, and he's also a New York Times and Wall Street Journal bestselling author. He's written over 11, 11 bestselling books, including the New York Times Bestseller, Real Estate Riches. I'm sure you've seen it around. He has been syndicated on radio for four years or more, and he's been on over 4,500 stations, which is very impressive. And lastly, but not least an interesting story, Dolf accepted a challenge to buy one house a week for an entire year without using any cash. Incredible story. Well, guess what? He failed, but he couldn't wait the entire year. He completed the 52 purchases of those homes in nine months and then ended up writing the book called 52 Homes in 52 Weeks. So with that, Dolf, welcome to the show.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – How to Rent our Home and Move into Another Property Oh, thank you, Marco. Thank you for your kind words. It's my absolute pleasure to be here. And I know that we're going to get along just from the title of your show. And congratulations, by the way, on the success of this show. It speaks to what you do out there in the world. But the title, passive Real Estate Investing that is so close to my heart, that's kind of what I've dedicated my life to, to showing people how they too relatively easily can generate passive income. And, you know, I want to, to give accolades to everyone who deserves them. And Warren Buffet is credited with having said, if you don't figure out a way of generating passive income, then you're condemned to working for the rest of your life. And so, you know, with all that, it is it my pleasure to be here.I just love hearing anything about real estate. If I come across a book marker that I haven't read yet, I'll get it and read it because my theory is, if you can spend $30 of your money and three hours of your life consuming a book, even if it's not well written, but you get just one idea from that book, that idea could be worth 200 a month for the rest of your life. It could be worth 10,000 a month for the rest of your life.
Hello my friends, and welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. I'm your host, Marco Santarelli. Remember, if you are a new listener to the show, subscribe, it only takes you three seconds and that way you never miss a weekly episode. And with that, let's get to today's question.So today we have a question from Rob coming in and he's basically wanting to know how to rent his current home, his principal residence and move into another property. Sounds like a pretty basic question and for the most part it is. But there's a lot of people who don't completely understand how to make that progression where you keep the original home that you live in as a rental property and move forward. So let me just break that down. So Rob writes in, he says, hi Marco, my wife and I want to rent the condo we own when we move out in two years into a larger home.Can you please do a podcast episode centered around the best strategies for this investment style? Example LLC creation, maintaining our low mortgage rate, how to set up bank accounts, tax strategies, et cetera. When I listen to your podcast, much of the real estate investing advice centers around investors who are looking to invest in properties that are on the market, our situation is different because we purchased the home under our names, mortgages, in our names, and only have personal bank accounts. Thank you and love your podcast, Rob.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Why You Should Invest in Indianapolis, IN (Market Spotlight)Well, Rob, thank you very much and I appreciate you sending in the question. It's a good question. So let's just quickly break this down because this is actually not a complicated one. So let's put it this way. You live in a condo, it's your principal residence, it's not a rental property. And it sounds like in two years you want to keep the property and move into a larger home.So you kind of outlined my bullet points for me here as far as maintaining your lower mortgage rate, unless you're in an adjustable rate mortgage right now, that's not gonna change. So if you were smart enough and fortunate enough to lock in a great, great low rate, you know, on a 15 year or a 30 year fixed rate mortgage, fantastic. Keep that mortgage, don't refinance it because you'll probably end up getting a higher rate at this point in time. But if the opportunity's there to refinance and get a lower rate, do that before you move out because you're gonna get the most favorable terms if it's your principal residence. So let's just assume that you already have very low mortgage rates and you want to keep it because that's what it sounds like you have. Then simply keep the mortgage in place. And what you're gonna do is ultimately when you find your new home, your larger home, you are going to put the normal down payment on that, depending on the type of financing you're using, but let's just call it 20%.It could be less, but let's just call it 20%. You're gonna put your down payment, you're going to get new mortgage financing and you're gonna purchase that new home. Then you're gonna move out of your existing condo, move into the new home, and then you're going to turn your condo into a rental property. You'll put it on the market, you'll rent it out, you'll manage it or have a property manager manage the property for you. And you're gonna do that as if you purchased a brand new off on the market rental property. The only difference is, is you just happen to have had this property as your existing principal residence. And there are a lot of investors that do this or get started this way where they live in a property that will make a good rental property and will cash flow. And so they just choose to keep it because it's easy to do that, keep it move into another property and then keep that property as as your first rental property o...
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, I decided to do another market spotlight today. I haven't done Indianapolis for a while, and so I thought I'd bring on my good friend and property provider, Michael from who knows where he is in a different state every time I talk to him. So I never know if he's in Florida or Columbus or in Indianapolis. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Connect with Anyone (with Charles Duhigg)But Michael, Hey, welcome back onto the show.Hey, thank you, Marco. Thank you. It's been a minute. I, I asked you on the show, you said you've been doing this for almost nine years now, so congratulations.Yeah, 2015 is when we launched the, the podcast. Yeah. It's been a long time. Yeah. It doesn't feel like nine years, but it's been nine years
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Another interesting interview today with Charles Duhigg. I had him on another interview, another episode. We were talking about The Power of Habit. But his most recent book called Supercommunicators is a fascinating read. You know, it's just interesting communication. We don't really think about it too much, but it is the most powerful superpower that we have. It really is communication is the superpower, and it's the best communicators that understand that whenever we speak, we're actually participating in one of three conversations. And this is something that we talked about today. There's the practical communication, there's the emotional communication, and then there's the social communication. And if you don't know what kind of conversation you're having, you're unlikely to connect with the person that you're speaking with or talking to, or texting with, or emailing.So, it's important to know how to communicate and how to be an effective and more powerful communicator. So it was an interesting conversation with Charles today. I hope you enjoy the show. Let me know what your thoughts are. And again, if you haven't subscribed to the show yet, remember to do so. Just takes you three seconds. And with that, let's jump right into our interview. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Power of Habit: Why We Do What We Do in Life and Business (with Charles Duhigg)Well, it is my honor to welcome Charles Duhigg to the show for a second time. Actually. He's a Pulitzer Prize winning journalist and the author of The Power of Habit, which spent over three years as a bestseller and has been translated into 40 different languages. He's also the author of Smarter, faster, better, another bestseller. And his most recent book, super Communicators, which was published this year. Charles writes for the New Yorker magazine, is graduate of Yale and Harvard. He's a frequent contributor, CNBC | PBS NewsHour Frontline. He's, you know, he is just all over the place. And just a very smart guy with some really, really good books that are very, very interesting. So, Charles, welcome back to the show. ThanksThank for having me on again.Well, it's an honor to have you back,
Hello, my friends, and welcome to another episode of Passive Real Estate Investing. You know, many of us think about habits from time to time, but we don't realize how powerful habits can be and how they shape our lives and the decisions we make or don't make. And so today's a very interesting interview with a, an award-winning business reporter, Charles Duhigg. And he takes us on a journey in this interview to the edge of scientific discoveries that explains why habits exist and how they can be changed. And what he's doing is he's basically distilling down a vast amount of information and engrossing us in how these habits work and how they affect our lives, not just us personally, but even businesses and organizations, cultures at its core. His book, The Power of Habit, contains an interesting and exhilarating argument. It's the key to anything you want to do, whether it's to exercise regularly, lose weight, be more productive, you know, achieve a higher level of success.And, you know, achieving success is understanding how habits work. So as you'll discover today in my interview with Charles, you know, by harnessing the science behind habits, we can transform our businesses, our investing, our goals, our communities, our lives, our families, whatever it may be. It's a, it's, it was just a very interesting conversation. We were a little bit pressed on how much time I was able to spend with him because he had another appointment to go to. But I tried to pack as much as I could into this interview. And of course, you could always just pick up the book from Amazon or a bookstore at the airport or wherever it may be. So, with that, let us jump right into our interview. I hope you enjoy it. And remember to subscribe. If you haven't done so already, just click the button, takes you three seconds to get updates every week on every episode that we put out.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco: Tips for Investing in Older Construction HomesWell, I am honored to have Charles Duhigg on the show. Charles is a Pulitzer Prize winning journalist and the author of The Power of Habit, which has spent over three years on the bestseller lists and has been translated into a whopping 40 languages. He's also the author of the book, smarter, faster, better. Another bestseller and Supercommunicators is his latest book, which has been published this year. Charles writes for the New Yorker magazine and is a graduate of Yale University and Harvard Business School. He has been a frequent contributor on CNBC, this American Life, NPR, PBS's, NewsHour and Frontline. I'm honored to have you on the show. Charles, welcome. Thanks for having me on.You know, I was just telling you the story before we started recording. I travel a heck of a lot, and every time I'm at an airport, I pop into you know, Hudson or whatever the newsstand stores are, and your book, The Power of Habit is always there. It's unmistakable and I can't seem to escape it
Hello, my friends, and welcome to another episode of Ask Marco here on the Passive Real Estate Investing Show. Well, I grabbed another great question today from those of you submitting questions in for my Ask Marco episodes before I jump into this question, which is great. Remember to subscribe to the show. Many of you are listening to the show but haven't subscribed. I'm not sure the percentage of that, but the statistics or the analytics for the show, show that a lot of people listen to the show and never click that subscribe link or button. So remember to do that that way you never miss an episode. And I'm gonna be cranking up more of these 12 to 15 minute episodes because I think they're easy to understand and quick and easy to digest. So it just makes a whole lot of sense. But of course, I'm still gonna have guests on the show. And when I do that, those interviews will run probably 30 to 40 minutes because there's just more content and more to talk about with my guests.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco: What was your first-ever real estate deal?So, today's question comes from Blake and Blake is from North Carolina. He asks a question about investing in older construction homes, you know, what recommendations and tips I have, but he has some pretty good and specific questions. So I'm just gonna read his email to me and maybe I'll break it down into two or three parts because he is got it kind of chunked into different sections. But he basically says, hi Marco. I'm searching for my first investment property and looking into specifically the Indianapolis and Kansas City markets. I noticed that many of the properties in these markets are older construction, some having been built as far back as 1910. The numbers on many of these properties look good, but I cannot help to wonder if they will make good long-term investments.This may simply reflect my ignorance regarding housing construction, but I worry about several things with these investments. And then he lists four things specifically here. Structural integrity of the house, longevity of the plumbing septic system and electrical wiring, potential unrecognized issues with the foundation of the house and lawsuits related to unaddressed lead paint with homes that were built prior to 1978. These are all legitimate concerns and these are good questions. And it doesn't just apply to Indianapolis or Kansas City. These actually apply to most every single market, depending on location and or age, because different homes were built with different materials over the different years, and there are different things to consider. And for me, having invested in many different states from as far north as Michigan to as far as south as Florida, I can see the differences in terms of materials used, the type of construction, the foundations that are used.Some properties don't have basements, others have basements. And you know, that could lead to foundation issues like cracked foundations. And I've had several of those over the years in the Midwest and the North. So let me address these and then he's got some related questions that go above and beyond that. So first of all, let's just kind of go down a list of tips, if you will. So when you're purchasing or looking to purchase and invest in properties, regardless of the location, these are many things that you should consider because investing in residential property can be very lucrative and, and it can be a great wealth preserver and a wealth creator. But every single property comes with its own set of challenges and opportunities. So there are things you need to consider when investing in new homes, but more specifically older construction properties because they're gonna have potential issues and sometimes they're not apparent or they're just hidden.So the first thing you want to do always as part of your due diligenc...
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, I wanted to grab one of my Ask Marco questions, and someone wrote in and asked me, what was your first ever real estate deal? And interestingly enough, I get asked this question from time to time. In fact, in the last two weeks, I've probably been asked three times. So I thought, well, I might as well just answer it as one of my Ask Marco episodes.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The 4-Step Financial Freedom FrameworkSo, short story, long, my first deal was when I was about 18 years old. I actually knew around the age of 18 that I wanted to get involved in entrepreneurship, have a business, and invest in real estate. And at the time, I thought real estate was the way to go because it was what a lot of wealthy people who I noticed around me from time to time had and held.And I know that in the community that I grew up in, which was made up of a lot of Italians, they were really bullish, if you will, but pro real estate, they all thought that real estate was the way to create wealth. And later in life, I learned that it's not just a great way to create wealth, but a good way to actually preserve your wealth. So I set out to make my first real estate investment. Now, fortunately, I had a really good paying job at a grocery store at the time, so I was able to save up a down payment while I was working there. And then when I became an adult, I was able to qualify for mortgage financing through the credit union attached to the grocery store chain that I worked at. So it was convenient in the sense that I was already an employee, had credit, and had the ability to borrow through the credit unions attached to the place of employment I was working at.So I looked around and I found myself a nice end unit town home unit, and it was a pretty decent property. It needed some work. It wasn't dilapidated or distressed or anything like that. It just needed a fair amount of updating. So my uncle at the time was a carpenter, so he was pretty handy with tools. He knew how to do renovations from cabinets to countertops to flooring, and you name it. So I essentially hired him to help me. He gave me a good deal in renovating this town home unit that I had purchased in the northeast quadrant of the city I grew up in. And it wasn't a very expensive property. Now, this was so long ago, we're talking decades ago that I don't remember the exact numbers. So obviously I don't have that property today. In fact, I sold it a long, long time ago.But I do remember that it was relatively speaking, affordable just because of the area it was in. It was what I would call maybe a BB minus type of neighborhood. So it was, it wasn't expensive, it was affordable. It was probably a mixed class neighborhood with white and blue collar workers. And it was a somewhere between a middle to lower middle income type of area. So this town home unit was under a hundred thousand dollars. I I don't remember the exact number, but I know that it was priced right and that it would rent in this area for enough to cover all the expenses and leave something left over for cash flow. So I did my analysis, I ran the numbers. I made sure that I could cover all my expenses with this particular property. Well, I acquired the property, I did the renovation to the property, and then back then there was no internet.So for me to lease this property, I literally had to put a sign in the lawn and print flyers and run an ad in the newspaper. And so that is what I did in order to attract potential tenants. So ultimately, some people came through and I
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and we've got a great show for you today. So, this show, even though it's called Passive Real Estate Investing, is not always about real estate specifically. Sure. We talk about real estate strategies, we talk about real estate tactics, and it's always focused around the broader topic of investing. But you know, we do talk about mindset and entrepreneurship and building a business or a side hustle and generating extra income because all of that will ultimately lead back to your goals of real estate investing and building a portfolio and creating passive income, and then ultimately financial freedom and from financial freedom to creating that time freedom. So you could do what you want when you want, with whom you want, but what if you could reclaim some of those most energy rich years of your life, regardless of what age you're at.I mean, if you're young, fantastic. You've got time on your side, and you can certainly do all the planning you need to do to get to your goals sooner. But you know, we're all at a different stage or chapter of our lives, and it's always good to know what the possibilities are and have the strategy and tactics to shortcut your efforts to get to the goals that you want financially speaking time, freedom wise. But for some of you, it may be time to transition from being, let's call it a high performing employee, to becoming a thriving entrepreneur. You see most advice on financial freedom, I say that in air quotes, is outdated. And high performers today, which I know a lot of you are listening to this show, you know, need a new essentially step-by-step playbook to replace that six. That could be a business empire and that could be a real estate empire. It could be whatever your that empire is, but it's something that's connected to your time freedom and your financial freedom. You know, we always talk about buying a rental property or two per year, and that's great advice, but what if you want or could achieve your financial investing goals quicker to do so, you need larger mindsets, larger methods, and more actionable strategies. The right strategies if you want to earn your freedom within the next six months or 12, 18 or 24 months from now. This is all doable stuff. It's just a matter of how clear you are on what you want to achieve. Are you getting results? Is it scalable? Can you do it quicker? Can you be consistent? And that's why I say earn your freedom within that timeframe. It's not about whether it's gonna be handed to you, but if you do the right things or you mirror the right people, you will get there.So my guest today left a six figure corporate job back in March of 2022. This was during Covid, kind of the ending of it through investing in real estate and starting his own side business. And since then, he has traveled to over 35 countries around the world, full-time, while spreading his mission of helping 1 million or more people, other high performers, reclaim their lives from corporate America to finally live up to their true potential. And that's what he still continues to do today. Interesting young gentleman. It was fun having an interview with him and we could have gone much longer and I think I might have him back on the show. So to talk more about what he does, he's got a great book out and he's got a great message to share and a lot to share. So we'll get to that interview with Brian here shortly.I hope you enjoyed today's episode. And be sure to listen through to the very end. There's a lot of golden nuggets peppered throughout, but even at the very end. So, I hope you enjoyed today's episode and we'll get to that here in just a minute. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Will There be a Housing Market Crash?Well, it is my honor and pleasure to welcome a special gu...
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, a question that comes up from time to time is the question of will there be a market crash or at least a major correction? And I've been hearing this for about, geez, probably almost two years now, and I thought I would address this in an episode. And speaking of, of the podcast and episodes, I wanna just make a comment here. I've been toying with this idea recently of doing shorter episodes like somewhere in the neighborhood of 12 to 15 minutes each, and maybe doing them a little more frequently, like definitely have one per week, but maybe have two per week. So this is just an idea that I've been toying with for a while where I can produce the content quicker, maybe more content, but have it in shorter form, more rapidly digestible content.So let me know what you think. I'm going to try this for a while and just have these 12, 15, maybe 20 minute episodes just shorter. It'll be easier and faster to consume. That typically means I won't have a guest on, but that doesn't mean I won't have guests going on in the future. I will, but they'll just be here and there. And when I do an episode interview, of course it's gonna be a longer episode. It'll be 30, 35 minutes, maybe 40 depending on the content and how much they have to talk about. So I hope you enjoy the shorter form. You can send me the feedback and let me know what you think. And you can do that by just going to passiverealestateinvesting.com. Or you can email me askmarco@passiverealestateinvesting.com.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How Does the Corporate Transparency Act Affect Real Estate Investors?Okay, well, let's get to the episode topic for the day.And that is, will there be a market crash? Well, there are two or three fundamental things we need to look at when we consider this question. The first is, what is the quality of the borrower? And that might be obvious to some of you at times, but it's not always that obvious. You see, the quality of the mortgage borrower taking on that mortgage loan has a lot to do with the sustainability and capability or the capacity for them to maintain that loan. Meaning that they can make the monthly mortgage payments on an ongoing basis. So the question is, is are they qualified, well qualified or not at all? You see, back in 2008, I'm gonna refer to this from time to time, before the great recession of 2008, when we had that market crash that started in 2006. And I remember this very vividly. I, I watched it unfold, almost like watching the movie The Big Short, which is one of my favorite movies.But it basically paints a very accurate picture of what happened back then. And the fact is, is that a lot of the people who were borrowing mortgage loans back then were not qualified. They shouldn't have been given a loan. They just didn't have the capability or the capacity, whether in terms of credit and or income. You know, there's all these running jokes there, there are jokes where if you could fog a mirror, you could qualify for a mortgage loan. There were no income loans, stated Income loans, ninja loans, the no income, no asset, no job loans, also referred to as the Ninja Loan. You know, people were able to qualify with credit scores as low as 620 and sometimes even lower into the five hundreds, which is almost at rock bottom. 'cause The score doesn't go to zero. The scores started about three 50 depending on which, you know which bureau you're looking at.So it's important to consider the capacity and the qualification of the borrower. So back then, everybody, almost everybody could qualify for mortgage financing today. And for years now, credit scores have been much more robust. They have been stronger. So today we're looking at credit scores, a median credit score of 768.
Hello, my friends, and welcome to another episode of Passive Real Estate Investing, and I'm your host, Marco Santarelli. I'm always glad when you tune in and listen to our episodes. Well, today's episode impacts pretty much everybody, so listen through to the end. It's not something that you want to miss. Now it, granted, it doesn't sound like an exciting episode topic when we're talking about legislation and the Corporate Transparency Act, but this is something you definitely need to know, not just want to know. Well, so what is it? What, what is the Corporate Transparency Act? Basically, it's an act that was enacted in the United States to address the issue of money laundering. It's also there to address terrorist financing and other illicit activities by requiring certain companies to disclose their beneficial ownership to the Financial Crimes enforcement networks. It's a government body, also known as F-I-N-C-E-N.But the primary aim of the CTA or the Corporate Transparency Act is to enhance transparency in combat financial crimes. But it also has implications for real estate investors. And this is why I want you to pay attention to today's episode and really understand what it's for and why it's there and why you need to comply and report. Because the fees, I shouldn't call 'em fees. The penalties are pretty large and pretty stiff. And you know, my guest today, Ted Sutton, will explain what those are. And when I heard them, I didn't know what they were when I heard them, I thought, oh my gosh. I mean, that's pretty serious and pretty excessive. So it's not something you wanna fool around with. But real estate investments, you know, have often been utilized as a means to launder money because of its high value and the relative ease of transferring ownership with real estate.So with the CTA in place real estate investors like me and you, particularly those who are operating through corporate structures such as limited liability companies and whatnot, you know, may be subject to the increased scrutiny of this act and the reporting requirements. And let me tell you right now, before you even listen to this interview, it probably and most likely does affect you. So yes, you are chalked into this circle.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Money and Morons – How To Build Wealth And Protect Yourself From the Inevitable Financial CrisisSo, on that note, let's dive right into my interview with Ted and I think you're gonna get a lot out of today's episode. Well, it's my pleasure to welcome Ted Sutton to the show. He is a licensed attorney who is the son of bestselling author, and the Rich Dad advisor, Garrett Sutton, who by the way, has been on our show multiple times over the years. Ted Works for Corporate Direct and Sutton Law Center. He specializes in the area of business formation and compliance with the Corporate Transparency Act, which is something we're gonna talk about here today because most investors don't really know about it or what to do with it. And he's also the author of Five Tricks to Teach Your Kids about Money, which you can download for free. And we're gonna give you that link in a little bit just later in the episode. With that, Ted, welcome to the show.Yeah well, thanks for having me on, Marco.It's great to have you on. It's interesting. I've had your, your father on multiple times over the years and I knew of you, but I never really had you on the show. And so this is a first. So welcome.Yep. Thank you for that. And it's nice because my dad is not here to hold my hand through it, so, you know, it's definitely
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And welcome if you are a new listener, and there are many of you who listen to the show on a regular basis but have not subscribed, remember to do so, just click the subscribe linker button, wherever that may be, from wherever you're listening. If it's on your smartphone, it's usually a little button nearby or to the right of the cover art. So we have an interesting episode today. You know, for the first time in American history, several events are happening and unfolding simultaneously. And when combined, they create a new level of risk and contagion that we've never seen before. You take the factors such as human longevity, an aging population, and really something we've known about for decades, but an unprecedented level of debt and deficit. These things come together to create a serious financial situation or even a crisis.And the worst part is that it's all our fault. I mean, if you really think about it as a society, we've brought ourselves to this point, and you're gonna discover more about this here in today's interview with my guest. But the question is, are you prepared for when a crisis hits? You see, most Americans don't have enough money saved up to cover a medical emergency, never mind retirement. And many assume the reason for this is that they don't make enough money. And while learning how to be more productive with your time and earn more money is part of that equation, the problem is really more complicated. See, the basics of saving and investing are not taught in schools, as we know. We've talked about this many times on the show. So most people go into the workforce, you know, behind the Eight Ball, lacking education and really not knowing how to make money, invest it, protect it.So, you know, those are the things that we do talk about on the show. But what makes this problem exponentially worse is this thing that you can call a disease called consumerism. And consumerism has spread throughout our culture like wildfire for many decades. Every day we're bombarded with advertisements convincing us to buy things that we don't need. You know, the grand lifestyle we are being pitched is not attainable by the average citizen. It just isn't. And it's not attainable without properly saving and investing. So my guest today basically has a wake up call for those who want to become wealthy and stay wealthy. It doesn't matter what your background or your age is. It doesn't matter if you desire to work hard or not, but you should work hard. But if you do desire to work hard and you have the discipline to make money, save it, and properly invest it, you'll do well.You will not only become wealthy, you will stay wealthy, and you will have the financial freedom and time freedom that you all look for. So, I hope you enjoyed today's episode. It's a good one. It's a little bit of a longer one, but let me know what your thoughts are and we will see you on the other side. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco: Investing Using Cash versus a HELOC (Line of Credit)Well, it is my pleasure to welcome Paul Daneshrad to the show. He is the founder and CEO of Starpoint Properties, a private real estate firm that he started back in 1990. He has built it into one of the most respected real estate development firms in the industry. And Paul speaks at national conferences all around the country. He has contributed to publications like Forbes, multifamily Executive, Multi-Housing News, national Real Estate Investor in Commercial Property News. He is also the author of a new book called Money and Morons, How to Build Wealth and Protect Yourself from the Great Influx. And I have to tell you, I love that title, Money and Morons. Paul, welcome to the show.Thanks Marco. Pleasure to be here.Well, I'm glad to have you on.
Hello and welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. I'm your host, Marco Santarelli. Thank you for joining me here today. Another great question, someone wrote in and asked me about investing using cash versus using a HELOC, which is a home equity line of credit or just simply a line of credit against your home or property. And the question came in from, well, it's actually two people by the looks of it, Jay and Julie working together here. I'll just read their email real quick and then address it.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco: Should I Invest in a Cheap Property?So, they write and say, hi Marco, I love your podcast. And actually bought my first property with Norada. Well thank you. Thank you for all of your information. Informative episodes. I can't get enough. I recently lost my dear mom who was a very smart and savvy investor, and my condolences go out to you.I will soon be receiving a large inheritance of $650,000. Additionally, my two siblings and I will be inheriting a Bay Area home that is fully paid for worth at least a million dollars million. I've considered buying out my siblings for the home with the inheritance money, which would leave me with a debt-free home to live in and at least $1 million in equity. If so, I would plan to take the heloc, the home and equity line of credit and invest that equity into rental properties in better markets. Alternatively, we could sell the house, which would leave me with at least $1 million cash between the inheritance and home sale. I could then rent or buy elsewhere and use that $1 million to invest in rental property and better markets. I am tempted to buy my siblings out so I can have a Bay Area home to live in or rent out.Since acquiring a home in the Bay Area is so expensive and competitive, would you suggest this, is it feasible to take a HELOC and invest that 1 million of equity or is it wiser to sell the house and invest the cash? I also have to consider where I would live if I did sell the house, whether to rent, buy, or house hack. Ideally, I would stay near the Bay Area since my work is here. I know this is a long question and I thank you in advance for your time and expertise. Well, thank you for the question and it's a great problem to have, if you will. Anything I say here, of course is not financial advice. I did respond to you as you know, with some clarifying questions. Basically, I wanted to know if you were living in that same house or living elsewhere and you know, I assume that you had a place in the area, so turns out that you just moved into that home from elsewhere, probably renting elsewhere, but now you're living there.But of course you could move back out and rent someplace. The idea I had for you originally, and I still think is probably the, the best option is, you know, my comment to you is, you know, is if you're living elsewhere or can live elsewhere and you're happy where you live now you may want to consider buying out your two siblings with your cash, the cash inheritance, and then selling the property after you've completed the transaction. You have full ownership and you're entitled to the property complete sale using a 1031 exchange, which is a tax deferred exchange. It's essentially selling the property, taking all your equity, you don't touch it, but you don't get taxed on it. And then rolling that equity into multiple properties in other markets basically a portfolio of properties elsewhere. And this will allow you to invest 100% of the net equity from that property tax free to maximize your investment dollars and then help you build the largest portfolio you can without having to pay taxes as part of that original sale.o this is one option. You have multiple options available to you, but from what I know and what I think I know based on your situation,
Hello and welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. I'm your host, Marco Santarelli. Thank you for joining me. And if you are a new listener to the show, remember to subscribe. It only takes you about three seconds to click that subscribe link or button, and you will never miss an episode. We put one out about once a week, sometimes twice, but on average it's once a week and we cover a different topic. And sometimes we have a guest from every subject matter you can think of, from mindset to real estate investing, to wealth management, to asset protection, to whatever it may be. So join our family of real estate investors and do that by subscribing to the show. Well, I wanted to do an Ask Marco episode. I haven't done one in a little while, and I went to my folder where I get emails that come in from the website on the Ask Marco form.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to CRUSH Your Real Estate Investing in 2024And one of the ones that came in just recently here was one that I used to get fairly often. I haven't seen it in a while, which is surprising given how much property values have increased over the last three to four years. And the question is basically this, should I invest in a cheap property? Interesting question. So the question came in from, I believe it's Yair, I'm not sure if I'm mispronouncing your name - YAIR, and Yair writes in and says, hi, I'm a 22-year-old looking to invest and you said at the end of your podcast that you're happy to help. Of course, we're all happy to help here. I currently have around $60,000 and I'm hoping to buy and then rent a property out. I have looked into Jacksonville and maybe North Carolina. If I could have a call or conversation with one of your team members, that'd be greatly appreciated.Absolutely. So y I've already emailed you back and connected you with my operations manager so she can connect you with one of our available investment counselors and you can have a conversation and then they'll help point you in the right direction. And we'll just answer whatever questions you have. And if it's something we can help you with, we will definitely let you know. Let's answer this question. Should I invest in a cheap property? Well, the first thing we need to do is define what we mean by cheap, because cheap can mean different things to different people. The thing we don't want to do is confuse cheap by absolute price. And the reason I say that is this cheap depends on where you're looking. It is relative to the market and it's also relative to the neighborhoods. So for example, if you were looking for a cheap quote unquote property in the San Francisco Bay area, that might be a six, seven, or $800,000 property.Whereas if you go to let's say Memphis, Tennessee, or let's say Indianapolis, Indiana, something that we will define as cheap might be a an 80,000, 90, a hundred thousand dollars property. So it really depends on the market and more specifically the neighborhood. You see, every market has a price range. There's the low end and the high end. So if you look at all the properties in any given market, you will see properties that start at a certain price and top out at a certain price. And if you really just cut the top 10% off of that range and the bottom 10% off of that range, what you're left with is essentially the effective price range for a market. So in a market, this is a hypothetical example, but we could look at Memphis, Tennessee or Indianapolis or Kansas City or something like that. You might see that properties generally speaking will start in the 80,000, 90,000, a hundred thousand dollars range on the low end.And we'll certainly go up to the multi hundred thousand dollars price range on the high end there. There'll be a million dollar properties in certain neighborhoods. But effectively speaking,
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Today I am joined with my good friend and industry associate Dustin Heiner. Dustin, welcome to the show.What's up Marco? Thank you so much for having me on the show. It's, it's so great meeting other real estate investors who have podcasts too, because, you know, we're in the industry, we're helping people, but at the same time, you know, we can actually carry a conversation and have a lot of fun doing it. So I really appreciate you having me on. It's just so great meeting somebody else who invest very similar, you know, because there's a lot of other ways to invest storage facilities. Those are good, don't get me wrong, but I just love, like what, you know, turnkey type properties. I love long-term. I love making sure that I'm making money every single month. But no, thank you so much for having me on the show.Yeah, no, it's great. So the reason I had such a quick intro and getting you right Introed, is because this is like a very ad hoc, unscripted un bullet pointed episode on really just whatever we want to talk about when it comes to crushing it this year in real estate investing in 2024, how does a real estate investor crush it? So, we're gonna talk about whatever comes to mind, like we're we're just doing this because you've got the Real Estate Wealth Builders Conference coming up very soon, which we're gonna talk about, and it's something that I think a lot of people listening to this are gonna be interested in. So we want to talk about, we want to plug it, it's not a shameless plug, but, you know, we want people to have availability or access to your event. Now, this event is now going into its third year.I was the keynote speaker for the last two years, and I'll be there again this year. You know, doing whatever I do, I'm gonna talk about whatever I talk about. I'm not even sure what that's gonna be, probably, you know, the economy and whatnot. But yeah, definitely want my audience to attend. And you know, obviously we want as many people from your audience to attend to learn, because you've got a whole bunch of speakers. So before we kind of deep dive into, you know, how to invest in real estate today, mortgage rates, the economy and all that stuff, you know, take a minute or two and, and just talk about REWBCON, what it is, where it's at, how do people attend and what they can expect to learn and take away, because you're gonna be there. Obviously, I'm gonna be there and let's just see who else is interested in going.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Power of Owning Just ONE Rental PropertyAbsolutely. And with the conference, I've been to many conferences. So more than likely your audience, they're good investors. They already know that they want to invest. They are most likely already investing. And with that, you've probably gone to any event or some sort of real estate event in general. And usually, 'cause I've been to these and I hate them, it's all hype and sales pitch from the stage. And then they say, now run to the back. It's normally a billion dollars, but it's a thousand dollars today. I hated those because it's all, it's all just sales. And I wanted something that was completely opposite of that because I wanted something that I would want to go to. So if I hate those, let me create something. And then you were Marco, you were one of the first people that I called. 'cause I said, you know what, this is what I'm trying to do.I really just want to create an event or a conference or something that we can get our communities together, our listeners, our students, our investors, and really just create a big party where we can all come together and help each other to invest. So this year, REWBCON, the Real Estate Wealth Bill conference, it's gonna be in St. Louis,
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, I wanted to take a little bit of time this Saturday afternoon to record a relatively quick episode on the power of owning just one rental property. You see, a lot of investors discount the impact that having or owning one single rental property has on their life and their future, especially their financial future. They just simply discount it and either don't do anything or they don't get started, or they just don't look into it any further. I believe that everyone should own at least one rental property. Owning real estate simply means that you have an income generating asset that will continue to generate income virtually forever. Unless you destroy the property, burn it down, or sell it, you'll always have this income producing asset that will work for you as long as you maintain it.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Housing Trends and Market Update - January 2024It will constantly generate income and generate wealth for you and your family and your generations for many, many years to come virtually forever. So of course, you know you'll have turnovers, which means you'll have some downtime from time to time, but that's normal with income producing real estate, any kinda real estate. When you have a tenant and a lease, you will have vacancies and you will have downtime. But don't focus on that. That's a minor fact and course of business in owning income, producing real estate. But think about this, if you purchase the property and you use leverage, which is what 99% of real estate investors do, and you leverage your investment capital and you have a mortgage, let's just say you don't pay the mortgage off for 30 years, at some point you'll pay it off. Some people pay it off early as as little as seven years.But regardless of when you pay it off, once you pay off that mortgage, your rental income becomes pure profit, of course less the expenses on the property. You have some maintenance and you have property taxes. And, and if you don't self-manage, you'll have property management, but you will have some expenses. But once you pay off that mortgage, that rental income coming in is practically pure profit. It's just income for you. So the fact is, is that your first property can lead to significant cash flow and appreciation and tax savings, but that is not really what sets you free. All that is powerful and wonderful. But the truth is, is that most people who want to invest in real estate, they never get started. They educate themselves, they learn about it, they want it, but they just don't get started. They either lose interest when a great deal's presented to them, or it isn't handed to them immediately, or they get stuck in this analysis paralysis, which is something that I suffered from long ago.They start looking at different deals they're unable to analyze, they're unable to pull the trigger when the, the deal makes sense and everything checks out. But they, for whatever reason think that oh, they're, they must be missing something because everything looks good, everything is right, the all the check boxes are checked, but they're just not a hundred percent sure. And I don't think anybody ever will be 100% sure about any investment. But once they find a good deal, they just don't pull the trigger. And that's just analysis paralysis. So they either don't get started, they lose interest, or they get stuck in this analysis paralysis mode. But this is why I feel that the most important thing to do is to find a good deal or a decent deal and just move forward with it. Just buy it, invest in it, cut your teeth on the education, learn everything you can through the process, because believe me, it gets easier with each and every deal and then it becomes second nature.But let me make something clear.
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and this is the only and first show on passive real estate investing. I started this show back in 2015 and it's been a great success. We've got literally tens of thousands of listeners all around the world, mostly in North America. I get emails literally every week thanking me about the show, asking me questions. I respond to many of those questions via email. I keep some of them and I batch them together for the occasional Ask Marco episode. So if you have a question about real estate or real estate investing, or the economy or housing or investing in general, or even a personal question, by all means send it over. I will certainly consider it for the show and I do my best to respond to every single one of them.But again, you know, like I started the show back in 2015, I aptly titled this show, Passive Real Estate Investing. Although it's not just about real estate investing, it's about investing in general and the economy and finance and money and currency and mindset and personal development. So I hope you enjoy the show and appreciate it. Remember to subscribe. It only takes you three seconds to subscribe to the show, whether it's on iTunes or Stitcher or anywhere else or even on YouTube. We're starting to slowly migrate all of this stuff onto YouTube. It'll take a little while, but we'll get it all there. And then ultimately it'll be a channel that mimics the show itself. But today it's another episode of housing trends and market updates. So with that, let's look at where we are with the economy, mortgage rates and the housing market in general.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Start with Strategy (with Dave Meyer)Let's also consider what to expect going forward with real estate prices and housing supply and demand, because that will impact you as a current or even future real estate investor. It's good to look at trends and the big picture, but you'll also want to keep an eye on your local markets that you invest in or markets that you're considering to invest in because you want to know what's going on in terms of housing trends and anything related to the market that may drive the market up or drive the market forward or maybe pull the market back. And of course, my team of investment counselors are here to help you if you ever want to take a deeper dive into anything. And everything that I talk about on this show, and there are so many different episodes, it's not just a mono color monotone type of show.I talk about a lot of different topics. I try to mix it up, not too much, but I do mix it up. But if you want to talk to my team of investment counselors about anything I talk about on the show and take a deeper dive as it relates to your real estate investing goals or just real estate in general in an effort to help you because we feel that if we help you, you ultimately work with us and it's a win-win symbiotic relationship. But with that, let's jump in. So today I wanna start with a conversation about affordability, because this is something that's talked about in the media a lot. In fact, almost all the time it's certainly on your mind because affordability applies to your own housing as well as your customers, meaning your tenants that are buying into the, into the space you sell called a rental property, whether it's an apartment or a single family home or something in between.It's really your product. It's the rental space, the housing, the living space that you provide. So affordability is still poor, but technically it isn't the worst it's ever been. Affordability, which is in our case here, defined as the median housing cost divided by 125% of the median income ratio. So in other words, what I'm saying is if you take the median housing cost and divide it by the median income of the people in that ...
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today we are going to talk a little bit about real estate strategy and my guest is a great guy who wrote a book just recently called Start With Strategy. It's all about real estate investing, creating your vision, mapping out what your strategy or strategies are when it comes to investing in the asset class of real estate. And it's a great book. He gets pretty granular in some of the stuff, which is the stuff I like. So you're very crystal clear on what it is you're trying to achieve, how you're gonna achieve it, the vehicles and the asset class, and the sub-asset class that you're gonna use in order to get there. And then how involved you want to be, like you want to be active, passive, semi-passive.I mean, these are all considerations that you need to have. So we'll talk about, you know, the in real estate investing journey, the strategies, how to choose a market, picking a neighborhood, the importance of your strategy, assessing your risk tolerance. You know, what makes a best market, what makes a best neighborhood? And, and really there's no one answer to that. It's somewhat subjective. It really just depends on what is your vision and what is your strategy and how those play into that. And, you know, we'll talk a little bit about, you know, personal wealth and how to build that and the habits that you should have if you're a real estate investor, especially if you're starting out. So join me today with my guest, Dave Meyer, and let's explore strategy as it relates to real estate investing. Well, it is my honor to have Dave Meyer on the show.Dave has spent his career working in technology and in the technology industry where he started investing in real estate. He has been a rental property investor from Colorado since 2010, and he invests passively nationwide. And it's pretty interesting 'cause we were just talking before, we were recording here today. He lives abroad and I'll let him tell you where he lives. It's pretty interesting. In 2016, he took the opportunity to combine his professional passions for real estate and technology. Joined Bigger Pockets where he now serves as the vice president of data and analytics. Sounds like my type of guy. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Market Spotlight: Cleveland, OH (with Rent Guarantees)Dave, welcome to the show.Marco, thanks so much for joining me. I appreciate you having me on. Yeah,No, it's great to have you on. You have a cool book coming out here very soon. In fact, by the time this airs, if not today, it's already available to to purchase. We're definitely gonna talk about that today. But before we get started, let's talk a little bit about you. Tell us a little bit about yourself in interestingly where you live.
Hello and welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and today we have another great market spotlight for you. We haven't done a market spotlight in the Cleveland market for a little over a year, so I thought it would be an opportune time because it's such a great market. It's got great cashflow opportunities, lots of inventory investors, really enjoy and appreciate what's available in the Cleveland market. It's something that we'll talk about a little bit later here in the show, is the true definition of a turnkey investment property. Like what is a turnkey rental property? And it was a conversation that Tom and I were having offline before I started recording today's episode. And it's just amazing how many people slap lipstick on a pig out there and call it turnkey. So we don't want you to make that mistake thinking you're getting a good property or a turnkey property, and it turns out it actually isn't because it's gonna end up costing you a lot of money. And usually that's measured in thousands of dollars trying to cure the issues in that property. So we want you to avoid that. So let's talk about the Cleveland Ohio market and why it makes sense to invest there and the opportunities available. And just educate you a little bit on what is one of these great opportunities out there. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Overcoming Toxic Thoughts and Negative Thinking with Tim StoreySo, with that, with me today is Tom, our fantastic property provider in the Cleveland Metro area. Tom, welcome back to the show.Hi. Thanks for having me.It's good to have you back on. I I know we were talking a little bit offline and it's always interesting conversation and we end up talking about things that I wish I was capturing in a recording and I said, you know, Tom, let's just talk about that on the show,
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, I just had a very exciting interview with a good friend of mine, someone who's very influential, very impactful, knowledgeable, well connected, humble, and he's my friend Tim Story. Many of you probably know of him or have heard of him, but he's just a, an very interesting guy, very high level coach, talks about mindset and mentality. He's got a new book that came out a few years ago called The Miracle Mentality, and something we talked about today. And something that I really wanted to focus on was overcoming toxic thoughts and negative thinking, and how can we get the right mindset set the right mindset so we achieve success, we achieve our goals, achieve our dreams. And it's probably not what you are thinking you're going to hear.It's very kind of a refreshing look at how our mind works and how we set our mindset and how to overcome obstacles. And that's really, you know, part of the, the key to this is, is overcoming those obstacles. You actually need a new mindset. And that's what he calls the miracle mentality. And, and my understanding of that at a very, very high level is that it's where our dreams, whatever they may be, are actually achievable. Things that you hope are actionable. And that's a key thing. Hope being actionable. And, you know, there's a streak of spiritual healing that is tied through this whole thing. So I asked them about the miracle mentality, what makes it up, why it's an important concept for personal development and growth. And we broke that down. You know, there's a deeper meaning there, something bigger. It involves adventure, more opportunity.And then, you know, we took a little bit of time to talk about magic and believing in miracles and what causes it to slip away. Why do we actually lose what we're born with and what we've been groomed with as a young child? And then it just starts to go away. And a lot of that has to do with the environment. There's a very particular environment that we need in order to grow and foster and nurture having the right mindset. And, and I'm not gonna give that away here. We, we talk about it in the interview and I love when he talks about what it is to have an uncommon life and why you want an uncommon life. And then what are the big things that take away, what are the biggest factors that erode that mindset and that faith and belief? So we covered a lot.It was a great interview and I honestly could have gone for another two more hours. But I'm gonna be meeting with him in a couple weeks for lunch and since he lives so close to me here in Southern California. And then of course, he's one of our regular monthly speakers at our Major Aspire tour events, which this year will be approximately 4,000 plus people per event. So yes, if you can make it to one of our Aspire Tour events, you know, by all means, you know, get yourself a ticket and attend. You won't regret it. You'll love it. Love it, love it. So that is my intro here for today. Hope you enjoy the show with my guest, Tim story, and we will catch you on the other side. Well, it's my great pleasure to welcome Tim's story to the show. Tim is an acclaimed author, speaker, life coach, and he is known for inspiring and motivating people from all walks of life, from entertainment executives, celebrities, and even athletes to adults and children in the most deprived neighborhoods in the country. Tim's traveled to 75 countries and he is spoken literally to millions of people. He often meets privately to counsel, high profile leaders in various industries. He's a wonderful guy. I've gotten to know him over probably the last 4, 5, 6 months because he attends our monthly Aspire tour events in major cities around the country. People love him when he's on stage and when he's speaking, I can't say enough about him and I'm honored to have him on the show.
Hello, my friends, and welcome to another episode of Passive Real Estate Investing. And I am your host, Marco Santarelli. Thank you for joining me, and I hope you can pay attention to today's episode. It's about 30 minutes. It is about the 1031 exchange. It's something I talk about frequently on the show, but I don't go into a lot of detail. But it's essentially known as a like kind exchange. It's a tax deferred exchange. It allows you to take your equity from the sale of your assets and move that into other investments like kind investments, similar investments, similar assets without generating any tax impact. No tax liability, meaning you could do it tax free. And when you stop to understand the power of doing this, you'll realize that you can keep everything you've gained, everything you've earned in those capital gains and compound them, turn them into additional gains by multiplying the effects of what you can invest in growing a larger portfolio, increasing your cashflow, increasing your gains, keeping the equity and using that to gain more equity through appreciation from increasing the size of your portfolio.It's not a difficult thing to do, it's not a difficult concept. It's actually quite easy to understand once you wrap your head around it. People do it all the time. Investors are doing this all the time to increase their portfolio size and maximize the wealth creation that happens. And when you really stop to think about the power of compounding what Einstein called the eighth wonder of the world, you'll realize you can increase your wealth by four times or more in a similar time period than you would or could otherwise. So pay attention to today's episode, and if it makes sense, talk to my team of investment counselors. We can help guide you on making this work on how to do this. It's not difficult. Investors contact us all the time for help in executing this because it involves the sale of your existing property or properties, but then identifying the replacement properties within a certain timeframe.So we're gonna talk about all that today with my guests. So I hope you enjoy it. I hope you get a lot of good takeaways from this. And if it makes sense, just schedule a call with my investment counselor team. Also put a, a link in the show notes here that can connect you to some more information and the team that we work with on the 1031 exchange side. So enjoy today's episode. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Asset Protection Strategies You Need To KnowIt's my pleasure to welcome Jeff Bemis to the show. Jeff was raised in Newport Beach, California, not too far from where I live right now. And he attended the University of Southern California. And after graduating from USC as a member of multiple honor societies, Jeff work at Ernst and Young. And he was a CPA there and he turned his career towards finance and attained his CPFA designation. He's a very smart guy.I've gotten to know him a little bit over the last few weeks. Jeff then worked as a consultant to small and mid-sized companies through a PE firm specializing in real estate and in the services based business. Then in 2006, Jeff joined Rim Rock Capital. Boy, I remember those guys. Rim Rock Capital Management, a California based absolute return hedge fund with $4 billion under management. Jeff has got a lot more in his bio here, but today Jeff is the co-founder and partner of 1031 Specialists. And it's something that I'm taking a very, very close look at because I've been talking about 1031 exchanges on this show for a long time, and how you can tap into your existing equity in your properties and leverage that up into a larger portfolio, into increasing your cash flow, into increasing the appreciation potential gains that you can get. And so what we want to talk about today is two things, how to defer capital gains,
Hello and welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, when it comes to real estate, ownership of real estate has many benefits from an investment and a tax perspective. But of course, there is downside risk. However, since the value of real estate holdings can be used to cover damages awarded in a lawsuit, should you be in a situation where you have a lawsuit, it's important to consider asset protection and asset protection strategies relating to real estate holdings in order to minimize the risk of a lawsuit or the claim in a lawsuit. So asset protection planning is a way to reduce exposure to future lawsuit risk. It encompasses insurance and how real estate is titled to make it, and other assets that you own less vulnerable to claims of individuals who may sue you at any point in the future. Basically, it's about preemptive planning.So the first place to start is with the property itself. Since real estate investors are easy to identify, easy to sue, it appears that we have deep pockets. That means that being adequately insured is a necessity. You want to have the right amount of insurance and the right level of insurance across all your assets. Then the second step involves the proper structure in which you hold your real estate for investment properties. That is highly unusual for us to hold them as owners in our personal name. You just don't want your name attached to the assets you should really own nothing, control everything, but own nothing. So, holding property in one's personal name or jointly with a spouse places those personal assets and other investment properties at risk. If a lawsuit results in damages. So if there's a lawsuit and there's a claim that's awarded, they're gonna come after you.But if you don't own anything, if there's nothing to go after, you essentially look broke, then there's nothing to claim. You know, you're basically trying to get blood from a stone. That's why you want to control everything but not own anything. So using the right tools mitigates your exposure, your risk, and your liability. So on today's episode, we're gonna learn more about property and property protection and how to properly protect ourselves from potential claims in a lawsuit in the future. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Insider’s Edge to Real Estate InvestingWell, it's my honor to welcome Scott Smith back to the show. Scott is the owner of Royal Legal Solutions based in Austin, Texas. He's one of the top asset protection companies in the country, especially for real estate investors. He provides niche advice for over 2000 clients representing all 50 states. He's an entrepreneur himself and he has a real estate investments based all over the country. I don't remember how many states that was. I know at one time was over 10, but he's an avid real estate investor himself. Anyway, Scott, welcome back to the show.Thanks for having me back, Marco. Great to be here.It's great to have you back on. It's been a while since we had you on the show. I know we've been talking more recently catching up on things and how you've been expanding your firm. Some of the other services you're now providing as part of the asset protection side of it, which involves some financial services and essentially what you've called a complete package. We can talk a little bit about that towards the end once people have got their mind wrapped around asset protection, what it is, why they need it, why it's so important and whatnot. But before we dive into all that, let's take a minute and talk about you. Tell us a little bit more about yourself and how you got involved in real estate investing as well as asset protection specifically.Yeah, so I actually grew up in Houston, Texas. Like probably like many of the people out there, like, you know,
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and I am glad you're joining me today because I do have a special guest, someone who's very interesting, and I just had a lot of fun with him over the last hour being a guest on his podcast. And we had a great conversation and we were all over the place, and that's what, you know, helped make it a lot of fun. My guest today is James Nelson. He is the Wall Street Journal bestselling author of the book called The Insider's Edge to Real Estate Investing. He's also a podcast host, which I believe is of the same name. He is also a principal and the head of Avison Young's Tri-State Investment Sales Group in New York City. And he's had a career that has lasted over 25 years. He has sold more than 500 properties and loans totaling over $5 billion.James is also a serial real estate investor, and he has launched two real estate funds with total capitalizations over 350 million. This might be an old stat, but you can correct me on it and has many accolades, including being named the number one broker at Avison Young Globally, a Commercial Observer's Power 100 CoStar's Power Broker, and a REBNY, he'll have to explain this one to me, Deal of the Year award winner. And he regularly lectures at Columbia, Fordham, I believe it is NYU Wharton and his alma mater Colgate. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Get a 3% Mortgage Discount on Florida New Construction Properties (Single, Duplex, Quads)So with that, James, welcome to the show.Marco. Thank you so much for, for having me on. And yes, that was so great to spend the last hour and hearing your story. And just thank you for all the incredible content that you put out there and share for the real estate community. So, th this is, this is a lot of fun to now be on your show. Yeah,No, it was a blast and it's great to do these back to back 'cause it just feels seamless, like it's just going from one to the other
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli, and we have an exciting episode today. Why? Because we've been watching mortgage rates go up and guess what? They keep going up and they haven't really come back down. So wouldn't it be nice to be able to get mortgage rates that were around 6% or maybe five and a half percent or even lower? Well, I know you want that because it just adds to the cash flow of the property and it just makes it more attractive. Yet we got spoiled at 3%. And then, you know, we had that for a long, long time. And markets change. You know, real estate is like a pendulum. It swings one way, then it swings the other inventory goes up and inventory goes down, mortgage rates go up, mortgage rates goes down. Things are constantly changing. And so the only constant is change. But I have something pretty exciting for you here today and I have a great, great guest, a friend of mine and one of our multi-city builders. He was telling me about some very special mortgage financing that he was able to put together and negotiate for the product line that they build in multiple markets in Florida. And I thought, wow, that's great. Not only is Florida a great, great state to invest in and he has incredible product, but what if you were able to attach about a 5.5% mortgage rate on that, which is about 3% lower than what you would get if you just went to just any lender today and got what I'll just call the regular financing. So let's talk about that today. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to When are mortgage rates too high?So first of all, let me welcome Jim to the show. Jim, welcome back.Oh, thanks for having me again, Marco. Good to be back.Great to have you back. Now, for those people who don't know, Jim actually used to live here in the great state of California and now he's living in the great state of Florida
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, we have an interesting episode today because I was on the phone yesterday talking to one of my good buddies and industry veteran about mortgage financing and whatnot. And Aaron has been on the show multiple times and we were talking about interest rates and how they've gone up and is it too high and is it a bad thing, a good thing? Does it even really matter? And we thought, hey, let's do a podcast episode on that because it's actually a pretty good topic. 'cause I think a lot of real estate investors today are asking, well, are mortgage rates too high? And the answer to that question, well, I'll just leave that till the end when we're all wrapped up. So Aaron has been a veteran in the finance industry since 1997, and he's been focused on real estate investors, which is why I love working with him so much. He just understands the game of investing and he knows how to structure mortgage financing. So it is optimized for what you want to do as a real estate investor. And he has a big team, I think it's 22 total staff members that help him finance investment loans. And I just found out today that he was ranked number seven out of 1.1 million loan officers around the country, which puts him right up there in the top 0.01% of loan officers. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Market Spotlight: Birmingham, AL with 5.5% Interest Rates!So with that, Aaron, welcome back to the show.Thanks buddy. Good to be back. I think this is number seven that we've done.Number seven, how many I timesHave you've been on the show? Keep track. I think this is seventh Deal, the seventh podcast we've done together.Oh wow. Well, I guess is that too much
Hello my friends, and welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today we have kind of a twofold episode. It's not only a market spotlight on one of our favorite cities, which is Birmingham, Alabama. In fact, we're in three markets in Alabama, Birmingham being one of them, Huntsville being another. But we have a very special type of financing available to you if you're looking to invest in real estate. And you're looking for lower mortgage rates, lower than what they've been for a while, because right now they're in the seven to 8% range. It's just kind of crazy as to how fast they've gone up. But what if, what if you can get mortgage financing around 5.5%? And I'm talking about 30 year fixed rate mortgages for income producing property, not for your principal residents, but I'm talking about income producing property that's very attractive.It's very exciting. You won't see this very often. In fact, I don't even know where you can find it. So it's kind of unique and exclusive to the team that we have here. And so today, let's focus on the Birmingham market and why home prices are still so low, especially compared to other markets. It's one of the most affordable cities in the US to live in. It is one of the most important business centers in the Southeast, and it's just a wonderful market to be investing in real estate. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Invest in Alternative Investments Using Self-Directed Accounts (IRA, 401k, and Roth) So with me today, I have one of our fantastic property providers in the state of Alabama, and specifically in Birmingham. And his name is Zach. Zach, welcome to the show.Thanks, Marco. I'm happy to be here.
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. So I'm recording this episode Intro on the road as I'm traveling around. And I am recording this off my iPhone because I don't have my professional studio grade microphone that I usually use to record these podcast episodes. However, you're only going to hear that for about two minutes because I'm recording the intro and outro for yesterday's live webinar that I did with John Bowens from Equity Trust. John is their lead educator. He does a lot of workshops and bootcamps and webinars and YouTube videos and all kinds of good stuff to educate people about retirement accounts, self-directing retirement accounts from IRAs to 401Ks to Roths, you name it.And super, super smart guy, great guy. We do a lot of work with him both with Norada Real Estate investments as well as Norada Capital. And we have a few other ventures that we are working on in partnership with them. So, you know, they are one of the largest custodians in the country. In fact, they are the largest by a factor of 10. So we did a one hour webinar yesterday. It was chock full of great information. We covered everything from basics to advanced tax strategies on how you could use any type of self-directed account and the different situations you would use those in and what the rules and regulations are, the caps involved with funding and growing those accounts when the distributions have to take place. And the audience was actually well engaged. We had a number of questions from the listening audience, from some basic questions all the way to some pretty advanced stuff.And even John was surprised, pleasantly surprised, but taken back a little bit saying, wow, you got a pretty sophisticated audience here. So there was some really good information and there's gonna be a lot of good takeaways from this interview. Even if you only hear one or two golden nuggets from it, it'll be definitely well worth your time and it's about a one hour episode, but if you don't have the time to listen to it in one sitting, you could of course break it up into two or three different episodes and just consume it over the course of several drives or maybe, you know, a couple of days. In other case, I was recording this webinar yesterday and I thought, wow, this will make a great podcast episode for you guys. And so here we are. I'm recording this intro. We're gonna attach this to the webinar and let you consume, you know, the information that was presented and, and discuss yesterday in our live webinar.So I hope you enjoy it. I hope you have a few takeaways and of course if you have any questions, you could reach out to Equity trust and their team as well as my team here of investment counselors, both on Norada Real Estate Investment side for the turnkey rental real estate, as well as on the Norada Capital side with our promissory notes that pay 12 and 15% per year, paid monthly direct deposits right into your bank account. Very simple passive investment that offers a high yield, lousy to beat inflation and is just the right fit for many people, not everybody, but for a lot of people, and especially if you have a self-directed retirement account, of course you can invest real estate in those retirement accounts as an asset class. But keep in mind that promissory notes make a great investment choice for self-directed accounts because they are simple and easy to set up and it's kind of like a set it and forget it for the term of the note.So something to keep in mind. But without any further ado, let's get to that webinar interview with John Bowens from Equity Trust and Nate from my office here and myself. Enjoy it and if you have any questions we hope to hear from you and we will catch you on the other side. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – Market stats.
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing show. I hope you're all doing great. I can't believe it. October 31st is around the corner. Yes, Halloween is around the corner, and that means we are 10 months into the year with only two left, and 2023 will be another year behind us. It's amazing how fast time goes by and it just seems like as the days go by and as the weeks go by and as the years go by, time seems to go by faster and faster. And we all know that's not the case. Time is fixed for all of us. It goes by at the same rate and same pace.It's just a perception of how fast time actually goes by. But in either case I hope you are having a great year and enjoying yourself and having a fruitful, successful investment portfolio under your belt, and you continue to build on that, and we're here to help you in any way we can.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Five Profit Centers That Make Real Estate the Most Powerful Investment So, you know, just a quick snapshot about the you know, the national stats, if you will. And I'll go into more detail about this in a future episode actually just around the corner. But you know, when you look at how things have progressed this year with rocketing mortgage rates and a bit of a cooling in most markets around the country, in some cases, more than a bit of a cooling, you know, we're still up year over year. If you look at current stats right now, and again, I don't like talking about real estate at a national level because I don't want to generalize real estate as being one national housing market because it, that doesn't exist.All real estate is local and even hyperlocal, but you know, it's a metric. It's just like a thermometer. It's an indices. You just look at things holistically, but then you break it down into granular components and that's how you actually should be looking at real estate. But again, just putting your finger on the pulse of things, existing home sales nationally speaking is up a little bit. It's about three and a half to 4% year over year at this point in time being October, which is not bad. I mean, it's, it's not great, but it's certainly not bad. Employment has been relatively strong, it's come down, but it's still about 2.1% year over year as far as employment growth. New home supplies are still lagging even though they're up over 7% year over year. What's interesting is that we're still under 1 million permits being pulled so far this year when, you know, from listening to this podcast that we need closer to about 1.5 million to 1.7 million permits per year to provide enough housing inventory to keep up with the demand for housing.So that means it's tight if you're a buyer or a homeowner looking for a, a place to live. But if you're an investor, the other side of the coin is the silver lining, and that is that the limited supply and the strong demand is actually pushing prices and rents up for you. So it's good if you're a landlord. So if you're on the equity train and you're in real estate, it's doing very well for you. But at the same time, if you're still looking for more inventory, it's a bit of a challenge because you're having to kind of fight that. Which leads to my next point. You know, the months of supply out there in terms of the resale market is still historically speaking and relatively speaking, very low. It's only about three and a half month’s worth of supply out there, meaning that if we didn't build one more new home today, we would only have about three month’s worth of inventory to keep up with the demand that we have.So we would be out of inventory in three months, not a good thing. But overall, you know, many markets around the country have cooled off but are still overpriced. And again, you know, it's a relative term, but it is overpriced from historical standards.
Hello my friends, and welcome to another episode of Passive Real Estate Investing. You know, you'll often hear people say that they don't like real estate because if you look at the long-term returns of the stock market seem to be a better return overall. Well of course when they say stuff like this, they are leaving out a few important things, a few key things because they're looking at real estate as being a very one-sided or one dimensional asset, and that's not the case as it is with most other investments like the stock market. First, when people say the stock market, what they really mean is something like the S&P500 or the Dow Jones Industrial Average.These are not the stock market, rather they are indices filled with some of the leading companies in the us. You'll often hear that the stock market makes returns somewhere from seven to 8% or 9%, 10% annually. And this is really based on the index returns rather than the market itself. Second, while a seven to 10% return is good annually for the average person, it is not a good return or even a great return for the professional investor. And when you stack up the returns from real estate against the stock market, they often only factor in that one profit center in real estate, and that is appreciation or capital appreciation, or you might just call it capital gains.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – More Great Investor Questions!The reality is, is that there are four ways you can make money with real estate that when you add them all up together make for a considerably higher return than the stock market.And these profit centers are the reason that real estate is one of my favorite investment vehicles. And I'm gonna throw a bonus profit center in there today. We will call it the fifth profit center, which I'll talk about here in a minute. But at the end of the day, you have to understand that real estate is multifaceted or multi-dimensional. It is not just one rate of return. You have to look at it holistically and look at each of those returns together to really understand the true power of real estate and what it can deliver for you as an investment. Now here's a quick word of clarification as I talk about this, realize that I'm talking about investment real estate, not property that you buy specifically to run a business or more specifically your personal residence. And as I've talked about in previous episodes, your home is not an asset.It may be to the bank if you have a mortgage on it, but it's technically not a asset. It doesn't generate cashflow or income, it puts money in the pockets of your county for property taxes and money in the pockets of your mortgage lender. If you have a mortgage loan on it, it's not putting money in your pocket, at least not unless you sell it years down the road and realize the gain in terms of capital gains. But essentially it's an expense. You're putting money into it every year. So from that perspective, investment real estate is investment property that puts money in your pocket.Now the first profit center is essentially the cash flow or the cash flow on operations of your business. If you're holding real estate as an investment, you will have tenants. And each month these tenants pay rent. Now, let's say you own a home and you are receiving a thousand dollars a month in rent.Great, that's $12,000 a year in gross income. When you subtract your expenses, which includes things like property taxes, insurance, your property management, if you have a property manager and you're budgeting for vacancies and your budgeting for a turnover, because ultimately your tenants will move out, then what you're left over with is your net operating income. This is what's left over to pay your mortgage payment, also known as debt service. And then anything left over after that is your cash flow,
Hello, my friends and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well I wanted to do another Ask Marco episode cause I keep getting some great investor questions and I handpicked about four or five and I'm going to go through those today. And they're actually quite diverse so some of them might not be applicable to you, but some of them probably help you out. So, let's just see what we have here.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Baby Money Soldiers (MUST LISTEN) with Gino Barbaro The first one was kind of interesting, it, I just felt that it was all over the place, but it, it is a question from Luke. And Luke writes in and says, Hey Marco, I have an LLC that files as an SS Corp. I heard that it is wise to have three bank accounts for your LLC one for taxes, which the IRS has access to one for payroll and one for operations.What are your thoughts on this and is it necessary for proper asset allocation and diversification of funds? If so, how much should be in the bank account for a business at a given time? Luke, wow, this is really just all over the place because we don't know what you're using your LLC for. Is it an operating business? Is it a title holding business? Meaning that it just holds title to assets and it doesn't actually have operations like a real business, meaning it doesn't have a product or service that it sells. It's just holding assets for you. And as I read your question, it made me think of a book called Profit First. In fact, I don't remember if I had the author on the show. I believe I did Mike Michalowicz. He is either the author of the Profit First book or the sequel to it, which is Profit First for Real Estate.But you made me think about that because when you mentioned three bank accounts for your LLC or your company, that's one of the things that they talk about is creating multiple accounts for your business. So you separate everything into its own bucket. And the way the Profit First model works is you could literally have up to 20 bank accounts for your company, but generally speaking you're gonna have a profit account, another checking account for owners pay another checking account for taxes and another account for operating expenses, which is where you draw expenses from to pay for the operations of the business. And what you're doing is you're essentially bringing in revenue or income taking your profit out first, hence the name profit first, putting it into your profit checking account and then what's left over is what you use for paying taxes and your operating expenses and whatnot.So it's kind of like flipping the model upside down. If you wanna learn more about it, you can go and get the book on Amazon or wherever, which is called Profit First. And then there's a sequel again, like I said, for Profit First for real estate. I never adopted that model just for the record, I found it to be not so much that it was non-traditional, but a little confusing having to look at and track multiple accounts. Now granted, they all show up on your financial statements so they're really in the same sheet, in the same reports and financial statements, but I just found it to be a little confusing. But you know what, A lot of people use it and they love the system and that's great. And to be honest, I've never tried it so it's hard for me to actually have an opinion on it based on real world experience.But regarding your question about an LLC having separate accounts, I just don't see the need for it. Especially you know, when you are trying to separate payroll from operations, I assume what you mean is your separating your pay because an SS Corp just pays its owner, it doesn't really have employees, it pays you the owner, I can see an the operating account and then it's not a bad idea to have a separate account for taxes if you know you're ...
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. I have an interesting guest today, an exciting show, someone who is a friend of mine, but I haven't interviewed him for a while, and so I'm excited to have him on. We've had like a couple of hours of conversation already today before recording this interview. But my guest is Gino, and I always pronounce his name in so many different ways, Barobaro, but Barbero, if you want, . We're both Italians, and actually we both come from the same region of Italy. So Gino is an investor. He's a business owner, he's an author. He is also an entrepreneur. And as an entrepreneur, amazing guy, he's grown his real estate portfolio to over 2100 multifamily units representing close to $300 million in assets under management, which is phenomenal.
And I'll tell you why I am so impressed with him here in a few minutes. But he's also the bestselling author of three books, Wheelbarrow Profits, which is his hardcore real estate book. He also has a book called The Honey Bee, and then one that's a little bit more about food, but Family, Food and Friars, or, and the Friars, interestingly enough, he lives in St. Augustine, Florida, which is an area that I love, and I'm looking to potentially get a second home in that area. And he lives with his beautiful wife, Julia. And yes, six children.
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Gino, welcome to the show.
Marco. When you said an interesting, I wasn't sure what you meant by that, but it's been an interesting life for me. How you doing, brother?
I'm doing good. How are you?
I'm doing good. When you said family food in the friars, your listeners must be like, what the heck is he talking about? I was the pizza guy. Jake was the drug rep, and I was in the restaurant business for years and years and years. And that was my passion. And I know you're gonna get into this, but real estate really took a hold of me back in 2008 and oh nine, and that's how I sort of transitioned out of the restaurant industry.
. And you're Italian and you love food, so family, food and friars completely makes sense.
To you. It does. Right?
Yeah. No, we, we live, we live for food. We live to live. I mean, we don't live to work. I mean, that's, yes, that's the European culture, and that's certainly the Italian culture. You know, we, a lot of Americans, interestingly enough, you know, live to work, whereas the way we look at is we work to live. You know, we don't want to just be working all the time. We wanna live life. Mm-Hmm.
, I agree a hundred percent. Yeah.
Cool. Well, it's good having you back on the show. The funny thing I mentioned and, and for, you know, just kind of a, a little fun fact, when we originally had our first podcast interview you and I both ways, you and your partner Jake, were literally on a sofa in a room that had a foosball table. , that was your start. Yes. You've come a long way, my friend. Yes.
Well, Marco, you said something insightful on my show. You know, we recorded go to the Jake and Gino channel. I, I interviewed Marco, and what you said was ready, fire, and aim. And I think that's what Jake and I were doing on that couch. We weren't ready to get everything right. The lighting, the microphone, the, the, the, the look. We just said, let's start. And what's the worst thing that can happen? We have a terrible interview at Marco, but we'll learn something from it. And it's the same thing with anything in life. Awkwardness. When you feel awkward in the beginning, that's the sign that you're doing something right. That you're stepping outta your comfort zone. And I'm glad that you reminded me about that. 'cause It makes me feel good. That's, it's, we live in the gap in the gain, as Dr.
Hello friends. Welcome to another episode of Ask Marco. Well, I appreciate the listener questions that are coming in. These are some great questions I picked out five or six for today. The questions are just getting a little bit more sophisticated and thoughtful. Some of these emails are fairly detailed. There's just paragraphs of information and I like the extra detail and information because it helps me to construct a better answer around the context and detail that you provide. So it is a good thing. Just takes a little bit longer to read and process of course, but that's all well and fine. I actually love the questions and of course, you know, I love real estate. But before I jump into the first question here, I just hope everybody's having a great year so far. It's September. We're working our way into that last quarter in the final stretch of the year. So hopefully it's been a great year for you. For me, it's been crazy, just a, a wild ride in a very positive way. So lots of good things going on, real estate related and otherwise. So with that, let me jump right into the first question here.
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So this first question comes from Tara. I believe it's Tara, not Tara, Tara, I'm not sure now. Well, anyway, she says, hi Marco. I've been thoroughly enjoying your podcast, which is a wealth of good information. I'm just getting started in my path to financial and time freedom and I'm looking to get started in short-term rentals using other people's money. She abbreviates that here. As OPM I currently have a condo, which is my private residence in Southern California, which is about $450,000 in equity and a 2.9% interest rate, which I assume is just a single first mortgage on there.
By the way, that 2.9% interest rate is fantastic. You've locked in near the bottom as far as principal residence interest rate, especially in California. Good for you. She says I have a small cash savings of about $60,000 and some stocks. So I'd like to also consider moving into a new primary residence and rent out the condo. Can you help me strategize the best way to go about getting started with my next step? Thank you Tara , I'm sorry if I'm mispronouncing your name. Well, great question. So I think the assumption that I'm making which is the assumption you're probably making is that it is in your best interest to keep the condo and move into another home in Southern California and keep that condo as a rental, which would make sense and might make sense if the market here wasn't so expensive. But if you're leaving that condo behind with all that equity, sounds like you probably have a relatively speaking small mortgage with a very low interest rate.
So your monthly payments are probably small and almost laughable in Southern California. But if you have a great first property and you're living inexpensively by moving out now into another property, you're gonna need a significant down payment, which it at this point, it's gonna have to come from the property through either a refinance or an equity line of credit or an equity loan because you're gonna need to add to the $60,000 that you have to create the down payment to move into another home. And of course this is gonna depend on the type of financing you get on that new home. If you have a very low down FHA mortgage that you can qualify for, great. But if you're looking at conventional financing, you're probably looking at a 20% down payment. 20% in Southern California is a pretty large number because of the property values here.
So I don't know how much stock you have, but if you sell your stock to add to the 60,000 to come up with a down payment that you're gonna need for your principal residence, which is a second property, in order for you to keep the condo as a rental, you're looking at, you know,
Hello my friends, and welcome to another episode of Passive Real Estate Investing. You know, it's the end of the summer. We're at the beginning of September. It's been a few months or a couple of months since I've done a housing market update and looked at housing trends and what is going on in the economy and interest rates. And I know that you as investors and many of you specifically as real estate investors, are always interested in knowing what is going on and to some degree having an idea of what is coming down the pipe in the next three to six months, 12 months. So I take this opportunity to take a look at what is going on around the country in terms of housing and real estate as an investment class because real estate is amazing. It is the most historically proven asset class.It is a true wealth preserver and for many, most of the time is a great creator of wealth and over time, long-term cash flow. So let's just break down a few things today and take a look at what has been going on.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Special Offer — 17% Interest Promissory Notes (for a limited time)I do apologize for the last couple of weeks. I've not been able to put out an episode because I've been traveling so much. I've been incredibly busy with some other business ventures related and unrelated to real estate, mostly on the education side. And I may have talked about it in previous episodes and I will be talking about it a little bit more in future episodes. And those have to do with our Aspire Tour Events, which we do once a month in a different major city around the country. And these are events that have at least 2000 people at the event or more.And these are events that will ultimately grow to 7,000 people at an event. And I will share more of that with you in future episodes and I'll probably bring on one of my business partners to talk about that as well. Also, I've been going to different cities to participate in some events, sometimes to speak at them as well. So had a crazy, crazy busy schedule this summer and I do my best to put out an episode every single weekend. For the most part, I do that 95% of the time. So if I skip a week, it's not because I want to skip it, it's because I haven't been able to record an episode. So anyway, I'll put my foot back on the gas pedal and try to be a little more consistent with the weekly schedule that I've been very consistent with over time.So let's jump right into it. Let's just begin with kind of the big picture or the macroeconomic picture, if you will, and look at housing and the economy in very high general terms. So some people have emailed me and said, Hey, you know, the economy is really shaky or it's
Hello my friends, and welcome to another episode of Passive Real Estate Investing. Actually, this is gonna be a quick, special episode because I want to let you know about a special offer, if you will with our sister company, Norada Capital, for those of you looking for some passive income, or if you've been looking at our offering and you've been sitting on the fence wondering if you should pull the trigger on investing in a promissory note with our company essentially our private equity firm. And we have been paying 12% and 15% interest paid monthly. Well listen up. This is maybe an opportunity for you to get off the fence, or maybe if you are already an investor and are looking to deploy some additional investment capital, this is an opportunity to get another promissory note with a bit of a bonus.
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So, here's the deal. So for a limited time, a very limited time, and I'm thinking probably till the end of August, the last day of August being kind of the drop date, if you will. We are offering a 2% bonus on top of the existing pay structure or terms, which means that instead of 12% or 15% per year paid monthly, it will be 14% or 17% interest paid monthly on those promissory notes. So for those of you who are maybe wondering, well, what exactly is a promissory note, cause you're not familiar with it, it's very simple. It's essentially a loan agreement. It's no different than a loan agreement. It's often referred to as a promissory note, that's the title on the top, but it's essentially a loan agreement between two parties, a lender and a borrower.
In this case you would be the lender. It's a corporate loan, essentially to our company the company, Norada Capital Management being the borrower. And so that loan agreement in other words, the promissory note can be for the term of your choosing, it can be anywhere from three years to seven years. We have done on and off two year, like shorter term, two year notes, and we can still do that. Just talk to your investment counselor here. But essentially you can do a, a note of your choosing from two years to 10 years. The interest rate is determined by the investment amount. Up to a hundred thousand dollars investment is 14% at this time, that's including that 2% bonus. And any investor who has a promissory note during this limited time offer of a hundred thousand or more will receive and get paid 17% interest on that note for the entire term of that note.
So if you choose, let's say, a four year note, you will receive 17% per year every year for the life of that loan. It's a great deal. Our promissory note offering has been around for years, and we have always had it at 12 and 15. Now it's 14 and 17 for a very short period of time. Just a little a little bit of information about our company, our fund, if you will. It is a private equity firm from the outside looking in, you could look at, look at it as an investment fund because essentially it is a fund and it is diversified across five specific categories. Three of those five categories that our company invests in as a private equity firm include e-commerce based businesses very lucrative area, especially if you're in the right area of e-commerce. But e-commerce has been around for several decades now and continues to grow.
Year after year after year, we've made some amazing acquisitions and launches, and now we were in the process of restructuring everything to make them more profitable. The second category, and I'm just giving you a high level, 40,000 foot view, if you will, of what is in our fund and what we invest in. But remember that if you have questions you wanna learn more, you can certainly go to our website and learn more there at noradcapital.com.
Hello my friends. Welcome to another episode of Passive Real Estate Investing and another episode of Ask Marco. I apologize for missing last week's episode. I've been traveling a whole heck of a lot lately. Things have been crazy this year in terms of business and business growth with the different ventures that I'm involved with and travel comes as a part of that. So as much as I do like to travel, it becomes very, very tiring. Anyway, it's another day and another episode and I'll see if I can record a catch up episode here in the near future. I'm looking to do a market update, if you will, on the economy and the housing and everything else related to that. So I'll do that probably later this week. So let's grab some questions here from listeners. Some of these are very recent, as in like the last 12 hours and some of these date back about a month and a half ago.
And I apologize for the late ones, but that's just what happens.
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The first one, I'm not sure who this came from, the email has got more than one name in it, so I'm not sure if it's Bob or John , but it's a very short question. So let's just begin with that. So Bob says, I have a property that I rented and depreciated for 24 out of the 27 and a half years. The property wasn't rented for four years. I have it rented again now, and my question is, can I deduct to the remaining three and a half years of depreciation or did I lose that? Well, Bob, the good news is, is you never lose the depreciation. If you have residential real estate, which means it's a 1, 2, 3, or 4 unit property, you can depreciate it for the full 27 and a half years that you own it, which means that the improvements, the structures on, on the ground, meaning everything but the dirt can be depreciated for the 27 and a half years.
It does not matter whether it is leased or not, that's irrelevant. You can leave it vacant the entire time and still depreciated for 27 and a half years. It does not need to be leased. That is not a condition, this is just an IRS rule and they allow you to depreciate the structure, the improvements over that period of time. So you didn't lose any time here and whatever you're referring to as remaining years of depreciation have always been there. So just continue to depreciate it the way you have, talk to your accountant or tax professional if you have missed anything or if you have other questions about it. But no, it's still there and certainly take advantage of it if you didn't have the income coming in from it. Well, you know, that's an unfortunate loss. You can't rewind the clock and go back in time to get the income that you missed out on, but there's always today and tomorrow and the future.
So I, I suggest you just work on that. Alright, well thanks for the short and simple question because some of these other questions are a little bit wordy in a good way.
The next question comes from Natalia. I believe this is one of those slightly older questions, so I do apologize for that. But she writes in and says, hi Marco. Thank you for taking the time to read my email and for the amazing content you deliver through your podcast. I started listening to your podcast two years ago while driving to get radiation therapy for breast cancer. Your podcast was very inspiring and opened the door to a new area. I had no prior knowledge. In 2022, I decided to take the next step and I got in contact with Melissa who's one of our investment counselors here, who was awesome and guided me through my first single family property in Birmingham, Alabama.
My initial goal was to acquire 10 properties in 10 years, but I am now way ahead of that goal. I got a HELOC on my house and I used the $100,000 to purchase another single family home in Memphis, Tennessee and put the down payment on a new construct...
Hello my friends. Welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. I haven't done an episode in a long time related to mortgage interest rates, but today it's gonna be something a little bit more interesting because we're gonna talk about why mortgage interest rates don't really matter. And you might be scratching your head saying, well, how's that possible? If rates go up, that means my mortgage payment goes up, my cashflow goes down, and that is a big deal. Well, that may be true, but maybe you're being myopic or shortsighted, and we're gonna talk about that. So I brought my friend and trusted mortgage loan originator, Aaron Chapman, back to the show. Aaron has been a veteran in the finance industry since 1997. This, this guy's been around for a very long time, and he's been focused on real estate investors specifically. So he's not your typical mortgage broker or loan originator that does loans for homeowners. No. He does mortgage loans for real estate investors, and he has a big team. He's got 22 staff on his team that help him. And our clients obviously invest in real estate with mortgage loans specifically for building your portfolio.
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So with that, Aaron, welcome back to the show.
Oh, it's good to be back, man. Like you said, it's been a while. I think we got five in the can right now, so it'll be number six for us.
It’s probably the sixth episode with you. Yeah, you're you're definitely the top repeat podcast guest .
Well, you know, membership has its privileges. Once you get to know Marco well enough, he'll let you come on a couple times.
Yeah, there you go. All right. Love it. Well, you're looking good and I love the beard.
You too, brother. And I say you keep working on that one.
Yeah, I will. I'm trying to copy you. I haven't caught up to you yet, but we'll get there. .
Yeah, it's gonna, yeah, well, the thing about this, you can, you can catch up. I'll never be so to the point where I can always stay ahead. 'cause If I do it, I'm stepping on this some and I gotta trim it up, man, it, it got to a point down to my waist. At one point that was miserable and I finally had to cut it because of, but there was a reason why I had to have it that long. There was, there's a story there.
Yeah. Before we jump into the meat of everything you had made a comment before that I don't think I've ever heard from you, and that's just your standing, if you will, in the y pool of mortgage lenders, mortgage brokers, loan originators in the country. It's kind of like a ranking, if you will. Can you repeat that for everybody?
Yeah, there's a place you can go. It's called the S Scottsman Guide. There's a couple places, Modex and the Scottsman guide that track us as loan originators, how much we're doing in the marketplace. And I've been reached out to by them because I don't really pay attention, I'm just kind of focused on getting my job done every day. There's over a million people in the United States that do the job that I do. And last year I was ranked number seven in the United States for transactions closed. And when you start looking at the group of people that they're ranking, most of the people in the top 20 have teams of loan originators working underneath them. I'm the only loan originator on my team. The rest of 'em are all operation staff. So every deal is truly comes through my sources of business. I do have licensed operation staff so they can do certain tasks that you have to be licensed for, but I'm the only loan originator driving the business. So I thought that was pretty cool to be ranked number seven for transactions closed. Now, I think if we went to just individual loan originators and what you, what you bring through, who knows where I'd be.
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, I'm bringing a good friend and a past guest back onto the show today. It's Chad Carson, or he's also known as Coach Carson. Great guy. He reached out to me just not long ago and he said, Hey, I have a book coming out and I want you to take a look at it. So I did. I took a look at it and I thought it was great. It's just another perspective and approach and view on real estate investing. And so for those of you who are not familiar with Chad or haven't heard the past episode in the past, Chad or many people know him as Coach Carson is an author. He's an investor, obviously a podcaster, a lifelong learner. And he used real estate investing to achieve financial independence in his thirties.
So he's done what a lot of us always aspire to do or think about doing. But he's publishing a new book soon called The Small and Mighty Real Estate Investor. How's that for a title? He sees the book essentially as a manifesto and guidebook for small rental property investors. And these are people who simply want to create financial independence and time freedom, not the, you know, the 10 Xers, the go big or watch me until I scale to the moon type of people out there. This is kind of like in the way I look at it, it's kind of like the building blocks or building bricks to build up a passive income portfolio without having to have goals that essentially are reaching for the stars. Why not hit the moon?
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So with that chat, hey, welcome to the show.
Great to be back Marco. Thanks for having me and appreciate that intro.
Yeah, no, it's great to have you back. Now for everybody to know you're actually in a d much different time zone cuz you're still in Spain. You're on a l a long vacation with your family. Is that true?
Yes. So we, I'm in Grenada, Spain, so if anybody's been to southern Spain, it's the kind of older, hotter part of Spain. It's about 104 degrees out outside today. I was just telling Marco that before we got on the call today. But we've been on an adventure. I have a 12 year old daughter, 10 year old daughter, my wife. And we moved to Spain for a year and at least for us, kind of part of our bigger picture story as we like to have the time freedom to travel and not only take vacations but also live different places. My wife teaches Spanish. We wanted our kids to become fluent in Spanish. So we decided to enroll them in schools here in Spain. And I took Spanish classes every week. I still kind of do my thing podcasting here and there, writing a book, but this has been a year for me just to get away from the normal routine. My wife has been teaching English, she's also taking classes here locally. So yeah, that's, that's been our, our experience for the last 12 months. And you know, real estate's always at the foundation of that though. That's what's enabled us because I've been doing it now two decades, 20, 21 years and build, building up to this point where you have enough income and also enough free time to be able to make this kind of stuff happen has been, it's been my goal and what I like to share about.
Well, that's huge. You basically are spending a year in Spain using the rental income from your portfolio and not necessarily working a W2 or active job in order to support yourself. You're basically doing it off passive income, right?
Correct. That's it. Yeah. I mean, a hundred percent of a hundred percent of what we spend in over here in Spain and we're not skipping either. We spend about eight to 10 grand a month. Somewhere in there is is rental income. So yeah, that's, I I do have other businesses and I teach a few classes here and there, but I've taken a sabbatical sabbatical from that this year as...
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli and welcome to another Market Spotlight. I haven't done one of these in a while, but I've been asked by multiple people to do Kansas City, Missouri once again. I've done it a number of times over the last eight years, if you can believe that This month is our eight year anniversary of this show. And I, it doesn't even feel like it feels like three years . But anyway, it's been a while. It's been a good ride. Before I jump into the Midwest, just remember to subscribe to the show. It takes you three seconds. Just click the button on whatever you're watching or listening on and that way you can be updated each and every week as we release a new episode. You know, the Midwest is one of the most affordable places to live and invest in in the country, and Kansas City is kind of the heart of that region.
I am a avid investor in the Kansas City, Missouri metro area. I have a good portfolio there and it's just done very, very well for me. So, you know, Kansas City being a large, prosperous, self-sufficient culturally rich area makes it a great place to consider as one of your investment options. So with that, I wanted to bring on one of our well trusted property providers in the Kansas City metro area and talk about the market, a little bit about the neighborhoods, the properties that they are focused on and what they are renovating into investment grade rental property. And our clients have been very, very happy with the product that is coming out of the Kansas City market. So with that, I would like to bring on Tam to the show.
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Tam, welcome to the show.
Thanks, Marco. I appreciate it. Excited to be here with you guys today.
Well, I'm happy you are joining me because it is that time again to do a market spotlight. And you know, Kansas City's been literally a perennial market for us. I have to say we've probably been offering property in Kansas City for 15 years, if not more. It's really been that long. Clearly that says a lot about the market. So why don't we just start off with you telling, you know, me and the audience, anything you want about the market and Kansas City and why in the heck should I even look at Kansas City?
All right, well I love to brag about our town. I feel like we're a big city with small town vibes. I think that encapsulates this area of the world and the people really nicely. So walk around on Fridays out here in Kansas City and you're gonna see everyone in red. It's chief red, everyone wear red. Obviously Superbowl champs this year. Very proud of that. But just a lot of hometown spirit. So whether it's the chiefs, you're a baseball fan, we have the royals here, we have major league soccer as well as barbecue. We have the speed races out here. My personal favorite, the art museums out here and some of the live music and jazz. So just a really down to earth people with a lot here to do for everyone. We have more than 10 million visitors a year just now to downtown Kansas City that brings in.
So we're somewhere that, you know, people think of us as a flyover city, but really we're also a destination. Just not one that probably springs to mind when you think of spring break necessarily, but just a great little town, very salt of the earth people and the market you talked about. You know, we've been around for a long time. It's what I like to call a very steady eddy market. So we have nice appreciation year over year. You have for an investor property, so not retail cuz we have pockets that are gonna see more than this. But for our standard investor property, you're gonna see somewhere between eight to 10 to 9%. That's about where you're gonna land year over year.
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, I have an interesting episode for you today. It's about 45 minutes in length, great interview. I encourage you to stay to the very end. There are a couple of places in this interview that go a little deep and in, in complexity, but it'll all come together for you. You know, my guest today, Emmanuel Daniel, interesting guy. He's on the other side of the planet. As I was interviewing him, he was in Poland, but he's got this fascinating book called The Great Transition, and it's about the personalization of finance. He says it's here and it's accelerating. And in his book, he uses the story of the ice trade to describe how the world of finance transitions from a focus on digital platforms, which is what we have today to a, a level, a micro level, is what I call it, but a level of personalization that we've never seen before.
It's happening, it's been happening for years, and it's accelerating. And all of this will have a profound effect on how institutions all around us, all institutions, markets, and societies will function in the the coming age, what he refers to as the network age, where we're all connected digitally. And he introduces a term called the financialization of everything. And I ask him to break it down into a fair amount of detail and what that means and how it applies to all of us. It, it, it literally will touch and penetrate each and every one of us and everything we do. But I ask him to describe it, and he describes digitization that will transform all economies around the world. But at the same time, it'll also enhance, you know, everybody's receptivity, , if that's a real word, you know, towards all kinds of technologies, from cryptocurrencies and crypto assets to blockchain technology, to artificial intelligence, to just being able to control your own finances, meaning that it is controlled by your own person.
It's decentralized. It's not centralized around an institution like a bank or a lending institution or even the government for that matter. But these are trends that are happening now and will shape everything in society. So, you know, his book is a collection of all these original ideas, and he expands upon them. And it's not a boring dry topic, it's just happening all around you, and you just have to kind of be aware of it and open your eyes and see that it's actually happening. So anyway, it's, it was a great interview. I'm obviously recording this intro after the interview, which I just finished, so I hope you enjoy it. Take in as much as you can, and if at all possible, you know, just break your listen time into two and listen to this in two parts. But try to get through to the end, and I, I'm sure you'll you'll get a lot of value out of this. So that is it. Let's move right into that interview. I hope you enjoy it.
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Well, it is my honor and pleasure to welcome Emmanuel Daniel to the show. He is a global thought leader in the future of finance, and I've been looking forward to this interview. He is definitely an entrepreneur and a writer, and he is listed as a top 10 global influencer in the FinTech Power 50 list in 2021. And in 2022, Emmanuel was trained as a lawyer. He has degrees from the National University of Singapore and the University of London. He travels widely and divides his time between Singapore, Beijing, and New York. And Emmanuel, welcome to the show.
Marco. Very happy and excited to be on your show. There's so many different ways in which we can slice this, this conversation. Yeah. So take it away.
Yeah, definitely. Well, you travel a lot and you know, we were just talking for a few minutes before I started recording the interview here...
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santorelli. Well, today we're gonna talk about something that I feel is exciting and that is how to pay less tax and make more money using something called cost segregation on your investment properties, on your real estate portfolio. And I know I've talked about this a little bit in the past over the years. It's, believe it or not, it's been eight years this month since I started this podcast. So it is essentially the eight year anniversary of passive real estate investing. I can't believe it's been that long. It feels almost like three or four years to me, but it's a very successful show. I'm happy to have you as a subscriber and listener. The show is just chock full of great five-star reviews. Oh, actually five-star ratings and great reviews.
I do read all of them, so I appreciate them. And you know, if you have the time, if you have a minute, you know, I, I would greatly appreciate some feedback, like a positive review and even, you know, whether it's four or five star, I, I'll take it. But I appreciate everything you guys have provided me and I will continue to do the show and provide you great content and value for as long as I can. But today I just wanna let you know that my guest is gonna talk about an interesting subject, which I think everybody needs to know about everybody. So don't skip this episode, but what if there is a way to legitimately and legally pay less taxes and make more money, keep more of the money you're making using something called cost segregation. Now, I, I'm sure that most, if, if not all of you have heard of cost segregation, you might not know what it means or what it is or how it works.
It is not that complicated. But we're gonna talk about what it is, how it works, the cost of it, how it can help you lower your taxes and make more money, keep more of the money you're making and some of the ins and outs of it. So that is the topic for today. Stick around. My interview is only about 40, 45 minutes, but it is chock full of great information that I think you will definitely benefit from. So with that, let us go right into our interview with Erik Oliver. And if there are questions about anything that we talk about today, you could reach out to him and his team, or of course our investment counselors here at No Ratta Real Estate Investments. We're here to help you and we, we'll always connect you to the right people that we believe will be beneficial in helping you achieve your financial goals. So with that, let us jump right into our interview today.
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Well, it is my honor to introduce and welcome to the show Erik Oliver. He holds a Bachelor of Applied Science and Accounting from Westminster College. Prior to joining Cost Segregation Authority, Erik was the operations manager for a multimillion dollar landscaping company and design firm in Long Island, New York. And I've since found out he's moved back to Salt Lake City. Since heading west and joining Cost Segregation Authority, Erik has been speaking both at the local, regional, and even the national level on the topic of cost segregation, which to a lot of people it might sound like a foreign thing or you know, why am I even interested? But believe me, stick around for this episode. You'll understand why it's important to you if you're planning to invest in real estate or already are investing in real estate. So he brings with him a passion for identifying cost savings and educating real estate owners on the benefits of cost segregation. So with that, Erik, welcome to the show.
Thank you Marco. I'm glad to be here.
Well, it's good having you on. I haven't talked about the topic of cost segregation for a while now.
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today I am recording not from my office and on my normal microphone that I usually use. I am in Florida in my hotel room recording this on my laptop. So if the audio quality is a little bit off, I apologize. I've been traveling for the last three weeks, going from one event to another. It's been a crazy last three weeks, and I'm finally heading back home in two days from now. But I wanted to get an intro, an outro done for the next episode, which is this week's episode. And I was on Candy Valentino's podcast recently. She's the author of Wealth Habits. And actually, I had candy on my podcast here not too long ago, probably, I'm guessing, six or eight weeks ago. And she wanted me to come onto her podcast, and I said, of course. And we had a great conversation. In fact, we covered all kinds of topics and went all over the place. It was not just real estate, but we talked about creating wealth and preserving wealth and what it means to me and all kinds of great stuff. And she liked it a lot. And I asked her for a copy of the recording on her podcast episode on her podcast, and I thought, you know what? I will just publish that on my podcast. And that's exactly what I'm doing here. So I'm just recording this quick intro and I'm gonna append the recording of the actual interview that I did with Candy. And hopefully you like it and enjoy it. There's some nuggets of information in there that I think you can use as takeaways. Anyway, I had a good time. It, we went for I think about 45, 50 minutes, if not longer. So it was longer than both of us expected to go, and we could have gone for at least another hour. But I hope you enjoyed today's episode.
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If you missed our last episode, be sure to listen to Ask Marco – Leveraging Equity, Short-Term Rentals, 100% Financing, Out-of-State Markets
And I will be back next week when I'm back home in California and recording my next episode. I'm not sure what that's gonna be yet, but I do know I have market spotlight coming up. I do have another Ask Marco coming up. I have a few other guests queued up as well on various topics. So just look forward to those. So without any further ado, here's my interview by Candy on her podcast and hope you enjoy it.
Oh, guys, I cannot wait until you listen to this interview with Marco Santorelli. He is a two-time Inc. 1000 entrepreneur. He's been investing in passive real estate for decades. He's an author, he's a Broadway show producer. He's invested in so many other businesses. It's really incredible to talk to someone that has the depth of experience like he does, and is also able to break down the data and what's going on in the market now in 2023. He's the founder, OFTA Capital Management, and NATA Real Estate Investments. And I love his strategy of how he's helping investors. We even go into the interview and disagree on one thing. I mean, not totally disagree, but we are coming at it from two different perspectives. So I always love those types of conversations as well. Let's dive in, guys. I am so excited for you to listen in to this interview, and I am super pumped to have you on the show. So thanks so much, Marco, for joining us.
Candy's my pleasure to be on. It's I'm really looking forward to this.
Yeah. You know, we connected on your podcast, which you have a great podcast you've been doing for a long time when I was promoting my book, and I loved our conversation, so I wanted to be able to bring you on because you're already doing stuff and you've been doing it for a long time. There's so many people in the real estate space that are just now talking about it, and maybe they have their first deal or their second deal, but you've been doing this a really long time and teaching it. So can you share a little bit with the audience just about wh...
Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing Show. As you know, this is a show where we talk about all kinds of things, not just real estate, it's about wealth investing, finance, the economy, the housing market, personal development mindset, and I guess whatever we want to talk about. So your suggestions are always welcome and sometimes I talk to people even at live events and they give me some pretty good ideas about what I can, should, and might want to cover. So I'm gonna cover about four questions or so from listeners. These are more recent questions, which is great. One of them is from last month, but the others are very recent. Before I do, I just wanna let you know that I'm recording this on Tuesday, May 30th. I will have my assistant edit this hopefully tonight, but it should be queued up for Wednesday morning Thursday at the very latest.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Housing Trends Market Update – May 2023But I am actually leaving town tomorrow for about 24 days on a four to five city stretch. And so I might be a little slow in upcoming episodes, but I'll do my best to record and release them as I travel on the road. But just real quick to let you know about my trip, it's gonna start with a annual cousin's reunion or get together something that we've started doing on an annual basis in Las Vegas. So I have cousins that fly in from a couple different cities and this really all started with me playing at the World Series of Poker. I've been playing in the World Series of Poker every year, practically every year since at least 2007, probably before that. I actually don't remember the first year, but I've been pretty consistent in going to the World Series of Poker. I am a pretty decent poker player.I'm certainly not a pro, it's not what I do for a living, but I love the game. It's a very much strategic game. And what I like about it is the multiple dimensions that you are dealing with every hand in poker. It's kind of like three dimensional chess, which is why I love it so much. And I just love the strategy and, and being able to not only play the hands and play the situation and play the position and play the number of chips that you're working with against every other person's stack, but you are playing the other players. So if you think about it, it's really the only game that you could label as gambling, that you are not playing against the house, you are playing the other players, which I find unique and it's part of what makes it fun. It is a social game.There's, you know, chit chat and banter and whatever, you know, conversations that go on. And it's interesting the people you meet. I've met several of the pro poker players that you actually see on television, even to this day, more so in years past when it was more popular. But yeah, I've played head-to-head against some of these people and it's always fun. Anyway, enough about that. Let's talk about real estate. By the way, I just wanna finish that thought from there. I will be going to our Power Room mastermind in Scottsdale, Arizona shortly after that. I have several events going on in New York, including the Tony Awards. And then after that I'll be going to Florida for two events. One is our money is Mastermind. It's the first one that we are hosting this year as our mastermind for our money as subscribers.And then after that we are doing some strategic planning sessions with my partners for some of the other ventures that we have going on loosely related to what we're doing here with Nora Real Estate and Nora Capital. All right. Having said all that, let me get to the first question from Carrie. Carrie says, Hey Marco, I recently met you at the conference in Phoenix. Your presentation was great. I have been an investor since 1991. I have several properties that are paid off.
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Thank you for joining me today. Today I want to talk about something that I plan to or intend to do on a regular basis, and that is a housing market spotlight, but it's not a spotlight, it's really just kind of the state of the union. It's what is going on in housing. In other words, let's look at housing, the economy, housing trends, and let me present that to you in a way that helps you understand what is going on and maybe where we're headed. You see, I spend literally thousands of dollars each and every month on data research analysis, and I take all that and I consume as much of it as I can, although that's actually pretty difficult given my schedule. I'm extremely busy. I'm running and managing and overseeing multiple businesses.I travel a lot, and given whatever time I have, which is not much, I try to consume as much of this research and information as I can. My goal is to distill that down into nuggets of usable information that you can take to get an overview of what's going on, call it the 40,000 view of housing and the economy, high level stuff, but not stuff that you know is too data intensive or geeking out on the information so that way it's digestible and understandable by you. So my goal is to basically consume, consolidate, condense, and present or deliver this information to you on either a monthly or a bimonthly, bimonthly meaning every other month basis. So we'll see how it goes. And as far as the format for this, I'm not exactly sure how I wanna present it. I'm gonna experiment from episode to episode.It will change, it will morph. I'll find a format and style that I like in order to present to you, and if you have any input or feedback, then let me know. Tell me if you like it, tell me if there's something you want me to change or something you want me to not discuss or something to add, but just feel free to provide me some feedback. But my goal is to basically provide you some useful information on a regular basis that I think you can take, whether you're a real estate investor or not. If you're a real estate investor, great. Doesn't matter whether you're seasoned and successful or a newbie and just getting started.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to 10 Rules for Successful Real Estate Investing RevisitedSo with that, let me begin by kind of setting the stage or the backdrop, if you will. So, Jon Gray, who's the president of Blackstone, the largest hedge fund in the world, this is a multi, multi-billion dollar company.In fact, if I'm not mistaken, I should almost use the word trillions, but they have an unbelievable amount of assets under management. So Jon Gray, who's supposedly worth about 7 billion, and that's according to Bloomberg, started Invitation Homes back in 2012. Invitation Homes, I believe is the largest landlord in the country. They've literally purchased tens of thousands of properties. Now think about that. Imagine how how much capital went in to invitation homes in order to acquire tens of thousands of properties over the years. So they are the largest landlord and property owner in the country, and this was all driven by Jon Gray. So he obviously knows a thing or two about what's going on, and he's putting his money where his mouth is. And given what he knows, he's obviously making some pretty big bets. But in 2022 in the Wall Street Journal, he said, and I quote, never in his 30 year career had he seen real estate fundamentals stronger than now.So that's a pretty strong statement. And if you think about it, if someone of this caliber and doing what they're doing is putting that much money behind acquiring tens of thousands of homes, and he's saying that the real estate fundamentals are that strong and he's talking about last year,
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Thank you for joining me today. Well, you know, I wanted to go back way back to an episode I did in 2015. It was in June, and literally it was episode number two and I titled it The 10 Rules for Successful Real Estate Investing. And I thought, what, if anything, has changed from back then to today, eight years later. So I decided to record an episode and go back and revisit those 10 Rules for Successful Real Estate Investing in part as a refresher, because I think they're all very, very important and it's important to keep the fundamentals in mind. But second, I wanted to see if anything changed and what changed, and maybe talk about that. So if these are truly principles based rules, then nothing should have changed.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – Taking Time to Recharge, Diversify or Hold, Delaware Statutory Trust, Asset ProtectionThe times might have changed, but the principles stay eternal. And so that's what I want to explore today, those 10 rules, and see how they apply today and if anything has changed. So there's no need to go back to episode two, although you can go back and listen to it if you want. I'm going to cover the important salient points, the nuggets that you need to know and make sure that I touch on all the highlights today that I covered back then. And where did these 10 rules for successful real estate investing come from? Well, basically it just came from years of successes and failures through the acquisitions, the mistakes I made in those acquisitions, the good, the bad, and the ugly. Dealing with tenants, self-managing, property managers. I was dealing with the market ups and downs, the great recession of 2008. It was just all part of that.And these are the same rules that I still follow today that I shared back then that I shared previous to that, and that I've been using all along as my real estate investing journey evolved and matured and as I gained more and more experience. So this just didn't happen in one day, it just kind of came to be over a, a course of time. So these are 10 rules. There's probably 15 or 20 in total if I really wanted to chart them all out. And maybe one day I'll record another episode and continue beyond the 10th rule and, and talk about the next five or 10 or even 15 if there are. So for today, let's go over these 10 rules and see how they compare.So the first one is titled, simply Educate Yourself. Now it's number one for a very specific reason is, and that's this. It's because the greatest returns and the best investment you can make is in yourself and in your mind. This is why I always say that you should educate yourself because that knowledge will pay dividends and it'll make you a better, stronger individual and investor. When I do presentations, I often start my presentations with a slide that has the following sentence in it. Ignorance is blank, and I let the audience answer that. I don't give them the answer right away. I just wanna see what people have to say. And more often than not, in fact, quite literally 99% of the time they say ignorance is bliss. Well, there might be some truth in that from time to time, but generally speaking, in my opinion and in my book, ignorance is expensive. You see, this speaks to the saying that what you don't know won't hurt you.Well, that's absolutely wrong because ignorance comes with a tremendous price and it's what, what's worse than that is that the ignorant never realized this. They're just kind of living day to day in their own fog or, or in the matrix or whatever you want to call it. But ignorance is expensive. Now, if you take nothing else from this episode today, remember this one sentence, the cost of ignorance is much greater than the price of education that's worth repeating.
Hello friends, and welcome to another episode of Ask Marco on the Passive Real Estate Investing show. I'm glad you're joining me today. I have another handful of great questions for this Ask Marco episode. But first two quick things. One, just remember to subscribe if you're a new listener here or if you haven't subscribed already, it only takes you three seconds and it keeps you posted every week when we release a new episode. So other than that, I just came back from REWBCON, the Real Estate Wealth Builders Conference in Phoenix, Arizona, and it was the second rub con event. There was one last year that my friend Dustin had put together and put on and did an incredible job with. There was about 200 people last year. This year it was closer to 400, so he almost doubled the size of the attendance, which was great.There were a lot of people there. It was a lot of fun. We had some great conversations. It was nice to meet a lot of the people who I've met in the past or just know from one place or another, or a lot of people came up to me and said, Hey, you know, I listened to your podcast, or I just started listening to your podcast. I wanted to come and meet you. Or I heard about REWBCON through you and felt that this is a good thing to do, a good place to go, a great place to learn and to meet and network with other real estate investors and like-minded people. And that's exactly what it was. So, you know, my hat's off to Dustin for doing such a great job at that event, I was there with some of my team, two of my investment counselors, and we got to meet a lot of new people as well as existing and old real estate clients that worked with us in the past, recent and long past in investing in real estate buying rental properties.And each and every one that came up to our booth there, I asked them, I said, how are things going? How was your experience? How was your property doing? And it was great. There was nothing negative. Everybody had something good to say. So I really enjoyed my time there and after three days plus travel, I am beat. So anyway, here I am. I'm doing another podcast episode which will be released here shortly. So let me jump into some questions here. This is the first time I actually got someone to send me a question that's not investing or real estate based. It's actually more of a personal question. And I know I've been asking for some personal questions from time to time, asking you guys to send them in, you know, if and when you can. And finally, somebody did. So
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. I've got an exciting episode today. Every once in a while I do a client spotlight where I bring one of our clients or investors on the show to just talk about their investing journey and where they started and where they are, and maybe where they're going to. And it's always fun to get into everybody's mind to understand, you know, how they're thinking and why they got into real estate and what they're up to and what they were fearful of, and all that kind of stuff. I think for a lot of of our listeners, it's somewhat inspirational and somewhat motivational. So that's the reason I like doing it, is because it does actually help some people. And then I also find out that sometimes my guests, when I do a client spotlight, have some takeaways themselves from the questions I'm asking.So hopefully that'll happen today, but I have some, not just one guest today. It's very interesting. I have a trio. I have three brothers. Now, let me tell you how I met these guys. It's Troy, Kyle, and Dillon. So I was at a Power room event, one of our power room events, and we were at the reception the night before the event started, and I walked in the room. It was literally a barn, literally a barn that we had this event in. And it was probably a mistake in my opinion, but no story for another day. But I was there with my assistant and these three guys come running at me and I'm thinking, oh man, these guys are gonna tackle me or something. I'm for my life. But no, actually, they were waiting for me to walk in because I guess they were clients of Nora Real Estate and they were listening to my podcast and they knew I was gonna be there because they obviously heard me talking about it on the show.And so these guys approach me and they are okay. I I'm just gonna say they're, they're three cute guys. They're in their late twenties. And they looked just like the Jonas Brothers, and I thought, oh my gosh, we got the Jonas Brothers here. Anyway, they introduced themselves as, as Troy, Kyle, and Dillon. And we got chatting and it was just a great meeting, a great conversation. And these guys are just wonderful. They actually were inspiring me, believe it or not. So I wanted to get 'em on the show, and here they are today. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen toThe Money Confusion and the Future of Our Economy with John Tamny (Part 1)The Money Confusion and the Future of Our Economy with John Tamny (Part 2) Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.See our available Turnkey Cash-Flow Rental Properties.Please give us a RATING & REVIEW (Thank you!)SUBSCRIBE on iTunes | Stitcher | Podcast Feed
Welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, this episode is part two of my interview and conversation with John Taney. We talked about many things on the previous episode, so if you're starting here, go back and listen to that one first. But he just released a new book called The Money Confusion. So we're talking about that and to some degree, a lesser degree, the future of our economy and interest rates and housing to a, a smaller degree. Very interesting conversation. I think you're gonna get some interesting insight and a different perspective on money and money supply as we continue this interview with John. So without further ado, let's jump right into that interview. I hope you enjoy it. And as always, thanks for listening and remember to subscribe. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Money Confusion and the Future of Our Economy with John Tamny (Part 1)So let me throw some random questions at you. In your opinion, what are some of the biggest economic challenges that the United States is facing today? Or are we facing any big economic challenge? Is Jalen Hurts in a recession is LeBron James? No, I mean, and the economy's a collection of individuals, and so there's always people going up and down at any one time. I I, I think this, this desire to basically li shrink what is wildly sophisticated and diverse to, oh, it's recessing is just a waste of time. But I would add what do the best companies on earth do they rush to their mistakes? Yeah. Pixar is the greatest movie studio ever. And why is it because they acknowledge all their movies suck at first
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Glad you're joining me here today. Well, we have a doozy of an episode today. I actually had a guest on that I just finished interviewing earlier today about money of all things money and the confusion around money and how there is so much illiteracy about money and currencies and what inflation is and how it Im impacts us as investors. And then what was very interesting about my conversation during this interview is the concept of money supply. And I say that in air quotes because it forced me to look at money and money supply specifically from a, a different angle, a different life, more from, you know, the demand side of the equation rather than, you know, the Federal Reserve being in the media and the news all the time, and they are responsible for the money supply and they put it into the system or take it out and, and what does that do to interest rates and mortgage rates, and how does that impact everybody, including us as investors?So it was just a very interesting conversation with a little bit of debate, and it kind of changed my view a little bit on how I'm looking at things. So it gave me more food for thought. And, and I wanna finish reading John's book. It's called The Money Confusion. We're gonna talk about that at some length. In fact, this interview went quite long. It went for about an hour. So I'm going to break this interview up into two parts and release part one right here on this episode. And then part two, probably in a couple of days, it'll come out very shortly thereafter. But try and listen to it through to the end because I think there's a lot of interesting and somewhat insightful information in there and, and some good banter and, and debate and conversation. So I think you're going to enjoy the episode. And on that note, let's jump right in. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – Choosing the Right Neighborhood, Land Trusts, Asset Protection, Investing Out-of-State, Low Down DealsWell, it is my pleasure to welcome John Tamny to the show. John is Vice President at Freedom Works. He's the editor at Real Clear Markets great website, by the way, a senior fellow at the Market Institute and a political economy editor at Forbes. John is also the author of six books, maybe more now, but six books on economics and politics, including Popular Economics, very good book, the End of Work, and his most recent book, The Money Confusion. What a brilliant title. John, welcome to the show.Thank you so much for having me on, Marco.Good stuff. John, you've been around for many, many years. I've followed you on tv, I followed you on podcasts, on other people's shows. You've got great books, all kinds of great comments and content, and even op-eds. Your op-eds are fantastic. So you have a lot of content out there for people to learn more about you and what you write about and talk about. But I only had a very quick bio for you. Why don't you tell us a little bit more about yourself so people have a better understanding of who you are and what you do?Well, probably the most important thing that I would stress is that, that I'm not an economist. I believe that economics is first grade material, that it's common sense, it's understanding human action. And I think economists have made boring what's fascinating. But I think also what they've done is they've complicated overthought what doesn't require much thought. And so my books are a rejection of economists in what they believe an embrace of just trying to understand why people do things how different things work as they do things. And, and I use, I never use charts or graph, rarely do I use percentages. It's basically pretty much all stories from, from life as we know it so that people, because my belief is that everyone knows economics ...
Hello. Hello my friends. Welcome to another episode of Ask Marco on the Passive Real Estate Investing show. I am glad you're here and I do want to make a quick apology for being late on releasing this episode, which is supposed to be out last week. But I was actually in Florida in Fort Lauderdale at a major event that my partners and I were putting on called Aspire. And it's, we refer to the whole event as the Aspire Tour because every month we're in a different major city around the United States on Thursday in Fort Lauderdale we had 1500 people there. Last month in Dallas we had 2000 people in the room. So these were major events and we have some great speakers there to educate and talk about personal growth and money and investing and money movement and so many different things related to wealth and financial freedom, as well as personal growth and personal development.So we call it Aspire. It's the Aspire tour and, and the website, if you wanna just check it out, it's aspiretour.com. Now, I will tell you that there is a new website that is being launched sometimes soon. I know it's in the works and it's in beta, so it'll probably be released here in the next week or two hopefully. But I was in Fort Lauderdale and it was just crazy. It felt like a mini apocalypse. My flight was canceled, literally coming in to the airport. We ended up circling around the Fort Lauderdale airport for a while before they finally said, we're not reopening the airport, we're gonna send you to Tampa. And so the plane turned around, started heading to Tampa, never made it to Tampa. Ended up landing in Sarasota. When my flight landed, I pulled out my smartphone, went to Expedia, booked a car rental from Sarasota to Fort Lauderdale.My intention was to drive it one way and drop it off at the Fort Lauderdale Airport when the event was all said and done. So I ended up driving there and drove into some torrential rain. It was unbelievable. I was told that they had one third of their entire annual rainfall happen in one day. And from what I've read, I've heard different stories, but from what I've read, they measured 26 inches of rain at the airport within a 24 hour period. And the majority of that rain, the 26 inches, came down within a 12 hour period. It was setting a record. Previous record for the rainfall in Fort Lauderdale was back in 1979, and that was less than 15 inches, which is still a tremendous amount of rain for a 24 hour period. So when I got to the city, there were cars, quote unquote, floating in the water.There were pools of water everywhere. Cars were stalled in the middle of the road. People were literally driving on the wrong side of the road, purposely, of course, to get around what they couldn't drive through on the right side of the road. Power was out in different places. It was nighttime, it was raining hard, it was hard to see lots of people walking on the sides of the road and the meridian of the road. It was just crazy. It just felt like a mini apocalypse. It was funny and scary all at the same time. And then I finally got to my hotel. The power was out. It was a nice Hilton on the water, no power, no hot water. Checked in at midnight, finally got to bed at one. Had to use my smartphone for lighting to light my way around the room cuz I couldn't see anything.There was no electricity, no lights, but it was crazy. After all of that, I was pleasantly surprised and amazed that all 1500 paid ticket holders showed up to our Aspire event the following morning at the Fort Lauderdale Convention Center. It was unbelievable. And it just goes to show that people who have a certain mindset, you know, for success, personal development, growth, even entrepreneurship, and just a business like mind that are aspiring, there's that word again, but aspiring to be something bigger and greater than themselves, or just to grow into somebody that they want to become. It just shows you that nothing will stop you,
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Now, even though this show is titled Passive Real Estate Investing, that's the name I gave the podcast in 2015. We really talk about all kinds of things. It's not just about real estate, it's about mindset and wealth creation and preservation, and even topics on the economy and housing inflation, interest rates and, and even other opportunities. So with that, you know, I wanted to bring one of my business partners and friends, Eddie Wilson, onto the show. It's something we've been talking about for a number of years, actually, never really got around to it for whatever reason. But, you know, I, I decided to have him on today as my guest. And so we had a great conversation. I'm recording this intro after my interview with him, which I just finished.But yeah, we had a great conversation about all kinds of things, and we went, you know, kind of down a few rabbit holes ever so briefly as it relates to the economy and housing and even inflation. So I think this is a great episode to listen to through, to the end, because there's a lot of good nuggets and some deep thinking involved in, you know, some of the things we did talk about. So I, I know you'll enjoy the episode. It was about 45 minutes in length. I think this is great to listen to and, and possibly even listen to a second time. So without any further ado, let's get to that interview and I hope you enjoy it. And if you have any comments or questions about it, shoot that over to me or my team and we will talk to you soon.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – The Mindful Millionaire: Creating the Life You Really WantWell, it is my pleasure to welcome a good friend and business partner on the show. His name is Eddie Wilson. Eddie is a husband, father Avid real estate investor. He's a CEO of multiple companies, a national speaker, and he has a passion for business growth. Over the course of his career, he has built and run more than 100 different businesses, which is just amazing to me. Managed 4,000 employees, traveled around the world, speaking about business and leadership. He was also one of my business partners in a number of ventures, and he's a good friend. Eddie, welcome to the show.Thanks for having me.Well, it's great having you on. We've been talking about this for a while and finally pulled the trigger to get you on
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I am your host Marco Santarelli. We have an interesting interview today. So, you know, as an investor, I think a lot of people are very much left brain, they're analytical, they're looking at facts, data, and numbers and whatnot. But we don't necessarily stop to think about, I'll call it mindset, but that's an oversimplification. But really just how do you create the life you really want? And what is involved with that? How do we think about money? What's our relationship with money? What are the habits that come out of that? Do we have a story? I think we all have a story related to money, but what is that story? Did you write your own story or did someone write your story for you? And what are you doing to sabotage yourself if that story is not the right story for you?And does it lead to procrastination or making the wrong decisions, decisions that are too emotional and not logical, rational? There's just a lot around it. And that is really where I wanted to bring on my guest today, who is an author and speaker on the topic about designing the life that you want and making sure that you have the right story in your mind and you create the right pathway for you to achieve the goals that you want to achieve. Her name is Leisa Peterson and I had a great conversation with her. We spoke offline and she's actually presenting at the Real Estate Wealth Builders Conference that I am doing an opening keynote to. It's known as REWBCON for short. And I think there's the, a link on our website and in the show notes the event is REWBCON 2023 or REWBCON2023.com.I'm not sure, but just check the show notes and you'll find that link there. But she's actually one of the speakers and presenters as well. And so she has a book out, it's called The Mindful Millionaire, very interesting book. And I thought, well, you know what? I should bring her on the show and interview her and talk about these things that I think are a little bit, don't wanna say Woo, they're certainly not woo, but a little bit more of the intangibles that go from intention, feelings, opportunity, the stories that we tell ourselves and the stories we create about money that we live by permission, the permission we give ourselves the evidence around that. And, and ultimately, how do you reinvent your life? How do you create the life that you really want to live? And so that was our conversation. I tried to keep it short, but it went for about 45 minutes, maybe 50, but there's a lot of good content there.And her book is chock full of more information about the stuff that we talk about today. So without further ado, let me bring on my guest, Leisa here, and I hope you enjoyed today's show. And thank you for listening. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Ask Marco – Asset Protection, Investing with My Spouse, Should I Sell My Rental, Using an LLC, and MoreWell, it is my pleasure to welcome Leisa Peterson to the show. Leisa is an author, speaker, podcaster and educator and a coach. She has an MBA in finance, which is amazing cuz that was the thing I wanted to take when I went to university. And she has held the certified Financial Planner designation as the founder of Wealth clinic.com. Leisa helps clients and students create abundant and thriving lives. Additionally, she's a regular guest on podcasts and radio shows and has been featured in publications like the Wall Street Journal, Fast Company, Forbes, The Week, and Huffington Post. And with that, Leisa, welcome to the show.Thank you, Marco. I'm so happy to be here.Well, it's great having you on. I've enjoyed my conversations with you offline. I like your book, which is relatively new. I believe the title, correct me if I'm Wrong, is The Mindful Millionaire, correct?Yes. Yes, that's it.All right,
Hello friends, and welcome to another episode of Passive Real Estate Investing. This is your host, Marco Santarelli, and today I decided to grab more than a handful of questions from you to do an Ask Marco episode. So I'm gonna try to run through these as quickly but as thoroughly as possible, I want to try to get it done in 20 to 30 minutes just for the sake of time. And I'm going to queue up another Ask Marco episode here in the next week or two because I've gotten a whole bunch of questions. So without further ado, let me jump right in.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Market Spotlight: Birmingham, AlabamaThe first question, and these are in no particular order is from Tom and he says, hi Marco. I hope you're doing great and I would like to express my thanks to you for all the energy and time you put into your podcast.Well, you're welcome. I've been listening for a couple of years now and have gotten a tremendous amount of value from it. It's helped me reshape my outlook on real estate investing and finance in general. Well, thank you. Appreciate that, Tom. I'm currently under contract for my first investment properties, two new builds in Florida, and while they're under construction, I've been looking into setting up my asset protection. As such, I've been re-listening to some of your past episodes on asset protection. In episode 4 0 6, you mentioned that you would be willing to pass along a list of suggested asset protection firms to anyone who emailed. Could you please send me that list? Yes, I can. And I did, I've already replied to you prior to this recording between your interviews and reading his high quality books. I'm currently leading towards working with Garrett Sutton, but I'd love to hear any other recommendations or feedback on his firm and others.So well, let me finish reading your email here. Also in one episode number 2 99, you mentioned a cash flow and returns spreadsheet that you developed, I believe on Google Sheets. Is that something you'd be willing to share? Thanks again for all your help, Tom. So regarding asset protection attorneys or actually any kind of service provider, what my team and I normally do is we will provide you more than one. If you have a request for an asset protection attorney or a tax advisor or whatever it may be. So often we will give you or email you two or three, maybe four, so that way you can pick and choose from companies and individuals that we know trust and work with. We don't want to just give you one because we don't want to quote unquote steer you in a direction of working with a particular company or individual.So we try not to do that. I'm not saying it never happens, but generally speaking we try not to do that. So I've already emailed you a list of think of three, maybe four potential options, Garrett being one of them. So feel free to contact, you know, any or all and decide for yourself regarding your second question, the cash flow and return spreadsheet. I believe what you're referring to is the episode that was something about the real rate of returns of real estate investing, something to that effect. So although I did email that to you because you emailed me directly, what I'm actually planning to do is create that as a downloadable Excel spreadsheet so that way anybody can download it off our website. I'll just create a landing page of sorts and make it available as a quick and easy free download so that way you can just play around with it and do whatever you will.All right, well Tom, thank you for the question and congratulations on everything you're doing. Next question from Corey. Corey says, Marco love the podcast. I listened religiously. I purchased my first investment property last year with all cash that is currently titled in my name. I'm going to do a cash out refinance in the near future and want to then quit claim the property into ...
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santorelli. So I've been doing this stream of market spotlights lately and it's great. The feedback has been wonderful. We've done, I think three different markets just in the last month and a half or two months. This might be the fourth, maybe the fifth, but fourth market spotlight that we're doing. One of the perennial markets that we've been in for a very long time is Birmingham, Alabama. It is a great market. There's a lot going on there. It's kinda like a hidden jewel in a way because a lot of people don't even think about it or talk about it much because it's not like a major metropolitan area. But we've had investors investing there for a long, long time with great success, very strong cap rates and cash on cash returns. It's still an affordable market. There's just a lot of great things to say about Birmingham. So I wanted to bring on one of our fantastic property providers to talk about the Birmingham Metro and what we have going on there and all the good stuff that they're doing. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Client Spotlight with Cameron Anderson So with that, Stephanie, welcome to the show.Thank you for having me.Well, it's great to have you on. It's been a while. In fact, we were just talking about this before we started recording. I, you were saying it was like four years or something like that bef since we had you on. Is that really true
Hello my friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. So I wanted to do another client spotlight here today. I think I'm gonna do a total of maybe four over the course of the last and coming up few months. But today I've got a relatively newer, let's call him that real estate investor, Cameron Anderson. He goes by Cam and well, might as well just introduce him. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Rental Property Insurance Goes High TechCam, welcome to the show.Thanks for having Marco.I figured I'd introduce you instead, instead of having you just waiting out there for me to talk about whatever I talk about
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, I haven't done an episode on rental property insurance for a while. I guess some people find that to be kind of a dull, boring, dry subject. But the thing is, is it's very important. And if you're gonna be a property owner, especially a real estate investor, you need to understand the importance of property insurance and what kind of coverages you need, the questions to ask, who to work with, and also just understand what's going on in the world of insurance, because it applies to you. You don't want to carry unnecessary liability and exposure. Look, you're an investor, you're a business owner, you need to be smart about this stuff. And when you look at the team that you have, that you build, one of those people on your team is your insurance broker.They're gonna be the ones to help advise and protect you. So that way you're not a target and your properties are covered properly. And if something should happen, regardless of what it is from a flood to an earthquake, to a fire, you've got yourself covered. You're not gonna be at a loss. So with me today is a guest that I invited on after being impressed with what he has done and the website and company that he has joined with. He is the chief insurance officer of a, a company called Obi, and his name is Matt. I hope I don't butcher his last name. Sika.
Hello and welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, we are doing yet another market spotlight today. I think I have four in total on the agenda here for the two month period that we're covering. And Memphis has been, I've said this so many times on the show, Memphis has been kind of a perennial market for us. We've been in the Memphis market for practically 18 years, almost nonstop. So we've always had opportunity, an inventory there. It's a market that I actually really like. The numbers just pencil out and there's always opportunity. So I thought, wait, you know, we haven't done a, a market spotlight on Memphis for quite a while and we're due for one. So today I brought one of our great, fantastic property providers in the Memphis, Tennessee metro area. Robert, welcome to the show.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Investing Today! Housing Trends, The Economy, Recession, and Interest RatesThank you, Marco. It's such a, an honor, a pleasure to be here. And of course I have to give it back to you. It's a thrill to be on the show as somebody who has not only partnered with Norada for many years now, but been a follower of your thought leadership when it comes to entrepreneurialship real estate investing, asset protection. It's a real thrill to get to sit down with you and spend some one-on-one time with your extraordinary leadership. And it's it's just, it's a dream of mine come true. So thank you for having me.Oh, geez. Stop it. Come on,
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. We did a little interview today with a friend of mine, Dustin Hyman, who started the Real Estate Wealth Builders Conference, or Rubicon is a, is what we call it. Last year was the first of an annual event, and this year it's Rub Con 2023. So we were talking the other day because he invited me back as the keynote speaker for this what is actually a three day event in Phoenix or in Scottsdale, Arizona. And we thought, Hey, why don't we just do a podcast recording. We'll both post it on our individual podcasts and we'll just have, have a candid conversation or candid discussion about investing today. And we didn't script this or, you know, put a, an outline together or figure out what we're gonna talk about. We just thought, okay, well, you know, let's just talk about whatever comes to mind and we'll talk about where we are, maybe where we've been and where we're headed this year in terms of investing, housing trends, the economy, interest rates, maybe talk about markets and whatnot.And so we just thought, okay, you know, let's just hit record and see where it goes. So anyway, we had a great conversation. I'm recording this intro after the fact. So we recorded earlier today and it was a great conversation. We had a lot of good points to bring up and interesting trends and some facts and some data and statistics, and just had a good time at it. So it was about a 35 minute interview, and I think you're gonna get a fair amount out of it. And then towards the end, you know, we'll take a minute and talk about the Real Estate Wealth Builders Conference or REWBCON that's coming up in a few months in Scottsdale. So I hope you enjoy today's candid conversation. I'm sure you'll get a few golden nuggets out of it. And if you have any questions, you know, just by all means, contact me, my team, or Dustin and his team, and hopefully we'll see you in a few months rubbing shoulders and networking and having some food and drink and whatever else out in Arizona. All right, well, enjoy the episode. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Six Ordinary Steps to Achieve Extraordinary Financial FreedomWell, I am here with a good friend of mine, Mr. Dustin Heiner. Dustin, let's rock this thing. How are you?Bless Marco. Thank you so much for having me. And it's, it's great getting to hang out with you again and just talk chop. I mean, that's what's fun about being an investor is we're not just, you know, telling people how to do this. We invest. That's one thing that if we're gonna do anything, we're gonna be investing in real estate. So it's great getting Ellen to talk to you about this and really just share where we are in our investing and what we're seeing coming in the future. Yeah.So let's just quickly set the stage. You and I were talking offline, in fact, it was another day and we thought, Hey, let's get together and, and record, I guess an episode and talk about where we are in the market, you know, where we came from and where we are, what's going on, and what we expect to see coming up in the future. And then maybe make an argument or two as to why it may be or is a really good time, time to invest in real estate right now. So this is completely unscripted. You and I don't have an outline or a script or anything like that. We're just having a conversation. We're kicking some ideas around and our thoughts are really what we wanna share with our audiences, correct?Totally. And, and I'll be putting this on my show as well, sharing with them because like other people being able to listen to, to us, you know, expert investors, you know, being on fly on the wall, listening to how we're talking, like I'm seeing right now, in fact just very similar, eerie similarities to 2008. So I started investing back in 2006. And so seeing all through the crash and investing through...
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, you don't have to be educated or very well connected to be wealthy. So how do wealthy people do it? Are they geniuses? Are they just lucky? Is it something in between? You know, we tend to think that something important or really special must be going on because sometimes it looks like magic, but nothing can be further from the truth. Wealthy people have simply adopted important yet ordinary habits, and they do them very, very well. They have consistency and they know what to do, and they just do it on a repetitive basis. And they achieve success sometimes slowly at the beginning, and then it rapidly increases. But they've learned the habits and the principles and skills to earn money, save that money, invest that money, which allows them to grow that money and then protect that money.And all that comes down to creating wealth. I mean, that's what they're doing. The whole thing about Think and Grow Rich, you know, it's a great book, but to think and grow rich and believe that is all that you need, it works. It only gets you so far. You know, you, you do need a certain mindset, and we've talked about that on the show many times and I've even interviewed multiple people that talk about mindset and habits and whatnot. And that's all important. But it's time that you actually do the things that need to be done, create those habits and that will allow you to become wealthy. And then you can set aside for yourself, you know, a lifetime of true financial freedom. So my guest today is an expert because she's been doing this since she was very, very young. She has written a book called Wealth Habits.It's a great book. And I wanted to bring her on the show to talk about wealth habits. And in her book she talks about six ordinary steps to achieve extraordinary financial freedom. So, I mean, we could have talked for hours, but I took an hour of her time and she was very grateful and gracious about it. And that is what we're gonna talk about today. So without any further ado, let us go straight to that interview. Well, I have a very special guest today. I was looking forward to this interview because Candy Valentino, who released a book back in November just a couple months ago, put out a really good book. And it's something that resonated with me cuz I always liked the topic of wealth. So Candy is the guest today. And let me tell you a little bit about her. Candy Valentino built a business, her business was built before she could even order a drink legally. So at 19 years old with no degree, no corporate background and no money, she founded her first business and went on to scale and exit several businesses in addition to creating a vast real estate portfolio as an investor, which I admire because I had an early start myself,
Hello everyone, and welcome to another episode of Passive Real Estate Investing. So before we get to today's episode, I wanted to bring on one of our Florida property providers. He was on the show about five months ago. We did a market spotlight on Southwest Florida. Reed, welcome back to the show.Hey, thanks a lot for having me today, Marco. I appreciate it.Yeah, so we were chatting, and you had mentioned to me that you're running some specials on properties that you guys are constructing new construction in Northport. Mm-Hmm.
Well, hello and welcome to another episode of Passive Real Estate Investing. I am your host, Marco Santarelli, and today we're doing another market spotlight. So I did one a few weeks ago, and prior to that I haven't done one, I'm guessing in five months. So I think it's time for us to do a couple. And one of my favorite markets, probably because I'm biased, and I actually have a, a good portfolio of properties in this market is the Kansas City Metro area. And for me specifically, it's the Kansas City, Missouri side of Kansas City. But I love that market. I have loved it for many, many years. I probably fell in love with Kansas City about 15 years ago, but I didn't actually start investing in Kansas City until about 2014, 2015. And, and I'm actually in the process in full transparency. I'm actually in the process of picking up some more property there.So I'm adding to my portfolio as I record this video and this podcast. So I wanted to bring on Pat, who is one of our great property providers there. They don't do new construction. They find properties that they can refurbish and renovate and bring up to like new condition in specific neighborhoods. So what we're gonna talk about is the market. Why should you invest there? We're gonna talk about the neighborhoods that you should be looking at, as well as where some of that inventory is that Pat is renovating. And we'll talk a little bit about the properties, we'll talk a little bit about the management side of things. And so at the end of it all, you'll have a pretty good idea of why Kansas City is a great option and maybe one to consider. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Understanding Our Economy Is Easier Than You Think, and More Important Than You KnowSo with that, Pat, welcome to the show.Thank you, Marco. I appreciate it. Appreciate your time and, and doing this spotlight on Kansas City. Thank you.Definitely. So Kansas City is, is a cool city because number one, there are so many water fountains all over the city.
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today's topic is something that I find pretty exciting, and I hope you do too. For some people thinking about the concept of economics is boring. But listen to today's episode because I can guarantee you it will not be boring for you. You know, economists and the economy is something that some people just find to be dull and boring, but the reality is, is it's not when you really start to understand what it is and how it impacts you, because it literally impacts every single one of us. But although many economists are reluctant to admit it, economics is not a science discipline that requires expert knowledge and specialized tools to gain understanding. It's not like biology where you need to know organic chemistry and have access to a microscope or some other equipment to know what's going on in a living cell.And it's not like astrophysics where you need to know the relationships among forces in the universe and have access to powerful telescopes to figure out the properties of a black hole, let's say. But like psychology, economics is a social science. It's an attempt to understand human interactions and how they affect the world around us. So it really focuses on those relationships as they relate to money, as well as the goods and services and the resources that money buys, and the transactions, the financial interactions that we take amongst us. And that's what really shapes our economy, and that's where we see market cycles, business cycles, economic cycles, peaks and troughs, highs and lows, booms and busts. It's really all what we make of it. It's what we do. So I wanted to bring on a great guest who came up with a book very recently called Understandable Economics, great title.And he really, I hate to say dumbs it down, but he really makes it simple and easy to understand. And I thought, as I looked at the book and started going through it, I realized I really need to get this guy on the show, because he can explain things in a very simplistic way and make it easy and fun to understand. And so my guest, Howard Yaruss, is someone who agreed to come on, and he gave me 45 minutes of his time, and I could have literally talked to him for hours. But the thing is, is he had a 45 minute window. So that's what we had. Anyway, enjoy today's episode. I'm sure there will be several, if not many takeaways for you. I would encourage you to pick up his book just to get a better understanding of economics and how it works and how it impacts you and all of us here in the country and literally around the world. So with that, let's jump into today's episode and enjoy. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to The Science That Shows Success Starts with Your ThinkingIt's my pleasure to welcome Howard Yaruss to the show. I've been looking forward to this interview for a while. Howard is an economist, a professor, an attorney, a businessman, and an activist who greatly enjoys explaining complex issues in a clear, interesting and easily accessible way. Howard graduated from Brown University. He studied at London School of Economics, and he's earned a lot of grief from the University of Pennsylvania. He has taught on a variety of courses on economics and business, and currently teaches at New York University. I hope I got that right. Absolutely. And he also has served on the boards of organizations that advocate for safer streets, help the homeless and support the arts. And we were having that conversation before we started recording here today, which is very interesting. And with all that, Howard, welcome to the show. Thank you so much, Marco. Great to be here.Well, it's great to have you on. Why don't you tell us a little bit more about yourself? I mean, I had, you know, kind of an introduction for you,
Welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. I have a very special guest today and my question to you is, how important is mindset? There's a lot of science out there that shows that how you think and how you talk, not only to yourself but to other people actually affects your level of success and how fast you get there. So with all the science out there that talks about your mindset and how you think and how you talk and your NLP or neurolinguistic programming, all this stuff ties back to the success and performance you have on a day-to-day basis and over the course of months and years in your life. Well, one of my friends, Michael Hyatt, wrote a great book recently called Mind Your Mindset, and that book is about the science and success that comes out of positive thinking.But don't let that sway you because we've all heard the term positive thinking, but it's not exactly what you think. And you're gonna learn about that here today with my interview with Michael Hyatt. So with that, let us jump right into the interview. I hope you enjoy it. I think there's a lot of good golden nuggets to take outta this interview today. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Client Spotlight – Scott SaundersWell, it is my pleasure to welcome a special guest. His name is Michael Hyatt, and many of you probably have read his books or know about him, but he is the founder and chairman of Full Focus. He has scaled multiple companies over the years, including a 250 million publishing company with over 700 employees and his own leadership development company that has grown over 60% year over year for the past four years. Under his leadership full focus has been featured in the Inc 5,000 list of the fastest growing companies in America and was named one of Inc's best workplaces. He's also the author of several New York Times, wall Street Journal and USA Today bestselling books, including Living Forward Free To Focus, which by the way is a fantastic book. I strongly suggest you pick that one up, the Vision Driven Leader and Win at Work and Succeed at life. Michael, my friend, welcome to the show.Thanks, Marco. Great to be with you again.Well, it's great to have you on. You have an impressive bio. What did I miss? Maybe fill in the gaps and let us know a little bit more about you.Well, probably the most important thing is my family. So I've been married for 44 years to the same woman. Wow. I've got five grown daughters. My oldest daughter is the c e o of Full Focus. My youngest daughter works in the company too. The other three are entrepreneurs and their own right. I have 10 grandkids and my entire family lives within 20 minutes of me and my 10 grandkids live within five minutes of suddenly. So that's a lot of my focus these days,
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. One thing I haven't done for a very, very long time is a client spotlight. Every once in a while I like to have a real estate investor, whether they're a client of ours or not on the show, to talk about themselves, their journey, their experience with real estate investing, their trials and tribulations, where they have succeeded, where they fall, and, you know, just talk about things that they've learned and, and maybe it'll be something that can help inspire you or get you to that next level in your real estate investing journey.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Market Spotlight: Cleveland, OhioSo with that, I'd like to welcome Scott Saunders to the show. Scott, welcome!Marco. It's great to be with you today. Thanks.Well, I'm glad you're on. We've been talking about this for literally months. I mean, it was, I remember it was last year I was driving up to Lake Tahoe for one of our Power Room mastermind meetings, and we were discussing things that you were working on as far as kind of an educational platform and your investing journey. Now, full disclosure, you are a client, a Nora real estate investment, and you've been doing very well on your own as well as through us. And I don't have an official bio for you, but I'm gonna throw it over to you and just say, Scott, tell us a little bit about yourself.Great, Marco. I appreciate that. Well, I, I wear a couple of hats professionally. I'm in the 10 31 exchange space. I'm a senior vice president with a company called Asset Preservation. I've done 10 31 exchanges, Marco, if you can believe it or not, since 1988. So I've been doing that a long time, helping people defer capital, gain taxes, build their real estate portfolio. So I do that professionally. Then on the side, personally, I'm a real estate investor. I started probably about 20 years ago or so investing in real estate. And then at the last few years I've really kind of accelerated that and been acquiring more assets and really growing that side. And so it's really been a journey like it is for everybody. Like you said, it really well you, you've got ups and downs you know, a few, few painful learning experiences and happy to kind of share some things that have gone right and maybe some things I would've done differently that might be benefits to other investors out there.So for me, I wanted to jump in and said, you know, I want to, I wanna start swimming in that pool, not just watching other people do it. So my first investment was probably about 20 years ago. It was a little fourplex in town, kind of what I call a c class fourplex. And I did everything wrong on that. Right. I, I bought it, I was gonna manage it, screen the tenants. I'm not handy at all. I can barely change the light bulb, so, right. I thought I could paint the walls and take care of it. I was naive. I bought a C-class building and I thought, you know, I'm gonna make this nice. I'm gonna landscape and make it pretty. I'm gonna repaint, I'm gonna put in some fence for kids to play. And the reality is I put all that time and effort in.It was still a seaquest building on a seaquest street. It didn't change the quality of 10 at all. And yet I put a lot of, you know, blood, sweat and tears in. And then I just learned the hard way. I'm not good at managing properties. I'm not good at maintaining them. I'm not really excited about screening tenants when I work full-time. And so at the end of the day that that fourplex was sold, now it's probably not wise. I probably should have gotten a property manager done something to hold onto it cuz it's now tripled in value from where I bought it, you know, in the early two thousands. So that was kind of a, a first experience and it really now guided me to doing things much more passively. You know,
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, it's been a while since I did a market spotlight episode and I think we're overdue. In fact, I recently had a few people tell me, Hey, you should do another market spotlight. So we've got two being queued up and I'm doing one interview here today with Tom, one of our property providers, fantastic property providers in the Cleveland, Ohio Metro. And so we're gonna talk about that market and the opportunities available to you there. My goal is for you to have a better understanding of the Cleveland Metro and why it's a good market for investing purposes. So I guess let's just jump right into it. FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to How to Have it All – Kris KrohnTom, welcome to the show.Hi. Thanks for having me.Well, it's great having you on. I, I know you've been providing us some good quality product, and one of the things I like about your companies is they're vertically integrated. You not only find the properties in the right neighborhoods, meaning it's the acquisition, but you do all the renovation work and also you have a property management company full service. So you hand the property off from one department and company to another, and you're very close, if you will, to the properties that are available for investors a around the country and wherever else they may be. So let's kind of start high level. I always like to ask the question, you know, why invest in Cleveland? And maybe you can kind of give us, you know, however subjective or objective answer you want.I was born and raised here, so I have to tell you, it's probably one of the better cities in the country. But other than that, you know, property wise, I think we have a consistent and steady growth here, appreciation, steady, we're not going straight up, so we don't have the fall or drop off ever. So I believe the steady growth is the answer there.So it's a big city. I'm not exactly sure what the population is, but what makes up the economy? I always like to look at markets in terms of how diversified the sectors are within the economy, you know, so it's not a, quote unquote one trick pony market like, you know, heavily weighted on oil and gas. And when that fluctuates or you have an economic change or recession related to that particular sector, it affects all the people within that market because there are layoffs and it's got a trickle down effect from, you know, the primary industries to the secondary and tertiary industries. You don't have that in Cleveland. You have a pretty broad and diverse economic pool, if you will. Maybe you can talk a about that for a minute.Absolutely. So, you know, historically we're a very blue collar town manufacturing the steel mills, things like that. However, you know, through the recent decades we've taken more of a shift to the, to more of a white collar industry such as banking, hospitals, you know, a a lot of financial institutions are here.Yeah, that's pretty interesting. What do you think is driving that diversification? Is it just because real estate is relatively speaking cheap there and, and industries and companies and corporations want to move there? Or is there something else driving that?You know, I think a lot of it is that, you know, for example, like the Federal Reserve is one of the federal reserves is here. And so I feel a lot of the banking institutions like to surround themselves around that. So we have some larger banks headquarters here along with some, some other industries like Sherwin-Williams, progressive Insurance that, you know, again, are, are heavily white collared businesses. And I think, you know, there's just the cost of living's low. It's easier, I think on employers to get more cost effective employees for that matter then.Hmm. Yeah,
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and today I have a special guest. But a couple of quick announcements. So I just got back from our final Power Room mastermind event in Las Vegas. As I'm recording this, I'm still recovering from being out of town for a week. And the reason I was out of town for a week this time around is because we had the official opening night for one of my new Broadway musicals. It's called A Beautiful Noise -The Neil Diamond Musical opened up on Sunday night. It was incredible. We had a packed house. Everybody was very excited. We actually even had the one in the only Neil Diamond himself attend. We gave him his own box seat up in a balcony off to the left of the stage. And he said, you know, I'm not gonna go on stage and sing.This is not my show, but he said, if you were to hand me a microphone, maybe
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. So today I have an interesting guest. It's a little bit focused on the economy and economics to some degree, but our conversation's gonna touch on inflation, deflation. Are we in a recession? What's going on with debt? Why do we continue, quote, unquote printing money? Is it even necessary? In fact, is is inflation even necessary? My guest is a very interesting guy, David Stockman. He worked under President Ronald Reagan for a number of years. He's got over 20 years experience on Wall Street, and he publishes some regular content through his newsletter that is a little bit contradictory to what you normally hear out there, especially from the talking heads in the mainstream media, which is a refreshing take because there's all these questions, you know, are rising prices are, ask Asset is important. Is it good, is it bad?Who's getting hurt? Is, are it the savers? Is it the people who are stacking assets? He just released a new book, interesting title, it's called The Great Money Bubble. I even asked him, you know, what exactly is a money bubble? Anyway, so I had an interesting conversation. I could have literally gone for hours with him. I didn't out of respect for his time. In fact, he told me he's got 40 minutes and I think I dragged it out. So once we do some trimming and editing, it'll probably cut it down to about 40 minutes on this episode. But yeah, I kind of forgot to ask him one question, but I, I'm gonna put it here in the intro for you. I wanted to ask him to talk about his four step strategy to protect your savings and your portfolio. We just ran out of time, however, it is covered in his book, his new book, which just came out, oh, I don't even think three weeks ago.It's, it's got a red cover with a dollar bill on it. It's called The Great Money Bubble. So you can look that up there. I guess the other thing I wanna mention is that, you know, he's somewhat more bullish, or excuse me, more bearish about real estate and the housing market than most anybody I talk to. And, you know, he's got his reasons for that. And that's all well and fine. I think what we all agree on is that there is a correction going on and it will continue for a little while. And of course that's very much market specific. Every market is different, as they say in real estate, all real estate is local. And when you're talking about a country that has over 500 metropolitan areas and then literally thousands of smaller micro markets, you can well imagine that what happens in one area is gonna be completely different than what happens across the tracks or across the river or across the country in another market.We didn't get that granular in our conversation. We were just talking at a very, very high level. But with rising interest rates, rising mortgage rates, and with, you know, kind of a recession looming on the horizon as well as a lot of markets being somewhat overpriced with sales, slowing down naturally. You know, it's just simple economics 101 prices will cool off in many areas, but that just leads to more opportunity as a real estate investor. There's gonna be more inventory, more deal flow, more options for you. The numbers might be better in terms of pricing coming down, even though mortgage rates have gone up often, that just lends itself to a better deal. But again, it's all math. It's not emotion. You just run the numbers and see if the deal makes sense. But there are always opportunities out there. Like I say, it's not a matter of when to invest, it's a matter of where to invest.And when you have a country as big as this, with as many markets as we have, clearly there will always be opportunities. And, you know, if that's something that we can help you with, certainly let us know. Just contact my team here. Alright, without any more delay, let's jump into my interview with David Stockman.
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today I wanted to take a different topic and talk about that. No guest, just me talking about some of the stuff I've been talking about recently on some presentations I've done about inflation and promissory notes more specifically, I had put together a presentation titled How to Earn 15% Interest and Beat Inflation with Promissory Notes. So I'm not gonna be talking about promissory notes today. I am gonna talk about inflation, what it is and how you can beat it. There is essentially a formula and some definitions I guess you need to know in order to calculate whether you're getting ahead or behind the inflation game. So let's start with this. I like these two quotes. So the first quote is by Ronald Reagan, who was a popular, famous, great Hollywood movie star back in the day, but he was also the US president from January, 1981 through January of 1989.So he said that “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” And although that's pretty graphic, I think it paints a picture of what inflation, you know, might be doing, not necessarily to you physically, but in terms of your, your wealth and your purchasing power, or in other words the cash or the savings that you have. Another great quote I love is by Milton Friedman and Milton Friedman was an American economist and a statistician who received the 1976 Nobel Memorial Prize in economic sciences. Super smart guy, great books, great articles, just a very intelligent, cerebral person that makes economic things very easy to understand. But such a simple quote, “Inflation is taxation without legislation.” He's basically saying that inflation is robbing you or stealing from you, like Ronald Reagan was saying, but you didn't ask for it.You didn't vote it in, you didn't want it, you didn't request it, nobody votes for it. But you know, it's just kind of brought upon us whether through monetary policy and what, you know, the politicians in the Federal Reserve decide to do, or it's brought on because of supply and demand dynamics. You know, the constraints, supply chain, bottlenecks, whatever it may be. You know, that's price inflation as opposed to monetary inflation, but it's inflation nonetheless. So inflation is taxation without legislation and what he's referring to is what the politicians are doing with monetary policy and printing, printing money and bringing that currency into existence and putting it into our economic system.So I get ahead of myself here. So a couple things I want you to take away today is, you know, why is inflation a wealth killer? How do you beat high inflation? And what my favorite inflation hedges are, there's four main inflation hedges that I have. So let's dive into that. Hopefully you'll get some good takeaways from this today and maybe I can help you point your compass in the right direction.FREE copy of The Ultimate Guide to Passive Real Estate Investing.If you missed our last episode, be sure to listen to Housing Trends – November Market UpdateSo, let's start off with a survey that was done recently. It was, I think earlier this year, June, 2022, there was a study or a survey done with 19,000 adults in 27 different countries. And they were all asked, what are your top global concerns? What were they over the last two years? Now this question was asked, you know, about six months ago, five, six months ago. And what was interesting is what was once the top global concern across all these people in 27 countries was coronavirus. It peaked at the beginning of 2021 and then declined rather rapidly. And as of today, it is one of the least or lowest top global concerns. Yet at the same time, there was two other things that I, I was looking at on a chart as far as what those top global concerns were.And one thing that was declining very clear,
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. So today I am recording on the morning of Thanksgiving. So to everybody listening, happy Thanksgiving or Belated Thanksgiving. I wanted to do a quick episode here on Housing Trends. In fact, I might actually turn this episode format into a monthly episode. I'm thinking about it and I'll just do a housing trends at least quarterly, but possibly every month. And I was thinking of calling this episode not entirely seriously, the good, the bad and the ugly, but there really isn't a lot that I would call ugly. But there are some dynamics in play that will not make the next year or two all that attractive for some people in some markets. And I, I'll talk about that. But I just wanted to give you a quick episode with a snapshot on what is going on with the economy and housing in general across the US and maybe spotlight two or three different markets towards the end.
And I might do that on an ongoing basis so that way you have an idea of what's going on potentially in a large market, like a tier one market, a smaller market like a tier two type of market, and possibly a focus on one of the markets that we are in. So if you like this type of content and you'd like to see me do a housing Trends type of episode every month, or at least every quarter you can let me know, just shoot me an email or drop me a quick message from our website at passive real estate investing.com. You can click on the contact or the Ask Marco link and just let me know. But my intention is to do that going forward. So you don't necessarily need to let me know, but I'm happy about suggestions.
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Okay, let's begin with mortgage rates.
Last week we saw the largest drop in mortgage rates in 41 years. We had a 0.47% drop, almost a half a point, and that was pretty substantial. The main driver for that was really just headline inflation was subsiding. And so that was considered good news in the markets and because of that, we saw mortgage rates start to decline. And I think that's gonna be a little bit of a trend unless there's something big that comes along that pushes it back in the other direction. Some of the other largest mortgage rate drops in history happened in the early 1980s. Really, there were three of them that happened in 1980, specifically in May where we had drops of 0.5 3.78 and as large as 1.23%. That's a huge drop in mortgage rates, but that was a long time ago. But I'm happy to see mortgage rates starting to decline.
And hopefully over the next six 12 and even 18 months, we'll see mortgage rates continue to go down and that'll help people with affordability as well as investors looking to get cheaper debt financing on their investments. And speaking of inflation, it is still up there. The core CPI or consumer price index is floating around 6.4%. The cpi, including all items, is at 8.1%. The good news is it's slowly coming down, so it'll take a while, but we are seeing some contraction in consumer demand and that will ultimately lead to lowered inflation because the demand will take away the upward pressure on pricing across the board, including housing, which I will get to here in a moment. So today I think it's realistic to essentially lower our housing outlook for the next three, six, and maybe even 12 months. Things have been, I guess, deteriorating a little faster than many of us have expected.
So the backdrop about six months ago was one thing, but today things are looking a little bit more sluggish. And so about six months ago, mortgage rates were floating around the 5% mark. The core CPI was around 6%. And the general feeling was that there was a good chance of recession late in the year,
Hello friends, and welcome to another episode of Ask Marco on the Passive Real Estate Investing show. I wanna begin today with a text I got last night. I was texting one of our investor clients and a person who's become a friend. I really respect him. He's a very successful entrepreneur and real estate investor. His name is Steven. I actually asked him, he made a comment to me in a text and I actually asked him, I said, would you mind if I shared this on the next recording of my podcast? And I was thinking of my Ask Marco episode here this morning, and he said, that's fine, because he was really passing the message onto me that he felt would be an important reminder for other real estate investors to understand the power and benefits of real estate investing, especially in today's environment and climate. And looking at how prices have appreciated so much over the last few years.
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So he said, yep, go ahead. You know, ignore the grammatical errors, but his text is actually pretty straightforward and clean. So with that, I'm gonna read what he sent me and just make a quick comment about it. So Steve texted me last night. He says, I was sharing with someone today, episode number 299. I listened along with him as a side note, the name of that episode or the title is The Real Returns of Real Estate Investing. Steven goes on to say, I have invested in nearly 2,250 unit or more class B plus properties. So that's a lot of property, a lot of units, probably in excess of 12 million in cash. I don't consider myself someone who needs a lesson like the one in episode number 299. While I listened along, I did not learn anything new. But as you came towards the end, I did get a good reminder.
I was fortunate enough to have refinanced plenty of money before interest rates began to jump. I received millions in proceeds, and as you know, I was looking for cash flowing investments, something that's getting harder to find these days. Near the end of the episode, you grounded me by reminding me what I already knew from my years of experience, the true value of these investments, the appreciation, amortization, and tax benefits gone are the bonus. Instant cash cashflow deals. It's time to adjust my thinking out of 2015 and get my money working through these times and appreciate the true benefits of the assets I wish to purchase. I can't be the only one who can benefit from this reminder. It might be a good idea to remind all of your cash flow hungry listeners that though times they are changing, there is still great wealth creation to be made with unrealized gains in low cash flowing properties.
This is an incredible reminder. It's a great point. It's really summarized in the last part of the last sentence. There are still great wealth creation opportunities to be made with unrealized gains in low cash flowing properties. So this is true. I mean, there are five pillars, as I call it, with real estate. And Steven points out appreciation, amortization and tax benefits, you know, being three that are very important to him and something that had helped him not only create a lot of wealth, but preserve a lot of that wealth. So keep that in mind when you're investing in real estate, especially if you're focused on markets that have appreciated quite a bit and are still somewhat pricey relative to where they were in 2015. And your cash flows aren't as sexy or as high. Your cash on cash returns aren't that high. Just remember that this is the long game, not a short game.
So if you're in it and your property is carrying itself, it's paying for itself. Even if you don't have a lot of cash flow, at least not today, that may change in 3, 5, 7, 10 years from now. You've got to keep in mind the benefits of that real estat...
Welcome to another episode of Ask Marco on the Passive Real Estate Investing show. I appreciate you taking the time to tune in and listen to these relatively short episodes. I decided to take another handful or so of questions today. I'm getting more questions actually, which is interesting. And it might have to do with the markets, the volatility, the stock market, continuing to pull back higher interest rates, mortgage rates, maybe some uncertainty or lack of confidence about what is going on. We're living in interesting times. It's election week as you know, and there's just a lot going on. I was actually watching the markets here recently, especially over the last few days, and I couldn't believe how much movement there has been even on a daily basis. And so I'm sure that's pretty unnerving for many people. It is for me, and I'm not even in the stock market and, and that might be a reason why I'm getting a lot more inquiries or questions about our promissory notes with Norada Capital.
And since I'm getting a lot of questions about that, maybe I'll just take 30 seconds to tell you about that or a minute. And if you're interested in learning more, you can go to the website at noradacapital.com and it'll give you a much more detailed breakdown of information. And then you can talk to my team if it's something of interest. But real quick, these promissory notes are not real estate related. I'm gonna take that right off the table because a lot of people wonder, you know, what, what is the fund built on? And it's really a large portfolio of businesses. There's over 16 companies in the portfolio. These are about half e-commerce based businesses that are growing profitable and literally growing month after month, quarter after quarter. And there are other assets in the fund as well. So it's a large portfolio of essentially viable businesses that are growing that have a very large market cap.
And the revenues and cash flows from those businesses are what give us the ability to issue or pay 12 to 15% per year interest on these promissory notes. And this is paid monthly. So if you're looking for passive income or predictably passive income, meaning that it's paid at the beginning of every month, direct deposit into your bank account to the tune of 12 to 15% per year, then you might want to take a look at these notes and now grant it, It's not real estate, it's not a hard asset, it's a paper asset. But if you're looking for something to generate income or cash flow, something that exceeds the rate of inflation and something that can supplement what you already have or, or the portfolio you've built, and especially if you have a self-directed retirement account of any kind, promissory notes are ideal for self-directed retirement accounts, whether IRAs or 401ks.
Anyway, again, for more information you can head over to noradacapital.com, NORADAcapital.com and you can learn more about it there.
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All right, so let's get to some questions here. The first question, interesting one, actually, all the questions today are pretty interesting. They're all over the place. So the first question comes in from Aaron. His email literally just said, turnkey availability. And I thought, well, maybe it was a turnkey question, but it's not. He says, Marco, first off, I have really enjoyed listening to your podcast. While I haven't listened to all of them, I have started at the beginning while I eagerly await new episodes, I'll do my best to keep up. I've been traveling a lot, so I, I'm trying to crank them out every week. Anyway, he says I appreciate the nuts and bolts discussions that the books don't mention.
I don't need motivation, I'm already sold. I need the details. You provide that. Thank you. You're welcome Aaron. So he says, I am a new investor.
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, today I wanted to bring back a good friend of mine, Mr. Aaron Chapman. He is a 24 year veteran, as in like 1997. That's how long he's been in the finance industry. He's focused on real estate investors and doing investment loans. That is his core expertise. He has a great team. The last count I had was 11 staff members. That's probably grown at this point, but him and his team, that's all they do is they work with real estate investors to finance investment property. He's a great guy, sharp dude, as I like to call him. He likes to follow what's going on in the mortgage market and the market in general. He talks about inflation. He likes to talk about how to finance intelligently even with rising interest rates. And so those are some of the things that we're gonna talk about today. None of this is scripted. This is all on the fly off the cuff, him and I just thought let's just get on and record a podcast episode to talk about the state of the market and how to proceed in today's environment. And I don't even have questions written down for him. So we're just gonna see where this goes.
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If you missed our last episode, be sure to listen to Ask Marco – Too Many Properties for a 1031 Exchange, Buy a Home or Rental First, Building an Acquisitions Team, Fast-tracking
Aaron, welcome back to the show.
Thanks brother. I did notice it's gotta be a long time since I've been on here, cuz when you said you had 11 staff members down, we're at 32 now, so it's been, it's been a while. .
Okay, well you're right. So it's been a while. Either that or are you ramping?
There was, I ran at 11 for, for God, it had to be like 6 or 8 months to a year. And then we just start finding the 11 was not enough. And we keep adding, keep adding, keep adding. Now we got quite the, quite the process and quite the group.
Well, growth is good. That's good. So you must be doing a lot of loans then.
We are, we've done as much as averaging about 125 a month. It's not that high right now, but it's still high enough that I get recruiters calling me all the time saying, Hey, you're one of the few out there. Still getting a lot done. We're still doing quite a bit of business a lot of business. In fact, I got a call, obviously you ever heard of an outfit called Modex. They called me up to to, to interview me as the number one loan originator in the state of Arizona and like number six or seven in the United States for the transactions closed over the last 12 running months. Like where the hell did that come from? And they, they track everybody who does loans, whether you're a licensed loan originator, you work at a bank. And they said there's 1.4 million people out there and that are doing this. And that's where I sit amongst them, which was pretty amazing to hear. I don't pay attention to it. So it kind of threw me back a little bit.
So anyone listening to this right now is hearing two things. One, you're growing, which means you're doing more loans even with the rising rates, you know, as the backdrop. So let's talk about that. Let's probably a good starting point. We've seen mortgage rates more than double since the beginning of the year. In January we were at sub 3% for a 30 or fixed conventional loan. You know, you can fill in any of the gaps here, but today we're more than double that. And so people are asking the question, you know, does it still make sense to get a mortgage loan to invest in real estate with financing? And if I use leverage, how much and do the numbers pencil out? I mean, I'm throwing a lot at you here. Obviously we can break this down into multiple questions, but that's probably one of the main questions people are thinking as they're listening to this and they wanna know what your thoughts and opinion is. So let's just throw it out on the table and just see wha...
Welcome to another episode of Ask Marco on the Passive Real Estate Investing show. You know, we've been getting some really good questions lately, so I grabbed about four, five, maybe six of them here today and I'm gonna go through them as quickly as I can and I'll take as many as I can. So let's jump right into it.
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If you missed our last episode, be sure to listen to Is It Wise to Buy Real Estate When Interest Rates are Rising?
The first question is from Todd. And Todd writes in, he says, Hi Marco, love the show. I am a long distance investor from California. Over the last 20 years, I've acquired over 50 doors in Ohio and Texas. These are a combination of single family homes and multi-family buildings. They are worth around $4 million and I owe about $1 million. I'm interested in selling some or all of them and doing a 1031 exchange into a higher value property or properties. What is the best way to accomplish this?
It seems daunting to try to sell all the properties at once. Thank you Todd. Well, Todd, great question. Yes I'm stressing thinking about it as I read your question. It is daunting. It is a task, a monumental task to try and sell 40 doors, or in your case actually 50 doors in an effort to do a tax-deferred exchange, a 1031. So first of all, I will say you are in a great, great position. Congratulations over the last 20 years you've amassed a $3 million addition to your net worth. I don't know what the cash flows are on your properties, but I'm sure you're probably sitting in a very good position. So congratulations to you. This is what I hope everybody does listening to this show and reading our content and visiting our websites is to create wealth and create passive income and be in a situation like you're in.
So this problem is a good problem, so congratulations on that. Now here's your challenge. Doing a 1031 means that you need to be selling all these properties or some of these properties, not necessarily on the same day, but within the same time period. And for those that don't fully understand a 1031 exchange, it's essentially a tax-deferred exchange. You need to sell your property within a certain period of time, take those funds through an accommodator, a 1031 exchange company and roll those into newer properties, not as new construction but new to you. So the challenge you have is that you need to identify the new property or the new properties within a 45 day period. That's not that difficult to do, especially if you're working with the right people or the right team. The identification piece is not that challenging and 45 days is typically more than sufficient unless you're in a very, very, very tight market like we have been over the last few years.
It is not so bad right now. We have a lot of inventory and a lot of deal flow. So the identification piece is not that difficult. The challenge is during that period you need to close on that property or those properties you've identified in the 45 days in order to stay within the 1031 guidelines. And if you don't, then the proceeds from your sale become taxable. You are not deferring the capital gains taxes. So the real challenge in my opinion is in selling your properties, multiple properties, plural within that time period to be able to close in 120 days, or excuse me, 180 days. So is it possible? Yes. Have people done it? Yes, we've worked with investors and clients that have had multiple properties that they've needed to sell and take the proceeds and roll those into newly identified properties. The challenge on your end is doing that with the number of doors that you're trying to sell.
So it may make sense for you to break that 50 doors down into smaller chunks unless you're trying to go for a much larger property with a higher property value and a larger down payment and take those 40, 50 doors, whatever you're planning to sell and roll all the sales procee...
Hello my friends. Welcome to another episode of Ask Marco. Well, sort of actually what I did is I took a question that someone submitted just recently and decided to do a full episode on it. It won't be a long episode, but I thought it was a really good question because it's probably a question that many people are asking themselves today, and that is, is it a wise idea to buy real estate right now when interest rates are rising? And I thought, Wow, you know what? That's a good question. So the original question came in from John and he said, Hi, is it wise to buy real estate or property now when interest rates are hiking? In regards, John. Well, let me take that question and expand on it because I think it's a good question to ponder.
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And I'm sure a lot of people have been pumping the brakes or backing off of investing in real estate because they think it's getting too expensive to cover the financing. Well, as a side note, just remember that it's not you that's paying the mortgage. You're not the one paying down the debt, it's your tenant. So as long as the numbers make sense on your investment property, if you've done your due diligence and the numbers make sense, they pan out, then by all means make that purchase, make the investment, because over the long term, real estate will pay for itself. Real estate will create wealth. Real estate will generate increasing amounts of cash flow or income for you. It's just a temporary thing when in the first year or the first few years when you buy rental real estate, that cash flows are lower because the rents aren't high enough or the mortgage amount is quote-unquote too much or large. Don't forget, you know, 10, 20, 30 years ago when you or your parents purchased their first property or that property back then and they were wondering if they could afford the mortgage payments.
Well, it might have been a large number back then, but in hindsight, looking back after 10 years, 20 years, even 30 years, you might look at that mortgage payment and laugh at it because it's so small, relatively speaking in today's terms. So keep that in mind. You have to have a long-term perspective or long-term horizon when it comes to investment real estate if you're going to be an investor. So speaking of interest rates or more specifically mortgage rates, let's look at history. Mortgage rates actually rose pretty sharply this year in 2022. They surpassed 6% on September 15th, and this was the first time this happened since 2008. And even though those increases have been pretty significant, 30-year mortgage rates are still below historical averages, which is nearly about 8%. So keep that in mind, even though we're at roughly 6% or so today, you have to keep in mind that historical averages are actually higher than what we see today.
Granted, it's gone up quite a bit over the last six months, seven months. You gotta put everything in perspective and run the numbers. Real estate investing is as much about math as it is about fundamentals. And you also have to keep in mind that mortgage rates are just a benchmark of sorts. If you're a borrower with strong financials, good credit, a good credit profile, you can get mortgage rates that are competitive and below what we see as industry averages. Plus, you have to remember that with mortgage financing, you can often pay points. In other words, you can pay prepay a certain amount at the close and buy the rate down so you can lower your rate by prepaying a certain percentage of that mortgage loan upfront. So during 2020 and 2021, during the Covid pandemic, the Fed took what some people might call as emergency actions.
In other words, what they did is they pushed interest rates and therefore mortgage rates down b...
Hello my friends, and welcome to another episode of Ask Marco. I am recording this episode today here on the island of Maui in Hawaii. I'm out here to do a presentation on day two of a three-day event called The Wealth Summit, and that's tomorrow. So I wanted to get this done because I have been out of town and I have not had the time to actually get down and do another Ask Marco episode. But anyway, today's the day. So quick reminder, for those of you interested and who qualify, we have our next Power Room mastermind event, December 5th through seventh in Las Vegas at Caesars. If you wanna learn more, go to our website at powerroom.com make sure it's a fit for you, and also find out if really it's something you qualify for, if you're interested, just hit the application button, fill out the form, and you will be contacted by the one and only the lovely Annie Yacht.
She is amazing. You'll have a great conversation with her because she will be able to answer a lot of questions for you and get you plugged in with who we are, what we do, what you'll learn, all the great stuff we do, all that good stuff. So anyway, check that out@powerroom.com. And other than that, let's get to the first question.
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So the first question today comes from Diego. He says, Hi Marco. I wanted to ask you that if you could go back to when you were 23 and you started from nothing, what would you do differently to get into real estate investing or entrepreneurship in general? What steps would you take in order to ensure success? Thank you, Diego. This is a good question. I don't remember if I answered something similar to this a few weeks ago, but I love these personal questions. I think they're great to kind of just tap into other people's experiences and my mind, if not other people's minds.
But for me personally, there would be not much that I would change or do differently than what I did other than maybe do it faster and fast track it, even though I really started as a teenager diving into books and knowledge related to real estate investing and business in general. So let me answer this question for you a little differently, Diego, and for the benefit of people listening to this. So if it were someone else and you would were to go back, you know, as a teen or an 18-year-old, a young adult, or 23, I assume you're 23, that's why you're asking, what would you do differently or what would you do? So the first thing, and I've said this many, many times over the years, is to educate myself. Now, I was already doing that, so I'm basically telling you educate yourself, and that means consume as much good content as you can as it relates to real estate investing, investing in general and business because those things are very tightly interconnected.
You don't need to be an entrepreneur or start a business in order to be an investor or a successful investor at that, or to even get involved in real estate investing. In fact, a lot of people just get into real estate investing, have relatively speaking, a superficial knowledge of it, but have the right team to work with them and they become very successful. But the more you learn, the more you earn. There's just a lot of truth in that. So educate yourself, and that means listen to podcasts, read books, as many as you can consume. They're cheap. It's the cheapest form of education. You can just go to Amazon and type in investing a real estate or anything like that and find all kinds of great books with great reviews, and you can learn a lot and be one of the most well-educated people, probably within your circle of friends and family.
So educate yourself, do it early and dig in deep. Secondly is learn and observe from other people. Other people who have success and experience are already doing it.
Hello and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. You know a lot of people, maybe most people don't fully understand the power of a self-directed retirement account and how you can use it to compound your returns, whether it be from promissory notes or real estate or equities, trades or whatnot. The ability to be able to defer or even eliminate your tax impact gives you the ability to take those returns and use them to further your investment activity and compound or accelerate your returns. So my guest today is someone who is incredibly knowledgeable, smart, smart guy, and I've had some great conversations with him. So I've decided to bring him on the show for at least one episode, but it'll probably be two, maybe three, to talk about self-directed retirement accounts like the IRA and specifically as it relates to investing in real estate.
So that is what we're gonna talk to John today about, and we'll talk about the pros and the cons. Now granted there are some cons, but it's mostly pros. There are moer advantages than there are disadvantages. In fact, very few disadvantages of using or investing within one of many self-directed retirement accounts. So with that, let us get to our interview with John Bowens. I hope you enjoy it. Now, there's a lot of good nuggets in here. It is a bit of a longer episode closer to I think 55 minutes, but stick around because there are golden nuggets throughout the entire episode. And enjoy.
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It's my pleasure to welcome today, John Bones to the show. He is the senior Director of education and client Success for Equity Trust. And if you don't know equity trust, they are the largest trust company in the country and I'll let him tell you more about that. But he has been in the self-directed IRA business for 15 years and has trained over 60,000 investors. John is also an active investor himself. He's focused on single family residential, both on the rental side as well as the private money lending side. So with that, John, welcome to the show.
Thank you so much Marco. Thanks for the invitation. Well,
It's great having you on. You're a super smart guy. I've had the pleasure of meeting you not too long ago at our Lake Tahoe Power Room Mastermind event and sat down with you a number of times and got to know you. I just love your depth of knowledge, which is something that I'd like to tap into a little bit today. Why don't we just take a minute here. If you can just quickly tell us a little bit more about yourself and your involvement with Equity Trust to give some context for our audience.
Sure, absolutely Marco. So again, thanks for having me. Really excited to share this information and education with your audience. My background is, is in real estate. I've been in real estate for, for 20 years now, and I stumbled across this concept of being able to use retirement plans to invest in real estate about 15 years ago. And what I was able to do is, is take my background in passion in financial planning and couple it with real estate. Again, I'd been in real estate for 20 years and I was working for a commercial real estate company and we went from, you know, a 95% occupancy rate to about a 60% occupancy rate in the great recession. And I spent my days going from where I was putting new tenants and new properties to locking tenants out and moving those individuals onto their next venture.
And so I, I stumbled across equity trust during that time period and I decided to make a, a little bit of a career adjustment, which I'm very grateful for coming across equity trust company and making that career adjustment. Because what it opened me up to is the ability to take full control of my IRA, 401k or other retirement plans.
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli well, I'm not gonna spend too much time talking about anything other than my guest today. The one and only Robert G. Allen, the reason is, is because the interview I had with him went longer than I thought. And honestly, I only scratched the surface of the questions I wanted to ask. I literally scripted a whole bunch of bullet point questions and just ideas of things I wanted to discuss. And we went down to, I think the second one so there was a lot left on the table, but the thing is we went for about 45 minutes and I didn't wanna keep him any longer, cuz we were at the top of the hour. And obviously I'm recording this intro to this podcast episode after the interview. That's how I know what we covered and how long we went, but it was a lot of fun.
I love chatting with Bob. He's a very genuine knowledgeable person. Who's very successful, has created multiple successes and hence, you know, one of his books, multiple streams of income, I mean he lives what he talks about and what he writes about. So with all that, let's just go straight to the interview. And if you enjoy it, remember to subscribe if you haven't done so and leave us rating review because I truly appreciate all the great positive feedback that we get for the show. And it just keeps me motivated to keep doing this and I have fun doing it. So let's get right to our interview with Bob.
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Well, it's my honor and pleasure to welcome back to the show. My good friend, Robert Allen, and as you know, Robert is an author and a mentor he's beloved for his down to earth style and highly effective systems. He's been teaching and coaching for so many years. And as I know him, his purpose in life is to help you achieve your dreams. He's been teaching and writing towards that purpose for 40 years. Maybe more. I'm not even sure anymore, but his first book, the colossal number one, New York times bestseller Nothing Down, which is on my bookshelf times two, cuz I have two copies of it is the largest selling real estate investment book in history. And then he had another book which was a massive bestseller called Multiple Streams of Income. And it was used to coin that phrase, multiple streams of income, which I hear often from so many different people. And one of my favorite books that he's written, which is what we're gonna talk about today is the One Minute Millionaire. So with that, Robert, welcome back to the show.
This book right here, right?
That one there. And guess what? I'm holding it up too. I have my own copy with your autograph in it.
There you go. Okay. So do you see the the butterfly flies up? You know, there's the butterfly. Yep. Bottom right hand corner. Is it flies up? You can do yours to see that fly up there.
it's such a novel book. I mean it's purple. The pages are colored inside with purple. It's got a butterfly that flies up as you flip the pages. It's really cool.
And it's two books in one, it's a non-fiction book and a fiction book. Right? So because some people are left are left brain. Some people are right brain. So a right brain person reads a book that's left brain and they go, oh, I don't think I'll ever be able to do that. And then a left brain person, you know, they, they they're part of them is right brain. And so they need to see pictures and images and they, so this book kind of combines both the left hand side is a, is, is the how to side the right brain side is the, the Y two, you know, how, how do I really pull it off when it's really, really important to me? So it's, I think it's, there's never been a book like this.
I've never seen it. It's a very interesting book.
Hello, and welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Today we have another great episode today is about your credit score and your credit profile. Something very important as you know, because the better your credit, the better financing in terms you get on your loans, whether it be mortgage financing or for car loans or appliances or furniture or whatever it might be, even for renting. I mean, a lot of landlords will pull your credit to see what the risk factors are preventing you from making timely payments every month to them. So credit is incredibly important. It's something you should build and protect. And my guest today is gonna talk about what credit is, how it works, how to build it and protect it, and some of the hacks to improve it. Some of them are quick. So you might wanna stick around to the very end of this episode and listen to some of the quick hacks that allow you to boost your credit and quickly with that. Let us get to our interview with Todd and I hope you learn a lot from today's episode.
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Well, it is my honor to have a special guest today. His name is Todd Wilson. Todd is a loan officer, but he's also a credit expert. He teaches people how to take control of their credit. He's the author of a great book called Crack the Credit Code. I love that title. Todd spent two decades learning about credit and after experiencing the effects of not knowing enough about it, he really made it his mission to research all the smallest details about credit and how it works. So with that, Todd, welcome to the show.
Thank you. How are you Marco?
Doing great. It's great having you on. And there was a lot of fun chatting with you before this recording. I'm kind of excited to dive into the meat and potatoes of this topic because everybody has one common denominator and that is they have a credit profile and they have a credit score. Most people don't know how it works, how to build it or how to destroy it. They probably know how, how to destroy it better than they know how to build it. but you know, it's something that we've talked about in the years past on the show. And I just think it's well worth revisiting, especially at a greater depth with you, because it's something that we need. It's important if we're gonna take control of our financial lives or we're gonna be borrowing capital to invest in real estate or whatever it might be. So I really think this is an important topic for everybody to listen to this touches everybody. It's not one of those things where I might be interested in promissory notes, or I might be interested in real estate, or I might be interested in this or that this impacts everybody. So with that, why don't you tell us about yourself? How did you get into this whole credit expert space? What was your journey?
Well, starting out as a loan officer, I had to learn about credit to begin with and, you know, everything was going pretty well as I was learning about credit and improv my own and then 2008 hit and it hit me pretty much as hard as it had hit anybody at all. I mean, you know, I went through bankruptcy, foreclosure, you know, lost everything. And I decided at that point, credit kind of got me into that mess. So I wasn't gonna use credit anymore. And so I didn't use credit for about three years and I realized how much that was actually holding me back because I couldn't buy a house. I couldn't buy a car, couldn't even rent a car or get a hotel room without a lot of trouble. So I decided that I had to get back into the credit game, but I didn't know how to do it.
And so I decided to ask a bunch of other people who were in the same industry, cuz I figured they know about credit too.
Hello, my friends. Welcome to another episode of Ask Marco. It's been a while since I did an Ask Marco episode. So I am long overdue, but I'm happy to be here. And I've picked out five or six questions, covering a range of topics from the emails that I get from our website. And hopefully today we'll cover some things that will provide you food for thought and help you in your real estate investing journey. And remember, I always say that education is critically important. It can be free. It can be cheap. There are hundreds of thousands of books on Amazon. It doesn't cost much to educate yourself whether it be through podcasts or books or masterminds or anything else like that. So just dig in and learn what you can you'll feel better about it. But if you put it to use practical use, it'll get you further ahead in life, not just with finance investing, but personal development, mentally, spiritually, whatever it may be.
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I love to read. I try and read as much as I can. Unfortunately, I'm far, far too busy these days to read as much as I'd like to. I've got so much going on all kinds of new projects. We've got our promissory note investment fund, which has been growing rapidly over the last two plus years. And if it's something you're interested in, you can check that out at noradacapital.com and speaking of masterminds, just a quick reminder, we're about two weeks away from our Lake Tahoe event for Power Room. That will be an exciting event in a very, very beautiful place. That's September 12th to the 14th. You can check that out at powerroom.com. If that looks like a fit for you, just fill out the form on there. I believe it says application, but just fill it out and our team will get back to you. It'll probably be Annie, just to share some more information about the event what's happening, who it's for, and, uh, just to make sure it's a right event for you.
So you don't waste your time, but you are welcome to join as my guest meaning attend as my guest. And if you think you're, you know, a business owner, leader, entrepreneur, a CEO of some kind, you want to grow and scale an existing business and learn more about investing and network with people who are doing all those things to varying degrees, then it might be a great place to learn and to network with people who are like-minded and can grow with you and you with them. So anyway, that's power room at powerroom.com. The node investing is@norracapital.com. And with that, let's jump into some of these questions. So the first question comes from Scott. He's got a question about other people's money strategies, the pros and cons, and he writes in, he says, hello, Marco, thank you. And your team for all that you do in terms of taking care of others, especially when it comes to financial and real estate education.
You're very welcome. I'm coming across more opportunities to use OPM as in other people's money and am curious about the various strategies, pros and cons in doing so specifically, I've encountered sellers willing to carry 80 to 85% owner financing and APM, which is an acronym for another person's money to cover the remaining 15 to 20%. That sounds like a great deal, right? So he goes on to say, I can make an argument to make the deal. Even if cash flow is zero, given the principle pay down appreciation and depreciation, that is if the math is right, what kind of terms would you deem favorable for the remaining 15 to 20%? Cheers, Scott, Scott. That is a very good question and very well articulated. And I like your line of thinking, especially if you're coming across deals today, like this, where you can buy or invest in rental property for essentially nothing down because you're financing the first 80 to 85%...
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli.. Welcome back to the show. You know, it's interesting. What, if you could talk to an attorney and ask him their thoughts about finding funding and managing real estate investments? Well, I recently came across a person who does exactly that they are an attorney with a real estate tax firm, and he just released a book called Replace Your Income: A Lawyer's Guide to Finding, Funding, and Managing Real Estate Investments. So I thought, well, why not interview this person and find out how they think and what they would say to what I would think are some pretty common questions, but I just wanted to get his perspective and pull some stuff out of his mind and essentially get a lawyer's view on things. So it was an interesting interview.
I recorded the interview before I'm doing this intro here, but I think you're gonna have some takeaways. Some of it's basic, some of it's a little more advanced and some of it's kind of a fresh perspective. One of the things he actually mentioned is how he was shifting from long-term rentals, not entirely to a small degree, but selling off some of his long-term rentals and moving that I believe he did a 10 31 exchange. I didn't actually ask him that, but moving that equity into other real estate properties that he turned into short-term rentals. So obviously location is critical and key in that strategy, but he identified some properties. He could pick up in markets where short-term rentals made sense, and he essentially increased his cash flow and income from the properties by doing a 10 31 exchange, I assume out of some long term rentals. So I don't talk to too many people who actually do that.
A lot of our investors have long term rentals and they build a portfolio of those long term rentals. And then they start to diversify their portfolio into some short-term rentals, which is actually exactly what I did not too long ago, just within the last couple of years. So now I'm mixing it up, but I never heard of anybody actually selling off their long term rentals to move into short term rentals. So I thought that was pretty interesting, but I'm sure you'll enjoy today's interview with Brian Boyd. And with that, let's move on to the interview. Oh, and just a quick reminder, before I forget we have our power room event coming up in, I think, three weeks in Lake Tahoe. So if that's something you're interested in, it's not too late, just go to power room.com and fill out the little application form and Annie will contact you and you can come as my guest.
There's no cost, there's no obligation. We do this for guests that meet certain criteria one time, and I would love for you to be there and get to meet you. So that's power room.com and our next event's in December in Las Vegas. And then we will be moving it back to our home base, just south of Jacksonville, Florida. It's actually insane Augustine, but it's part of the Jacksonville Metro area. So would love to see you there anyway, with that, let's get to our interview with Brian Boyd.
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It's my pleasure to welcome Brian Boyd to the show. He is the owner and managing attorney of real estate tax firm, Boyd and wills, which they help individual and businesses in all matters relating to residential real estate, commercial real estate, construction litigation, and business law. He's also the author of the new book, Replace Your Income: A Lawyer's Guide to Finding, Funding, and Managing Real Estate Investments. And I love that title with that. Brian, welcome to the show.
Thank you for having me, Marco. It's a pleasure to be here.
That's great to have you on it was it was fun and interesting chatting with you abou...
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, today we're gonna do a quick, relatively quick episode and market spotlight on Southwest Florida. It's been a hot bed for a new construction for job growth, for price growth, for economic growth. It's just a great location. And it's a place that I was investing in way back when in 2005. So go figure things go full circle. So anyway, with me, today is one of my trusted builders and a good friend Reed and Reed is a guy who has been providing us a lot of great new construction inventory, not just in Florida, but other places too, but he's especially focused in Southwest Florida. And we're gonna talk about the market and the opportunities there for you as an investor. And that way you have a better understanding of this particular option. So Reed, welcome to the show.
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Hey, thanks a lot for having me today, Marco, it's been a pleasure working with you and your team over the last few years.
Yeah, likewise, definitely you guys are very professional and a class act and all the product we get from you guys is fantastic and you service people very, very well. So we're very happy about that. And of course our clients, the investors are very happy too. So I'm talking a little bit fast and you know why it's because the battery on my laptop is running very, very low. So I don't wanna run out of time because of lack of battery juice. How embarrassing is that? Right. Anyway, we'll get through it. So re let's talk about Southwest Florida. First of all, let's define what we mean by Southwest Florida, cuz we're not talking about one specific city. You've got Cape coral, you've got Punta Gorda, you've got all these, you know, secondary tertiary markets. Why don't you clump that all together and give us an explanation of what we mean by Southwest Florida.
Yeah, yeah, no problem. Yeah, exactly what you said. You know, these markets that we build in are our secondary tertiary markets. Some people call them bedroom communities. It would be markets like Cape coral, north port, port, Charlotte, Punta Gorda, Lehigh acres. And these are all markets where you know, they're very, very strong rental markets. They're just outside of more maybe well known or, or quote unquote major cities just outside of like Sarasota or Fort Myers. So a lot of people that live in these towns work in the larger towns, but that being said, there's still plenty of jobs in the smaller towns. Florida has unbelievable low unemployment right now. So everybody's working, even my kids have two jobs and they're teenagers. So I don't know what that says.
Right. Well, that's great. Especially in today's environment where we have really low unemployment, even in the economic environment that we're in. It's interesting how everybody's kind of struggling to find people to hire. Now there are some companies that are slowing down or stopping employment just because you know, of, of economic uncertainty, but I think that's gonna be short lived. What cities are we talking about with the new construction homes that you guys are building in Southwest Florida? So we know the markets that we're talking about.
Well, the main markets that we're building in right now, and we have upcoming projects now we've got projects in all the towns that I had mentioned earlier, but you know, for your clients and your investors, the, the projects that are coming up soon. So if you got somebody with a 10 31 exchange or a cost se before the end of the year or something like that, we would wanna look at markets like Punta Gorda, Cape Coral and Port Charlotte. Those would be the areas that we've got projects finishing up in the next say 90 to 120 days....
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, it's been a while since we did a market spotlight. And so today we're gonna have a market spotlight on North Carolina, specifically Charlotte large market and Metro area that we have been in for many, many years on and off. It just depends on our team and inventory, but it's a great market that whole region in North Carolina has been growing very rapidly. There's a lot of people moving there and there's a lot of reasons to move there and invest there.
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And I'm excited to have Tyler, one of our fantastic property providers in the area on the show with me today. So Tyler, welcome to the show.
Thank you for having me.
No, it's great to have you on, we haven't done a market spotlight in a while and I don't actually remember the last time we did a market spotlight on the Charlotte Metro area. So it'll be good to share with our audience and listeners a little bit about the market, why we should be investing there, what's going on there. And then we will kind of conclude by talking about the neighborhoods and the properties that are available and what that looks like. So why don't we start off with, you know, the most general question, which is where I always like to start, and that is why Charlotte?
Why Charlotte? It's a great question. Charlotte is a growing city in North Carolina, just above South Carolina. There's a lot of great things going on there. It's the second largest banking capital in the country, right behind New York city. It is quickly becoming a tech city as well. There's about a hundred people moving to Charlotte every single day from places like Ohio, New York, California, and everywhere around there. I think people really like it here because of the affordable cost of living and the, the nice climate. You're very close to the mountains. You're only a few hours away from the beach as well. Taxes are relatively low here compared to other states. And so when people come here from other states, they, they feel it's very affordable compared to where they're from in a lot, a lot of ways.
Yeah. Nice. So, you know, I like to hear that the population is growing because when you have positive net migration into a market that increasing population provides support for the housing market. And if it's big enough and it keeps growing, then it provides upward pressure. And so what you get is price growth because demand starts to exceed supply. And then you also start to see that trickle into the rental market where rental prices start to go up as well. And if you're invested there, it's good. If you're a property owner or homeowner, it's good for you because you know, rent go up, cash flows, go up, equity goes up. And so, but if you're not in that market, then it's something you should look at because if that's a trend that's gonna continue for years to come, then it's something you want to take advantage of. You wanna ride that wave or be part of that trend and take advantage of that opportunity. So what kind of employers make up that market? I always like to look at markets that have broad economies. You mentioned one of them already, you know, the finance sector.
Very big finance. So there's a BB&T now Truist the SunTrust and BB&T of merge. And they're a bank called Truist now. We got a Wells Fargo here. There is Bank of America is headquartered here as well. Just to name a few, there's a lot of manufacturing as well in the outsskirts of the city got places like Jeld-Wen where they global manufacturer of windows and doors got Bobcat Doosan of North America, which creates obviously large construction equipment and things of that nature. Just to name a few again,
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, today we have a returning guest. He is someone who is very intelligent when it comes to self-directed retirement accounts like IRAs and 401ks. He knows how to help you defer and eliminate taxes. So if you're thinking about investing in buy and hold rentals, flipping property, investing in promissory notes, or just using your IRAs and 401ks to invest for the purposes of creating more wealth and additional cash in your retirement account, this is an episode you wanna listen to. It's going to be focused primarily on real estate strategies as they relate to your self-directed IRAs and 401ks. So I hope you enjoy today's episode. There's probably gonna be a lot of takeaways here. And if this is an area that you want to learn more about, certainly listen to today's episode, but also maybe pick up some books, including Mat's book on an IRA's specifically titled The Self-Directed IRA Handbook. And with that, let's get to our interview.
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Well, it's my pleasure to welcome back a returning guest to the show, Mat Sorenson. He is an attorney and he is also the CEO of directed IRA. He is a bestselling author, a national speaker, and an expert on self-directed retirement accounts. He's also, I just found out the VIP contributor to entrepreneur magazine. He is a real estate investor, which I'm sure my audience would love to know. And he has been at the forefront of the self-directed IRA industry since 2006, a very long time. And he wrote the book, The Self Directed IRA Handbook, which is the most widely used book in the industry for self-directed IRAs. So Mat, welcome back to the show.
Yeah, Marco, thanks for having me. I love talking about self-directed IRAs. Obviously I had so much to say, I wrote a book about it and but I love talking about real estate too, cause this is what I do with my own account. Like literally that's what my retirement account owns is real estate in my retirement, you know? So I love pairing those two things together and excited to be here, talking about that.
No, that's great. Well, I'm glad you're back on. We're gonna have a very focused show today. We're gonna talk about using IRAs and 401ks to buy rentals, do flips and invest in notes. Yeah. Which is timely because I've been doing a lot more work in the whole promissory note investment space and investors are calling and asking about that.
So I think this is a great topic. It's kind of timely, but I think there's a lot of misunderstanding out there about whether people can use an IRA or a 401k to invest in real estate. Some so-called gurus out there. Say not to, yeah. You can talk about this and why, because you know, you're losing the tax benefits of among other reasons. So where do you wanna start with this?
Well, I wanna just start, like right now, I mean, we're recording this, this is like summer of 2022, you know, and what's happened in the economy is the stock market totally down. Right? And that's what most people's retirement accounts have been invested in. They're buying stocks and mutual funds and they just got hammered over the last six months. I mean, this has been the largest stock market correction. Actually, t's the second largest stock market correction in my lifetime. I mean, I'm 42. This is the second biggest one. And so a lot of people are like, well, dang, is this all I can buy with my retirement account is what's on wall street, stocks, bonds, and mutual funds. And so you know, here at directed IRA where we handle self-directed accounts, there's lots of companies like ours that do that. But I mean our real estate clients,
Hello, friends. And welcome to another episode of Ask Marco. It's been a while since I did an Ask Marco episode and I plan to do a few here, back to back and just space them out here over the next few weeks. I actually like these Ask Marco episodes because it gives you the listener, the opportunity to submit your question. And many of them, I reply to just via email. And then I just handpick some of them, usually four or five at a time. And I put them into one of these Ask Marco episodes. And the beautiful thing about that is it gives you the opportunity to hear what other people are thinking. And the questions they're asking that you may not have thought about, but once you hear it, you think, oh yeah, that's a good question. I'd like to ask that question as well or hear the answer to it.
So it gives you the opportunity to hear what other people are thinking and get into that question and get an answer to it. Even if it's high level and maybe not superficial, but something that I can put some flesh on. And again, this is never financial advice. It's just my opinion and my experience that I'm sharing with you. But it's just an opportunity for you to throw the question out and get some perspective and an answer too. So before I jump into the first question here, just a quick reminder, and I'll plug this, I guess from time to time, our Power Room Mastermind. Our next event is coming up in lake Tahoe, September 12th to the 14th, and the next event after that is our year end grand finale. If you will, our final event, which is in Las Vegas, December 5th, through the 7th, you can go to where our website at powerroom.com.
This is an incredible mastermind. It is a high end mastermind, great members, great speakers, great content, just a great event, all around fantastic networking. It's essentially the exclusive mastermind for CEOs, entrepreneurs, business leaders, investors, and you can come as my guest. We allow you to drop in at one of our events, any one that you want and check it out, just get a feel for who we are, what we do, what we talk about, you know, the networking, the dinners, everything. It's just a fantastic event. If you can't make one of these next two events, our next event starting early next year in Q1 is in Jacksonville. I don't have dates for that yet, but it'll be Q1 in Jacksonville, Florida. Technically it'll be in St. Augustine, right outside Jacksonville. So I will let you know about those dates when I have them.
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Okay. So let's jump into our first question here. It comes from Steve. He says, hi Marco. I was scrolling through your episodes trying to find something that addresses current market conditions and what is considered a quote unquote, good deal under these current conditions. In the last six months, I've gone from being able to find deals, although rare, still having the 1% rule for turnkey properties today, the best deals I can find are at about 0.8, 5%. And what he's referring to here for everybody listening is the rent to value ratio or the rent to price ratio. I'll explain that here in a minute, but Steve goes on to say on top of that insurance costs are rising. You obviously have a great cash flow calculator on your website, but I was curious if you had thought about doing an Ask Marco episode where you address what is considered a good deal in today's market, especially now that the fed has officially raised rates again.
Thanks. So I'm gonna answer this question to a small level of depth, because I think I'm gonna just tee this up and tease you with a future episode in the near future about this exact question about market conditions and how I feel about market conditions and what's going on. In fact, I'm actually toying with the idea of having potent...
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. I have a returning guest today. Great guy, very intelligent and extremely helpful in the category of making more money through saving in taxes. So Tom Wheelwright was on the show a couple of years ago. Really good guy. I've talked to him on many occasions at different places, and I really enjoy having conversations with him because I always like to pick his brain and find out how can I pay less in tax legally, ethically, and morally. So he just released a new book it's called The Win-Win Wealth Strategy: 7 Investments the Government Will Pay You to Make, quite literally. So that is the topic for today. And I just picked up the book, started it. I haven't finished it. There's a lot of great content in there and he has great examples in every chapter.
So it's very easy to understand and follow along. So, you know, taxes is one of those areas that make people cringe or stick their head in the sand and avoid the topic because they feel that they don't have much if any control over it, but the opposite is true. And when you understand the game of taxation, it's really just a rule book put out by the IRS that is essentially giving you direction through tax incentives on what they would like you to do to help them in producing the types of results that they want to get in terms of the economy and, and employment and whatnot, infrastructure, so energy, whatever it may be. So this is kind of a fascinating way to look at things. And the more, you know, the more you will grow. And, you know, I like to say, the more you learn, the more you earn, and this is one of those things, the more you learn, the more you save in taxes, which means it's the more cash goes into your pocket. So it's like earning more, but that is it. So let us get to our guest and I hope you enjoy today's episode.
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It's my honor, to welcome back to the show, Mr. Tom Wheelwright, Tom is a CPA and tax and wealth expert. He's the CEO of WealthAbility, a Rich Dad advisor, entrepreneur international speaker, the bestselling author of tax free wealth. And he just released his latest new book titled The Win-Win Wealth Strategy: 7 Investments the Government Will Pay You to Make. Tom is the CPA for Robert Kiyosaki, which most of you know is the author of Rich Dad, Poor Dad. And he has spoken on stage on every continent to literally over a hundred thousand entrepreneurs, small business owners and investors. Man, this guy does a lot all around the world and his goal. I love it's to help people achieve their financial dreams faster by permanently and legally reducing their taxes. How amazing is that, Tom, welcome back to the show.
Thanks. Always, always, always good to be with you, Marco. Always
Good. Oh, I appreciate that. Yeah. We had a great conversation almost two years ago. It's been that long since you were on the show and I actually apologized to you already for not having you on last year that I take full responsibility for that. But Tom, you know, it's always great listening to you and talking with you. We have so many friends in common and I got thinking here this morning, it's been a while since we spoke, how has the tax landscape changed? If anything, over the last two years since you've been on the show, because I was wondering that this morning.
Yeah. So interesting enough. Not as much as we thought it might change, actually. We can thank my Senator Kirsten Sinema in Arizona for preventing massive changes. She and Joe Manchin, of course in West Virginia were the two roadblocks to that awful build back, better plan. We may still see something before the midterms who knows,
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. So today I wanted to bring on someone else who was one of my mentors many years ago. I had Robert Allen on recently. And for those of you who listened to that episode, you know, that I will be bringing Robert back on again, here in the near future. But while I was learning from Robert, I was actually brought into a long bootcamp series back in 2003, where I met someone else who became one of my original mentors. And his name is Todd Dotson. He is one of the original wholesaling mentors well known throughout the industry in the country and really a true pioneer in the real estate education and training arena. He is the developer of the first onsite, literally onsite mentoring program. And he has the unique advantage of having mentored.
I don't know how many students, but hundreds, if not thousands of students in virtually every market around the country, he's known as the seminar, industry's secret weapon for student success and the media personalities. He has provided fulfillment training for around the country, including Robert Allen reads like a who's who of real estate education. And, you know, on that list of quote unquote successful students, you know, there are many of them and they have come from many different real estate investment education companies. I happen to be one of those students of Todd's from many, many years ago, and I think he's got one of the best wholesaling programs out there. So with that, Todd, welcome to the show.
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Hey, thank you so much for having me. And I'm really excited to be here, grateful to be here. Thanks for that introduction. And, and man, I'm, I'm so proud of you and all that you've accomplished and I'm ready to get into this and let's help people create cash so they can build wealth.
Yeah. Sounds great. Lo I love the sound of that. That sounds great. So I kind of introduced you, tell us a little bit more about yourself, fill in the gaps that I've missed. Cuz I know that you've been around the real estate investing block for a very long time.
It is a long time. It, it seems like a long time ago in a land far, far away. Now that you mention it, I live in Arlington, Texas. I've been in Texas since January of 1993, but I grew up in California, Marco, as you know, I was born in Oakland raised in the San Jose bay area. My dad was a pastor, a preacher in California for 30 years. Mom was a school teacher, always had a strong desire to get involved in real estate and begin that journey in May of 1988 by purchasing a late night TV program off of in commercial Dave Del auto back in the going way, way back in the day, the cash flow system and began implementing that, making that work in the Bay Area at that point in time, you know, three bedroom, two bath home was about three 50. So we're talking 1988 and was renting for maybe 1500 bucks a month. So there was no no price to rent ratio that was favorable. And so I began looking at some different areas and I popped over into the Central Valley while still living in San Jose and began investing there initially buying, renting and, and holding so passively investing. And that was, was really kind of the start for me.
Interesting. When did you move to Texas?
Moved to Texas in January of 1993 and it's, you know, it, it's interesting because I, I began buying properties in the Central Valley. We'll say Modesto area. Just cuz the price to rent ratio didn't work in the bay area. And, and back then the focus was really either buy, fix and sell for a lump sum of cash or buy rent and hold for passive income and long term wealth building. And so I chose the, the passive income approach,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. So this is part two of my interview with Richard Duncan titled The Money Revolution, the name of his new book that just came out not too long ago. Great book ,500 pages, 250 charts. Very interesting. Read the subtitle, How to Finance the Next American Century. It was actually an eyeopener of a book and an eye opener of an interview because it kind of changes the way I thought about how money printing and how the economy works in the us and the impact and effect of the federal reserve and the amount of currency that's being put into the system and what that looks like on the global stage. So today is part two of my interview with Richard Duncan. Very interesting person, great books. He's got four books out, really, really good books about the global economic crisis and the global economy.
Just really good stuff. I really highly recommend you read his stuff or at least go to his website and check out what he has to offer. We went long during the interview. And so this is part two. I had to chop it up into two and we were talking before and after I was recording as well. So we were probably talking for a total of two hours and I could have gone for another four. So I hope you enjoy it with that. Let's go right into part two and we'll wrap it up here in about 30 minutes.
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There's a lot to unpack there. And you know, in the back of my mind, I'm thinking, you know, how is this going to impact me and other investors and real estate investors down the road as inflation changes, interest rates, change debt, burdens, income tax changes, our tax benefits and tax incentives gonna be changed or taken off the table in order to pay for all this extra spending.
I'm just thinking of all these different things. My first quick question here is what you just described as not as, as increased spending. Is it sustainable? Because when you go from the numbers you were talking about, you know, 10, 15 years ago, as far as you know, what our, our national debt was to the explosive growth that we have today, that's not just explosive, it's, it's exponential. And we all know that you can't keep following that same trajectory on a chart in, in terms of debt. I mean, even federal debt, when, you know, you have the printing press of the federal reserve, and you can just print to infinity at some point that system, I would think, I don't know if I believe this, but I would think will break down, especially in an environment where you have rising rates, because the government doesn't want interest rates to rise. If they're having to pay on that debt, the interest on the debt that they're borrowing. I mean, correct me if I'm wrong here, but overall, this doesn't sound like it's sustainable over the long term.
Well, let's for the moment. Assume we go back to where we were in 2019 with low inflation, low interest rates and globalization keeping a lid on both inflation and interest rates. If we return to that environment, then it would be possible for the Fed to finance this borrowing over. And again, this is over a 10 year period and keep interest rates down by buying the, the debt that the government sells just as it kept interest rates down after 2008. And again, in 2020 and 2021. Now, in terms of the, the size of the debt, I actually think this sort of investment would bring down government debt rather than causing it to increase, because what we are talking about is government investment or government funded investment in basic research and development corporations tend to invest in applied research and development. In other words, they take existing research and development.
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli today. We have a returning guest, someone who I follow and pay attention to because whether you think about it or not, what he has to say and what he studies and the information he passes along does impact each and every one of you directly or indirectly. And if you don't think it does, it will. And you'll understand why today. My guest is Richard Duncan. He's the author of four books on the global economic crisis, including the international best seller, The Dollar Crisis, a book I've had for a very long time. And in that book, he forecasted the global economic crisis of 2008 with extraordinary accuracy. Richard has served as a global head of investment strategy at ABN AMRO asset management in London, probably a company that many of you haven't heard about, but he's worked as a financial sector specialist for the world bank in Washington, DC. And he's headed the equity research department for Solomon brothers in Bangkok. And he also worked as a consultant with the IMF, the International Monetary Fund in Thailand during the Asia crisis. He's now the publisher of a video newsletter, which I am a subscriber to called Macro Watch, and he can be found at richardduncaneconomics.com, brilliant content and information. And with that, Richard, welcome back to the show.
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Thank you so much, Marco. It's great to be back. Thanks for having me back on.
It's my pleasure. I'm glad you're back. It's been approximately 14 months since we had you on the show. And the last time I had you on, we took kind of a deep dive into the looming inflation. I mean, it was already happening, but it just got worse and worse. And I think you had lot to say about that and predicted that and sure enough, you know, we've had a couple years of pretty high inflation. So in hindsight, I mean, how off were you, were you pretty spot on with your predictions?
Well, honestly I did not have any idea that the inflation rate would go as high as it is now, but of course the world has changed so dramatically in the last 14 months. I mean, first of all, I was too optimistic about COVID. I had assumed it would, you know, eventually stop, but instead we've had two more big waves of COVID since then Delta and now Omicron. And each of these waves have continued to disrupt the global supply chain. The latest when we spoke 14 months ago, COVID had not really affected a Asia very much, but when Delta got here, it did, it started shutting down factories all across this region and Omicron has been equally bad or even worse because now spreading all around China, China's shutting down entire cities. Shanghai was shut down for practically two months. Beijing is partially shut down now. And so this is just an ongoing disaster in terms of global supply chain bottlenecks. And then on top of that in February Russia, invades Ukraine and causes a huge spike in oil prices and food prices and metals and chemicals and many other commodities. So that was unforeseeable. I would, I would argue, but so the inflation has gone very much higher than I had ever imagined that it would.
Yeah. I, I mean, a lot of these things have been a huge impact on the global supply chain, which has disrupted supply and pushed inflation because we didn't lose the demand, you know, creditism and consumers were still spending, but we lost a lot of that supply and that just, you know, just fuel on the fire for inflation. I mean, a lot of this stuff is hard to predict. I mean, you can't predict a black swan event or anything like that. So of course, you know, what you thought was bad, just got worse.
So what we were seeing, what we're experiencing is the partial reversal of gl...
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Thank you for joining me on yet another weekly episode of the show. You know, I had a really good interview today with someone who I really enjoy reading his materials. He's got great books out there. One of my favorite is a book called Wealth Can’t Wait, his name is David Osborne. And I wasn't sure what to expect before the interview, but I knew I was going to enjoy it because he talks about things that I really resonate with. Not just investing or creating wealth, but mindset and building momentum and just having, you know, the right habits in your life and creating the right environment and designing the lifestyle that you want to have for you and your family. So I was prepared for the interview and we got talking before I actually started recording and it was just amazing to me on how many things I clicked with him on from his amazing bookshelf shelves, I guess, plural in his house to the types of books, he's reading the habits, he's working on, the things he's tracking his interest in health and nutrition.
What he's doing there. I could have talked to him for four hours just on kind of our housekeeping portion of the interview. So then we just decided, okay, well let's just start recording. Cause everything we're talking about, we can just talk about, you know, as part of the interview. And then we ended up talking a little bit more towards the end, but he had to run so intriguing guy. I'm gonna have him back on the show. David Osborne is, you know, really dialed in, but anyway, I hope you enjoy today's episode. I think you will. This might be probably one of my favorite for the year, just based on how it went. And so I wish I could have talked to him a lot longer with more stuff, but you know, we were going for an hour and a good part of that was actually the interview itself.
So anyway, I'm not gonna delay that any longer. I hope everything is going well for you and enjoy today's episode. And we will bring David back on in the near future because I think there's so much more that we can talk about. Well, anyway, enjoy today's episode and I will see you on the other side.
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Well, I'm really excited to welcome my next guest, David Osborne. I've been looking forward to having him on the show for quite a while because he's got such great content and he's such a successful guy. David has built one of the top real estate brokerages in the us actually in the world with more than 4,500 agents and annual sales exceeding 10 billion a year, which is phenomenal. He's the number one bestselling author of several books, including Miracle Morning Millionaires. And one of my favorites Wealth Can’t Wait. And he has a new book out called bidding to buy a step by step guide to investing in real estate foreclosures. David is also an educator, which I love and he teaches audiences how to live abundant lives through goal setting, hiring great talent and developing multiple streams of income, which I am a huge fan of with that. David, welcome to the show.
Hey Marco, it's great to be with you. Thanks for having me.
Well, it's great to have you on. I have to tell you, I was walking through the airport. I think it was LAX one day and I always popped my head into the bookstore, you know, Hudson news or whatever it is. I'm a big fan of books. Obviously you are. If people are watching the video right now, they could see there's probably about 5,000 books behind you on your bookshelves. yeah. So I'm an avid avid learner, avid reader, and obviously you are too, but I saw this book, which was the same colors of my brand at Norada Real Estate Investments. It's white, red and black,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. So interestingly enough, today's interview with one of my mentors and someone who I've learned quite a bit from Robert G. Allen, very famous well published author, and very, very successful real estate investor. I had an interview with him today, which you're gonna hear in a few minutes. And before you kind of discount the subject matter, don't write it off. I think this interview is very good, well worth listening to it's a little different than what you might expect, but I guess the point I'm trying to make is it was completely different than what I was expecting to do with Robert and the conversation I was expecting to have with him. I was completely set up to discuss one of my favorite books that he's written called the One Minute Millionaire full of great content.
It's a very interesting book. And I've been thinking about it for the last day or two. What am I gonna talk to him about? What do I want to ask him? I even have a signed copy of the book right here with me, and it's just such a good book, but we talked almost about nothing in that book during this interview. And so it was an interesting twist, but it's still worked out very, very well because I talk about side hustles and being able to make money to have more investible capital. So you can invest in more real estate and build a portfolio faster. In other words, how do you compress time? How do you get more down payment capital to invest in any kind of investment, but real estate specifically, and often that means that you either double down on your employment, you raise your income.
If you can, you do more business, if you're running a business or you bring on another business, what I call a side hustle. And it didn't hit me until towards the end of the interview, that everything he was talking about in terms of writing and publishing a book, which is not all that difficult can be your side hustle. It is an opportunity to generate more income, but more importantly, open more doors, get exposure to more deal, flow, access to more people. So your network expands and you can tap into other people's networks. And also probably most importantly is have the ability to raise capital from other people, OPM-other people's money. And that could be through just syndicating. That could be through partnerships, simple partnerships, just two people or a small group or raising dead capital. I mean, there's just so many ways to, to finance real estate and raise capital and do more deals.
And a book is just a great, great way to open those doors and do more deals. It separates you from everybody else because everybody else is just talking a talk or handing out a business card, which quickly goes into the trash. When you have a book, especially a book with value, because it's got good content and you can hand it to someone with an autograph inside, they're gonna keep that it becomes a sticky item. So Robert talked a lot about the idea of a book and the benefits of a book and why everybody should have one in this episode and how he can tie it back to Multiple Streams of Income. Another one of his very popular bestselling massive bestselling books, Multiple Streams of Income, but he ties it all back in how you can use and leverage that book. Even if it's a small book into expanding, whatever you're doing, especially you're investing.
So with that, let's jump into that interview. I hope you enjoy it. There are quite a few golden nuggets and takeaways from this episode and heads up. I did invite Robert back on the show for a follow up interview, call it part two, where we are gonna talk about real estate, real estate investing, and mostly about the topic of the One Minute Millionaire of the book and the content in that book. It is a thick book. So there's no way we can cover it all, but we're certainly gonna hit on some of the major points. All right,
Hello, and welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli and welcome to another great episode. You know, entrepreneurial women are shattering glass ceilings, they're winning promotions and building multimillion dollar companies from the ground up in industry after industry. And yet many are still living paycheck to paycheck without accruing real wealth, even highly successful women can struggle to build portfolios that generate wealth and create true financial freedom. One of the best and least understood ways to thrive financially is through real estate investing. In fact, 90% of millionaires are made through real estate, but unfortunately only about 30% are real estate investors that are women in the millionairess mentality, financial expert, Tamar Hermes addresses this problem by distilling her expertise into proven strategies. Women can use to mitigate risk and reap financial rewards through real estate investing. And while many financial books discuss real estate and wealth building strategies, few acknowledge the specific challenges women face while charting their financial destinies tomorrow uses real world examples and a step by step explanation to help women build their own legacies while tackling roadblocks, such as a lack of confidence or fear of taking on risk or debt and bad investment experiences.
Tomorrow condenses years of wisdom into an easy to follow investment formula. Anyone can use whether you're a man or a woman. And the result is an indispensable handbook that teaches women, The Millionairess Mentality that they need to build a foundation of unshakeable wealth, one property at a time. So with me today is my guest Tamar, who I look forward to interviewing here and having a conversation about her past her experience and her new book. So with that, let us welcome our guest.
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It is my pleasure to welcome Tamar her maze to the show. Tamar is a full-time real estate investor. She's a coach author and the founder of wealth building concierge. As the CEO of wealth building concierge. She empowers women to become financially free by teaching them how to invest in real estate. Tomorrow has been investing in real estate for over 20 years, focusing on appreciation with buy and hold single family homes and duplexes, her mission. It is to support women in overcoming fear and overwhelm in investing by building their confidence and education, taking them to taking action, understanding there isn't only one way to invest. She's actually a very smart woman. I've known her for a few years. She is a contributing writer for entrepreneur and her first book, The Millionairess Mentality, a professional woman's guide to growing wealth through real estate was released just recently a month or two ago. And as a three times Amazon number one best-selling book. And with that Tamara, welcome to the show.
Thank you. It's great to be here, Marco.
So was everything I just read pretty accurate or have there been any changes to that?
Pretty accurate? I always joke because I say that because I'm a few years older than a lot of other people in the real estate space that I've done a lot of things and I have a large portfolio. And as we know, time is our best friend in real estate. So I have actually a pretty vast portfolio in addition to single families and duplexes now involved in all kinds of passive investments and in all kinds of also active investments that are more sophisticated than the single family and duplex, which is pretty common. Mm-Hmm once you dive in, you usually start branching out.
Yeah, well, I know you're a big fan of income passive investments, and you've kind of built your lifestyle around a portfolio of, of various passive investments.
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. This is a special episode. I'm going to share with you the power of joining a mastermind. Now I really would like you to stick around to the end of this episode. It won't be a very long one, but I do want to cover some things that have been very influential in my life and in the lives of many, many people that I know. And I can share with you endless stories of the benefits and power of leveling up your life, your business, and your investing with mastermind groups. Now let me explain what they are. So let me lay out my agenda here for this short episode. I'm gonna talk to you a little bit about what is a mastermind for those that are not too familiar with it.
And if even if you are just listen through to basically two minutes of what I'm going to explain as a mastermind, I'm gonna talk a little bit about why you should join a mastermind and the benefits that you will gain. Also, I'm gonna share with you some of my own personal experiences and some of the amazing benefits that I have gained. I mean, material benefits. And then I'm gonna kind of close it up by telling you about the Power Room Mastermind. And I'm gonna share with you some of our past speakers that have come both to speak, provide content, education, and even be interviewed by my partners. And so that is pretty exciting. And wait until you, I share some of the names with you, you'll find it pretty amazing. And then I'm gonna kind of close it with a special offer if you will, and an invitation for you at the end of this episode.
So stick around for that, because if this is something that resonates with you, you don't wanna miss it because I'm basically giving you an open invitation to come to one of our events.
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So let's begin leaders in the past, like Walt Disney, Franklin D Roosevelt, Benjamin Franklin and Thomas Edison, they all shared one secret that propelled them to success. Each person was a member of a mastermind group. Yet mastermind groups met long before 1937, the year in Napoleon Hill, the author of the book famous book Think and Grow Rich, coined that term. In fact, he wrote down this formula for success using information shared by these business moguls like Andrew Carnegie, who became one of the world's richest men during the early 1900’s. So what is a mastermind group? Well in Think and Grow Rich. Napoleon Hill describes a mastermind group as the quote coordination of knowledge and effort in a spirit of harmony between two or more people for the attainment of a definite purpose close quote.
He says that when a group of minds and I call them like-minded individuals, when a group of minds come together, they essentially create an unseen, powerful force. What he refers to as the mastermind masterminds are typically led by a person who, or a couple of people who start the group as a way of helping people to achieve specific common purposes. For instance, the leader or leader is directing a mastermind might want to help people in scaling a business or learning about investing or taxes or personal development or growth or leadership or improving your profession or your career, or starting a new business, whatever it may be, but they facilitate the group. And this can be over the course of an afternoon, a day, two days in some masterminds that I belong to, they typically go to or two and a half days. So, you know, the facilitator or the group or the hosts of the mastermind, set the stage, introduce the speakers and lay out the content and really just run the event.
And it's a lot of fun. It's engaging. It's very insightful. And you walk away with a lot of good knowledge.
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. Yes, I'm your host Marco Santarelli. Thank you for joining me here this week. You know, interesting concept. I love the concept of personal development, and I've always been interested in reading books about self-development and personal development. And the whole concept of performance peak performance has fascinated me and there's a lot of good content and material and books out there about it. But I wanted to bring on someone who is at the core of peak performance and personal development, who has been studying it for many, many, many years. And he is very knowledgeable. He's written so many books on the subject and specifically about the concept of flow. I thought it would be great to have him on the show to talk to you about peak performance and the concept of flow, which is the topic of his latest book, which is in my opinion, a collection of all his previous works put together.
It really is the culmination of all of his previous books. So what's interesting is we are capable of so much more than we know, and that's really the message at the core of the book, The Art of Impossible and building on cutting edge neuroscience in over 20 years of research that he's put in Steven, a bestselling author and an expert in peak performance has laid out the blueprint for extreme performance improvement. And it's just a fascinating read. So if you want to aim high, this is the playbook to make it happen. It's an inspirational book. It's aspirational, it's pragmatic, it's accessible. The Art of Impossible is actually a life changing experience disguised as a how-to manual for peak performance. And anyone can use this book. Anyone can shoot for the stars. Of course, there's no space suit included with the book, but it is a good read.
If you want to learn more about peak performance and how you can get into a state of flow and achieve more with less time something I call compressing time. So with that, let us get to our interview today. And I hope you enjoy my guest.
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Well, it is my honor today to welcome Steven Koler to the show. Steven is a New York times bestselling author, an award willing journalist and the executive director of the flow research collective. He's one of the world's leading experts on human performance. He is the author of many books, 13 books, actually nine of which are bestseller. Actually, I stand to correct myself there because he just told me that he just released a new book three weeks ago. So the total's now 14 books. So 14 books nine of which are best sellers, maybe 10 pretty soon here, but that will include The Art of Impossible, which is a fantastic book. The future is faster than you think the rise of Superman and one of my personal favorites. Abundance. If you haven't picked up the book abundance, please do. So. It is an incredible book. His work has been nominated for two Pulitz surprises translated into over 40 languages and has appeared in over 100 publications, including the New York times magazine wired, the wall street journal time and the Harvard business review. Steven it's an honor to have you on the show. Welcome.
It is good to be with you, Marco.
Well, I was looking forward to this interview for a very long time because I discovered the concept of flow years ago from Roger Hamilton, who was someone I'm in business with very interesting guy. I've learned a lot from him and he mentioned the concept flow and I've never heard of it before. And I wasn't sure what it meant, but I intuitively I kind of had an idea of what it was because I know when I'm in my own flow. So I want to talk about that today because I think our audience is gonna be very receptive and interested in thi...
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Well, we're gonna talk a little bit about building wealth today, and I have a great guest to help me with a conversation about the wealth that she has created and some of the takeaways and lessons that she's learned. You know, one of my favorite quotes comes from a comedian, George Carlin. His content is just amazing. It's hilarious. But I remember him saying that most people work just hard enough not to get fired and get paid just enough money not to quit their job. So it kind of becomes a bit of a trap. So the message I think from that is that if you're continually trading your time for money with the wrong assets or with no leverage, and you don't have anything that you build, you'll make it virtually impossible for you to build wealth.
So you need to focus on accumulating assets, ideally income producing assets, and not worry about the lifestyle. Other people are leading and just focus on the goals that you have in the lifestyle you want to create by accumulating those assets that are wealth creators, as well as hedges against inflation. And obviously to most, if not all of you real estate happens to be a perfect fit for that. So with that, I want to bring on our guests today and we are gonna talk about building wealth with Wendy Papasan.
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Well, it's my pleasure to welcome Wendy Papasan to the show. Wendy leads real estate teams in Austin and Houston, Texas, as well as Minneapolis in Minnesota. She in 2009 had a team that to date has sold more than 1,250 homes totaling more than 475 million, which is a lot of volume for a real estate brokerage. In addition to her real estate business, Wendy is a sought after real estate speaker and coach. She is passionate about seeing women succeed in business and helping everyone grow their wealth. She has a goal to help her clients become millionaires and she co-founded her best life.com, which I'm sure she's going to talk a little bit about today as a community activist and philanthropist. Wendy is the chairman of the board at KW. Kids can a nonprofit that helps young adults think bigger and find their mission. She and her husband Jay have helped raise more than $1 million for children with cancer. She's also involved with fundraising for community first village, a master plan community that provides affordable permanent housing and community for the chronically homeless in central Texas, which is amazing. She's married to New York times bestselling author and Keller Williams, Vice President of learning Jay Pesan. So with that, with all of that, Wendy, welcome to the show.
Thank you. Thank you so much for having me today.
I tried to read that fast cuz it was a lot to go through.
I know it's a lot. I know it's always awkward too. When, when you're just like listening to somebody, read your bio. Yeah.
Yeah , but for sure. Well, I'm excited to have you on the show. I mean, I know a little bit about you, but I know more about your husband, Jay, and you know, maybe one day we'll have Jay on as well. And we could talk about some of the books so that he's written, but you have an interesting past, I know a little bit about your story, about getting it to real estate investing and your work with Jay and your guys' work with Gary Keller who started Keller Williams and now is like a very successful business person, entrepreneur. And I'm sure all that feeds into your story. So with that, let's just kind of start with you, tell us about yourself and maybe if you wanna sprinkle it in a little bit about your working relationship with Jay.
Sure. Yeah. Well, so, you know, Jay's been at Keller Williams for 22 years and that really started because we moved to Au...
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well it's time for another market spotlight. I think it's been a little while since we did one. And the reason I like doing these market spotlights is to help educate you. So you have a better understanding of the different markets and the opportunities around the country and to share those opportunities around the us with you. But first, remember to subscribe to the show. It takes you all of three seconds. Just click the subscribe button and help us share the show with other like-minded individuals. Visit us on iTunes and leave us a rating and review if you can. We greatly appreciate it. And it helps us share the show with more people.
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With me today again is one of our great builders, Jim. He is one of our multi-city builders in the state of Florida. Great guy. We've done a lot of work with him over the years. And Jim, welcome back on the show.
Yeah, good to be back. Thanks, Marco.
Great having you back, you know, it's very interesting to see what has been going on in Florida. You know, some of the data that I have has shown that nationally appreciation rates have been 20% year over year, and this is coming through new builder surveys. So, you know, mm-hmm, , we we're hitting these record numbers. Four of those regions have posted even higher year over year appreciation rates. And this is led by Florida somewhere in the neighborhood of 25% year over year, which is mind boggling. And what's also impressive is, is if you look at Florida as a state over the last five years, home values in the state of Florida have, have increased by nearly 69%. Those are phenomenal rates of return on the appreciation side of the equation. So you're definitely in a great state in terms of wealth creation and opportunity and migration and all that good stuff. And I think those are some of the things that I'd love to talk to you about today and touch on. So sure. Tell us the markets that we're gonna talk about today. I think there's three of them.
Yeah. We'll focus more up in the Northeast Jacksonville Palm coast and then a little west of us as Ocala. We've done a lot in those markets together over the last, you know, seven, eight years. And it's been great to watch the steadiness of need. These are three markets where the housing demands cannot be kept up on right now. It's very interesting, you know, going into oh seven Marco. I remember, you know, we all remember that writing on the wall in the Jacksonville greater Jacksonville area, there was almost three years of inventory, almost three years on the market that tells you, wow, that's a lot of inventory. It's gonna take a long time. That's gonna press down on pricing right now in Jacksonville. We're sitting at about four months, four months of inventory, which is quite a difference. And that's great for the position we're in for the need of housing.
And we've seen the prices gone up a lot, but it's been interesting to watch. Like I was talking to you in our conversation before Jacksonville's median value is still below 300,000 and it's had great growth, but a lot of our investors that have come out of California for example, and they wanna, you know, get into a, a more landlord friendly area or better tax area. Well, they've gone to salt lake city or they've gone to Boise, Idaho. Just give two examples. Well, on the market check, we did last month on that those median values were at 585. So they're almost $300,000 more in cities like that. The median income in those areas is just around 60,000, Jacksonville's 59,000. So we're feeling really good about the fundamentals of where the price point still is,
Hello, my friends. And welcome to another episode Passive Real Estate Investing. I'm your host Marco Santarelli. So my guest today, a guy named John has been in real estate for a very, very, very long time. He's one of the OGs and he's been through multiple recessions multiple tax law changes. He has seen interest rates as high as 19 plus percent. And of course the more recent historically lows of 3% or so, but he has been around for a very long time and he has purchased many properties. He's also helped and coached dozens and dozens and dozens of people. In fact, if I'm not mistaken that number is actually well into the hundreds. He lives in Florida, and he has been using all kinds of strategies in terms of buying hold. He focuses single family homes, although he has invested in apartment buildings and pretty much everything else. But what is his favorite?
It's the basic building block of residential real estate, the single family home and what he likes to talk about and what he has proven and help many people do is build wealth one house at a time. And that is the title of his book. So I hope you enjoy today's interview. And with that, let us go straight to the interview and let's see what John has to tell us.
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It is a great honor for me to welcome John Schaub to the show. John is the author of a great book that I bought many, many, many years ago called Building Wealth, One House at a Time. And doesn't that ring a bell to you listening to of the show because that's what we do all the time. We're buying real estate and building our portfolio one property at a time. It is a great book. I suggest you pick it up. He also has a follow-up to that book called Building Wealth in a Changing Real Estate Market. He has prospered through the years through at least three recessions that I know of. He's gone through multiple tax law changes and, and he's seen interest rates ranging from a low of about 3% to a high of about 16% in his 52-year career as a real estate investor. So with that, John, welcome to the show.
Thank you, Marco. I am honored to be here.
It's great to have you on you have so much experience. I mean, more than literally anybody I know, and I know a lot of people in real estate, it'll be interesting to kind of get into your mind and just get some perspective, especially having seen everything that you've seen. Why don't we start off by you sharing a little bit more about yourself other than, you know, the little bio that I have here, just so people have some perspective as to the breadth and depth of experience that you have in real estate investing.
Okay. Happy to when I was in college, back in the sixties, I, I took real estate courses and got my license while I was in college. And my senior year, I managed a little apartment building and a guy came along one day and wanted to buy it. So I sold it to him. So I made a commission my senior year in college and I made $5,000 commission, which was a lot of money in 1970. I had friends good friends in law school at that time. And they were irrigating starting jobs as five grand a year. So I said, you know, I'm on to something, let's stick with this. So I, I took a chance. I got my broker's license. I, I hired some salesmen. I developed some land. I did a lot of little things to start with, but I soon decided that I wanted to be an investor, not an agent.
So I started buying properties in 1973 here in Sarasota. And I still have the first property I ever bought. I continue to hold properties and I've learned over time that not all properties are alike of, for us. I've owned a little bit of everything. I've owned some commercial. I owned a motel, I owned some apartment buildings, I own duplexes and land and developed some land.
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, I hope you stick around to the end of this episode today, because what is your biggest expense? Your biggest expense is taxes. The less tax you pay, the more money you put in your pocket, and the more you have to work with in terms of spending money and investable capital. So this is something I'm always interested in. I am trying to learn as much as I can and about it whenever I can. And it is a really deep and broad subject, but we don't have to overcomplicate it because there are professionals out there that you can work with, ask questions of and help you to structure your investing and your business affairs. So you can lower your taxable obligations, the tax impact. And there are many, many, many ways to do that.
The tax code is actually chalk full of incentives, of ways to lower the taxable income that you generate and the tax impact that you have. And that could be so many ways that could be through depreciation. It could be through passive losses, active losses, it could be through cost segregation. It can be through expense. If that's a real word items, basically expenses to reduce your taxable income. So there are so many ways. And one of the guys who I know who's very sharp and I'm actually doing some work with his firm personally is a guy that I met many years ago, a young guy, very sharp his name's Brandon Hall, and I invited a him on the show. Again, he's a returning guest and I thought I would talk to him today about the passive activity rules, as well as some bonus depreciation and maybe some other questions if I can squeeze it in.
So that is what you are in store for. I think this is well worth listening to right through to the end and possibly a second or third time, because it is just gonna be chalk full of good information that you could use. And so with that, let us get to our interview today.
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Well, it's my pleasure to welcome Brandon Hall, back to the show. He's a returning guest. Brandon is the managing partner of hall CPA and accounting and tax services firm for real estate investors and entrepreneurs. Brandon was named 40, under 40 by CPA practice advisor. In 2018. He leverages his personal real estate investing and his big four accounting experience to offer unique insights to his clients. And I am actually one of them. So Brandon, welcome to the show.
Thanks Marco. I really appreciate being back here.
ight on. Well, it's good to have you back. I love, love what you and your partners do at the firm. It's always fun talking to you guys and I love your level of expertise and you don't look like a very elderly per your whole team is like so young. It just blows me away.
Yeah. Yeah. Well, yeah. In accounting. So our, our larger mission that we don't really talk about much on the real estate side of the, of things with all of our content is we are actually trying to change the accounting industry. So there is just it's an old, tired, broken model. And I think there's a lot of young firm owners like myself that are out there that we're kind abandoning together to try to figure out if we can actually do some damage on changing the industry, how it operates and you know, who's the face of the industry. So yeah, yeah, yeah. We are a bunch of young, young folks.
I like it. It's fresh. It's refreshing. And you put out great content. You have good articles. I like your podcast. I mean, everything you're doing is great. So keep up the good work.
I appreciate that. Thanks. Thanks. Yeah, the content's been fun. It's been a lot of fun. My, my larger mission is to help as many land landlords as I possibly can. And you know, cause I mean we're, our,
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Thank you for joining me today. I have a turning guests, someone who I've had on once or twice already. She is a real estate investor and someone who has spent years self-managing her properties. And we were talking the other day and she wanted to see if we want to talk about her very, very simple, but still very useful five rules to remote property management. I think it makes a lot of sense as I've been getting more people asking me and my team about self-management and how they can go about doing it. Not that there's anything wrong with professional, full service, property management. It's something that I use and believe in. And that's by choice because of my work schedule and my lifestyle and all that kind of stuff.
But it's something I'm slowly venturing into because I think that I will have the capability capacity and time for it. And so I'm learning as much as I can about self-management my guest today Dana will talk about these five rules and hopefully you get a lot out of this episode. Of course, I'm always open to feedback and if you're new to the show, remember it to subscribe. I hope you enjoy the episode. Let's jump right in.
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Okay, well, I'm very pleased to bring back a returning guest, Dana Dunford, and she is the CEO of Hemlane, a technology enabled property management platform. She's also like me a strong advocate of purchasing rental properties anywhere in the US, as long as it's a good deal, because as we both know that the best investments are not typically found in your backyard, Dana received her MBA from Harvard Business school in 2018, she was named one of the top 20 women leaders and influencers in commercial real estate tech. She previously worked at apple on their worldwide financial planning and analysis team, and then as well as Nest, which is as the home tech company acquired by Google for 3.2 billion and she worked in business development. So she's a very smart lady. And with that, Dana, welcome back to the show.
Great. Thanks for having me back on the show, Marco.
Well, it's great to have you interesting topic for today. It's centers around remote property management. Something that I know a lot of investors have questions about out and some of them certainly think about, but let's start off by talking about what remote property management is and why we're even talking about it today.
Yeah, the, the background on remote property management actually has to do with the investor. And when you look at investors around the us, so those who will own rental properties, 72% are self-managing. And what you're noticing more and more thanks to you, Marco, is that it's much easier to purchase properties outta state and get better returns than it was 10, 20 years ago. And so now you have these two different trends. One is purchasing properties that aren't in your backyard, and two is managing your properties yourself because majority of real estate investors do that in this need to merge the two together. However, I will would say that most people and I'm pretty conservative with real estate investing and operations. Most people do it incorrectly. They think great. I'll buy a property in Florida. I live here in California and I'll be able to manage it myself remotely.
And I will do all the communications online. I will have a smart lock box and that will solve everything. And that's not actually the case. There's ways to do remote property management correctly. There's ways that you can set yourself up for failure. And if your goal, which hopefully it is, is to purchase more rental properties, have diversity.
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. We have an interesting show today, a little bit different than normal because I have a very well known high profile. Well credentialed economist on the show today Dr. Lawrence Kotlikoff, and I think economists see the world a little bit differently than most other people, including people in the financial space. So it's an interesting convers and I have a long list of questions that I can't possibly finish on today's guest interview, but I hope you enjoy it. There's some interesting perspective in terms of retirement and social security, and whether you should hold debt, pay it off early, how long you should wait until you retire or should even retire at all. So it was an interesting conversation offline and online, but anyway, enjoy today's show. And if you have any comments or thoughts about it, you know, by all means, contact me at passiverealestateinvesting.com. And just let me know if you'd like more guests like Larry, who I'm bringing on the show here today. But with that, I hope you enjoy the show and we will see how this unfolds.
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Welcome back. It is my pleasure to welcome Dr. Lawrence Kotlikoff. He is the New York times bestselling author of many books. He is a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, and last but not least President of Economic Security Planning, Inc. A company that specializes in financial planning software. He has so many more credentials I can go on and on. The economist magazine did rank him among the 25 most influential economists in the world. He is the number one New York Times Bestselling author of a book called Get What's Yours, The Secrets of Maximizing Your Social Security and a more recent book Money Magic, which I literally just ordered. And I've been reading the book summary. So I'll be honest. I haven't read the whole book yet Money Magic: An Economist's Secrets to More Money, Less Risk, and a Better Life. And with that, Larry, welcome to the show.
Great to be with you, Marco. Thanks for having me.
Well, it to have you on, I've been looking forward to this. I'm gonna tell you that this will probably be, not be our typical or conventional conversation that we have on this show. You're coming from a slightly different perspective. I think on some of the things that we talk about and have talked about over the years on the show. So it'll be very interesting to get your take on some stuff. Let's just start very high level with you. You have so many cred, just, this is more my old curiosity. Why did you choose to become an economist?
well, it was actually in the first paragraph of the book money magic that just came out in January. I was thinking about becoming a doctor and had to take introductory biology and they had me dissect a frog. the idea was you, you put the, you sedate the frog, you cut open its chest, you reveal its heart. And then you put, I think, some set of choline or something on the heart, you stop it from beating and then you start rubbing it back to life. And so I did this the first time I was horrified and the teaching assistant comes over and says, you did a great job, do it again. And this and record. And so this goes on for like two hours. We, I killed the frog and revived it about 50 times when I left the class, I was an economist, I was majoring in economics.
that was the very that's great. So, you know, I just got excited by economics ability to do good things for, you know,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli well, you know, there's been a lot of talk about how the economy, interest rates, especially when they're going up and inflation. That is a, a big one. And it has been a topic of conversation for many, many months. As we know that inflation has reached 40 year highs and it's affecting everybody, it's affecting housing, it's affecting assets, it's affecting our purchasing power. And you know, it's an area of concern. So today we are gonna talk about all of those and maybe a little bit more with my guest, Dr. Frank, Nothaft, who is with core logic. They are one of the biggest data aggregators in the country in terms of the economy and housing. So it's an interesting conversation, but these are the types of things that I think you need to keep a third eye on.
You want to keep your radar focused on some of these things, because right now, a lot of this is tailwind for you as a real estate investor, but you always have to know when the tide shifts, because when that tailwind becomes headwind, that's when you need to start making some changes in your investment plans and maybe even your investment strap strategy. And certainly that's something that we can get into the weeds on, in a one-on-one conversation with my team, because it can become a little bit on the deep side, but also it's very custom to you. It really depends on your own personal situation in terms of your income strategy investments, your goals, what you're investing in, what you hold, et cetera, but any way without further ado, let us get to today's interview with our guest. And I hope you enjoy the show.
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Well, it is my honor today to welcome Dr. Frank Nothaft to the show. He is the chief economist for CoreLogic America's largest provider of advanced property and ownership information analytics and data enabled services. And I have to admit in full transparency. I am a client of one of their divisions. Dr. Frank does lead the economics team responsible for analysis, commentary, and forecasting in global real estate insurance and the mortgage markets. And with that, Frank, welcome to the show.
Hey, thanks for having me today, Marco. It's really my pleasure.
It's great having you on. And I was looking forward to this cuz I know the content you put out is always insightful, deep, informative, and I really enjoy your stuff for those listening on the audio, not the video here. I just want to comment and compliment on your tie purple is my favorite color and you've got a wonderful bow tie. That is beautiful. Purple. So I love it.
Oh no, thank you so much, Marco.
All right, well, let's dive in. So let me start with something a little more broad in scope. You know, we're around March of 2022, and you could say that we're about two years into this whole COVID mess. If you will. The thing with that is it's caused so many ripples in the economy. You know, there's been disruptions in supply chain, there's been migration changes, labor issues, and the list goes on and on, you know, and this is all outside of any health related issues and consequences. I'm wondering what you think the degree is that this is still impacting housing in the us and the economy in general.
Oh, it is still impacting the housing market. And we see that with the record level of home price growth and the migration of households that we've seen across the United States. That's actually been one of the more dramatic elements of a pandemic. And I'll give you an example. The census bureau just released its latest estimates on a population by state at the you know, through 2021. And what we saw was that during the first 15 months of the pandemic,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I am your humble host, Marco Santarelli and welcome into the show. So what is it like to Retire Early with Real Estate? Well, that is what my guest and I are gonna talk about today. And he has authored a book called Retire Early with Real Estate, a really good book. It's great, even if you're a seasoned investor, but it's good for everybody from newbie on up. And, you know, the whole concept of retirement is something that we think about and entertain and probably retirement means different things to different people. But regardless of what it means to you, I think at the end of the thought process there at the end goal is really time freedom that financial independence and financial freedom provides you or affords you. And so that's the conversation I'm gonna have today with my asked Chad, who again, wrote the book Retire Early with Real Estate, and we're gonna dive into some of the concepts that he talks about within the book.
So it was a great interview. I hope you enjoy it. And if you like the episode, if you like the podcast, of course, you know, by all means, leave a rating and review on iTunes or whatever platform you're using. And with that, let us get straight to our interview.
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All right, well, it's my pleasure to bring on one of my favorites, Chad Carson, to the show, Chad is an active real estate investor. He's been investing for a long time. He's an entrepreneur. He lives in Clemson, South Carolina, if I'm not mistaken and when he's not investing, he's out traveling and he's with his wife and his two kids. He's probably playing pickup bass at ball and he's hiking, and he is learning something new. I mean, he seems to be a perpetual student, which I admire because I know Robert Kiyosaki that way. And I certainly am that way, but he also writes and teaches other people about investing in real estate. And he does a really good job about it. I've been listening to him and reading stuff on his blog for a number of years now on and off. And I think he does a fantastic job. So he's focused on what he says, what matters the most. And I agree with him on that. He is also the author of a great book, which I happen to be holding in my hand here, Retire Early with Real Estate. Great read with that, Chad, welcome to the show.
Marco, thank you so much for having me as honor to be here on the show.
Well, it's great to have you on, I think my audience are gonna resonate with everything you have to say. And I think we have a great topic today, which is essentially based around your book. So I'd like my audience to get a better feel for, you know, who you are and kind of how you got onto this real estate investing train. So why don't you share with us anything you'd like to add to what I covered, but how did you get started and what was your WHY. Cause I think that's a really big thing to focus on.
Sure. Well, the, the very beginning for me was a little unorthodox. A lot of people have a full-time job and then they get into real estate best thing on the side. And I was in college. I was a biology major and I was pretty sure I was gonna become a doctor. I was, I played football in college that paid for my school. I was lucky in that respect. And then I just enjoyed biology and science and thought that would be a fun career, but I was really tired because I'd been playing so much football and I said, I'm gonna take a break for a year or two. Maybe I'll go study abroad or travel in Europe a little bit. And also just try out entrepreneurship just in the meantime. And so I started getting into real estate and I had my father had rental properties growing up.
So I had that kind of benefit as well.
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Well, I have an exciting show today. Why I'm excited about the whole topic of taxes. Not because I want to pay more taxes, but I'm always looking for strategies and ways to reduce my tax impact. Whether I can defer, eliminate whatever the case may be. We all should educate ourselves when it comes to taxes and how to be more efficient with our tax strategy so we can defer and eliminate taxes. So I have a very special guest today. Someone who I've known for a number of years, his name is Brett Swarts.
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Brett is a capital gains tax deferral expert. And he's also the founder and CEO of capital gains tax solutions. He's a sharp business person and an advisor and a really good guy all around. Brett, welcome to the show.
Marco, thanks for having me excited to be back on the show.
Well, it's great to have you on, we're gonna talk about something that I find exciting and I hope people get excited about it as well because let's face it. Most people don't like to talk about taxes and tax strategy and whatnot. It's something that probably gives them a little bit of brain damage, but that's why you hire experts. But the important thing here, I think for most people to understand is what are the tools that we have at out there that we may not even know about that we could use and implement in our investing strategy and in our business and whatever else we're doing that can eliminate, defer and reduce our taxes. And that's exactly what I want to talk to you about today, but let's find out a little bit more about you and your company, capital gains tax solutions. Why don't you just share with our audience, what, what that's all about?
Thanks Marco. Yeah, so I grew up in the real estate business in the bay area with my mom and my dad, my brother building custom homes and, and having rentals and cash flow. So I fell in love with real estate at a young age, had a chance to go to college and study and take an internship at a place called Marcus and Millichap or learn the brokerage side of and multi-family and underwriting side and, you know, cap rates, cash flow, IRS, you know, all of negotiations structuring deals. And, but it wasn't always that great. You know, in fact, 2006 was really good and then it went really bad, pretty fast by 08. And I went from making a little bit of money to like nothing overnight. And that began, oh my gosh, what I'm gonna do help to keep the lights on with my family, my wife at home with her new baby daughter at the time, like, how are we gonna keep this dream of being in commercial real estate alive?
And so I did whatever good entrepreneur commercial real estate, real estate investor wannabe does, who wants to be full time in it? You get a side hustle, right? And that my side hustle was at cheesecake factory. And so nights and weekends, I worked at cheesecake factory and by day I'd make cold calls or negotiate with banks and try to help my clients solve problems. And that was my kind of my my journey, if you will, of being in a season of life that says, do I really love commercial real estate? Do I really love solving problems for clients enough to push through the pain and the pain on the other side is, you know, like anything, enough pressure and enough pain, it can create like that the diamond and the diamond being my business partners who are really, really smart pressuring on me to become an expert in deferred sales trust in 1031 exchanges and help people to navigate the whole options, like what to do, what not to do.
And I didn't anything at the time, but in oh nine, my manager at Marcus & Millichap brought in my business partner who spoke on the deferred sales trust.
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli .What a crazy market we have been seeing for the last two years. Strong, strong price appreciation, lack of inventory, strong demand. That doesn't seem to be subsiding, even in some of the more expensive markets around the country, the tier one markets, but that's the topic of today? What is the housing market doing? And that seems to be a common question. Everybody's talking about housing and the question is how's the market? Are we going up? Are we going down? Is there an issue where rates going are prices are gonna continue to appreciate that's. The general question is how's the market. So today's topic is about the housing market, the trends that are going on and what forecast we might see for the next 12 to 24 months. And I have a great guest, someone who is a founder of a company that aggregates a ton of data it's Alto research.
And I've got questions for him to find out about what we are seeing in terms of price days on market inventory, the housing shortage, and how long he predicts. That might last, what is happening with the resale stock at, out there. And also I'm gonna ask him about some price predictions, inventory predictions, and mortgage rate predictions. So that is what we're in store for today. I hope you enjoy today's episode. And with that, let us get straight to our guest.
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Well, it's my pleasure to welcome Mike Simonson to the show today, he is the founder of Alto research, a company that brings data and insight together on the us housing market company serves some of the largest wall street investment firms. They serve banks and tens of thousands of real estate professionals all around the country. I have been following them for many, many years since they started. I guess Mike can tell us about it with that, Mike, welcome to the show.
Thank you. Nice to be here Marco.
So when did you start Altos?
So we started January 1st, 2006. I like to say two bubbles ago.
Wow. That's impressive. You guys have been very interesting to follow cuz you guys aggregate so much information and data and then, you know, draw intelligence out of that. What you would call insight on markets all around the country. Why don't you tell us a little bit about Alto research, the sources of your data and you know what you do with it?
Yeah, so we track every home for sale in the country. We track every week. So, you know, there are new houses that come on the market and they're priced at a certain level. We track, you know, every home that's on the market in every zip, essentially every zip code of the country. And we use that data analyze. So traditional housing data, traditional real estate data is lagging. It's like backward looking, they're looking at sold prices of a house that's sold in January or maybe December is now starting to be visible now in February. But that house was put on the market in October and then it got an offer in November and then it closed in December. Like there is so much signal back in those months, back then we can tell you exactly what was happening. And so what Altos does is focuses on what's going on right now, we do it for the whole country and the, then we turn that into usable data. So I, a lot of our businesses with real estate agents and brokers who are taking local market reports and being able to hand that to their clients who are making buying decisions or selling decisions right now and using the traditional approach, or this is what's sold two months ago. It's not really helpful. You know, when we can say, Hey, there are 14 homes in your price range on the market right now. And a third of 'em have taken a price cut. Like that's real interesting signal that people can use...
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, we have a very, very colorful and entertaining guest today. Someone who is very interesting person as you'll discover why, but one of those people who let's just face it, if you were walking down an alley and you saw him coming at you, you definitely wouldn't want to make eye contact, but you know, there's that saying? You can't judge a book by its cover. And Steve Sims is definitely one of those people, but he really is a guy that is very honest and genuine. What you see is what you get. He is pretty raw, but you know, again, you know, you can't judge a book by its cover. He's a guy he's got a shaved head, Harley Davidson garb on body piercings on a five-foot 11 frame. He's 240 pounds and his image doesn't scream. Hey, let's be friends, but that's the irony of it all because despite his exterior looks, he's a remarkably open, honest, engaging, generous, insightful, intuitive, and competent person. He's had some very amazing experiences all around the world and has shared many of those with other people. And he's leveraged all of this to build a remarkable and successful entrepreneurial career. He's got a great book out that I think is well worth picking up and reading, cuz it can help you in many areas of your life. It's a great personal development book at all levels, from investing to entrepreneurship and whatnot. The book is been out for a number of years to be, you know, honest about it. It's not a new book, but he does have a new book in the works this year that I know about, but he will not talk about. Anyway with that, I hope you’ll enjoy today's episode and let's get right to the interview with Steve.
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Well, it is my great pleasure to welcome a great guy to the show. I'm very excited to, to have this person on today. His name is Steve Sims and Steve is the visionary founder of the world's first luxury concierge, a company called Bluefish and there a service that delivers the highest level of personalized travel transportation and cutting edge entertainment services to people like executive celebrities, professional athletes, and other discerning individuals interested in living life to its fullest. And he's gonna tell you a lot more about that today. He's also the author of a great book you should pick up called Bluefishing: The Art of Making Things Happen. And I love that title. And we're gonna talk about that today too. So with that, Steve, welcome to the show.
Thanks for having me.
Well, it's an honor to have you on and in full disclosure for my audience, you are a relatively new member of one of my mastermind groups. You're a great and funny speaker and you are definitely an inspiration to many, many people. And as they learn a little bit more about you today, they're gonna find out why. So, Hey, let's start with you. Who's Steve Sims?
Well, apparently I'm great and funny. So as, as you just explained, I'm just an aggravated kid like everybody else, it's amazing how many, it's amazing how many poor people are so aggravated that they become rich. How so many dumb people are so aggravated? They become smart. So I was an east London brick layer and every one I knew was Paul. So I quite simply went out in the planet to quite simply have conversations with rich people now for those people out there that aren't blessed enough yet to see this on video. Don't exactly look like Hugh Grant. And so, you know, if you see me walking down a corridor at 11 o'clock at night, usually people run away, you know, sad, absolutely the look that God built me with, but I just wanted to converse with wealthy people and go, hey, in the early stages,
Hello, my friends and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli while I'm really excited about our guest to today, Mr. John Burns, he is a wealth of knowledge when it comes to housing and the economy and what is going on across the country in terms of demographics trends and everything else. That's related to things that we're interested in as real estate investors. So today I'm gonna have a conversation with him about the US housing market, the past present future. We are gonna talk about trends and discuss things such as interest rates appreciation. What is going on in terms of COVID debt, income ratios, appreciation rates, the tipping point that may happen in the housing market and how that might affect you and how to prepare for that. So it's all a good conversation in today's interview. So with that, we're going to slide right in and talk to Mr. John Burns.
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It is an honor. And my pleasure to welcome John Burns to the show. John is the founder and CEO of John Burns Real Estate Consulting, a firm that is helping business executives make informed housing industry, investment decisions. And John also, co-authored an amazing easing book called Big Shifts Ahead. A book that was written to make demographic trends easier, to understand, quantify and anticipate. And I'm telling you, it's a fantastic book for real estate investors. I'm holding a copy of it. In my hand right here, I highly recommend you pick up a copy. It's only about six years ago that he wrote the book, but so much of it is still applicable to day. And it gives you a phenomenal understanding of demographics and what's going on in the country as it relates to the economy and housing. So with that, John, welcome to the show.
Thanks Marco. Great to be here.
Well, I'm excited to have you on, because I've been looking forward to this interview for a long time. I've got about 10 questions or so not a lot, but I know that you literally talk forever about some of the stuff cuz the depth of your knowledge is amazing. Let's just begin with a little bit about John Burns Real Estate Consulting. So people understand who they're listening to before we dive in, just tell our audience a little bit about John Burns Real Estate.
I started it a little over 20 years ago because I realized well at the time, actually it was hard to go get the data and figure out what was going on in the housing market. Over 20 years, it's changed to there being too much data, which, which you figure it out for me. But the commercial real estate industry was so sophisticated. They had their own research and it was easy to do cuz the buildings don't move around residentials a lot harder. So I just saw an opportunity to create a research department that everybody could use. And as long as I'm charging them you know, less than the cost of a person, it's hugely economical to them. And then we do supplement it with a consulting business. So we've got about 110 people, half of other than operations half are figuring out the housing market for our subscribers and the other half are doing consulting projects, very focused on new home development and growing in the building products in the single-family rental space.
Actually an amazing thing about your company is you have people scattered all over the country, even though you're based in Irvine, California, which just 15 minutes north of where I'm sitting. You've got people from Hawaii to Florida. It's amazing.
During COVID we had one go to England and one go to New Zealand and they're still with us.
Congratulations!
Home thing pretty well.
That's very cool. I love it. So let's just start big picture here.
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. Well, we have a great show for you today. You know, there was a quote, I will member from someone I heard many, many years ago, and it's basically this “Be the person you want to become.” And I think that's really powerful, but the question is, is how do you do that? How do you be the person you want to become? So I think a lot of that comes down to the habits that we incorporate in our daily lives and that, that leads right into today's topic and our guest for today. So without stealing any of his thunder, I'm gonna let Hal talk about everything that he has been working on for years here and put into a great book. So with that, let us move forward with our guest today.
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Well, it's my pleasure to welcome Hal Elrod to the show. He is an author keynote speaker, a success coach, and he is the author of the bestselling book, The Miracle Morning, which is a phenomenal book. He's also the author of The Miracle Equation, founder of The Miracle Morning book series. And he's the host of the podcast Achieve Your Goals. Hal, welcome to the show!
Marco. It, it is a pleasure man. And great. Thank you for having me.
I'm glad to have you on, I mean, you've impacted so many people with your books, which has been out for years and you know, as I was telling you, before we started recording here, one of the people that I know Robert Kiyosaki told me on one of the cruises that I went on with him, how much it has changed his life. I mean, he was very vocal about it and he had nothing but good to say about it. And he's one of those people that's like always into personal development and he practices, you know what he preaches. Yeah. So that says a lot about the book, but we're gonna get into that in a minute. If I love my audience, especially those that have never heard of you or your books to learn a little more about you and your history, because you actually had a air quotes fatal accident many years ago, and you're obviously still here, which is phenomenal, but that changed the course of your life. So why don't you share a little bit about your background and talk to us about what it was about that accident that changed the course of your life?
Yeah, absolutely. I was, so I was 20 years old. I was a sales rep for Cutco cutlery. I was, you know, in college and I actually one of the top reps in Cutco, they make kitchen knives for those that don't know. And I was in direct sales with them and I gave a speech one night at one of their events. And that night driving home from the speech. My car was head on by a drunk driver at 70 to 80 miles per hour. And I spun off the, the head on collision with a drunk driver, sent my car in a tailspin and my driver's side door, the car behind me, my car spun sideways. And they crashed into my door at 70 miles per hour. And so if you can imagine, you know, having a car crash into your door at 70 miles an hour, what you'd imagine would happen.
And it crushed the left side of my car into my body. I broke 11 bones instantaneously in my leg, broke in half my arm broke in half. I shattered my elbow. I severed the nerve in my forearm, ruptured my spleen, punctured my lung, almost completely severed my ear, fractured my eye socket. And I was essentially that night I almost died or I did technically died. I was, I bled to death. I lost over blood over the course of an hour. When they finally pulled me out of the car, using the jaws of life I had bled out and my heart stopped beating and I stopped breathing. I was clinically dead for approximately six minutes and they used the defibrillators. They threw me onto a helicopter and put me into an eye IV and they shocked me back to life e...
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco. Santarelli. It's been a while since I did an investor spotlight. And you know, now that I think about it, I think I'm gonna start doing more of them throughout the year. It's always interesting to hear other people's experiences investing in real estate, whether they're clients of ours or not. There's always experiences, lessons learned. It's interesting to hear about their journey, where they've come from, where they're going. They know sometimes they don't believe it or not, but that's something, you know, we definitely want to help them with today. You know, there have been some great golden nuggets and lessons learned from my interview with one of our current and past clients, guy named Tommy and super nice guy, but he's just having a whole heck of a lot of fun and investing in real estate. And he's looking to continue to build his portfolio while he enjoys his amazing work at Purdue University. So without further ado, let us get to that interview and I hope you enjoy it.
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Well, it's my pleasure to welcome Tommy. So to the show, Tommy is a client of ours. He is a fabulous guy. I extremely friendly. And my entire team here have really enjoyed working with Tommy and helping him invest in real estate. So with that, Tommy, welcome to the show.
Thank you so much, Marco. And I will just say what a pleasure it's been to be working with you and your team. I reciprocate that sentiment. It's been great so far.
Thank you so much. I appreciate it. Well, you know what I know we had a brief conversation yesterday about coming on the show and doing an investor spotlight of sorts. And I haven't done one of these in a long time, to be honest with you. And I think I'm gonna start doing some more of them because I actually gain a lot of insight from listening to other people's stories and journeys of where they're coming from, where they're going to, you know, what their investment goals are, how they stumbled across this, all that good stuff. But you know, for our listeners, let's just start off with you. Why don't you take a minute or two, tell us a little bit about you, just like, you know, you had told me in the past and we can kind of go down the journey that way.
Well, first thank you so much for this invitation. I feel honored that you're picking me to be on this investor spotlight. I am just your regular W2 worker. I am at Purdue university and I am a research administrator at Purdue working at the Purdue Institute of infant immunology and infectious disease. And you can imagine how busy I've been in the past couple years since COVID hit. But like most of us we've been in hybrid mode kind of being back and forth at work, but also at home. And in one of those evenings, I was talking to my mother-in-law who asked me to please go watch this program called wealth breakthroughs. And in one of those interviews, I saw you Marco pop up. And I started talking about this turnkey investment opportunity for real estate investing, and I have a rental property here.
And so I had already started in this journey path for, towards trying to get some passive income through rental properties. And so I was compelled to look you up and look up your Norada Real Estate Investment company. And sure enough, I called and I started working with you really was Melissa Nash being a wonderful real estate agent on your team. And we started to explore what would be investments outside of my local area, my local community, which again, I, you know, I was interested to explore and my goodness, it was such a pleasure working with her because she was so knowledgeable, not only about the different markets that are av...
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli and welcome to February, 2022. I hope you had a great January. It's been very busy for us, and I hope it's been great and busy for you too. Well, this has been an amazing year. There's been a lot of activity in the real estate market, as well as legislation that has been going back and forth for the last few months, especially as it relates to taxes and tax regulations. And that is really what we want to talk about on show. I think it's an important show for everybody, especially if you have a self-directed retirement account of any kind, but the big question is are self-directed IRAs and even 401ks doomed. That is a big question. There's been a lot of regulation that has been proposed to essentially destroy and gut the self-directed IRAs.
Well, IRA in general. And so my guest today, John Hyre is someone who we're gonna talk about this. Now, granted, this is a very complex and deep subject. And so we're gonna talk about the, you know, what is going on and what you can do about it, some strategies for the next 30 or 40 minutes, but don't take it lightly. I think it's very important, especially if you either have a set off directed retirement account or a traditional IRA, or if you're planning to set up any kind of self-directed account, including solo 401ks, or 401ks of any kind will Rogers reminds me, you know, with his great famous quote, the only difference between death and taxes is that death doesn't get worse every time Congress meets. Well, it felt that way in December with all the new legislation that they were trying to push through the door before the end of the year.
And that is no bueno. So fortunately a lot of it has been taken back, but that doesn't mean that they literally can't shove that back in there tomorrow. That's just the way things go with Congress. So you just have to stay vigilant. So anyway, my guest you're gonna enjoy today. John is an amazing guy and very knowledgeable, and I do intend to bring him back on the show in the future. And if you have tax related questions, I don't necessarily need them today, but submit them as one of the Ask Marco questions, I'm going to bank them. And then when I have John Hyre back on the show, we're gonna go through essentially and ask John anything type of episode with tax related questions. So something to be thinking about, especially as you're listening to this particular episode today.
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So without further ado, let us get to our guest today. It's my pleasure to welcome John Hyre to the show. John is a tax attorney with 27 years of experience, his virtual practice caters to real estate investors, small business owners and self-directed IRA and 401k investors all over the United States. He is exceptionally knowledgeable on these matters and he painstakingly reviews the core cases to stay on the cutting edge of these regulations. He's an amazing person. Someone you should definitely get to know John, welcome to the show.
Glad To be here, glad to help people keep what's theirs.
Yeah, absolutely. I mean, I told you before we started recording here that I hate paying taxes. So I'll pay my quote unquote fair share, but I try and minimize that as much as possible. So let's start off with your practice. You have a fascinating practice. You do something that I don't know, any other tax strategist or tax attorney does, and you literally will go to Washington DC or wherever you go. And you'll literally read court cases and court documents, and it's just, you know, admirable, but tell us about your practice and what you do.
Sure. I started out solely in real estate when the internet was young and accountants and attorneys on both were less specializ...
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And I am glad to have you back. You know, this topic of home inspections should not be a boring one. I know on the surface, it might appear that way, but you need to know as much as you can about home inspections. Clearly, I think it's obvious that the importance of a home inspection does not need to be stated. In fact, we have a policy that all the, uh, clients, all of the investors that we talk to and work with must order a home inspection when they're purchasing investment property, regardless of what it is, including new construction. But you know, a lot of people misunderstand what an inspection is supposed to contain, what it should cover and should not cover. What is the breadth or scope of that inspection? How do you even find a good home inspector?
Well, these are all good questions and I've jotted down many others that we're going to ask and discuss with my guest today, who will be on here in half a minute, but you know, just real quick here, you know, why should you get a home inspection? Well, there's many reasons off the top of my head. It, you know, if you're doing due diligence on property and you need to make sure that you are not getting yourself into trouble or purchasing a lemon, it essentially provides you an out. There's always a contingency in every purchase agreement. It's a due diligence period. And within that due diligence period, you can order an inspection. And if it doesn't come back to your satisfaction, which is not a quantifiable description, it's more qualitative than quantitative, but it gives you an out to get out of that contract, get out from under it and just have your deposit returned if you have a deposit on it.
So it gives you a contractually legal way to get out of a contract. So there's that, of course, safety reasons. You wanna make sure that you don't have issues at the property like raydon or mold or carbon monoxide. So, you know, you wanna make sure that there are no safety issues. In addition to that, it may be able to point out if there are any illegally built additions or installations to the property. Maybe there was something that was built, some sort of extension or addition room that does not fall under code, or maybe there was never a permit issued for it. So you should be aware of that as a side, the, uh, seller should and is supposed to disclose that information to you. But you know, that's another thing is just to reveal any illegal additions. It's a negotiating tool. I mean, if there are issues that need to be solved or cured, it allows you to negotiate and bargain either a credit or a reduction in the price, or just have the seller cure those issues that are red flags or must be done items.
It gives you the ability to forecast future costs. If you have an idea of the wear and tear of various things in the property, then you can forecast what some of your renovations or capital expenditures might be in the future. So it's good to know what the shelf life is of various component in the property. That inspection could be the deal breaker type of document that you need to say, well, no, this is just too much to fix. I don't want to credit on anything. So, you know, it's just a no go. Deal's not gonna break now. We never have that situation. I shouldn't say never, probably one out of every 300 properties has an in come back and the report is essentially a deal-breaker. There's just too much there to wrap your head around. But like I said, it's, it's very rare that that actually comes up.
So other than that, you know, the final thing, but this is certainly not the last thing. Uh, but the final thing that I wanna mention here is insurance. I mean, no insurance company, will I a property if there are various issues there. So it's basically like a clean bill of health. And, uh, as long as the, uh, inspection passes through your criteria and the insurance company's crite...
Hello, my friends and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. It is great having you back. Well, I hope you've been having a great 2022 so far. It seems like the last month and holiday passed by very, very quickly. Maybe it's because we are just all so busy running around in so many different directions. I don't know about you, but it just seems to me that lately we've been having so much more media attention to debt specifically to federal and government debt and inflation. And, you know, Milton Friedman once said that inflation is taxation without legislation. And I also like something that Kevin Brady at once said, and he said, inflation destroys savings, impedes landing, and discourages investment. That means less productivity and a lower standard of living. And that couldn't be closer to the truth. So, you know, I guess because of just the amount of inflation we've been seeing price appreciation and inflation over the last 18 months or more here at Norada Real Investments, the company that I run here for real estate investors, we've seen an uptick in investor inquiries for investment real estate.
So, you know, I think to a large degree, that's probably because there's more of a flight to safety, safety in the sense that real estate is a true hard asset. It is a natural head against inflation, but I think there's also maybe some increasing stock market concerns because it actually has been more volatile in the last three to six months. And I think some investors are getting a little nervous and being shaken out of the stock market and they're moving some of their capital or maybe all of it, you know, towards hard assets like real estate, which is a natural, I hedge an asset that produces income also allows you to gain equity through appreciation and amortization of your mortgage loan, which of course we outsource to our tenants. We don't pay that ourselves. Our tenants pay off our mortgages for us. So real estate is a fantastic investment.
It's the most historically proven asset class. And it's a great way to deal with rising debts and inflation moving forward. You know, we were drowning in record levels of debt before COVID 19 came along as a crisis and we are now deluged in it. The US private sector loans have tripled relative to income since the 1950s and government debt is also at an all time high. These soaring debts burden, most individuals, and it stifles growth. It compounds inequality in this country and it brings falling living standards for millions of Americans. Unless of course, you're on the right side of that debt equation, which usually involves assets that you can acquire and leverage using debt to benefit you. And we'll talk about that. Of course, I've mentioned it many, many times over the years on the show as well, how you could use debt as a very powerful tool to accelerate your wealth creation.
My guest today, who is Richard Vague argues that contrary to mainstream assumptions, we cannot simply hope that the trend will correct itself. Mounting debt is a feature of our economic system. He argues, and it's not a bug, so debt's perpetually grow and compound. And that polarizes and impoverishes countries and economies if it's not dealt with. And so that seems to be one of the key questions, you know, how do we deal with it or do we just ignore it and leave it alone? Because as he argues, it's not a bug, it's just a feature of our current economic system. So with that, let's get to our guest and explore. Are this mind-bending new perspective on debt and inflation?
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It is my pleasure and honor to introduce Richard Vague to the show. Richard is an American businessman. He's a venture capitalist,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And today we have a very special episode because we're gonna talk about something that impacts everybody, not just those listening to this show, but everybody in the country and actually around the world. So my guest today really sharp guy, Jeff Deist, from the Mesis Institute, we're gonna talk a little bit about the state of the economy and inflation, and these are things that impact you, whether you know it or not, and I'm sure you do, cuz we have a very well educated, smart audience on this show, even though we are listened to in over 100 countries, most of our listeners are here in the United States and this is going to hit close to home. So inflation has been, you know, in the headline news for a very, very long time.
And it's an important subject. In fact, the timing of today's interview coincided with the latest release of the annual inflation rate, which came out this morning at a whopping 7.1%, which is what was expected, but it's such a crazy high number relative to what we've been seeing in years past decades, past actually four decades to be more specific. And that number that 7.1% keep in mind. That's the headline rate that's what's talked about in the media and among various talking heads, but when you really look at the real rate of inflation, not the nominal rate of inflation, you know, by number that real rate of inflation is actually higher. And so the annual inflation rate that was released this morning in the us has accelerated to 7.1% over the last month of 2021. We're here in January and that is a sharp for re new high since June of 1982, it is in line with the market expectations.
And you know, we're comparing that to a whopping 6.8% that came out in November. So it's still increasing. Now energy was the biggest contributor to that gain. I'm sure that's not a surprise to many people, but really accelerated across the board housing or shelter rose from 3.8% to 4.1% food. Now I'm talking more specifically food at home, went from 6.4% year over year in November to 6.5. So a small increase, but still it's over a 6% increase year over year vehicles, both new and used moved a whopping 11.8% for new vehicles and 37% for used cars and trucks. Think about that. Good luck finding a vehicle that is affordable. I mean, if you're sitting on a bunch of cars and you wanna sell now was a good time. Clothing went up almost 6% medical care services went up about two and a half percent and that's not talking about healthcare here.
We're talking about medical care services. Inflation really spiked last year in 2021 for many reasons. I mean, we're talking about the pandemic induced supply constraints. However we real, those might be, I mean, there's definitely supply constraints, but how much of it was pandemic induced is another question because there was certainly increased demand. There was a lot of people buying. So demand certainly increased. There are soaring energy costs, labor shortages, which I'm still trying to wrap my head around. I think there's a lot of people who have just left the labor market and it chosen to stay unemployed or at home for whatever reason, but inflationary pressures like these are expected to last well throughout the year. And certainly in the years to come, I don't think is short term. And we're gonna talk about that in today's interview with Jeff Deist here, because he has some thoughts and opinion on, on that as well it's anybody's guess, but just based on the credit based system that we work and live in and where we have been coming from and where we're headed, certainly points in the direction of more inflationary pressure and increased inflation.
So I hope you enjoy today's. I do plan on making another one or two with potentially some other guests or maybe just myself about inflation and the impact it has. So let us go on to our interview with Jeff Deist an...
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And today we have what I'm calling part three of a series I'm doing called the 7 Common Questions Asked of Our Investment Counselors, all six of our investment counselors, talk to investors and clients, and they all ask different questions. Some of them are very similar as, you know, a lot of common questions, but every once in a while we, you know, have stuff that is different. And some people don't even think about that question and they realize, oh yeah, that's a good question. Maybe I should have asked that as well. And so I thought I'd interview or bring on each of my investment counselors or at least four of them to talk about the seven most common questions that they get asked in these seven categories that I've created. And the feedback has been really good at the first two. And so I'm gonna do at least another one or two, and today is number three. So with me today is one of our investment counselors, senior investment counselors, Michael. Michael, welcome to the show.
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I appreciate your invitation.
Yeah, definitely. Well, it's good to have you on this is I think your first episode, is it not?
Yes, it is. And with that lead in, I've some big shoes to fill, so I'm looking forward to it.
Well, I don't know about that, but I'm happy that you're on. So let's have a nice conversation here today. So we, we did a little chatting before we started recording here and you had an interesting twist. We don't need to get deep into it, but if you want to comment on it, you mentioned that most questions are instinctive. I thought that's okay. That's interesting. But you know, you're angle that you might take here today is to answer these common questions from a more intuitive perspective. Do you want to comment on that real quick before I start diving into the seven areas?
Yeah, absolutely. And part of where this came from is more of just been doing this for about five years with the rental properties, been in the financial industry, investing over 25 years. And when you had asked me to come up with the common questions, what I've noticed, a lot of my clients, a lot of my investors is there's really two sets of questions in a general kind of form that they have on all of our calls. You had mentioned the instinctive questions. And those to me are more the, the obvious, the procedural type questions, or like a lot of people refer to the how to questions, what mark, how to put the pieces together. What should I expect things of that nature, but where I've seen where at some of the most important questions are those intuitive questions and what I mean by that?
These are my clients. When I get on the phone, they are asking the question, maybe not specifically in word form, but it's those intuitive questions of why, why do I invest in real estate? Why should I invest in rental real estate? Why should I use turnkey rental teams to manage my properties? Because for me in all of my years of investing asset classes have cert time of the years or certain events, you can look back on the late eighties, early nineties with the advent of the semiconductor and Moore's law and increasing computing power technology was the asset class to be investing in. You could maybe even look to mid 2000 with the advent of the commodities and you had that run with China expanding. And so every asset at class does have an environment that is why we should be investing. So I really would like to kind of take more of the approach to help our clients think of it as more or the why question, answer the why question. And if you agree with the why question, the answer, then all of the instinctive,
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Well, we have a special guest today because he has taken a book concept and rewrote it specifically for real estate investors, which I'm really excited about. In fact, I didn't even know this book existed until two days ago. And so with that, I wanted to bring on David Richter. I hope I pronounce that correctly. Yep. David is an experienced real estate investor that took part in over 800 deals, which is amazing. And he's everything from whole tailing to wholesaling, to retailing. He rented properties. He's done lease options. He's done over financing. He basically did every exit strategy under the sun when it comes to real estate. And so he's a very seasoned real estate investor. But what he did is he took a concept from a book that I read years ago called Profit First. And many of you being entrepreneurs and business owners, professionals who listen to this podcast have probably heard of the book, or maybe even read the book, but he took it one step further. He took that whole system, that whole concept and created it for real estate investors. And so the book is called Profit First for Real Estate Investing.
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And with that, David, welcome to the show.
Marco, thank you so much for having me it is an honor to be here.
Well, I'm glad you're on. This was interesting because I've never heard of this book and usually I'm right on top of all the new books that are coming out. Not that I can read all of them. I don't have that kind of time, but I found the book Profit First. Very interesting. And the fact that you took it one step further and adapted it for real estate investors, I thought this is really cool. And so I have to be honest, I only went through a summary of the book. I haven't read the book cause it just came out. Is that correct?
Yeah, it just came out this month.
Okay. Well congratulations. Thank you very much. Let's start with you. Tell our audience a little bit about yourself and your journey to get to this point. And then let's start talking about things like mindset and the, how the formula works. Cause I just love how profit first flips the profit formula backwards up on its head, which is kind of difficult for, I think a lot of people to understand, but I don't wanna get ahead of myself. Let's talk about you for a bit.
Sure, sure. So I got into real estate investing back in 2012 because someone, when I was in college gave me a good friend, gave me the book, Rich Dad Poor Dad, Poor Dad. So it all started with a book for me and that's where my mindset was changed. Just like a lot of people probably listening to this has probably read that book or have heard of it. Robert Kiyosaki wrote that and it was just an incredible book and that's where I started reading a whole lot more on real estate investing and just business in general. And that's where I also, during that time bought my first house on 12-12-12. I'll never forget that day. And it was, you know, it was a fixer upper, fixed it up, rented it out for a while, actually lived in it after, uh, we had rented it for a little bit.
So we cash flowed it then lived in it then actually at least optioned it at the end. And then the person who was in there exercised their option within like six months. So it was like a great deal that I did on that first, uh, that first house. So I was, I was hooked. I'm like, I need more rentals. I like this passive income. Like I really like this. So I actually started working with an investing company in the area where I was living and we start, we grew that company from about five deals a month to about 25 or 30 deals a month. And you know, doing 300 deals a year between all those different exit strate...
Hello, my friends. And welcome to another round of Rapid Fire Listener Questions. And this is your Ask Marco episode on the Passive Real Estate Investing podcast. Well, I hope everyone had a wonderful Christmas weekend. We are at the tail end of the year. This year has just flown by 2022 is just around the corner. And I'm pretty excited about the topics we're gonna cover into the new year. There is a lot going on with inflation monetary policy, markets that are appreciating some of them highly inflated others offering great opportunity. So we're gonna have some great guests coming on in the new year. Also, I'll be talking about some of these topics very soon. And, you know, as I look back on 2021 is just amazing how I was only able to get about half of the projects I wanted to get done, done. And I seem to always overestimate what I can do in the short term, but I always end up underestimating what I can do in the long term.
And I think this is a truism for most people. I think people tend to overestimate what they can do short term, but then if they stick to it, they realize that they can accomplish great things over the years. And so they underestimate what they can do long term. So I think that's something to think about here as we close up 2021, and as we roll into 2022, you know, set yourself some goals and just, you know, strive to achieve what you want to achieve, but don't get disappointed if you are not get the momentum that you would like to see short term, because if you stick to it, that momentum compounds on itself and you can accomplish great things over the course of years.
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And this is very true for real estate investing as well. A lot of people get started and you know, they have one property, maybe two and things look like they're just moving along slowly.
But know if you've been in real estate here over the last two years, and you've seen what rents have done in terms of rent growth and price growth, particularly in many of the markets that we're in. And that includes the Southern markets like Florida, Texas, any of our Southern state markets. You look back after 12, 24 months, and you're very impressed by the amount of price growth, the appreciation. In other words, the equity gains that you've seen. And it's just a matter of being patient. Like I've said so many times on this show, real estate is a true and tried get rich slow investment. It is not an overnight get rich quick type of deal. So just understand that you gotta stick to it, keep stacking properties as quickly as you can within your capabilities and you'll accomplish amazing things, amazing things. So let's take 2, 3, 4 questions here for today's rapid fire listener question episode and see what we can accomplish. And I have many more of these coming and there are some great questions coming in. So I'm excited to cover more as the episodes roll along.
Okay. The first question comes in from Jasmine, and this is really more of a clarification question. She says, good day, Marco, love your podcast. I have listening for almost a year. I haven't missed an one episode since well, thank you, Jasmine. In your last episode where you talked about HAI, the Housing Affordability Index, it was mentioned that real versus nominal inflation. I have searched the internet to find concrete, solid information on this knowledge and have a hard time where to find it. What is the difference between real and nominal inflation, not interest rate and how do I find out what is the current real inflation rate right now? Many thanks and keep up the excellent work. Can't wait to hear my question answered on air smiley face.
Okay. Jasmine. So hopefully it wasn't a confusing episode because when we tal...
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and today we are going to do part two of our seven common questions asked of our investment counselors. We did one a few weeks ago, had some great feedback and response. So I've brought on one of our other investment counselors here today to go through same seven categories that we went through last time. And who knows? I have no idea what Nate's gonna talk about, but there's a chance that some of these might be the same as my interview with Melissa, but odds are, they'll probably be different. So hopefully this is gonna help a lot of you in different ways. And with that, Nate, welcome to the show.
Thank Marco. It's good to be here. My friend, very good to be here.
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Well, I'm happy to have you on. It's always a pleasure and a joy speaking with you. You're a very sharp individual. And so now I get the chance to kind of ask you questions and kind of poke pro into your head and get to hear what other people are asking you. So what I did last time with Melissa is I went through these seven categories. I'm starting off with, you know, the most common question that you get when it comes to people who are getting started. And that doesn't necessarily mean that you are a newbie and this is your first property, although that is often the case. But you know, when you first connect and dialogue with someone on the phone, there's always gonna be some questions that you get before. Even the process of choosing markets and properties happens. And so let me ask you, what is the most common question that you get as it relates to getting started, either investing or getting started in working with us, I'm gonna leave it wide open for you.
Yeah, that's a great question. And to be quite honest, it's, I'm gonna feed you right back at you. People literally say to me, well, how do I get started? And so I have to clarify, similarly with them, are you referring to buying a piece of real estate? Are you referring to building a passive investment plan? Like what, what do you mean by generally getting started? Now? I would say in most cases, most investors I'm working with that come on board to Norada, want to buy investment real estate. They, they wanna invest. And typically they wanna invest fairly quickly. A lot of times it's, you know, I have capital right now and I wanna deploy it. So they come on board and they say, Hey, what do I need to do to get this money deployed? What's the first step. Some people think it's market.
Some people think it's financing. Typically what I like to do is I like to clarify a step by step process. And number one thing for most investors that I recommend is first and foremost, from a basically a step by step process would be, what can you do with your capital? Can you get financing? Right? So number one would be, let's talk to lenders to at least see where you're at with financing. Some investors can get qualified for conventional financing and some investors cannot. So if we can't get conventional financing, maybe it's a, a different type of financing. So from a practicality standpoint, getting started in buying an investment property. Step one would be, let's get pre-approved for financing now from an overall perspective on getting portfolio built. And what's this whole real estate thing about, I think the, a broader answer to that question is, well, step number one.
What, what do we do when we get started? Well, we need to identify an objective. What's your goal for investing? Right. So getting started for some people might be, I wanna invest in appreciation based markets, or I wanna invest in cash oriented markets. You know,
Hello, my friends. And welcome to another episode of Ask Marco on the Passive Real Estate Investing show while we've got some great question is for you today on our rapid-fire listener question episode. And if you're hearing a little bit of an echo it's because I am actually in the sunshine state, I'm here at my place in Florida, not in California right now. And so I do not have sound dampening foam on the walls around me, which is what I usually have when I'm recording back in California. So I apologize if there is a bit of an echo here, hopefully we'll be able to edit that out. Anyway, it's been a crazy year. This year, 2021 it's December, it's almost over 2022 is around the corner. We have seen in incredible appreciation in every market around the country. In fact, as I sit here today, about 85% of the markets that we track are still being ranked as strong or very strong in terms of price, growth and appreciation.
So will that continue? I expect that to continue well into 2022, but not at the same pace that we we've been seeing over the last 12 to 18 months. So expect continued price growth and appreciation and rental price increases rents continue to be strong and will continue to grow. However, the pace that we've seen in the last 12 months is certainly not what we expect to see in the coming 12 months, which is a good segue into the first question here from NG.
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And NG writes in and says, hi Marco, in one of your episodes, you mentioned the US market is a collection of submarkets and we cannot generalize the entire US market being in a bubble. Are there any resources to indicate these submarkets being in a bubble? How do know if a specific market or Metro area is in bubble territory? Well, NG, that's a great question.
I think people think that, or ask that question often, and I'm gonna give you kind of a way to determine how to know if you are approaching bubble territory. But the important thing to understand is there are different, very labels and dynamics at play here. So it's really difficult to spot a market top or bottom. However, real estate is generally speaking, slow moving. And so you can see trends and trend changes as well as recognizing from looking in your rearview mirror when you have turned a corner. So with that, just understand that as of last year, 384 metropolitan statistical areas in the US or what we call MSAs. And, you know, that does change from time to time as new MSAs are defined or carved out, but suffice it to say we have 384 metropolitan statistical areas around the country. And each of those MSAs are made up of often dozens, if not a hundred or more cities of different sizes at the county level, we have 3,119 counties.
And again, this does change a little more frequently than the number of MSAs, but 3,119 counties and county-equivalents across the United States. So what we find is that each market is local and every city and town changes on its own fundamentals and economics and dynamics. They have their own supply and demand dynamics that change those markets. One good resource for you is the housing affordability index. And it is based on the ranking of 174 metropolitan areas. Now this might be a little bit more general or large or wide in scope than what you're looking for, but the housing affordability index or what they abbreviate as HAI, the index in a metropolitan area measures whether or not a typical family earns enough income to qualify for a 30 year fixed rate mortgage on a typical single-family home without spending more than 25% of their income on the payment for principal and interest.
Now this 25% number is a little different than what they use fo...
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. And I'm a little excited today because I've got a friend of mine on who is also a very knowledgeable strategic financial thinker. I guess that's what I'm gonna refer to him to. You like that, Tom?
Yeah.
Well, Tom Laune is a guy who I've known for years. He is the creator of the Bulletproof Wealth Strategy, and I'm going to let him explain that I understand what it is, and it's rather interesting. He's also a leader in guiding investors to become their own bank. And don't let that turn you off. When you, you know, hear about being your own bank, especially if it's foreign to you and you don't understand what that actually means, because imagine this, what if you were able to save your money and save that money?
Not for the sake of just saving money, but for the sake of being able to leverage it, to use it, to multiply it and take that those savings earn on it, leverage it into investments, have the liquidity of being able to tap into those savings control it control not only the finances, the money that you're saving, but also control your destiny and have an insurance policy on top of that. Think of it as a kicker. At least that's my description of it. And that's the way I think of it. So I'm not going to steal Tom's thunder. I'm going to let him dive into this a little further. So with that, Tom, welcome to the show.
Thank you, Marco. I'm excited to be here. I've been really looking forward to this.
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Well, great. Yeah, we've been talking about this actually literally for months about coming on the show and talking about whatever you want to call it. You know, whether you refer to it as the infinite banking concept or the Bulletproof wealth strategy, something that you created, you trademarked and you own or something different, but you have an interesting background. So the first thing that comes to mind is like working with the band REM, which is w you know, a great band. I used to listen to them for forever. Why don't you share some of your background because it's very interesting. And then take that and kind of segue into how you got into this area of finance.
Sure. That's very cool. Well, I was in the music industry for 29 years and I sort of, uh, so, so I started, um, way back just by trying to record bands that I was in and I recognized that these recordings were coming out terribly. So I ended up going to college and working on a degree, actually three degrees, one in recording engineering, one in film and video production and one in electronics technology. And when I graduated with those three degrees, I really started learning what I was doing in that field. And the way I did that was through mentorship. I ended up being an assistant to guys who are really, really amazing engineers. And that is how I had such a long career in the music industry. And I got to work with just ridiculously talented people. I mean, I got to work with Stevie Ray Vaughan. I consider one of the best guitar players of all time. Um, Stevie Nicks. Um, I got to work with Mavis staples. I got to work with the fabulous Thunderbirds, Bruce Springsteen, REM. I mean, the list just goes on and on and on. And it was an awesome, awesome career. And in the middle of that, when my income was really high, because I was really just very successful in that career, I had a financial professional come to me and say, Hey, you need to protect this income while you're doing so well, because you don't know how long you're going to be doing this well and what could happen in the future. And so, honestly, Marco,
And welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and you know, on today's episode, I am going to do something a little bit differently. You know, there's a quote, it says “The first step in getting an answer is being brave enough to ask a question.” And, you know, with that, I got thinking we've got six investment counselors here who talk to investors literally on a daily basis. And I'm sure there is a lot of questions that are common, but each investment counselor has a different experience with every client that we work with. Plus every investor client that we work with is very unique. Not everybody has the same situation, they have different scenarios, they have different locations, different interests, different investment goals, different amounts of investment, capital, different credit profiles, different concerns, certainly different levels of experience and knowledge, and understanding.
Some of them are very new. We refer to them lovingly as newbies, and some of them are seasoned, very experienced. I'll refer to them as seasoned or professional. And so we've got every shade of gray in between. And with that, I got thinking, well, why not, you know, have a conversation with one or more of our investment counselors here and ask them what are the most common questions that they get asked by their investor clients.
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And so with me today, I have one of our investment counselors here, Melissa. So Melissa, welcome to the show.
Hey Marco. Thanks for having me.
It's great. Having you back on, it's been a number of years since you've actually been on the show. So I think we're long overdue. So welcome back.
Thank you. I agree with that.
Yeah, good stuff. So, you know, what I thought we would do today is kind of break the, uh, investors journey from getting started to post-closing and I broke it down into seven categories from getting started to, you know, whatever is related to the post-close. And if we take those seven sections, I'm just gonna go through them one at a time with you and ask you what is at least one of the most common questions you get asked related to that particular area. So you ready to go with that? I'm ready to go. Cool. Okay. Well, every investor starts at the beginning and I just refer to that as getting started. And that doesn't necessarily mean that it's their first investment property. They may already have 5, 10, 15, 20, or more properties, but they're getting started with the next purchase. And so this is going to be a broad question, but what is the most common question you get asked in general when it comes to getting started? This is before you even have a conversation about markets or even working with us, what are those getting started? Common questions that you get.
Yeah. Good question. Like you said, there's a lot of questions that people have and depending on what their experiences and where they're coming in and how new they are, I would say generally the questions that people want to know about is everything from how do I read a proforma? How do I know if a return is good? What is a good return? And of course that leads down a big rabbit hole because there's so many different strategies for so many different people, you know, what they're trying to get to and what their end goal is. And that's what my job is, is to help investors kind of narrow that down and kind of figure out what makes sense for them. So definitely reading a proforma, understanding the numbers is probably a big one. And then, you know, down the line to financing and everything else that you mentioned.
Okay. So when you first get on a call with someone,
Hello, my friends. And welcome to another episode of Ask Marco where we're going to cover some Rapid Fire Listener Questions. So I picked about four questions for today, and I wanted to mix them up a little bit. So these are going to be hopefully a little different than some of the past episodes.
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And let's start with a question from Megan and she writes in and says, hi Marco, I am a new listener and I love your podcast. Well, thank you. Thank you for sharing your knowledge and expertise. I have a question about how to change an owner-occupied property into an investment property. I bought a duplex this year with one side, rented out and with the other side owner-occupied, I was single at the time since then I got married. Congratulations, Megan!
My now husband and I considered selling his place and living in the duplex together. But now we are wondering if it makes more sense to keep both properties. However, as I understand it, I am obligated to reside in the duplex for at least one year, as I bought the home with the intention to owner occupy and was able to pay a lower down payment as a result. Do you have experience with this? I am legally bound to reside in one side of the duplex for the next year, or is there a way to change this property into an investment and rent out both units? Very interesting question, Megan and a good one, by the way. I haven't seen this come up for a long time and I just want to say congratulations on getting married and everything you're doing. I think it's fantastic. And the fact that you're thinking about keeping both properties instead of either, or is very positive because it's always better to have a larger portfolio and create wealth through the growth and equity of more than one property than just one property.
So this is why having a larger portfolio and mark multiple properties is such a powerful thing. So you're thinking about this the right way. And so I'm happy to see that. Now this is an interesting question. So I'm not an attorney. I'm not giving you legal advice or financial advice or anything like that. But I have seen this come up a lot in years past where people would purchase a property. And this was especially true before, you know, the housing crash of 2006, 07'. And you know, the great recession that followed that in 2008, there were a lot of people who would purchase properties, you know, with a owner-occupied home loan to get the lower interest rates. And their intention really was not to live in the property. They were just trying to get a better loan and then rent the property thereafter. This still goes on.
The reality is, is that the lenders typically don't check. And if they do, it's usually shortly thereafter, often within the first two or three months, they just verify that you're still in the residence, how they do that. I'm not sure they probably send letters to the residents. They may check whatever they can in public records. And that could be utilities. The thing is, is when you sign mortgage loan documents, you don't want to lie. You don't want to be fraudulent, but the key word in all of this is intention. When you sign the loan documents, you are saying that I intend, or I am getting this loan with the intention of living in the property as my residence or my principle residence. And that may be very much true at the time that you purchase the property and sign the loan documents. However, I know things happen in life.
People get job transfers or there may be a death in the family or health issues or whatever the case may be. And people have to, you know, move or downsize or whatever the case is. So at that point,
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Well, we have a really interesting show today because there's a lot of talk about inflation in the news. If you have not been aware of that, you're just not paying attention. The reality is, is the inflation rate in the US is the highest that it's been since the 1990s, which is crazy. And the rising prices are affecting everything that we purchased from food to autos, to home utilities, to rent. And this is all according to the Bureau of Labor Statistics, the BLS, I mean, they published some pretty good data, so it's hard not to believe what they, what they publish, but this was just released last week. So US inflation has hit a 31 year high this month in October and consumer prices just jumped 6.2%. That's a whopping amount. That's higher than what we typically talk about as annual rates of inflation.
And so now Americans are spending nearly 15% more on the goods and services that they buy primarily because of two reasons. Supply chain bottlenecks, just out here, not far from where I live in the long beach port, there are ships lined up forever, and they're talking about a four-month delay before some of those ships are actually unloaded. So we have the supply chain bottlenecks creating supply shocks, driving prices up along with the endless us monetary stimulus that's being created here, where they're just quote-unquote printing money nonstop. These are driving prices up higher. So this creates a problem for you as a real estate investor, because how do you protect your cash from inflation while you're saving up for your next down payment? Because you want to invest in hard assets, income-producing real estate. That's what we all want to do, but if your cash is getting eroded away every year, faster than, you know, you can generate a return on it, you're actually losing money. And that's a pretty straightforward concept to understand.
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So, with me today is Taylor and Brett Sohns. Hopefully I pronounced that correctly,to discuss this problem and a possible solution. So welcome to the show guys.
Thanks for having us Marco.
So you guys are brothers working together. You've launched a company called Life Goal Investments. Very interesting. And I'll be honest with my audience here. You know, when I first got an email from you guys, I was very quick to dismiss it. I was close to deleting it, and then I had to read it again a second time. And then I went to your website and I thought this problem through about inflation and saving and how do you keep up? And I thought, man, you guys kinda hit on a really important problem and you have an interesting solution to it. So let's start the show off by you guys telling us about yourselves and then what led up to life goal investments. And then we'll kind of dig into the problem.
So Brett and I are brothers, as you mentioned, I'm the younger brother. We grew up in the middle of nowhere in upstate New York, little, one red light town. And then we went to school down around the New York City Metro area. And we did our undergrad and grad work there, both. And we wound up stumbling our way into wall street. And so for the past combined 25 years, Brett and I worked on wall streets, we traveled around the United States and worked with the wealthiest families that we are. And so at some point along the line, we realized that are these really the families that need the help realistically, the financial help that we're providing at this point, or is it more the person that we grew up with next door, et cetera. And so we were always looking for a solution to get back to our roots,
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, today we're going to talk about something, a little different something you probably have noticed over the last maybe three, four years is there have been more and more investment properties that have been coming to us and through our network that are new construction, they are not your typical turnkey real estate investments. And what I mean by that is properties that are newly refurbished or renovated into like-new condition. And that's really what a hundred percent of our inventory was for the longest time, especially since the great recession because there was all this new inventory that was coming out of the market and our property providers in the different markets would take that inventory. They would acquire it, renovate it, make it into like-new condition and then provide it to us.
So you, as our client could build a portfolio of these great properties in great locations that have cash flow well, as inventory continued to get tighter and tighter over the years, especially over the last three, four years, maybe longer. What we've been seeing is more of this trend that new home builders have been picking up on and capitalizing on, which is what we've referred to as the B2R space or the build to rent. And it's essentially new home builders, building a property, specifically designed for investors on the acquisition side. But the business model is they take these properties and they rent them. They're not living in them as homeowners. And so one of the states, ie Florida is one of those states where you see a lot of this bill to rent product. And it's a great profitable, lucrative model where we see a lot of price appreciation. There's never a guarantee with appreciation. Just keep that in mind, but we've been seeing a lot of price appreciation over the last few years. You still see good cashflow and you see warranties and other things.
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So what I wanted to do today is bring one of our trusted providers from the Florida market. And I say Florida in general, not a specific market. Why? Because Wagner who I'm bringing on here in a second is one of those people who we work with closely to bring us product in different cities within the state of Florida on that new construction side. And so with me today, I have Wagner. Wagner, welcome to the show,
Marco, thank you very much for having me. It's always a pleasure and an honor to work with you and to be here once again with you and your listeners.
Well, it's great having you on, I know we've had this conversation a number of times about bringing you on and talking about new construction. You know, it's interesting. Cause what we were talking about is actually spotlighting one or more markets in Florida and having a market spotlight. And I think what we just decided to do is table that as a new episode separately, and we'll probably cover the Ocala market in Florida, which has been on fire for a long time. It's just been a solid market. But for today, I think what we want to cover are 10 good reasons to invest in build to rent or new construction homes essentially. Is that right?
That is correct. And build to rent is one of the hottest topics. It's one of the hottest markets right now in the country. The wall street journal has featured in May, build to rent communities, popping up and how it should control those friends and how to make the product very unique. And that's really what we specialize Marco in the best 20 years, we have done over 400 turnkey properties or flips. And then we really, I started acquiring a lot of land about six years ago.
Hello, my friends. And welcome to another episode of Ask Marco and a round of rapid fire listener questions. I've got a couple of great ones here today, and I'm recording this from my hotel room. As I'm traveling from one city to another right now, I just came back from a great three-day mastermind event in Salt Lake City. And there was just a lot of great content that I could take away from that, both on the personal development side, as well as building the business and making it stronger, improving the culture, and being able to provide better value and service for everybody who A - listens to this podcast, B - works with us at Norada Real Estate Investments and C - invests in promissory notes through Norada Capital Management, which has been an incredible success over the last one to two years. So I want to thank everybody for your support, your trust, and your involvement.
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With that, let me get to a few listener questions here. I think this is one that many people think about and either don't know or don't ask. So this first question is from Josh and Josh writes in and he says, hi, Marco. I stumbled upon your podcast a few weeks ago and have immediately appreciated the clarity you provide about passive real estate investing. Thank you. Well, Josh, you're welcome. So he's goes on to say, as a newbie, one question I've wondered about is how someone avoids the significant capital gains taxes. If they decide to sell their properties. Once a person has reaped the long-term benefits of real estate appreciation. After many years of holding investment properties, this assumes someone is just done, wants the money out in cash form, and isn't rolling sale proceeds into new properties via a 1031 exchange. I'm a long way out from having to think about this quote unquote problem, and perhaps would personally try to keep the properties in the family business after I'm done. But I'd appreciate hearing your thoughts on the topic if you have time. Thank you.
All right, Josh. Well, yes, I have time. I'm making the time and I'm going to give you an answer. So first and foremost, my comment is why ever sell your properties? Personally, I don't think there is ever a need or a time to be selling any properties ever, unless you a have some sort of very tragic situation where you are in desperate need of cash and you have no other option. You cannot borrow other from banks or institutions or from family or friends. And you're really just strapped meaning that your hands are tied behind your back and you have nowhere else to turn. Hopefully you're never in that situation, but unless you actually have a really compelling need to sell or you're in the path of a comment and you're going to get destroyed by something coming out of the out of the cosmos, I don't seem to see a reason to ever sell property unless you are moving your equity to another better location for better upside potential, or just leveraging up and expanding your portfolio, which is the whole reason why you would use a tax deferred 1031 exchange.
So I'm not sure why you're avoiding doing a 1031 as an idea or concept because it really is a great option to do a tax deferred exchange and roll your equity or your proceeds from one property or multiple properties into more or other properties. But ultimately if you have no reason to sell, you know, just keep them in your portfolio, keep them in your trust, keep them as part of your net worth and your assets, and then just put it in your will put it in your trust and pass it onto your, your kids or whoever. So, anyway, I just pose that question because I want you to...
Welcome to Passive Real Estate Investing. I'm your host Marco centrally. Well, I have an exciting show for you today. Why? Because I get a lot of people asking me and my team. Should I self-manage do you have a property manager that I should use or should I just manage it from afar? Well, the reality is, is that a very large percentage of investors out there in real estate actually self-manage. And so it's not an uncommon thing, even though for years, we've been talking about completely turnkey investment properties, which means that they are professionally managed. That is a great option for many people. However, for many other people, they are better off self managing. They will make more money and there's other benefits. And that's what we're going to talk about today. So I don't want to steal any thunder from my guests who happens to be Dana Dunford.
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And she is the CEO of Hemlane and they are a technology enabled property management platform stay tuned and don't tune out from this because this is very interesting. I've actually checked them out and I'm actually considering trying them out myself to self-manage quote unquote, one of my own properties, but she is a strong advocate of purchasing properties anywhere, which is basically aligned with our philosophy because the best investments are really not always in your backyard. Dana previously worked at apple on their worldwide financial planning and analysis team, which is very impressive. And then she worked at nest in business development. And for those of you are not familiar with nest, they are a home tech company that was acquired by Google for $3.2 billion. So they are not a small company. She received her MBA from Harvard business school, very impressive. And in her free time, she is an avid question, paraglider and a skier. Dana, welcome to the show.
Thanks so much for having me Marco.
Well, I've gotten to know you a little bit better here over the last week or so in other conversations. And I'm very impressed with as a company and as a service and never really understood what the name was or what it meant. But now I know because I actually read it on your website, but why don't we start off with hem lane? You can fill in the gaps on my introduction about you. So if you want to share more about yourself, do that, because I think that actually ties into Hemlane and how that got started.
Great. So I'll give you a little bit of background on myself and my co-founder who is equally just as important in this equation and then how that relates to Hemlane. So both of us were out there helping manage properties that weren't in our backyard, like Marco said the best investments aren't there and doing it haphazardly through, you know, trying to find a service professional, to go out and do the plumbing all of the way to no following up with the tenant to remind them that rent is due. And really there wasn't a solution out there for us. And when we looked at the market, it was like, do it yourself, do everything yourself or a full service. And we really fell somewhere in the middle. And if you ask Frank, who's my co-founder what was important to him. He really wanted to do the leasing himself for one of his properties, but he didn't want to have to, you know, do a lot of the accounting stuff.
Cause he just didn't know it versus someone like me. I love the county and I have an applied mathematics background as well as a finance degree. And I really wanted to be able to control all of that in the system, but knew nothing about repair coordination and wanted someone to help with that. So that was really the impetus of,
Hello friends. And welcome to another episode of Ask Marco on the Passive Real Estate Investing show. Well, we are now officially into the fall. Summer is over whether it's still warm. It's nice outside. I'm still traveling a whole heck of a lot. And so if I'm delayed in putting out these episodes, you will know why. Anyway, it's been an interesting year. You know, supply is very low. Demand is very high. The real estate's been on fire. This is not a normal year. It has been an anomaly appreciation rates are very high. We are seeing in our top markets, the 63 markets averaged out with appreciation rates in the 20% range year over year. And that is just not normal, certainly not sustainable, but we will see that taper off considerably going into 2022 and 2023 as a supply slowly catches up to the demand and we see just a slowing down a breather if you will, in the markets, but that's to be expected.
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So today I want to cover two or three questions that have come in with people, submitting their questions on the website. For me, there's an Ask Marco button or link on the website. So I just randomly picked these. I took a quick look and then I thought, okay, these are good. The first question is from Eric and Eric is writes in and says, hello. I'm in the process of buying my first home. I currently live in Sacramento, but I am considering a few different places to move to. I want my first home to eventually become a rental property. So I've been researching how to do that. Good for you. That's great. One thing I keep hearing is ROI, which is an acronym for return on investment. My question is how would I go about finding the potential ROI of my first home and what is a good percentage?
Thank you, Eric. Okay. Eric. Well, interesting question. I guess the first thought that goes through my mind is always be careful mixing business with pleasure, meaning your personal life with your business life, meaning your principal residence with it being a rental. If you like where you live and your principle residence, your home can make a good rental property then great. You've married the two, but what I find is often people want to live in places that don't make for good rental property. And this is where my trademark line or slogan came up many, many, many years ago, and it's live where you want to invest, where it makes sense. And it's because often those two things don't mix. And even if they do mix, you may find that where you want to live is not good for rentals or where it's good for rentals may not be where you want to live.
So keep that in mind, but you know, if you can marry these two and make them work together, fantastic, then live in a home that you enjoy and an, a market that you enjoy and then turn your rental property or your home into a rental property. So with that in mind, it all comes back to the numbers. Again, I've said this many, many times, it all comes back to the numbers. So I guess there's two ways to look at this one is, you know, from a very high level, it's a quick litmus test. And then second is getting into the weeds and looking at the details. So the litmus test version of this is what I call the rent to value or rent a price ratio. And what you need to do is look at what your purchase price is at the time of acquisition, relative to what you can get in gross rental income for that property.
So again, you know, simple numbers, if you bought a hundred thousand dollar home and you're able to get eight, nine or $1,000 per month in rental income,
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli and I am happy to have you here. Well, you know, the government has made some changes recently and they have removed some restrictions on investment property. And I have a guest today who I've had on about a year ago, last December, Caeli Ridge. And she's going to talk about what this is and what it means to us as real estate investors. It is a positive move forward, and it is an attempt to address the housing supply shortage that we have in our country. Right now, more specifically, what they're trying to address is the limited affordable housing, and I'll say affordable in air quotes, but the affordable housing problem or supply problem that we have going on. And hopefully this relaxing of these restrictions will help that and be a sustainable solution.
I don't think that's the entire answer to the problem. We just have a lot of demand. Lack of supply inflation is high. It's going to continue for a while. Inflation is a problem, and it's something you should really wrap your head around and understand. So with the lack of supply, strong demand, monetary inflation, price, inflation, all these dynamics going on and property values going up along with supply shocks that have been going on for over a year now in part due to the whole COVID situation, you know, we're not out of the woods, we're going to see this problem go on for at least the next three or four years. According to research that I'm reviewing, but potentially is as long as 2030, you know, for the next nine years or so, it's something that we need to be aware of. Now, if you're on the right side of the equation, if you are a real estate investor or you are starting to invest in real estate, guess what?
You have a tailwind, you don't have headwind, you've got the cards stacked in your favor, and this is a great place to be. So think about that, you know, in real estate investing and real estate investments specifically, residential are arguably the best investment class, the best asset class to be in. And so with that in mind, let's kind of unpack this whole government removing the restrictions on investment property and what it means to you as a real estate investor and what it means to go forward over the next year or so. So I'll ask Caeli various questions about what that means trends that she sees going on and various loan products that are on the horizon for us as real estate investors. So let's dive right in and get going.
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It's my pleasure to welcome Caeli Ridge back to the show. She is the president and CEO of Ridge Lending Group. She has been an established real estate investor for over 20 years now. And she has worked with tens of thousands of real estate investors all over the country, helping more people and more families realize their dreams as real estate investors than any other mortgage lender out there today. And with that Caeli, welcome back to the show.
Mr. Santarelli, it is my pleasure, sir. Thank you so much for having me.
Well, it's great to have you back on you are a wealth of knowledge and you do a lot of our clients, mortgage loans for them, which is great because it makes them happy and it makes it for a smooth transaction. And really, you know, I think most investors dislike the financing part of the purchase process the most. So anytime you can make that easier for them, I think they're very, very happy. So thank you.
And I've never heard that before. In fact, it's usually I hire people say, let's just do the financing, you know, at nauseum, they love it so much.
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. Well, we have a very exciting show for you today, and I have a very special guest, you know, we all love paying taxes don't we? Actually, that's not true. I'm kidding, we don't. But the reality is is we all have to pay taxes at some point in time, whether it's now or in the future, but wouldn't it be great if you could defer, eliminate, minimize, reduce, or just put them off forever and you can, there are ways to minimize your tax impact. So today I'm bringing on a very special guest. His name is Mark J Kohler. He's got some amazing books out there. I thought I'd put together my own list of tax saving strategies and just kind of throw it out at Mark and see what he has to say.
He's got his own list. It's probably much larger than mine, but, uh, let me tell you a little bit about mark and then I'll let him chime in and fill in the gaps that I've missed. But Mark is a best-selling author. He's a national speaker. He's a radio show host. He's a writer, a video personality for entrepreneur.com and he's also a seasoned real estate investor. He's a senior partner in two firms, a law firm, as well as a separate accounting firm. And I will admit and openly tell you full disclosure that I am a client. Mark is a personal and small business tax and legal expert, and he helps clients build and protect their wealth. And that's the key thing here. And I'll just wrap up here by telling you he's got three amazing books that I've read. And I started reading the many years ago. One is a great title, Lawyers are Liars: The Truth About Protecting Your Assets. The second one, and the follow up book to that is what your What Your CPA Isn't Telling You: Life-Changing Tax Strategies. And lastly, The Tax and Legal Playbook: Game-Changing Solutions to Your Small-Business Questions, which is fantastic with all that. Mark, welcome to the show.
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Thank you. And gosh, I just am grateful to be here and I'm so excited to hear your top 10. You know, I was like, you got to top 10. Okay. Let's see. I want to see if maybe I'll get a new one for my top 10. So this is going to be good. We’ll collaborate. I’m excited about it, Marco.
You and Matt are very, very seasoned at what you do. And honestly, I've learned a lot from you guys. So I wouldn't be where I am today, if it wasn't for you and Matt, your partner. So I appreciate everything you guys do. And you know, just to shout out to you, anybody listening to this really should subscribe to you on YouTube and listen to your podcast and follow you because really you put out such great advice that anybody listening to this, even if they're not a client can really take it and run with it and do something and help themselves.
Well, thanks. And on that note, current event, justice week, it rocked our world is the Democrats finally came out with their proposed tax plan that articulates everything, president Biden ran on and for the small business owner, the real estate investor, it's tough. It's a little ugly now. I'm not trying to be political. Trump did a lot of dumb things. I can't say, you know, no, one's a perfect president, but there's some things that are some people may say, well, it's for only those that make 400 grand or more that are going to be impacted. No, there's a lot in there. And so now we're far, we're ways out. It hasn't even gone to committee. We've got, um, let's starting in committee now and the Senate is going to chime in and we'll see what it looks like, but everybody you've got to follow this because there's an opportunity for you t...
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. This is a quick Ask Marco episode. I've been getting a number of questions related to cash-out refinancing, and some of these are strategy-related questions. So I've put two or three of them together here that I will attempt to answer and cover as best as I can.
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So before I do that, I'm sure everybody has been watching the real estate news and seeing what has been going on around the country in terms of price appreciation, tight markets, multiple offers situations, and just how incredibly on fire real estate has been in the US and I'm talking in general terms here, obviously it's market by market and very much market specific, but we are just seeing an incredible here this year. We will probably close out again. This is on average the year with over a 16% average annual nationwide home price appreciation.
This is more focused on new construction than existing sales, but the existing home market has also been just as strong if not stronger. And I'll have more information on that in coming episodes. I don't have that data in front of me, but I don't think the next two years, 2022 and 23 are going to be as strong in terms of price appreciation. And when I say strong, I mean, as crazy as what we're seeing here, but everything is incredibly strong. Existing home sales have been strong, existing home values this year, just from one of the indices I follow has just broken 20% year over year, which is unbelievable. The month of supply out there, meaning the amount of inventory in the resale market is a whopping low 2.6 months worth, which means that if there was no new inventory, the existing demand for that would basically take all the inventory off the market in two and a half months.
So again, we're living in crazy times and interesting times, but I will have a little bit more to say about the US housing market health and the pulse of it, as well as some single-family rental stats in an upcoming episode today, I want to just focus on some of the questions that I've been getting in terms of cash-out refinance. And so I'll cover two, maybe three of them here they're related, and there is some overlap, but the scenarios are different. So I thought it would be interesting to just talk about that. So the first question comes from Casey and Casey writes in and says, hello, thanks so much for all the great content and resources I've been listening for about a year now. And I, your show, I'm learning so much. I worked with Melissa and recently closed on my first investment property.
Well, congratulations. And I'm glad to hear that you are building your portfolio. It was a great experience and I'm excited to continue growing my portfolio with Norada. My question is how do you decide when it's time to do a cash-out refinance on a property? What factors should I consider other than making sure I can cover my expenses? And third, do I wait until I can pull out my original investment? In my specific situation, I purchased a Memphis property for 120,000. I financed 90,000 and it appreciates, or it appraises for 145,000. It was already occupied and currently rents for $960 a month. But the market rate per the property manager is closer to 1,035. I don't necessarily need a high cash flow, but I would like it to pay for itself. I also have a reserve of four months rent set aside. My short-term goal is to acquire two to four more properties in a hundred to $125,
Hello, my friends. Welcome to another episode of Ask Marco. Well, I am back in the office. I've been doing a lot of traveling this year and quite a bit, actually in the last couple of months, these live events are wrapping up all over the place. Mastermind groups, real estate related events and whatnot. So I'm actually doing a lot more traveling and I've been kind of buried over the last couple of weeks. So I apologize for not being available to put out some new episodes here, but I'm getting back on track. So just bear with me be patient. I will certainly get some new episodes put out and I've got some new guests queued up here for the weeks to come.
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Anyway for today, I am focusing on one specific question that I got from Lee. And this is interesting. I'm going to title this episode, "Help my wife and I disagree about what to do with our California property. "
Now it doesn't have to be a California property to apply to your situation. This could literally be anywhere in the country. It's the concept and the principles in the question at hand, that is what I want to focus on here. So let me start reading Lee's email to me and I'll break it all down for you. So hopefully you'll walk away with some ideas, principles, and a way to think about how to make the best use of your situation, especially when you are sitting on equity. So Lee writes and he says, hi, I am a new subscriber to your podcast, and I love all the info and education. You're welcome. I walk every morning with my dog for an hour while listening to your podcast, I guess you are binge listening and going back to episode one, I have to imagine. I have a question about where to go from here and how to get started in real estate investing.
I currently live in Simi valley, California, but I lost my business of 36 years due to the shutdown. Very sorry to hear that I'm using this opportunity to take on a new career in Arizona, where we own vacation property. All right. So obviously you have a plan moving forward here, as far as where you want to live and what you might want to do, and very sorry to hear about your business shut down. So Lee goes on to say, my question is about the California home. We pay $265,000 for it. 25 years ago. It is now worth about $1 million plus. My wife and I disagree about what to do with the property. I want to sell, pay off our vacation home and start buying multiple investment properties. In other states. My wife wants to keep it and rent it out for about $4,100 per month for a couple of years before we sell it, I can give you more details, but I want to keep it simple in consideration of your time. I would appreciate any advice you could offer. Thanks in advance.
Well, Lee, thanks for the question. It's a good question. First of all, for those who don't know where Simi valley is located, it is north of Santa Monica, California, which is Northwest of downtown Los Angeles. So it's probably a couple of hour drive from there. The semi valley market that Metro area has been hot, much like most parts of the country. And so I bring this up because it's a variable, an element or a fact that you need to consider making your decision. So when you look at the metropolitan statistical area for Simi valley, which is made up of Oxnard and Thousand Oaks, we've seen over the last probably seven years, very strong appreciation, especially in the years of 2012 to 2014. A lot of it was double digit rates of appreciation, but it's been coming down ever since.
And so the inflation adjusted annual home price appr...
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Well, I haven't done a market spotlight in a while and I thought it's maybe a good time to do another one here. So the question is, why should you consider investing in the Chicago area market. Chicago is such a large market. We've been in and out of Chicago for many, many years, had a lot of success. It is a mega metro area with a lot going on. And so that's one of the things we're going to talk about today.
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So what I did is I brought one of our fantastic property providers in the Chicago land area on the show with me here. So his name is John. John, welcome to the show.
Thanks Marco. I appreciate the invite.
Well, it's great having you on, I know we've had some conversations about Chicago and what's going on there and more importantly, why should anybody consider investing there? Now? I will say we've been in Chicago for many, many years, not necessarily every month or every year, just because of a lack of inventory among other reasons. But Chicago is interesting because it's such a mega metropolitan area and there are so many companies that are out there. It's one of the world's richest cities. It's often rated as having some of the most balanced economy in the United States. There's 12, at least that I know of 12 fortune global 500 companies and then 17 financial times 500 companies. So it's a strong economic center. You've got a lot of people that live there that move there. And I think it's a good market to look at. So why don't we start with kind of the 40,000 foot level of the market. If I were to come to you and say, why should I look at Chicago? Or why should I invest in Chicago? What would you tell me?
Well, first off Chicago, I think is a very unique market, very diverse there's endless opportunities, whether you're in the actual city of Chicago, or if you're out in the south suburban areas where we do a lot of businesses as well, the growth that we're seeing personally out here is logistics, right? There's a lot of infrastructure getting put in because the mid America here is the central hub for railroads for anything to get shipped out. Uh, on top of that, Amazon is bringing in it and about every south suburban town, new fulfillment centers, there are seven of them. I know of right now that are getting brought into the south suburban towns. There's more going back up into the city. Google is in west side, Chicago tech is a big hire right now, uh, in the west side of Chicago. All those things are possibilities for young people that want to advance and move up with plenty of housing in the Chicago land market.
Yeah. We just updated a, an article on our website, which anybody listening to this as welcome to go and check out. And in fact, I'll make sure that we put the link in the show notes, but it talks about the Chicago Real Estate Market. And we try and update that, you know, once or twice a year. What's interesting is I'm just reading right off the website. You mentioned, you know, it's a logistical hub and it absolutely is. In fact, it has some of the largest number of federal highways and railroads in the entire country. But one of the quotes off of our webpage here is Chicago is an international hub for finance culture, commerce, industry, education, technology, telecommunications, and transportation. So you stopped to think about that. It just goes to show you how broad of an economic base the city has. And because of that, it just brings in all kinds of jobs and provides all kinds ...
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. We have a great, great episode for you today. What is one of the fastest ways to grow your wealth with real estate? Or even as a small business owner? The answer is it's the tax deferred 1031 exchange. If you know what I'm talking about, then you know what I'm talking about. And if you don't know what that means, stay tuned. This episode is going to answer some great questions and we've got some golden nuggets of information throughout this episode, and then a great strategy that you should be thinking about or employing today or this year. If you are thinking about doing a 1031 exchange or planning to do a 1031 exchange, the challenge you're going to have in today's market environment may make it difficult for you. But I think we have the solution.
It's one of the strategies that we talk about later in the episode. So stay tuned for that basically listened to the entire episode. I think there's just a lot of good information in today's interview with my guest, Dave Foster. So if you need help, there are a lot of people out there who can help you with a 1031 exchange. Some people are more seasoned and better than others. What I do like about my guest today, Dave, is that he is an investor himself and has been using the 1031 to create and grow his wealth for about 22 years. And I thought this episode was timely. Given what is being proposed in Congress about changes to the tax code. There's always, you know, the initiative to tax the rich tax, the wealthy, increased taxes on those that make more money. But what people don't realize is that the tax code is really just an incentive code.
It's really the government's way of telling people what to do because the government can't do that thing very well. And then the rental housing is an example of that. That's why there are tax incentives for real estate investors. It's because the government doesn't want to create government housing. It's been tried many times and we all know how that pans out. So really the tax code is an incentive for business owners and investors and people in general in telling us what we should be doing with our money, where it would be put to work in our favor to provide the greatest returns for us and get the best in terms of tax deferrals and tax savings. So the 1031 is just one of those. And that is something that we're going to focus on here today. The question is, is will the binding, the administration make changes to the tax code, especially with 1031 exchange.
It's in the news every single day right now, and it's being kicked around like a football. So anyway, with that, let us get to our interview today. And, uh, I hope you enjoy this episode. Let me know, by leaving a rating and review on iTunes or Stitcher or Google podcast or wherever you listen to this, but iTunes would be the best. And I really appreciate that. So thank you in advance. And here we go with our interview today,
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It's my pleasure to welcome back a returning guest. Dave Foster, Dave is a degree accountant and a serial real estate investor. And Dave is also a qualified intermediary and a consultant who shares his tax-saving strategies with investors to take advantage of using the tax-deferred exchange to grow their wealth faster. Something we talk about on the show on and off, but quite often, and Dave has been using the 1031 exchange as a cornerstone of his own personal real estate investing for over 20 years now.
Hello, my friends. Welcome to another episode of Ask Marco, where I do my best to answer your questions about real estate investing and finance. We have some good questions today. And before I jump into those questions, I just want to read a couple of sentences from an email I received from a person named Clint, who is actively speaking with one of our investment counselors here, but he also is an upcoming client. And I feel that that's going to happen pretty soon, but there's a reason why I wanted to read this to you real quick. He said, Marco, I'm a huge fan of your podcast. I have Nate waiting on me to pull the trigger. I have vowed my first property to be through your company solely because of the information you have provided. I may never be able to work directly with you personally, but I look forward to working with Norada.
Well, I just want people to know that when you're working with anyone on my team, you're working with a whole team and we work together. We collaborate we're on the same page. We buy the same properties that you see when we send them to you. Now keep in mind. I've said this many times, we don't put all the properties on the website it's practically and physically impossible. Probably what you see on there represents 10% of what's available or in the pipeline. It's just impossible. But when you see properties that are sent to you and you have conversations with our investment counselors, understand that you're working with a team and I'm part of that team. So you may not be speaking to me directly, but that's okay. I mean, I'm there in the background and if you know, it need be, we need to jump on a quick call.
I can do that from time to time. Although, you know, I'm stretched and traveling a lot. I have a bunch of projects on my plate and I'm out there looking for more inventory for you guys to invest in and, you know, build your portfolio, build your wealth. But, you know, I appreciate Clint writing in and sharing his thoughts and feelings about it. And I just wanted everybody to know that, you know, we work together. We're a team here. And so the best thing to do is just look at Norada Real Estate Investments. And you know, my team here as the hub of a wheel and everything that you need is one of those spokes from the properties to the property management, to the financing, to the asset protection attorneys, to the tax strategists and advisors, if, and when you need them all that and more is part of that entire wheel.
So look at us as the hub of that wheel, where your quote-unquote one-stop-shop and, you know, we just are there to help bring the people to the table that you need to work with to be successful. And then, you know, what you do from there is up to you. You make the final decisions, but we can just certainly share our resources and refer you to people that we know like, and trust.
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All right, with that said, let's move on to the first question, which comes from Steve. I'm going to read this out. It's not that long, but there's a lot in here as Steve writes and he says, hi, Marco. I know that historically it is not financially adventitious to renew a tenant's lease to get a potential rent increase or to have attendance lease, not be renewed when they are causing a relative amount of inconveniences for you, such as large amounts of small maintenance requests.
For example, I've always heard that in the long run, it is more adventitious to keep them versus the cost of making a unit rent ready.
Hello, and welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli and to all of my US-based listeners, happy belated independence day. I'm recording this a couple of days after July 4th, and I guess I just took a week off last week. So I apologize for not getting an episode out there. Having said that, I want to remind you that success doesn't come from what you do. Occasionally. It comes from what you do consistently. And part of that, which is something that I talk about all the time is to constantly or consistently educate yourself. You always want to be on top of things. Now that doesn't mean that you need spent hours every day becoming a master at anything, but the more, you know, the more you grow as they say, and you've also heard the phrase, the more you learn, the more you earn well, that's so true.
And I think part of that should be understanding at a high level things about our economy and what is going on in terms of our monetary policy and our fiscal health in this country and what money is and what money is all about. And the fact that it is a tool that you can use to leverage, to increase the amount of free time you have in your life. And you build your lifestyle around that.
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So what I want to do today is talk about the US economy to a very small degree, but also talk about the health of the housing market in general, and a bit of a forecast going forward for the rest of 2021, and maybe into the years to come. Now, I don't have a crystal ball. However, there are a lot of data points out there that we can look at and make assumptions and predictions on that typically play out in the greater picture.
So when you understand what's going on, you can get a pretty good sense of what is to come in the coming months and coming years in terms of housing or inflation or monetary policy or wages or employment or unemployment, whatever it may be. And I think it's a good idea to stay on top of that stuff. You don't need to be an expert or spend hours every week on top of it. But my goal here is to give you a taste of it. I think it will be helpful. And I will probably do this every quarter where I have a quarterly us analysis and forecast. I might do it monthly. I'm not sure yet. We'll just see how it goes. And maybe I'll just gauge that based on the feedback I get from both my team, as well as you, the listeners, because I do get emails from time to time saying, Hey, I liked this.
Or didn't like that. Often some people will say, Hey, I have a question about what you talked about, or they might say, Hey, I really liked what you covered. And it would be great to hear more of that. And one of those examples is market spotlights, where we just interview a provider that we have in a particular local market to talk about that market, why it makes sense to invest there and what's going on and what are the opportunities? I think people have been finding that very helpful. So I'll probably do more of those going forward, but I'm always open to your feedback and your suggestions, and if there's something specific or general, but you want me to cover by all means, let me know. Well, having said that, let's just dive right on into it here. So let's start with this crazy unprecedented federal spending that we have seen here over the last year, year and a half.
And that all begins with the cares act that came out. I believe it was March of 2020, which was a whopping $2.2 trillion. That's with a T. And that is a very,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli, and welcome to today's show.
So today's show is a little different than some of the others. I wanted to do a market spotlight on Florida and some of the markets that we're building new construction homes in. But when I was talking to one of my large property providers out in Florida, who I have today, as one of my guests on the show, we got thinking about doing a post pandemic market update, and we did talk about markets around the country. So it's kind of a nationwide in general to some degree, but there was a little bit more of a focus on the Florida markets, because that is just a hotbed right now for growth and activity, investor interest investor demand to the point where builders have literally stopped taking orders, not all of them, but many of them.
And so they are pacing themselves. Literally, they have a term in the industry for how many contracts they take at any given time, whether it be per week or per month. So it's time for a market update with a focus on Florida. And this is coming from a post pandemic perspective because the last time I had Jim on was exactly one year ago, last June. And so it makes sense for us to get caught up. Now let's remember something about Florida and one reason why I like the Florida markets so much, it is one of the best states for real estate investing. They have stable markets, a very diverse economy, strong population growth, organic growth, international demand home of many, many fortune 500 companies. You can get newly built, single-family detached homes, duplexes, and these come with warranties. So that's always nice not to say that there is anything wrong with newly refurbished existing inventory, which can be just as good if not better.
Because often they're in very mature markets with strong demand and desirability from the existing population there. And you can find both of these types of properties in solid white and solid blue-collar areas, all with good rent to price ratios. And so that's a very attractive thing and something of course, that you want to look at as a real estate investor. And of course, there's very high private sector employment. The Florida markets in general, and to a large degree from Texas on over the whole Southeast region does not have a very high public sector employment base. It's predominantly private industry, which is great. And it happens to be one of the fastest-growing job markets in the country. And when I say it, I'm referring to Florida as a whole, and we can break Florida down into its various regions. So I'm very bullish on real estate.
As I talked about in a previous episode about six or eight weeks ago, if you haven't listened to that episode, I would go back and listen to that one. I literally say why I'm so bullish on real estate and all the reasons why. So anyway, let's get to our interview today. So I hope you enjoy it. And if you have any questions hit me or my team up and we'll be happy to help you.
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All right with me today is Jim. One of our fantastic new construction property providers in the state of Florida and some other places as well. But I want to welcome him back to the show because it's been a while since we had them on. And we got into some conversations recently about what is going on in this crazy hot market down in Florida, especially as we are kind of moving away from this pandemic. So Jim, welcome back to the show.
Marco. Good to be here.
Hello friends. Welcome to another episode of Ask Marco. I'm your host Marco Santarelli. And we have got some great questions that came in. So I decided to do another episode of the Rapid Fire Listener Questions. I kind of liked that title, so I might keep using it. So today I'm going to talk about three or four questions that came in and hopefully I can address these. And I think they're going to be helpful for many people because these are questions that are not your typical questions, but they're good questions to ask.
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So let's start off with the first question here from Maria and Maria writes in, she says, hi Marco. I have a question regarding the numbers you and other turnkey providers use on the cash flow analysis. For example, I have seen that if the monthly property management fee is 10%, this goes into the, APOD, which is a, an abbreviation or an acronym for Annual Property Operating Data.
It's essentially your income and expense statement. So if you just look at a profit and loss statement, that's basically what the APOD is. So she goes on to say, but what about the lease-up fee and renewal fee that may vary with each property management company? Those fees should be prorated into the monthly percentage to get a more accurate monthly cash flow. Why don't most providers include this and make you think you are getting 200 to $300 per month, monthly cash flow in the first year. And then she goes on to, well, first of all, that is a good question. She goes on to illustrate this by saying, let's assume the monthly rent is $940 a month. That's pretty specific. So that must be your property. And the property management fee is 9% of the rent, which works out to $84 and 60 cents. The lease agreement is for two years and the lease-up fee is one month's rent.
What percentage then should I use on the APOD for property management services? I would like to know your thoughts. Thanks. Okay, Maria. Great question. Thanks for writing in here is my answer to your question. So you need to, first of all, understand that the part of your, APOD or your profit and loss statement at the very top that we call vacancy allowance is your budgeting for future vacancies. Now I'm going to break this down a little bit. So bear with me here. So you have your gross income or more likely your gross scheduled income, and you deduct your vacancy allowance from that gross scheduled income. And what you have is your effective net rent. That's basically your gross collected rent or what you might call net rent that they can see allowance is what you use to budget for these turnovers and these vacancies.
So it's not part of the expense, which is further down on that page, which is referred to as your property management fee. Your property management fee is really that 9% you're talking about per month for managing the property. It is not a lease-up fee. It is you can break it out as a separate expense if you want to, but from budgeting or profit and loss statement perspective, it's at the top. It's part of your vacancy allowance. Now you will see people as in investors use all kinds of numbers here, they'll use anything from 3% on the low end to 10% on the high end. I personally like to use five or 6% as my vacancy allowance. In other words, what I am budgeting or forecasting as my vacancy on average per year. Now I don't get a vacancy every year. In fact, most of my properties don't have vacancies for multiple years, but let's just assume that you're going to have a vacancy per year, which in my opinion,
Welcome to another episode of Ask Marco. You know, it's been a while since I've taken some listener questions. So I thought I would grab three or maybe four today and cover some random questions. These all came in within the last four weeks. So these are relatively fresh.
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So the first question here is from it's either Sharmay or SHARMs I guess it depends on whether it's French or not. So if I've mispronounced your name, I apologize. In other case, the question is, hi Marco. Thank you for the excellent podcast. Our family appreciates you and your team for providing quality content and delivery and becoming real estate investors while you're absolutely welcome.
The question is, would you please talk about the bi-weekly payment strategy in the primary residence? How can this strategy be set up? I'm motivated to save and invest in rental properties with your company. Thank you for sharing your expertise kind regards. Well, great question. So let me answer it this way. You're basically asking about making by weekly payments or maybe some other form of payment strategy. So this is actually a great thing to do for people who want to accelerate the pay down of their mortgage, regardless of whether it's a 30 year or 15 year or whatever it may be. Of course, you're going to have to check the mortgage documents to make sure that you can do that without paying any fees or penalties. Most mortgages are set up where you can accelerate the payments or pay off additional principal without penalty. There may be a prepayment penalty if you pay it off within the first one, two, three, four, or five years, again, that will be in your mortgage document or your promissary note for your mortgage. But having said that let's just quickly cover this.
First of all, let's define semi monthly and bi-weekly because a lot of people get this confused by weekly, as in biweekly, payments is not the same as semimonthly, since there are 12 months in a year, you would make 24 half payments on a semi monthly plan. And because there are 52 weeks in a year, if you make a half payment, every two weeks, you end up paying 26 half payments or the equivalent of what is ultimately 13 monthly payments instead of the 12. So that little difference will result in paying off your 30 year mortgage in about 25 years. I'm just rounding it off here. So on a $200,000 mortgage at a 4% interest rate, you would save more than $23,000 in interest. Of course you can do more to pay it off faster and save more in interest. If that's your ultimate.
Now keep in mind. This makes a lot of sense on your principal residence. If your goal is to reduce your debt and pay off your mortgage quicker, I don't know if I would use the same strategy in all cases with my investment properties. Now that's not to say that I wouldn't or I haven't considered it or I haven't done so, but when I looked at my principal residence, I kind of liked the idea of having it paid off and have it free and clear unless I want to tap into that equity on my principal residence and pull that out. Tax-free to invest in rental property in other words, to grow my real estate investing. But I don't think I would do that on my rental properties as far as paying them down early, because number one, my tenants are paying off the mortgage, not me. I'll just let them happily pay it down each and every month in each and every year.
And number two, keep in mind that with fixed rate mortgages, you are talking about a debt that is fixed in payment,
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. And I am glad you are here today. You know, there is a saying that money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. And that is by Ann Randall, who is a great author, has written some great, great books on independence, freedom, Liberty, money, and all the topics surrounding that. These are fiction books, by the way, they're presented as a story, but you take away some great lessons about, I guess, just being in a free market and what a free market really is and why capitalism is so important and the importance of money and what it is and what it isn't. But here's a concept for you, you know, what would you do if you had complete financial freedom and therefore time freedom, would it lead to something that my guest today talks about, which is being a lifestyle investor, which essentially means that you're creating financial and time freedom for yourself to live the lifestyle that you want.
I think this is a great concept, and I didn't learn about that until 1997, but, you know, I think a lot of people don't mix the two and combine those concepts properly. They think about investing to create financial freedom, but maybe that's at the expense of creating a job that you are stuck in for a very long time or a business that is really just tethered to you. And you can't really separate the two. So what does it mean to be a lifestyle investor? Well, that's what we're going to talk about today with my guest here. And, you know, it's really more about a journey to financial freedom and creating the life of your dreams. It's a very much a doable thing. It's just a matter of knowing how to do that, having the right guide someone to coach you along or show you the way which is really just copying other people's success.
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So it is my great pleasure to welcome Justin Donald to the show. He is an author of an amazing book that I just started reading. And I can't wait to finish called the Lifestyle Investor: The 10 Commandments of Cashflow Investing for Passive Income and Financial Freedom. Now, really who doesn't want that. Entrepreneur magazine calls Justin, the Warren Buffet of lifestyle investing. I think that is a great title and an honor to be called that he's known as a master of low risk cashflowing investing specializing in simplifying complex financial strategies. And his ethos is to create wealth without creating a job. And I really love that because ultimately that's what we want to create with financial freedom is that time freedom that goes hand in hand with it. What's amazing about Justin is over the span of 21 months. And this was before his 37th birthday. His investments have drove enough passive income for him and his wife, Jennifer, to actually leave their jobs, which is phenomenal. That's I think what a lot of us inspire to do, and it's one of the reasons you listen to a podcast like this. So with that, Justin, welcome to the show.
Oh, thanks, Marco. It's great to be here. I appreciate you having me on and I'm just looking forward to hanging out for some time today.
Yeah, well actually, you know, as I kind of dug deeper into your book and started reading it, I was like taken back because it seems that you and I have gone through down a similar path then had a similar experience and had a, you know, kind of an interesting journey along the way of being an entrepreneur and investor being involved in different things like real estate s...
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. And I am glad to have you back today. We're going to talk a little bit about the pros and the cons of self-managing your rental properties. Some people do it. Some people love it. Other people hate it, and they just want professional management. I actually know real estate investors who invest from thousands of miles away. Do it well, do it successfully, but it's their thing. And it's not for everybody. Maybe you have to have thick skin for it, but it's really not that bad. I've actually, self-managed a few properties I prefer not to. I would much rather spend my time elsewhere and do other things like find more deals and negotiate more deals, work on my business and do whatever else I enjoy doing. So we're going to talk a little bit about that today with my guest, Steve White, it'll be an interesting conversation.
We went for about 30 minutes talking about the ins and outs of managing your property. Now there's a lot of information out there and there's a great book we're going to mention during today's interview. So stay tuned for that. And I actually suggest listening to it right through to the end. It's not a long episode before we jump into that. Let me just quickly give a thank you for all the reviews that we receive. We receive actually a lot of compliments and reviews, both on the podcast, which is well past a thousand five-star reviews on iTunes. And that's just the United States. There are every country has its own set of ratings and reviews that you can't see unless you're in that country or you're actually signed into an iTunes account based out of that country. So whatever you see on iTunes is always local to the country, but thank you for all of those and as well, a lot of reviews online, which I greatly appreciate it.
Those are not so much about the podcast. Those are actually about my team at Norada Real Estate Investments and what we are doing to help other real estate investors invest successfully in passive real estate investments in the different markets that we have around the country. So something we've been doing for over 17 years now, we were arguably the first nationwide turnkey rental property provider in the country. There was only one other, but they're really not around anymore. They've kind of morphed into other things, but again, thanks for all the reviews and the ratings that you guys have shared greatly appreciate it. So love to hear the success stories and speaking about success in case you didn't notice the quote, we put a quote in our weekly newsletter, and if you haven't subscribed to that weekly newsletter, I suggest you do. I just go to our website and fill out any form on the website, whether it's the membership form or download of the report, you'll be added to that weekly distribution list.
And we put a quote in each and every newsletter, and they're usually really good. This week's was from Howard Schultz and it was a very simple, short one. It's “Success is best when it's shared.” And I truly believe that I think anybody who success should pass it along, share that knowledge with other people sometimes pay it forward. You know, this podcast, there's no cost for it. It's free and look a lot of the content. Well, pretty much all the content we put out is also free. So sharing in that knowledge and that success with you and other people that we talk to and work with is really the best way to give back and share. So success is best when it's shared. And I love that quote by Howard Schultz. Aside from that last quick mention here is that we have officially launched, even though I started it last year, but officially launched Norada Real Estate Funding.
It's really the funding arm of our existing business for all loans that are non-conventional loans. So when you've tapped out your conventional loans or you're having trouble qualifying for conventional financing,
Well, we have an exciting episode today because a lot of you have retirement accounts. Many of you have self-directed retirement accounts and a percentage of you don't know what to do with that money. And so we're going to help you today because yes, you can invest in real estate. Yes, you can get financing. And unfortunately, a lot of people don't realize that they can get mortgage financing to invest in real estate within their self-directed retirement accounts. Did you know, there is over $19 trillion, that's trillion with a T held in retirement accounts. This is as of 2020, just last year. So there is a lot of cash and assets held in retirement accounts. But the question is, is those of you who are in the stock market and are afraid that maybe it's a little frothy and a little overvalued, and maybe you need to take some chips off the table and move them to hard assets like real estate, or you're sitting on cash because you don't know what to do with it. Well, that's what we're going to talk about today.
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So today I have two guests. I have one of our newer and very well seasoned investment counselors, Nate hall, on, on the I guess the zoom call and the recording. We're kind of recording in multiple ways here today. So Nate is one of our investment counselors here who is very well-versed on investing in self-directed IRAs and strategy related to that. In addition to that, we also have Bob Cash and Bob is the president and CEO of Sierra Crest Capital Inc. Now Sierra crest capital is a commercial business purpose lender, and they are a vital source of capital to over 1200 real estate investors. They've originated in excess of $150 million in non-recourse IRA loans. Now that's a key term there non-recourse this. We're going to talk about this today because it has to be a non-recourse loan for you to invest in your self directed retirement account. And Bob has an extensive background in all aspects of mortgage lending, including appraisals, residential sales, loan, origination, escrow title, and underwriting, private money loans. So with that, Bob, welcome to the show, Nate, welcome to the show.
Thank you, Marco. Thank you, Marco.
Well, it's great to have you guys on Bob. Let's start with you. Did I miss anything in terms of your background and Sierra Crest Capital or anything you want to fill in?
No, I think you nailed it pretty good. We are a private money lender. And the one thing that I really want to heart by is, are focus on, I shouldn't say is the, the commercial business purpose lender, and the difference between what we do and what maybe a conventional lender would do is that we don't lend to individuals. We are not a consumer lender. We're a commercial business purpose lender, which means that we only lend to entities. You have to have an entity, a trust, and as, but an LLC, or you need to have it take title your asset in the name of a custodian. And we'll get more into, into that from a standpoint of what works best in that scenario. But if you called up and said, Hey, my name is Marco sands, really? And I want to borrow money from you, Marco, unless you've got an LLC doing business.
Okay. I don't want that to deter or scare off anybody listening to this because they might be thinking, okay, yeah, I've got a self-directed account. I've got some cash. I've got real estate, but I don't have an LLC or an entity. So I don't qualify. Or this is not something for me. You're absolutely wrong because it is very quick, simple, easy, and cheap to set up an entity like an LLC that you can use f...
Well, I have a very exciting guest today. And this guy is someone who I've known about for many years only because of his amazing series of books, which I've bought not once but twice. So, um, but, uh, for those of you who are familiar with the Tuttle Twins book series, you'll know who I'm talking about here. There's a lot of things that we could talk about. I figured we keep it tight today and talk about the wealth gap, financial education, and a little bit about his books, because you know, we live in a capitalist society, at least for the most part, we believe we're in a predominantly free enterprise market system. The reality is that's not entirely true. And we're going to talk a little bit about that today, but we still have great opportunities. You know, sometimes people refer to the United States as the cleanest shirt and the dirty laundry, and there's some truth to that, but you know, I'm happy about where I'm at in the country that we have, but you know, sometimes you have to question the policies and politics that go on and how that affects you as an entrepreneur or an investor or just the layman.
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So we're going to talk about things surrounding the topic of the wealth gap today. And my guest, who I'm very proud to have on the show here today is Connor. [inaudible]. Connor is a founder and president of the Libertas society. And I hope I got that right. It's a free-market think tank in Utah, he was named one of Utah's most politically influential people by the salt Lake Tribune. Connor's leadership has led to dozens of legislative victory spending a wide range of areas from privacy, government, transparency, property rights, drug, policy, education, personal freedom, and so much more. He's a public speaker and the author of at last count 21 books and Connor is best known for the Tuttle twins books series, which is a children's series, introducing young readers to things such as economics, politics, civic principles, just a great series. But interestingly enough, it's great for adults last but not least Connor lives in Salt Lake City, Utah, with his wife and two homeschooled children. So Connor, welcome to the show.
Thanks for having me Marco. I appreciate it.
Well, I'm excited to have you on because uh, your books have been great. In fact, I was really turned on and inspired by them long before I ever was introduced to you. So, um, we're gonna talk about that a little bit later. Can you maybe fill in any gaps that I missed in introducing you because I know that you are doing a lot of very interesting and cool things.
Uh, no, I appreciate the intro. Uh, we're up to 28 books now. Uh, so the, that bio was a little outdated, but it's hard to always keep that updated because we're cranking these things out like crazy. Yeah. So Libertas Institute is the free market think tank that I run, we primarily work on what's called policy reform, but my real passion is education and entrepreneurship and finding ways, help people understand how these policies like impact their lives, right? Like we're all turned off by toxic partisanship and what's happening in Congress and it's all kind of theatrical. And, uh, but, but in a very real sense, you know, policy, what the laws are impact us as business owners, they impact us as families. We all have a vested interest in making sure that we have the right balance. Um, and that we have a system in place that, you know, provides us protection and security and fairness and the economy and so forth, but that doesn't get in our way.
Well, I have an exciting episode today because this episode we'll officially announce in launch our new division, if you will separate company, but it is Norada Real Estate Funding. It is essentially a sister company to Norada Real Estate Investments because we found that a lot of investors have different needs for mortgage financing. And sometimes you get limitations are capped out with your traditional or conventional financing, according to Fannie and Freddie, you can only have 10 of those 10 per credit score, theoretically 20 per married, couple, but you know, what do you do after that? Like what if you are acquiring more property than what you can get conventional financing for? Well, there's this whole other world of lending that introduces mortgage products that allow you to purchase more property with leverage, with financing to a theoretical or hypothetical unlimited number of loans.
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Now, I have a guest on today who will talk about that in terms of what the limitations are, what this financing is, but I just wanted everybody to know that we have this financing available. So if you have reached a wall or a cap or a ceiling, if you will, of mortgages that are preventing you from purchasing more with financing, well, we have a solution for you. We have an answer for you also for those who have maybe some credit or financing or qualification challenges with conventional financing, guess what? We may be able to provide financing for you as well. And this might also be true for foreign nationals, but I don't want to get ahead of myself. So with me today is one of our team members and mortgage analysts. His name is Eric Shaw, great guy, smart guy. He really knows his numbers. And with that, Eric, Hey, welcome to the show.
Hey Marco. It's great to be here. Thanks for having
Me. Well, it's great having you on. I know we've been talking about doing this episode for a little while and we finally, uh, picked a date and time, and now we're doing it. As I said, this is the episode where we let the cat out of the bag and let people know that we, uh, have a funding arm or funding division. So I'm looking forward to talking about it. It's really exciting. Definitely. Well, Eric, you know, let's just dive right in. If you don't mind, let's talk about what this financing is and isn't because we obviously know it's not conventional financing. The typical product that most people are familiar with that is known in the industry is the cheapest form of mortgage financing. And this is product that is really just provided to us through the two government-sponsored entities known as Fannie Mae and Freddie Mac. But that's what it seems that 95% of the people out there are familiar with and that's all they know, but there's this whole other world, this other industry mortgage financing that people refer to as non-QM or non-qualified mortgage financing that opens up all kinds of options for people. And so why don't you kind of give us a, an overview of what that is and what that isn't, and that will really set the stage of what we're talking about today.
Sure. Yeah. As far as, uh, as you mentioned, most people are familiar when they go and buy their primary residence. When they buy their home, they go to Wells Fargo or Chase and they get their mortgage. And then Wells promptly sells that through Fannie Mae and, um, Fannie Mae waves, their wand, and they get this magic rate of 3% or so the mortgages that we're talking about are for investment purposes. So these aren't primary residences,
Well, I've got a really special guest for you today. You know, we always think about how can we better ourselves or improve ourselves? How can we be the best at what we do? Whether we're C-level executives, we run a small business, we run a large business, maybe we're real estate investors, but at the end of the day, we're always trying to improve ourselves. We believe in personal development, we believe in bettering our craft and being more aware of who we are and how we can learn more and apply that knowledge. So really the question is how do you raise your game? How do you become the best and how do you become the best of the best? These are the things that my guests and I will talk about today. You know, it may come down to routines and rituals who knows we'll find out.
So stick around. And by the way, by the end of this interview, I'm hoping that you pick up my guest's book because I'm telling you it is a great read. It is so chock full of information, and he summarizes every chapter at the end, which I thought was brilliant because he gives you the nuggets and the takeaways, which makes it so easy to digest.
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So with that, I want to bring on my friend, new friend, Alan Stein, Jr. And let me tell you a little bit about them and then I'll let him fill in the blanks. Alan is a successful business owner and a veteran basketball performance coach. He spent 15 years working with the highest performing athletes on the planet, including NBA superstars, Kevin Durant, Stephen Curry, Kobe Bryant, and the list goes on. Alan teaches proven strategies for improving organizational performance, creating effective leadership, increasing team cohesion and collaboration and developing winning mindsets. Now, these are all big terms and we're going to break this down because it really applies to you as an individual, not just in corporations and companies. And I'll just conclude by saying that some of our clients are pretty amazing. They've included American Express, Pepsi, Starbucks, Charles Schwab's, Penn State football. I mean, the list goes on and on, and he's of course the author of Raise Your Game: High-Performance Secrets from the Best of the Best. And with that, Alan, welcome to the show.
Oh, Marco, it's so great to be with you. My friend, I've been looking forward to this since we put it on the calendar several weeks ago.
Well, I've been looking forward to it too, and I apologize that we had to cancel one time. Anyway, we got you on.
Yeah. You know, I feel blessed to have met you last year. You know, I've known you for a little while now, and I've heard you speak and present a couple of times and you know, we've chatted on and off here and there. And you're really an interesting guy and I've heard your story multiple times and it's just fascinating how you have become what you've become and how you kind of grew through the ranks. And I love the story. Maybe let's start off by sharing your journey to becoming a performance coach. And you may want to start off by just defining what is a performance coach. Cause some people might be scratching their head it's, you know, what is a performance coach?
Uh, most certainly will. Let me say the feeling is very mutual. Marco. You never, since we met, you know, you, you have a very magnetic energy about you that I was drawn to immediately, and you have a, a really fun curiosity and you ask really insightful questions. Uh, so I knew that this would be a fun chat, a performance coach, as it pertains to my life in basketball was I wa...
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, you know, Andrew Carnegie many decades ago said that 90% of all millionaires became so through owning real estate. You know, that was true back then. And it is certainly true today. I was having dinner with Robert Kiyosaki a couple of years ago, and it was a very interesting conversation about the future of real estate and the economy and all the money printing that is going on, especially now, as we just approved a $1.9 trillion stimulus package. And it seems that year after year and decade after decade, this money printing or these stimulus packages keep getting bigger, almost exponentially bigger, but you know, Robert Kiyosaki once said that real estate investing even on a very small scale remains a tried and true means of building an individual's cashflow and wealth. And that is Oh, so true.
It is true today. It was true a year ago. I believe it's going to be just as true a year from now or even a decade from now. So before we get into today's show, I first want to take a moment to thank each and every one of you for being a subscriber to the show and providing positive feedback. You know, I get so many reviews on iTunes and everywhere else, and I do read them all. And I really appreciate all the feedback. The most two recent reviews said, this show is on my weekly podcast rotation and brings timely and relevant information to listeners. If you want to level up your wealth-building strategy, this is your show! And I appreciate that. One more quick review. Someone wrote, I recently discovered this podcast found it to have great content and practical steps that can be used immediately. If you are a real estate investor, do yourself a favor and subscribe today. And yes, on that note, if you like the content and today's episode, be sure to subscribe if you are not already a subscriber.
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So what is today's topic? Well, I want to talk about why I'm bullish on real estate today and why you should be too. So why is this? Let's break it down. It comes down to two basic things. One is the fundamentals, two is the economics. So I'm going to get into the fundamentals a little bit to give you both a 40,000-foot view of this, as well as get into some of the details of what is going on and why it makes sense to be invested in real estate and to continue investing in real estate. These are what I refer to as the fundamentals.
The other part of it is the economics. And I'm going to explain to you why figuratively, literally real estate is an ideal investment, and I'm going to break that down because it is actually an acronym, but I'm going just give you a quick overview of that because I actually recorded a very detailed episode about why real estate is the IDEAL investment. And I'm going to give you some examples today about that. So with that, let us jump in and talk a little bit about what is going on in the country, some national trends, and why the fundamentals make sense and make this one of the best investments to be invested in today.
So let's begin with supply. You know, economics is all about supply and demand and it's just economics one Oh one, it's the fundamental of economics. So the reason why real estate is such a good investment today from a fundamental perspective is twofold. Supply is tight. In fact, in many markets, remember, all markets are local. Supply is very tight. And to the point where there's almost no inventory, when you have less than one months of supply t...
Welcome to Passive Realestate Investing. I'm your host Marco Santarelli, really special episode today. I have a great guest today that I've been wanting to get on the show for a while. His name is Richard Duncan. I will, uh, read his little bio here shortly, but I just want you to know that this episode is going to be very interesting. We're going to talk about things as it relates to our economy and inflation, where we're heading. Are we heading towards massive inflation or there's so much information and misinformation about there as to whether we're going to see inflation hyperinflation, are we going to be in a very low inflationary environment and how this impacts you? And it does impact you because inflation changes the prices of the goods that you buy from food to your insurance, to your car, to your education, and everything else. So inflation is a factor in your life all the time.
Some people refer to it as this invisible tax, this stealth tax into a large degree. It is because it's eating away at the purchasing power of your dollar, but at the same time, it is good in other ways. And you're going to find today's episode this interview very enlightening because we don't think about inflation in other ways that it helps us. And when you broaden your view of the scope of how you look at this from not just a local perspective or even a national perspective, but an international perspective, meaning from a global economy, you start to realize that this whole subject of inflation is much bigger and broader in terms of how it affects you and your local economy and the national economy and the world economy as a whole. It's just a fascinating subject. Our interview today went a little long. You could listen to this, you know, across two different sessions, whether you're driving or, you know, cutting the grass, whatever you may be doing.
So if it's a little bit long, I think we went 50 minutes. You'll understand, and you can just pause it and come back to it. And by the way, everything we've talked about in this interview, we literally could have talked about this for hours and hours. And so when you start to look at Richard's stuff, his blog posts and his videos, and all that kind of stuff, you'll start to understand why this is such an interesting and broad topic.
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So with that, and in no further ado, I'm going to get right into that interview. So here we go.
It's my pleasure to welcome Richard Duncan to the show. Richard is the author of three books on the global economic crisis, including the international bestseller, The Dollar Crisis, which by the way, I bought that book many, many years ago, it was one of my favorite books. I still have it to this day on my bookshelf, but The Dollar Crisis is a book that forecast the global economic crisis in 2008 with extraordinary accuracy. And since Richard began his career as an equities analyst in Hong Kong in 1986, he has served as global head of investment strategy at ABN AMRO, asset management in London. I hope I actually got the name of that company, correct. He worked as a financial sector specialist for the world bank in Washington, DC. He headed up the equity research department for Solomon Brothers in Bangkok, and he has also worked as a consultant for the IMF in Thailand during the Asia crisis. He is now the publisher of the video newsletter Macro Watch, which I am a subscriber too. And it, that can be found at richardduncaneconomics.com
Richard, welcome to the show.
Marco, thank you for having me on.
Hey,
Hello, my friends. And welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli. And I decided to do another episode of rapid-fire listener questions. I did one last week, I picked about four questions. I had some great feedback, so I thought I would do it again. I've picked about a handful of questions covering different topics so I could mix it up, but the feedback was great. And I thought, well, I'll just pick some more and cover them quickly concisely and clearly, so we can just cover a bunch of ground, cause I'm sure there's a lot of people who have similar questions to some of the people who submit their questions to me before I get into those.
I just want to say that I'm proud to have our podcast picked as one of the 8 Best Real Estate Investing Podcasts by US News and World Report.
Yes, that's the one usnews.com. So they just picked this less than four weeks ago. I knew about it, but I forgot about it. I was going to mention it in a previous episode, but yes, we are one of the supposedly by Paulina Likos, she's an investing reporter at US News and World Report. And she, I guess, likes our podcast. So she named it one of the 8 Best Real Estate Investing Podcasts in the US, so THANK YOU VERY MUCH!
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All right. So the first question is from John and John writes and he says, Marco, first, I love your show and want to thank you for all the insight and education you provide. My question is, do you think 1031 exchanges will be eliminated soon by Congress? Good question.
This is just my opinion. I don't think it will be eliminated anytime soon. In fact, it's hard to imagine that's going to be eliminated anytime in the foreseeable future, the 10 31 exchange has been around for nearly 100 years, and it has constantly been under attack by different administrations, both federal and state level. And they have always been trying to eliminate or significantly modify the 10 31 exchange, which as most, if not, all of you know, is essentially just a tax-deferred exchange that allows you to take the proceeds or net proceeds of a sale and move them into some other like kind exchange. So that way you can continue to move your investments forward without being penalized by taxes in the process of doing so. But this has been under attack multiple times, even in different tax reform acts from 2014 to 2015, and there were budgets under the Obama administration that tried to modify or remove it.
It's just going to continue. In my opinion, it's important for us. It's been around for a hundred years. It's a critical piece of the US tax policy. Everybody who's part of the 1031 exchange does pay taxes. They pay taxes in many other ways. So it's not that they are working and living completely tax-free, that's not the case at all. It's just a way for them to defer their taxes so they can build more wealth over time. And at the end of the day, it is undeniable that the benefits that come from the 1031 exchange, which is part of the IRS tax code is good for the economy. It stimulates economic activity. And if it wasn't for the 1031, there wouldn't be as much activity. And the velocity capital would be much slower. So this is a good thing. It expands our economy expands the workforce.
It expands your net worth. I think there would be some very significant backlash if politicians seriously tried to remove the 10 31 exchange. So I don't foresee it changing or going away anytime soon. So thanks for the question, John.
Next question from Robin. Robin writes in and says,
Welcome to another episode of Ask Marco. So today I'm going to try something just a little different. I get a lot of questions that I can't possibly keep up with people who are actually sending me, Ask Marco questions from the passive real estate investing.com website. So I thought this time around rather than take one or two and go relatively deep into the answers of the questions I figured I'm going to pull out four or five and just give you more of a rapid-fire response to these questions. So I'm still going to answer the question and I'll do my best to give as much detail as possible, but I'm not going to ramble on about it. I'm going to try to answer it a little more quickly and then move on to the next question. So that way I can cover more questions in the same amount of time, or maybe a shorter amount of time, but this way it just gives you a more broader cross-section of questions. So I'm just going to refer to this as a rapid-fire listener question episode.
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So the first question is from Justin, Justin writes in and he says, Hey Marco, I am a new investor who recently purchased my first rental property and recognize the benefits of buying hold rental real estate. I was just listening to your podcast on investing in promissory notes. I was wondering where you put promissory notes in terms of investments. If you had $50,000, why would you choose investing in a promissory note over buying another property? Well, Justin, good question. I never said I would put it in one or the other. It really comes down to this. It depends. And as I've talked about in a previous episode, it comes down to what you're looking for. You see with promissory notes, they're very one-dimensional. They have a consistent stream of income, usually from interest, unless the note is amortized where it's paying you back principal and interest.
So if you're investing in a promissory note, that's great. It's the most passive form of investment. And it doesn't necessarily mean it's a real estate based investment. A promissory note could be backed by a company, a corporation, virtually anything that's an investment related. It could be part of a fund and there are dozens of different types of funds at the end of the day. It's a lender and borrower agreement. So you agree to lend your money at a particular rate of return, which is usually a rate of interest that's paid on a monthly, quarterly or annual basis. Sometimes it's not paid at all until the maturity date where you have a balloon payment for the principal, plus the interest as it accrued. But you know, it's just interesting income. It's very straightforward. There's nothing complex about it. It's very passive. Real estate is everything we've been talking about and everything you probably know about investment real estate.
It has multiple ways to make money or make a return. It's not just the cash flow, which gives you cash on cash returns, but it's also the equity growth over time from the amortization, the loan plus the appreciation that you get from inflation price inflation over time. Plus you have tax benefits and you're able to leverage you can't really do that easily with promissory notes. It's a hundred percent of your capital being put to work with investment real estate. You can put as little as 20% down control, a hundred percent of the asset have a hundred percent of the benefits. And so you have the benefit of leverage.
Welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And today we are going to talk a little bit about what the heck is going on with Fannie Mae and Freddie Mac and the mortgage financing in this country, especially as it relates to you as a real estate investor, you'll want to stick around for the next 20 minutes. As I bring Aaron Chapman back on one of our primary mortgage lenders that we work with, we probably work with five or six different companies to help investors finance their deals. And the nice thing about the people we work with is they specialize in investment loans, conventional financing for real estate investors. They don't do anything but that, so they understand the mindset of the real estate investor, what they're looking for and what they need and how to structure their financing to maximize their returns, their ability to leverage the lowest rates. And remember, it's not always about interest rates. Yes, rates are important, but you've got to look at the bigger picture because your returns are spread across different legs of the stool. It's not just having a very low, I guess it's all relative. So I can't really compare that to anything, but it's not about having the absolute lowest debt service payment, because even if it's off by 10, $20 a month, you might be missing out on great deals that can provide you literally thousands of dollars of additional equity gains each and every year, if you're not missing out on those deals. So don't get too hyper-focused on interest rates. It's a bigger picture. And we can have that conversation with you with our investment counselors here or with any of our mortgage lenders that we work with. So Fannie Mae released some interesting news just recently. They are tightening up their standards on investment properties and how much they're willing to lend from their pool of funds. So with that, I wanted to bring one of our mortgage lenders, Aaron Chapman, to the show. And with that, let us get right onto that interview. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
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It's my pleasure to welcome back to the show, Aaron Chapman. He is one of our rock star mortgage lenders that we use frequently and quite literally every day. So Aaron, welcome back to the show.
Good to be back to the show brother. This is I think number five or six.
I dunno, it's a lot, but it's not enough, but it's all good. I mean, you're a, you're a wealth of knowledge and we do a lot of work with you and you know, what's going on in the mortgage industry. So let's talk about that. Something hit the wire, as you were saying just recently. And it has to do with changes to mortgage financing that investors really need to know about. So before we get into that, I want to make sure that people who are new to the show, understand who I'm talking to. So tell us a little bit about yourself.
So, uh, been in the lending industry for 23 years, got into it in 1997. The stories really, really detailed how I got here. So we're all going to hit that at all today because we don't have the time. So I've been focused on the real estate investor in 2003 and then really started developing a relationship and an understanding of the investor to the extent that that's right, but business focused now to kind of give an idea, but I tell people is that, you know, the main thing you got to have is good solid professionals on your team.
Welcome to another episode of Ask Marco. We have a great question today from David, he's got a hundred thousand dollars to invest and he's trying to decide whether he should continue buying turnkey rental properties or invest in other passive investments. So David writes in, he says, Hey Marco, I had an interesting question that I wanted to run by you. I am currently 32 and have three rental properties and a handful of other alternative investments, including mortgage notes, syndication funds, et cetera. I am an accredited investor and I am looking to continue to grow my overall investment portfolio from my W2 income. I have about $100,000 per year that I am dedicating towards building my investment portfolio. As I am an accredited investor, would you steer me towards passive funds with larger returns, which require accreditation, or would I still greatly benefit by investing in turnkey rental properties? I would love to hear the pros and cons of each. I love the podcast. Thanks for your help.
Well, David, thank you for the question. So first and foremost, nobody including myself can steer you in any one direction. I can't do that. I won't do that. Nobody should do that. You have to obviously make your own decisions and nobody should steer you in any particular direction. However, people can provide you information, education, and knowledge in order for you to make an informed and educated decision with that said, I will say this, that the big question here is, are you after income or are you after capital gains? What is more important to you right now? And you also have to take the longer-term question into consideration here about what is it you're trying to achieve in the future, down the road, what is your destination and your needs today could change and your strategy doesn't have to be overly simplistic, where it's all about income or all about capital gains. In other words, price growth, because at some point you're going to want to shift your portfolio to go from one to another strategy. So let me explain that a little bit here. So I break this down into two general categories. There are income investments and there are capital gain investments. So income investments are those that provide predictable income. The income can be variable. The income could be fixed, but it's predictable because you know that you're going to get it on an annual, quarterly, or even a monthly basis. And there are different types of income. For example, you could have interest income, which comes of things such as promissory notes, mortgage notes, it's some types of bonds provide interest income. Then there are dividends. If you hold stocks or some sort of investment that pays a regular dividend, often quarterly, sometimes annually, then you have that dividend income. Of course there are royalties royalty income. For example, you may be invested in a business or you may have a record deal. Uh, I guess, I don't know if there are records anymore today, but a music deal or maybe you're licensing some sort of intellectual property like photographs that photographers do. In that particular case, you will receive royalties oil and gas is also another good example of an investment that produces income based on the production of those oil and gas wells, even mineral rights, those are royalties. So there's royalty income and last but not least, you can be involved in revenue share. So when it comes to revenue share, often you're invested in an existing business or a newly launched business. And what you are doing is you're participating in the income, usually the top-line revenue and getting a percentage of that. So you don't have to participate in any of the downside risk or the expenses that are often variable. So you know exactly what you're getting and it's generated from sales or top-line revenue. So that's a revenue share model. And sometimes that can be convertible, meaning that you start off as income and it converts...
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. Well, we have a very special episode today because we're going to talk about the Phoenix, Arizona Metro area and why it is such a hot market yet again, for investing. And along with that, the new construction opportunities that are available there, which I'm very excited about. And you're going to learn about that today, and then you'll understand why I'm so excited about it.
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So let me begin by introducing Steve, who is our primary point of contact with our builder, who we've been working with for many, many years in other markets, including Houston, the greater Salt Lake City area, even in Idaho that has been on fire lately. So Steve, welcome to the show.
Good to be back. Let's see. I see. I didn't offend you too badly last time.
No, you did it. And in fact, uh, I was so forgiving. I thought I'd bring you back on.
Oh, that's nice of you. All right. I don't get another chance this time, but I'll do my best. I'll behave.
No, we love you, Steve. It's always great working with you and we, we do a lot of business together, so it works out. Um, so look, I'm really excited about the Phoenix area and when I bring up Phoenix to some people, they look at me a little bit surprised because Phoenix has been on an incredible run in terms of population growth, price growth. In fact, I pulled up some numbers on one of my tools and I'm looking at the appreciation rates in that market, in the Metro area. And in the last quarter, annualized, it was 9.9%, almost a 10% annualized rate of appreciation. The last 12 months was 8.3%. Over the last two years, it worked out to seven and a half percent annualized. But if we go back like five years, we've seen an average overall rate of appreciation of 9%. And if we go back 10 years, it's also a 9% average annual rate of appreciation. And I have to think a lot of people from California are moving to Phoenix and just driving property values up, but it's a hot market. So tell me what you think about what's going on and in general with Phoenix and why we should be investing there.
Well, as you mentioned, we do a lot of new multifamily construction in a Utah, Idaho, Houston kind. If we drill down to the Western us though, you know that spine of the Rocky mountains, you tires on Idaho. It's been an interesting setup because we all know that Phoenix along with maybe what Vegas and Southwest Florida, that was ground zero of the 2008 mortgage meltdown, right? That's where a lot of the speculation occurred in the markets. You really took it on the chin accordingly. And you can look back on that and you can say why there's lots of reasons why, but always concerned about having a diverse employment base, right? Can people get jobs? Can they afford the mortgages and the rents that they're signing up for? And that turned out to be in Phoenix, back in 08, not, not really to be the case, right?
There was a lot of speculation that was driving that when you look at it, now it's a different place, right? We're talking about a much more diverse employment base. Now the demand for the housing and some of that appreciation that's been happening that you've been talking about is very much warranted. There's a shortage of housing in the Valley or Maricopa County there. And I think much of it comes from people are leaving California,
Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli, and I'm glad you're here. So today I want to talk a little bit about this ongoing question and debate, which I see asked all the time and bantered around by many investors, both beginner, newbie, seasoned, and professional. And that's the whole question of whether I should invest in single-family homes or should I invest in multi-family rental properties?
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So this episode was sparked by an email I got from a person named Tim and Tim writes in and he says, I wanted to make money with rental properties. Grant Cardone feels it's safe money to purchase multiunit properties, which has a lower default rate than single-family units. I'll address that in a moment, but I'm open to hearing what you folks think is the best way for a beginner investor, like myself, to look into this.
Tim, thank you for the question. So, although this is not an Ask Marco episode, I did want to take your question and turn it into more of a full fledged episode, because this is actually a good question. And it's a good thing to take a look at. So let's analyze this, first of all, I'm going to say that there's no right or wrong answer. One is not necessarily better than the other. Although I have a somewhat biased answer to the question of whether I should invest in single family or multi-family, but it's not just a personal bias. It's really based on what I'm about to talk about here today. I think there is a slight edge in single family rentals than there are on any type of multifamily, even fourplexes. Although I love single family, duplex, triplex fourplex, because of the financing, which is completely advantageous. You can lock in 30 year fixed rate, conventional loans or financing that you can't do on commercial properties, which by definition, according to lenders is anything that's over four units.
So let's get into all this. So let's begin by talking about the advantages of multifamily properties. The first thing that investors think about when it comes to multiunit or multi-family properties, those that are five units and above, which could be 50, 500 or more, is that you can scale faster. And there is some truth to that. And this is the big thing that Grant Cardone talks about and, you know, love him or hate him. I know Grant he's been on my show. I've been on his ask the pros show a couple of years ago. You know, the whole thing about scaling faster is that you can complete one transaction and end up with, let's say 20, 30, 50 units in one purchase under one roof typically, but it could be multiple properties.
But the idea is that you have fewer closing costs. Although the closing costs are significantly higher and a little more complex when you're purchasing multiunit properties or multi-family properties of that scale. You're definitely going to be paying a lot more in terms of the appraisals, the inspections, the complexities of it, et cetera, but it's still one transaction. And so if you're getting one loan for that purchase, you essentially have fewer total transactions. So there's some simplicity in that, but there's greater complexity in the purchase or the transaction itself, but you can scale faster. Now this is assuming everything else is equal, meaning that you are starting with the same investment capital that could be, you know, 200, 500,000,
You know, real estate investing can generate some great returns if you know what you're doing, but many investors do not have the skills or education to make that start or grow their real estate portfolio and build those returns. You know, I often get asked the question, what is the best book or books on real estate investing? And I've compiled lists over the years. In fact, there's one on our website right now called the Top 10 Real Estate Investing books, but I'm going to be changing and updating that list. It's a little dated. There are several books on there that I definitely want to take off. They don't apply anymore, or they're a little too outdated. So hang tight probably by the time you listen to this episode, or maybe a few days later, you will have the updated list.
In fact, I'm going to take the top 10 away and just refer to it as the best books on real estate investing. But I get asked this question, and this is why I want it to compile a list of the most important books on real estate investing and mindset. You know, the saying goes, "the more you learn, the more you earn" that is definitely true. So if you're going to read these books that I'm going to present today, you will be way ahead of most people, you know, real estate is an ever evolving industry. We know real estate is one of the best investments that you could ever make. And many people succeed, but some fail and most people never get started. The first thing you need to do is get your mindset, right? And once you have the right mindset, then you can form the habits that will ensure your success because with the right mindset and the right habits, you can acquire the knowledge and education that you'll need to take action and become a successful real estate investor.
One that has created the wealth and passive income to live the life on your terms, which means financial freedom that ultimately leads to time freedom. That's what we all want, right?
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So I've created this list and I felt I would give it to you in a way that breaks it down into several categories. I want it to break it down into the following areas, mindset, finance, and investing real estate investing for beginners, which is really from beginners to intermediate level investors and then real estate investing books to grow your business. So once you've gotten started to just continue to grow and scale books on property management and books on taxes, or more specifically on how to save and minimize your taxes. So that's essentially six categories. Now, keep in mind, this is not an exhaustive list. There are literally hundreds, if not thousands, but hundreds of books on real estate.
In fact, if you don't believe me, just go to amazon.com and type in real estate investing or even just real estate. And you will see there are a lot of books and that's the problem. There are just too many books to choose from, and it's really hard to know which ones are good, great, or bad. And believe me, there are many bad books out there. The other thing too, to keep in mind is that if you don't like reading, or if you're a slow reader, you can get the audio book version of most, or probably all of these books that I have on the list today. So whether it's print or audio, there's something for you today. In fact, you could actually have both. You could read when you have the time to read and lis...
We have a question that probably stumps a lot of people because there's a lot of confusion about the depreciation tax savings that we get and benefit from real estate investing. So today's question comes from Jonathan and he says, hi, Marco loved the podcast. I'm in the Washington DC area, own three condos to perform well, one breaks-even though it's appreciated about 25% since I purchased it also own a single-family home out of the area, I'm going to sell the poor performing condo. And I'm considering a 1031 exchange as I'm planning to take the proceeds and invest in one or maybe two properties out of state. It seems like there are some major trade-offs with the 1031 exchange. Just wondering if you can explain the pros and cons, I'll do my best. For example, I would get to forego a $40,000 capital gain. If I do the 1031 exchange, I also have about $35,000 of paper losses on that condo that I'd be able to carry over into the new property. On the other hand, my understanding per my tax guy is that my entire existing depreciation schedule would also move to the new property. So instead of getting a new 27 and a half year timeline against a new structure where the improvement would be larger, I'd be carrying over my old depreciation schedule 22.5 years against a smaller quote-unquote improvement bottom line, I'd avoid a capital gain tax hit and would carry over some losses, but would lose tons of future depreciation, which would shield against the income taxes, which are higher than capital gains taxes. Anyway, that's my understanding. Maybe you can clear this up and give a 10 31 explanation with pros and cons. Thank you. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
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Okay, great question. I am going to give you a reasonably good, but general answer because everybody's tax situation is different and this actually is or can become a little bit complicated, but I'm going to try to clarify and simplify. So what we're trying to do here is just clear the confusion about the depreciation tax savings that come with the 1031 exchange, and as it applies to your particular situation. So for those of you new to this, 1031 is just basically a way for you to sell your real estate purchase replacement real estate with it, and defer the capital gains tax that you would normally be paying from the gains on that original property. And so it's a beautiful thing because it allows you to depreciate the property in the case of residential for 27.5 years and write that off against the passive income of that property.
So what it does is it reduces and eliminates the tax impact from the income on that property. And it's a great tool that I think a lot of real estate investors don't understand, maybe don't know about, or certainly don't take advantage of it. And especially if you are someone who's sitting on more than one property, you have a portfolio and more importantly, you have a lot of equity, something I call equity, rich cashflow poor. You can reposition that equity into one or more other properties and increase your cash flow, still protect and preserve the equity that you have. You're just moving it to other properties and reset the clock on the depreciation schedule, which is really the core of the question here that I'm answering today from Jonathan's question. So I am going to actually invite one of my 1031 exchange guys very soon, probably next week to record another episode about the 1031.
Welcome to another episode of Ask Marco where I answer your investing related questions. I hope you're having a great day. Today's question is really more of a statement than anything else, but I'm going to turn it into a question and it comes in from Cameron and Cameron writes, and he says, it is mentioned on the podcast that you offer a session with an investment counselor to help those interested in real estate. I'd like to sign up for a session and learn more about NORADA, the markets, and how to make my game plan better. Cameron, great statement. I'm glad you wrote in this might be a common question. I'm not exactly sure, but let me talk about that for a minute. And I'm going to break this down into two parts, the mentorship part and the investment counselor part.
So let's quickly define mentorship because for some people it means different things. It's certainly not coaching per se, but mentorship is essentially a relationship in which someone or a company that's more experienced than you, or has more knowledge than you provides guidance to essentially a less experienced or less knowledgeable person. That's all mentorship is. I say that I have many mentors. Now. Some of them are people that I engage with, that I talk to and interface and ask questions of, although I don't come right out and ask them for a mentorship relationship where I want to be mentored by them. It just comes out of the relationships that I have. But then there's also the mentors that I have that are people that I've never met before, who I just love to learn from or listen to, or read their books or listen to their podcast or audiobook or whatever it may be. And because I'm learning from them and I want to absorb the things that they're teaching and talking about. I consider the mentors, I look up to them and I learn from them. So, I mean, Tony Robbins was one of my first mentors, even though I've only met the person one time in person. And I'm sure he doesn't remember me now that this was so long ago, but still to this day, I really love the stuff he talks about. And so I consider him a mentor. So he's just someone who's more knowledgeable, more experienced about a lot of things that I want to learn about. So we don't officially offer mentorships. And I get asked from time to time from people. If you know, I have the time to mentor them or be a mentor, I guess if there was the right place at the right time, I'd be open to doing that provided it's a mutually beneficial relationship and it doesn't take up a lot of my time. But right now, a lot of the stuff that we put out in terms of articles, this podcast, the interviews that I do on other people's shows and podcasts, the interviews with newspapers like USA today and whatever else, the stuff that I contribute is a form of mentorship. So I'm just going to continue to put the content out there. And I have some other stuff lined up this year. That's coming out as well that you could look at as a form of mentorship. But aside from all that, what we do offer through our investment counselors, for someone who's thinking about investing in real estate, or is actively involved in investing in real estate, building their real estate portfolio. But it's just looking for more help or guidance because they want to move the ball forward and level up. In other words, continue building their real estate portfolio, invest deeper, or maybe change them and shift a little bit in what they're doing. That's why we're investment counselors come in. So you refer to it as a game plan. And that's actually a very good description. So when you work with an investment counselor, first of all, that initial strategy session is free. In fact, we don't charge for anything, all that counseling and the guidance that we provide. It's not specifically investment advice. You have to make your own decisions, but the counseling and the guidance and answering questions and all that that comes at no cost,
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, Warren Buffet used to say, “look at market fluctuations as your friend, rather than your enemy profit from folly rather than participate in it.” And there's a lot of truth in that, you know, it reminds me of another saying, and that is “the trend is your friend until the end.” And the nice thing about real estate is it's pretty easy to identify and follow trends, and they show you where things have been, where things are today and where things are headed and as a real estate investor or any investor for that matter, it's good to know where things are headed and what the trends are, because then you can get into the opportunity. You can get into the game and ride that train, and you can get out of harm's way when things are coming. And you can see that coming from often months, if not years down the road. So my guest today has a lot to say about the markets and the trends that are going on. He's very dialed in, has many years of experience investing in real estate, but also as an analytical person, as far as I know him, he has very much been dialed into pulling data from public records and whatnot, and looking at what is going on in terms of the markets around the country and real estate as a whole. So with that, let's bring on our guests and talk about the housing market and what's going on for this year in 2021 and beyond.
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It's my pleasure to welcome Sean O'Toole to the show. Sean is the founder and CEO of property radar. And prior to launching property radar, Sean successfully purchased and flipped more than 150 residential and commercial foreclosures leveraging his 15 years in the software industry. Sean used technology as a key competitive advantage to build his successful real estate investment track record. He's an amazing guy, very knowledgeable. I've known about Sean for many, many years and followed him when Property Radar was originally Foreclosure Radar, which goes back a few years. And with that, Sean, welcome to the show.
Thanks for having me. It's great to be here.
Well, I think you are long overdue for being on the show because you are just a wealth of knowledge and the amount of data and detail that you've gone into over the years, pulling out foreclosure information from public records is mind boggling, cause that is a very labor intensive task.
I've been there myself and I did not enjoy doing that. So, but let's start with that and start with you, tell us a little bit more about yourself and how you ultimately launched Foreclosure Radar and then rebranded to Property Radar
Yeah, so computer guy, software developer early on and dropped out of college twice, actually for software companies and worked in Silicon Valley through the nineties and the.com boom. And after the.com bust ended up flipping houses and flipped, like you said, over 150, uh, properties, mostly bought at the foreclosure auctions. And I started tracking every foreclosure in California and at the end of 2005, you know, saw some worrying signs in the market and got rid of everything that I had, but I kept tracking all the foreclosures and they just started to skyrocket. So it turned that into a software application, kind of a picks and shovels to arm, everybody that was going to go after that business.
Interesting, great timing by the way,
Today I wanted to give you three listener questions. So let's just call it an Ask Marco Three Pack. So today's first question comes from Lucas and he says, hello, Marco, let me start off by saying thank you for your podcast. It's been a great learning tool over the past two years. My question is in regards to VA home loans, which is veteran administration and the standard 10 Fannie or Freddie Mac loans. So if someone used a VA loan to purchase their primary residence, does that free up a 10th conventional loan that can be used as an investment property, essentially giving me 11 loans before having to start applying for commercial loans, one VA residence and 10 conventional for investment properties. Thank you, Lucas.
Lucas. Good question. I think this is probably one of those questions where some people are not sure or misunderstand it. So the way Fannie and Freddie Mac look at your credit is how many home mortgages or loans mortgage loans do you have? It doesn't matter where it comes from. It still counts as a mortgage loan. So unfortunately it counts as one of your 10. So if you have a VA loan and it's actually on your credit report, it's going to count as one of those 10. So you're still going to be capped at 10. So you have nine Fannie Freddie loans and one VA loan. Simple question, simple answer, Lucas. I appreciate you. Um, submitting that. So thank you. And I'll just keep that one short and sweet. Next question is from Benjamin. Benjamin says, hello, Marco, my fiance and I just purchased the townhouse. We were renting the previous owner. The landlord was done being a landlord and wanted to sell. We purchased the property at below-market or right around market. And no, we can turn it back into a great rental. However, we purchased the property as owner-occupants. Our plan is to stay in the property for the next year or two before moving out and turning the property back into a rental. What should we be doing during this one or two-year period? I know there are unseen profits and appreciation and equity, but I feel eager to see the property cashflow are there projects to the house we should look into. It was just renovated in 2019. Should I be looking to invest as a limited partner in other real estate deals where I can maybe see quicker returns on cash invested? Okay, well, let me just start off by saying if it was just renovated in 2019, which is just over a year ago, then there's probably nothing you need to do or should do to the property. I can't imagine that there would be anything you can do to that property other than add a bedroom to increase what you would be able to rent it for when you ultimately go and rent the property. So I don't think anything you could do to increase the upcoming gross rental income on that property. The other thing too is you mentioned the next year or two before moving out, check with your tax advisor for the specifics, but as a general rule of thumb, if you live in the property for two years consecutively, you can move without having to pay tax on the capital gains of that property. I think the rule of thumb is it has to be two consecutive years over the past five. So if you wait the full two years and a day, then you will be able to move and keep that property. And of course you wouldn't have any capital gains apply to you at that point anyway because you're not selling the property, but you can move to another residential property and consider that your new home and the capital gains exemptions. Now continue in kick in on that second property. So that first property can be actually labeled as a residential homestead or a home of yours. Now, something that you probably will want to do. And I'm assuming you've already thought about this, but find out what the market rent is compared to the purchase price or the, I guess, the market value in your case of that property, if they're kind of in line and you know that you can leave that property as is,
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli, you know, how many different apps do you have on your phone open right now? Or how many tabs do you have open on your internet browser and how many different email threads and Facebook messages do you have going on at any given time? If you're like most people, you probably have lots of each of these things too many. In fact, multitasking might be a bigger problem than you think. Not only is it splitting our time into fragments, but it is not helpful nor is it efficient. And it actually is counterproductive today. And with my guests, you're going to learn why multitasking. And I say that in air quotes, isn't even an accurate name for what it describes and why you should set designated hours for your time, whether it be at the office home or any other place of activity and how you can find more time to do the things that you actually love. How can you actually free up to 40 hours a month of extra time that you can put to whatever you want to put it towards? So with that, I'd like to introduce my guest and we can talk more about this concept of multitasking and why it is actually a lie. All right, it's my pleasure to welcome Dave Crenshaw to the show. Dave develops professional leaders in fortune 500 companies and universities and organizations of every size. He has appeared in time USA today, fast company and the BBC news. And I'm sure many other places which he will fill you in on his courses on LinkedIn learning have been viewed tens of millions of times. His five books have been published in eight languages. The most popular of which is the Myth of Multitasking, which is a time management bestseller. And as an author speaker and online instructor, Dave has transformed the lives and careers of hundreds, of thousands of people around the world. Dave, welcome to the show. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
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Thanks Marco. Glad to be here.
Well, it's great to have you on. So, you know, I kind of read a bio of you and I'm sure I missed a couple of things. Maybe tell us a little bit more about yourself and what you do and where you came from.
Well, okay. So a couple of unusual things that aren't in the bio is one, unlike a lot of time management, you hear a lot of time management experts, productivity experts. These are people who have always had it together, right? Always been organized. I was diagnosed as off the charts, ADHD. In fact, the term that the psychologist use was freaking off the charts. So focus organization, like you see my really nice, this is not a background. This is my real office. This is fantastic. But 20 ish years ago, you had to use a shovel to get from the front door to the desk. It was complete chaos all the time. Wow. So when I'm talking about things like focus and organization and productivity, I'm coming from the standpoint of somebody who understands how incredibly difficult that is for most people. And so I adapt what I'm teaching to that. And the other thing that wasn't in the bio is I was mentioned by the Chuck Norris in the official Chuck Norris factbook. That's about the coolest thing that could happen to anybody.
That's awesome. Right on. I'm sure you were stoked when you heard that.
Oh my gosh! I couldn't believe it. I thought it was a Chuck Norris joke. Yeah.
That's awesome. Well, you know,
Welcome to another episode of passive real estate investing. I'm your host, Marco Santarelli, and welcome to the show and welcome to 2021. You know, if you are a new listener or this is your first episode, I hope you enjoy the show. I hope you enjoy this episode. And if you enjoy it, please remember to subscribe. We are available on all platforms from iTunes to iHeart radio, and we are heard all around the world. Of course, the majority of our listeners are in North America, but this is a great show because I like to share mostly stuff related to real estate investing. And that's pretty much what I focus on. But of course, from time to time, we're going to talk about things like personal development, your own personal growth and goal setting, and whatever it may be. So today, the thing I wanted to do is actually create an episode, which is just me, mostly a monologue, but I took three questions that I got from people submitting their questions to me via email through the website of course, mean I'm going to refer to this as just an ask Marco three-pack. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to I Feel Lost and Have Investment Paralysis
Enjoy the show!
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So I picked three really good questions from three different people. And I'm going to turn that into just a single episode before we go there. I just want to comment. It's just been less than two weeks of 2021, and it's been such an interesting year so far. There is so much news and media attention on the changing of the guard here in the US with one administration leaving and another coming in, regardless of your political view. To me, it's been an interesting theater show to watch I referred to politics as political theater, because so much of it just seems to be amusing to put it lightly. But anyway, that's going on. We have historically low-interest rates, mortgage rates specifically, which has been not only fueling the housing market as a whole, but it is created just incredible opportunities for us as real estate investors to purchase with historically low-interest rates.
It's cheap, cheap money. And if you really think about it, real rates of inflation are probably higher than the mortgage rate that you have. So it is essentially free money and not only is it free money to subsidize the purchase of your investment properties, but your tenants are paying it off for you. So if that's a good deal, which by all accounts, it would be an is how much of that do you want? I would be scrambling to acquire as much down payment capital as you can, and build a real estate portfolio. If you haven't started or just to increase the size of your existing portfolio, of course do it with the right team in the right markets, in the right places with the right properties. And you'll do very, very well, but the mortgage rates have been incredibly low. And speaking about Lowe's, let's talk about highs for a sec.
I don't know how many of you actually follow cryptocurrency and specifically Bitcoin, I'm not promoting advocating Bitcoin by any means. I do own some and full disclosure, but not a lot, very little, but I do find it interesting. And I studied it years ago. The whole blockchain technology is actually fascinating if you ever want to, um, you know, entertain yourself by learning something that is just really revolutionary. And I think is going to radically change how we do commerce and finance. In fact, it's already changing how we do commerce and finance really the day will come where you will be ma...
Welcome to another episode of Ask Marco and our podcast, the passive real estate investing show. I'm glad to have you here. And this is the first episode that I'm recording here in the new year 2021. Now, if the audio sounds a little odd it's because I'm recording this on my iPhone in a hotel room in Salt Lake City. And the reason I'm here is because we are doing a live webinar on real estate and investing this afternoon with some colleagues of mine here. And so we wanted to do it live, and this is why I'm out in Salt Lake City. Anyway, I had a number of questions come in over the holidays. So first and foremost, I want to just wish everybody a Merry Christmas, Happy Holidays. And of course, Happy New Year.
Get a New Business Formation for as Little As $0 (excl State Fee) What's interesting about 2020 is it's been really difficult for a lot of people, but at the same time, it's interesting to see how many businesses have done very well. And this is especially true in the online e-commerce space, real estate, especially residential, not so much in commercial, unless you are in storage or warehousing. But if you just do a little research online, you can just see how many businesses have suffered as well as how many businesses have actually done incredibly well. So it's been an interesting year and I just hope that this year is going to be a better year for those who have had a hard time last year. So I'm going to start off with just a quick testimonial that came in via email here over the Christmas holiday. And it's from, uh, Tim and Keeley. I believe it is. They just wrote in and said, hi, Marco. I wanted to wish you a Merry Christmas. And I want to thank you for the content you consistently put out on the podcast. You're very, very welcome investing in real estate through Norada has changed the future of my family. I am grateful for the amazing team I get to work with to build generational wealth for my family. Keep up the diligent work. God bless Tim and Kelly. Thank you very much. I appreciate you writing in and I'm very happy for you. And the more people that we help, the happier I am, because it's ultimately my long-term goal and mission to help 1 million people whether directly or indirectly. So at the end of the day, it doesn't matter if you are doing business with one of our companies, whether Norada real estate investments or Norada real estate funding or Norada capital management, where we have promissory notes, it really doesn't matter. I just want to put the content out to help people gain financial education so they can get on a path to financial freedom. And that just helps everybody it's good for the greater good. So looking back at 2020, I'm probably going to record a separate episode on where we're coming from and where we're into 2021. But one interesting little fact or stat is that if you look at core logic's case shiller index, and I'm not a big fan of index or indexes as a, probably a better English, but because the Case-Shiller index only looks at the top 10 or 20 markets. So it's a very, very general barometer, but it's a good reference point to make the point I'm trying to make here. Home prices reached a 14 year high this past October, according to case Schiller or the case shiller index, which covers home prices in the top 20 major metropolitan areas. And that national index is now up 24.5% from its former high, which was in July 2006. Now that doesn't mean that we're in a bubble. Remember all real estate is local. And so you can't look at housing as a quote-unquote national housing market. There's no such thing, it's all local hyper-local, but in just very broad general terms, you can just see that we've had a tremendous year and in a pretty strong run from what was essentially our last high, 14 years ago to where we are today. So that's incredible if you've been in real estate if you've been investing in real estate, and if you haven't, you know,
Welcome to the show today, cause we've got a special show and I'm going to ask you a question. What if it was possible to unlock the equity in your home or your property without taking on more debt and be able to use that equity for virtually anything that you want to use it for. But of course we're real estate investors. And what I'm thinking of is you would take that equity that you've just pulled out of your property or properties and use it to invest in more income producing assets like turnkey rental properties or whatever it may be. So my guest today is someone who is in an interesting space. This is something I've actually talked about very briefly in episodes in the past, where you have the ability to take out equity without actually incurring debt. And it's an interesting concept. So I'm going to let my guest talk about that here today. So my guest is Matthew Sullivan and he is the CEO and the founder of QuantmRE a company that solves a real problem for property owners by helping them to access a portion of the equity in their properties without actually taking on debt. Now you might be asking yourself, well, how's that possible? Or how do you do that? Well, hang tight because we're going to answer that question. Matthew has a proven track record in the real estate innovation space and that's through his experience as a co-founder of secured real estate income strategies fund. And he is the president and founder of crowd venture.com a real estate crowdfunding company. So with all that, Matthew, welcome to the show. Thank you for having me on. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Money in the Streets with Barry Habib
Enjoy the show!
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Well, it's great to have you on here. You know, my audience is probably wondering, well, what exactly does this person do? So tell us more about yourself and where you've come from and you know what you're up to today.
I've always had an entrepreneurial background, I think primarily because I think I've discovered at a very early age that I was systemically unemployable. Um, so, um, that combined with this sort of burning desire to go out and build things. And so I, my sort of entrepreneurial path really started, you know, gosh, 30 years ago, how time flies. And I started off life as a stockbroker and went into corporate finance and then run my own businesses that were involved in telecoms and technology and finance moved over to the US seven years ago. And what I did, there was really something that I've been meaning to do for years, which was to get involved and to start a business that was directly involved in real estate. So the first thing I did was to set up a crowdfunding company, which was one of the very early real estate crowdfunding companies, which took advantage of the changes in legislation that came about by the jobs act.
And that really was my staging point or my platform to enable me to build relationships in the real estate sector over here, I was based in Southern California, sets a real hotbed for real estate innovation, and really one thing led to another. And as we grew the business, we stumbled across this incredibly interesting asset class, which is the equity in owner-occupied homes. And so three years ago, we set up QuantmRE, um, which is the company that you mentioned. And what we do now is we help homeowners unlock some of the equity in their homes, as you say, without taking on debt.
Interesting. Okay. So that's a very interesting concept. It's not something that's new.
Well, today we have an interesting guest really smart guy who just released an incredible book. And I wasn't sure what we were going to talk about. I wanted to talk about the book and I just come to realize that this guy is incredibly knowledgeable about the mortgage industry and housing, and in predicting where the housing market is going and he's in the media all the time, CNBC, wherever else, Fox business. So we ended up talking about the housing market and the future of what's going on in terms of mortgage financing and real estate, residential real estate, specifically at the beginning of this interview. And then we got into his book, which is amazing because it's about opportunity where opportunity lies that the fact is opportunities around you all the time. And it's just a matter of being aware. And we talked about mindset and trends and his stories are interesting about what inspired him to write the book. He's very well connected. He's an amazing individual. I've come to really like him, and we're going to be hanging out together in New York. The next time I'm out there, which is another business venture that I'm involved in related to broadway. I'm going to leave that to the very end of the episode, where we talk a little bit about that I could have gone on for hours with him about every single one of the topics we talked about. So we're going to talk about real estate trends going on in real estate. We're going to talk about his book, Money in the Streets and opportunity and mindset. And we're going to talk about a little bit about Broadway and what he is doing in that. He's been very successful. So with that, we are going to move on to my guest and I think you're going to really enjoy the show. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to The Lending Landscape Today and Into 2021
Enjoy the show!
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It's my pleasure to welcome Barry Habib to the show. Barry is an American entrepreneur and a frequent media resource for his mortgage and housing expertise. He was named the 2019 mortgage professional of the year by national mortgage professional magazine. And he was a 2019 finalist for the prestigious Ernst and Young Entrepreneur of the Year Award, which is amazing. So with that, Barry, welcome to the show.
I really appreciate that. Thanks for having me, Marco.
It's great having you on. You're a very interesting guy. I love your new book and I really love what you've accomplished. And as we were talking here offline, you've told me about some of the other achievements that you've had recently. So tell our audience more about you and what you've achieved and maybe a little bit about your background and what you actually do.
So you're very kind. Yeah. I have been named the Top Real Estate Forecast for the year by Zillow and Polson Homes for 2018 and 2020. I was the only one who won that twice and there's so many wonderful, respected, big names in there. You know, you get Goldman Sachs and Bank of America, Wells Fargo, and many, many, many others. And then there's a little old me and my team. And we've been fortunate and blessed that we've been able to come up with good metrics that have been very reliable for forecasting real estate, but we've also done a good job in forecasting rates. We received a lot of notoriety for breaking down what's going on with when the fed was buying too much. I got in front of the fed and explained to them that they were buying too much last March at the end of March of last year and did a whole thing on CNBC and ...
I have a very special guest today, not only a friend, but one of our preferred mortgage lenders that we work with here at Norada Real Estate Investments. So I got talking to her, I don't know it was a week or two ago, and I thought, Hey, you know what? I need to get you on the show. We need to talk about what's going on in the world in terms of mortgage lending and trends that you see. And so today I have with me Caeli Ridge, and Caeli's the president and CEO of Ridge Lending Group. And she has been a well-established real estate investor for over 20 years now. You wouldn't know that because she looks so young, but she has had properties all across the United States. So she is a seasoned investor and she has worked with tens of thousands of real estate investors all over the country, helping them put together their real estate portfolios to help them realize their dreams as a real estate investor. So with that Caeli, welcome to the show. Thank you so much, Marco. I am very excited to be here. Hopefully, I'll be sharing some valuable content to you and your listeners. Thank you.
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Well, I know you can, that goes without question. So for those people who really don't know who you are or much about you or Ridge Lending Group, why don't you just give us, an overview about yourself and your company?
Sure. So the ongoing soundbite is that Ridge lending is a second-generation company that focuses pretty much exclusively in the non-owner occupied versus the owner-occupied side of residential real estate investing. We have a nationwide footprint and almost every state I should probably for compliance reasons mentioned, which we are not in our seven of them. Let's see if I can do it by memory, Alaska, Maine, North Dakota, New York, Vermont, West, Virginia, Wyoming. Got it. Otherwise we're everywhere. So I think that's a real value add for most of our investors. Like you said, I've been doing this for over 20 years. And I think one of the unique things people find out about me is that I am not real estate investor and having worn both hats as the lender and investor, hopefully, add some credibility to what we bring to the table. But my personal focus has really been the education of the individual investor from that lending and underwriting perspective, because I think that everybody listening will agree that the learning curve in real estate investing is pretty intensive just on its own.
So when you start to fold in all the financing part, I learned that it's that piece that people tend to be a little bit overwhelmed by in some cases intimidated by, but the leverage is going to give us our greatest rate of return. So I just think it's very important to have some arsenal, some information, some definitions what's going on in the underwriting side of all of this, teaching them some of the language about it. Cause it is like a whole new language and preparing them to understand how to optimize most important of all right, how do they keep their debt to income ratio at its lowest, which is optimal for qualifying or their credit score at its highest? Are there assets available as need to be for underwriting guidelines? So those are the things. If I were to say, you know, a true value add the education that Ridge provides its clients I think is very valuable. And then finally I would comment that we are not a one size fits all lender because we're...
Today we have an interesting question from Lindsey and Lindsey asks - Should I pay off my rentals? And I assume that is for cashflow purposes. So Lindsay writes in and says, hi Marco, first off, I really enjoy your podcast. And thank you for providing such great content. You're very welcome. My question is I currently have three duplexes, a quadplex, and I am closing on another duplex next week. I do not like to have a lot of debt. And my end goal is to gain enough passive income, to be able to not have a typical nine to five job. That's a great goal. If I have the funds to pay off the rentals, would you advise that I have funds in the stock market, but I am not very risky and it makes more sense to me to pay everything off. I also have been taught that diversification is the key, ie, stock market, and rentals. What are your thoughts? Thank you, Lindsay.
Get a New Business Formation for as Little As $0 (excl State Fee) Lindsay, thanks for the question. These are good questions. You have a couple of them in here. So let me start off by saying that I don't know your age. I don't know your income goals, and I also don't know your investment timeframe. So I need to make a few assumptions and generalize a little bit here. So that way it applies to you, but it's applicable to everybody listening. The concepts and the principles are the same when it becomes very specific to you. It's really all about what you have to work with. What's your income, what's your income goal? What are your debts? What's your timeline, all that stuff. So these are variables that anyone listening to this needs to adjust for their own particular situation. So having said that, I want to start off by just saying this. You got to look at your strategy. You always start off with your strategy. So this would be my question to you. If I was on the phone with you is, you know how old you are, not that I need to know specifically, but just, you know, where are you at in your life? Your inning. As some people call it, what inning are you in? And you know, what timeframe are you working with? Like in other words, if you have some income goals or some investment goals, you don't need to be young or old to achieve them. The question is is how long do you want to take to achieve those goals? So you need to look at that. So age is certainly a variable because time is your biggest, biggest friend. It is the most powerful resource that you have. And the more time you have, the more you can accomplish and time is that one thing that you can spend, but you can never get back. Everything else probably bends those rules, or it doesn't apply, but the time you can spend it. You just can't get it back. So time is on your side and the more you have of it, the better off you are. And that's especially true with leverage or in other words, debt, which we'll talk about here in a minute. So as part of your strategy, you have to consider age, secondly, as part of your strategy, you need to consider your cash flow and cashflow goals. In other words, what are your living expenses? But more importantly, what are your goals, and what are you trying to achieve from a financial perspective? And thirdly, part of your strategy is what is your equity growth? So there's probably a point in time where every investor is focused on growing their portfolio and maximizing how much equity they grow in their portfolio. The more, the better, the faster, the better, and the more equity you have in a shorter period of time. The more options you have to use that equity to increase your cash flow by increasing your investments. ie income-producing real estate. So age cashflow and equity. Now comment about your debt. You mentioned debt and you're averse to that. You don't like to have a lot of debt. Well, the question is what kind of debt I've talked about this many times on the show, you don't want to have bad debt, consumer debt,
So I wanted to give you a quick Q and A today. I had a question from a lady named Jennifer, and she writes in this, she says, hello, Marco. First of all, I appreciate your podcast. It has introduced me to a source of income. I don't know that I ever have ever considered or even encountered otherwise I'm listening from the beginning and have made it to episode number 130 or so. So far as an investor, getting ready to make my first purchase. I do have two questions. And so I'm going to cover these relatively quickly because I've covered them in other episodes, but it's well worth hearing these again. So her first question is, is it still a good time to invest in this unprecedented time of coronavirus economic trauma and upcoming changing leadership change? I am nervous that I am preparing to invest in the face of potential economic collapse slash federal lockdown. I know you don't have a crystal ball, but you do have years of experience to speak from. I don't have a lot of money and I'm utilizing much of my savings for the first purchase, which is terrifying. As I grew up with the education of safe, safe, safe. I know this isn't the best way, but I am nervous that I am choosing the worst possible time to invest number two.
Get a New Business Formation for as Little As $0 (excl State Fee) Well, actually let me answer the first because that was a lot to chew on there. So first and foremost, depending on what your age is, a lot of us grew up and this certainly includes me with the mindset of save, save, save, save, everything, save what you can save for a rainy day, et cetera, et cetera. And there's some truth to that, especially when it comes to emergency funds and you know, other necessities, but there's a certain point where that doesn't make sense anymore. And that is more true today than it was in decades. Past that information for me came primarily from my grandparents who were born in 1903 and lived through two World Wars and grew up during the great depression and all that stuff. And to some degree, that was also my parents, particularly my father. But what you need to understand is that up until 1971, as let's just call it 1972, when the US dollar was taken off, the gold standard that changed everything. So currencies around the world were now free, floating in the free market, called the Forex, and they were no longer tethered to gold. And so now, instead of something that kept pace with inflation or was tied to something that was an inflation hedge, it just floated freely. And so now the age of inflation came into play and your currency is now worthless and less every year. It's basically being devalued. And so saving doesn't make any sense. You know, the saying is, is this savers losers? Not that you're a loser, but you're losing money because your purchasing power is being eroded every year by inflation. So saving doesn't make sense. So you need to put your money to work. That's the bottom line. So don't be nervous about that. The question is is where am I going, invest my money, where it's going to preserve the capital, protect the capital and give me the best rate of return and real estate is definitely, and probably by far the best place to invest your capital. If you want a true inflation hedge and have all the upside potential cash flow and tax benefits. Now having said that you're right, I don't have a crystal ball, but I do keep an eye on the trends. And I look at what's going on. So at the end of the day I care, but I don't care about what's going on around me in terms of the economy, leadership change in government coronavirus, all that stuff. And the reason I say that is this, no matter what is going on around us, short of an absolute, you know, end of the world event, we all need food, shelter, clothing. We need a place to live. We all need housing and we're going to live where we can afford to live and a place that we like. And that's true,
Well, today I want to talk a little bit about Covid's impact on the rental market, both past, and future. I have a special guest coming on here in a couple of minutes, but I just wanted to touch upon it to a small degree, because this is really shaping housing trends and especially rental housing trends. You know, we are living in an environment right now where affordable housing in the US remains very, very low. In fact, most of the housing stock under the $200,000 price point, and I'm talking nationwide here makes up only 10% of the housing stock out there. So it's very difficult to actually find an investment property that usually makes sense at the 200,000 to $250,000 price point and below all the way down to 100,000 or so that housing stock only makes up about 10% of the market.
And it's diminishing the affordable housing in the US remains very low, almost historically low, actually potential homeowners have just been nervous because of COVID. You know, job security has been in question for many, many people, and they're not sure how that's going to unfold going into the new year 2021 and rental housing trends are now including more and more online and virtual type tours. And that's actually one of the main trends we're seeing virtual features become commonplace in terms of applications. Those are being signed online tours are not necessarily being done in person they're being done through virtual tours, video 360-degree tours, even full-featured facilities, such as, you know, larger a grade apartment complexes are bringing in virtual workouts and virtual exercise classes and even virtual wine tastings. It's just kind of crazy. And I know this doesn't apply to most of us listening to this because we're investing in single-family homes, duplexes, fourplexes, and whatnot.
But for those of you that are invested in apartments or syndicated large deals, I mean, those are the trends we're seeing. You know, another one of the trends that COVID has been pushing in terms of the rental market is the importance of location. The location has become less and less important, especially if you have the ability to be mobile or you're an open job seeker, and you're looking for a new opportunity. Well, the entire United States, in fact, the world is your oyster. You can go anywhere. And for many people they're able to work from anywhere. So you could live wherever you choose and work from wherever you want. And interestingly, more and more companies are actually allowing employees to work remotely through the technology that exists today, you know, be at Zoom or Skype. And, you know, obviously having a mobile phone and the laptop with an internet connection, a lot of work can be done remotely.
And we've seen this pretty much everywhere this year with large corporations that actually have call centers. The call centers have been either scaled back or closed, and people are actually taking phone calls and support calls from their homes. So this is just an ongoing trend. And I think it's going to roll back to some degree, but not entirely. And it'll be more and more commonplace to be able to work remotely from home or elsewhere. And this is also pretty true for cities that have large number of employees, very densely populated cities because a lot of people are either refusing or have a reluctance to actually being cooped up in very dense metropolitan areas where there's a whole bunch of other people, at least until the fears subside with everything going on with COVID and how that's just being perpetuated and propagated and whatnot. So location has become less important and we're seeing tech hubs all over the place, losing people to the suburbs and rents dropping in these cities like San Francisco, San Jose, and any other market that has a very densely populated downtown or central core where there's a lot of tech-related jobs because a lot of these tech jobs can be done remotely.
Well, I have a very special guest for you today. Someone who I've been actually following for a few years, I am absolutely impressed with his teachings and how much he is giving back to people in teaching them how they can become a better person through a better brain, which is very fascinating to me. So some of you might know who he is. His name is Jim Kwik. He is considered the world's number one brain coach. He is literally a world-renowned expert in memory improvement, brain optimization. That's a mouthful and accelerated learning, and it is my honor to bring him onto the show. So Jim, welcome to the show. Marco, thank you for having me and thank you everyone who is listening. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
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Well, I'm glad I finally got you booked cause we've had to rebook and I actually first approached you about it last over a year ago at the Inc 5,000 event that we were named thankfully and graciously, you know, to be on that list. But I thought what you teach is just perfect for my audience. Cause I always talk to my audience about being a perpetual student. Never stop learning, educate yourself. In fact, that's my number one rule of successful real estate investing is to educate yourself, but it's hard to educate yourself unless you're a good learner, if you will, and you probably have better words for it than I. So why don't we start off with just a brief intro on who you are, because I know you have a fantastic story, but I don't know if we're going to be able to fit everything I want to cover into a 30-minute episode here.
Yeah, no, I hear you and congratulations again at the incorrect condition at that event. When I'm speaking on stages, I'll do these demonstrations, even in the breakout session of that, that gathering, um, where I'll have, uh, 50 people in the audience stand up and I'll memorize their names or an audience will give me a hundred words or a hundred numbers and I'll recall them forwards and then backwards. But I always tell people, I don't do this to impress you. I really do this to express to everyone what's possible because the truth is every single person who's listening to. This could do that in a lot more. And they're probably thinking, no, I'm too old. I'm not smart enough. You know, I didn't do well in school or whatever it is, but the truth is we just weren't taught. If anything, we were taught a lie. And for me lies stand from me, do as a lumber of acronyms, I tend to obliterate a lot to make it very memorable. A LIE stands for a Limited Idea Entertain, limited idea entertain. So it's not true that you're not smart enough and that you're too old or you're not capable of it. It's just, we weren't taught how to do these things. Cool. Taught us what to learn, what to focus on, what to remember, but not what were the classes on how to learn, how to focus, how to remember. And the reason why I noticed this is possible is because I grew up with some pretty severe learning challenges. When I was five years old, I had a traumatic brain injury, very bad fall. And I had learning issues, focusing issues, poor memory took an extra three years to learn how to read when I was nine, the teacher pointed to me in front of a whole class and said, that's the boy with the broken brain. And that label became my limit. And it's interesting. You know, my teachers would have been surprised if I would have wrote a book, you know, read a book much less wrote a book. And, um,
Today I want to talk about something that I get asked about from time to time from many people. And they also want to know about what the impact of COVID has had to some degree and where we're going. So I chalk that up to be essentially a conversation about market insights and opportunities. And so I thought I would touch on some high-level stuff, but stuff that is usable information that you can take away and apply to your investment strategy today and going forward into 2021. And I think this is an important topic because a lot of people are trying to understand what is going to happen in 2021. As we go into a new year, having now gone through an election with potential changes to tax implications for real estate investors. And I don't want to get into a tax conversation today, but I do want to talk about some of the trends that are going on. What's happening to home prices and home values. Will they continue to rise? What might be driving that some of the trends and demographics that are going on and, uh, talk about some of the fastest-growing us metropolitan areas where migration patterns are going, what's happening to rents around the country. Maybe we'll just touch upon a few macroeconomic variables, and I'll just leave you with some insight as to opportunities that are on the table and coming up. So with that, let's talk about some market insights and opportunities. Download your FREE copy of The Ultimate Guide to Passive Real Estate Investing.
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So as many of you know, I'm pretty much an ongoing perpetual bull in the real estate market. And what I mean by that is rather than being a downer, being a bearish person, thinking that the real estate market or the housing market is going to go down or crash. I don't look at it that way because I look at real estate markets as being very, very granular. I look at them as being local markets. Now, sure. There are some macroeconomic factors like interest rates that will affect investors and housing because the affordability of real estate is definitely being affected by interest rates. And you know, that affects your monthly payment and that's what we buy on. But aside from some of these macroeconomic factors, generally speaking, you will always find good opportunities out there in different markets. Those markets change, you might have to change your market or your investment strategy, but those opportunities will always be out there in real estate. So whether that's in one particular market that you're in today, maybe it's your market or another market tomorrow, you will find opportunities by changing markets, changing areas within those markets, and looking at different neighborhoods, the opportunities are out there. This is why I believe that you can always be a real estate investor. The deals are there. It's just having the right team, knowing what to look for, and putting in the effort to find those opportunities. And that doesn't necessarily mean it's difficult, especially if you know what you're looking for and you have the right team working with you.
So let's start off with some market insight. Let's talk about some national trends. We all know that home prices have been driven up and have been going up steadily for many, many years more so over the last two to four years, depending on what market you're talking about. But the national trend has been that home prices have been driven up. Now, there are many factors driving this,
Hello, friends and welcome to another episode of Ask Marco. Today we have a great question here, and it comes in from Shaw. And I know we don't talk about insurance and umbrella insurance, all that much on the show. We do touch upon it. I've had some really good guests over the years, talking about insurance and the intricacies and the ins and outs of it. But how do you apply that when you have an asset protection structure in place, which everybody should have, and everybody needs. So this is in a way, a very general question, but he has a very specific scenario and the way Sean set up his entities from an asset protection perspective was very well done. It's probably one of the best structures in a very common way to do it, but his question revolves around applying umbrella insurance, which I think is a good idea for everybody to have. So Shaw writes and he says, hello, Marco, your podcast is one of my absolute favorites for passive investing and has answered numerous questions. I have asked other experts and they have not known the answer. Well, thank you so much, Shaw. Um, I can't take all the credit, but thanks. So I come to you with one of those lingering unanswered questions regarding umbrella insurance. Oh good. Your recent podcast on asset protection was incredibly helpful in trying to determine how to structure and best leverage the entities we have in place for future scalability. We have an LLC, a commercial umbrella, and personal umbrella policy, and a living trust before your earlier podcast. I was not sure how these entities should work together or what I might still need. I believe I will actually need two to three LLCs holding titles because we have 10 properties and a Nevada and Wyoming holding company that would own the LLC and itself be owned by our living trust. That is a brilliant structure. You're doing extremely well with what you just described in that hierarchy. And you can even get more granular than that, but that is fantastic. So my question is on how to best insure this structure. My insurance agent has told me I need a separate commercial umbrella for each LLC. If I create a holding company for the LLCs can. And should the holding company be the one carrying a large commercial umbrella policy, or do you recommend smaller umbrellas? Like one to $2 million for each LLC holding title? I currently have a $5 million commercial umbrella policy and a $3 million personal umbrella policy plus $1 million on each of the properties, individual policies. So for those of you listening, he's referring to the liability coverage of these different policies. So the 5, 3, and $1 million, he talking about liability insurance. Thank you for your opinion and guidance on this question.
Okay, Shaw, I'm going to do my best to answer this question. It may not be a complete answer that you definitely need to work with your insurance agent and a competent and knowledgeable insurance agent because not all insurance agents understand how to set up these umbrella policies, the way they should be for real estate investors who have an asset protection hierarchy like you have. And it's really not that complicated. It's just some insurance agents just don't offer it and some companies don't offer it like State Farm. One of my insurance companies, they're not really familiar with this commercial umbrella policy structure. And in some cases, it's not something they offer, but they do have it. It's just maybe not what you need. So let me take a stab at this. First of all, congratulations on what you've built and the structure you have, keep on building it. And certainly, let my team know how we can help you with that. So just some quick definitions to throw out there for people listening. So they have an idea of what's going on here. A personal umbrella policy provides an additional layer of liability coverage above and beyond the liability limits that you have in your existing policies. Now,
So today we're going to talk a little bit about something that a lot of people are talking about today. And I could literally spend hours if not days on this subject, not just by myself, but bringing on guests ranging from economists like Peter Schiff or Mr. Yoon from the national association of realtors all the way through to, well, you name it. You know, people who are making predictions with crystal balls or people who are actually reading the tea leaves and looking at data and trying to forecast where we're going. And there's a lot of common denominators, a lot of common data that point to the direction we're going because these are essentially trends. And a lot of it's very strong. So I think there's a lot of truth in most of the information out there. So I just want to provide a little bit of commentary and color on the US housing market, even though there's really no such thing as a US housing market. Uh, it all real estate is local. I have to basically just keep reminding, you know, my audience and listeners here about the fact that real estate is hyper-local. It's not just local because you can't look at a metropolitan area or even a city for that matter. Sometimes you have to break it down into neighborhoods or even smaller, but, you know, everybody's concerned about housing and there are people who are sitting on the sidelines thinking that we are heading towards a housing crash. And I don't think there's a lot of truth in that. And there's a lot of reasons for that. But, you know, there are markets who are experiencing price declines, and these are usually the markets that are very, very heavily overpriced. They are on the flip side to say it another way is they're very unaffordable. And these are the big markets like San Francisco and parts of the Bay area, New York, especially the inter-core and Manhattan, where things are ridiculously overpriced. A lot of coastal markets are very much overpriced and unaffordable, but the question is, is what's keeping the prices afloat, why aren't prices coming down. And that's what I'm going to comment on a little bit today. So with that welcome new listeners, remember to subscribe and, you know, we're being heard around the world over 150 countries. We have hundreds and hundreds of thousands of downloads on an ongoing basis and our total download count as well into the millions at this point. So I appreciate all of you for tuning in subscribing and listening and putting up with me. So anyway, let's talk a little about us housing and the coming crash, or is there one?
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So as of now, the housing market remains hot. It's a hot seller's market across the country. Pretty much everywhere and annual price growth has reached a record and inventory continues to fall. And that's really a problem because that is just creating a very tight squeeze on buyers. It's making it hard to find inventory and it's pushing prices up and therefore it's actually dropping the affordability in some markets, but there's actually a counter-argument to this as well, which we'll get to here in a minute. These record-low mortgage rates and the shortage of inventory has kept the US housing market very strong with respect to buyer demand and strong housing demand pushed by the pandemic is driving prices through the roof here in 2020. So both prices and sales are surging month over month and they're breaking new r...
Today's question is very quick and simple. And so I'm going to give a quick, simple answer. And interestingly enough, this is not a question that comes up very often at all. And the reason is, is because the question has to do with something that is 27 and a half years down the road. So John writes in with a question and he says, I've been searching for the strategy planning for approaching end of depreciation, life of rental property. 27.5 years was always so far out there. I didn't expect to still have the property as you get into the twenties, meaning 20 years and on of ownership, not your age of twenties, should you start looking to exchange the property or just disregard and only look at the income potential though, there will be similar units, but at higher-end depreciable cost basis.
So good, good question, John. The answer to the question is really two parts. Really, it depends if you've held a property for 27 and a half years, which by the way, for listeners that are not aware, the IRS allows you to depreciate the improvements of your property, which means everything, but the dirt over a 27 and a half year period, and this depreciation is essentially a phantom write-off. It means you can deduct it from your taxes, your income, your passive income each and every year. And it lowers the taxable income from your property. Now, although it's not actually lowering the income in dollar terms, it just looks like it's lower on paper. So you don't have to pay tax on that. What it is doing is it's giving you essentially a free write off to lower the tax impact, or probably even eliminate the tax impact from the income coming from that property for 27 and a half years. It's a beautiful thing. It's a powerful thing. It's a great thing that the IRS or the tax code allows us property investors, real estate investors to do with our income properties. It's a beautiful thing. Now what happens is after 27 and a half years, the depreciation has gone. You've effectively written off the entire property, the improvements, and now going forward, you continue to get the cashflow. You continue to benefit from the property. Nothing really changes other than the fact that you lose this depreciation tax write-off. So you have two choices. One, you sell the property well more specifically, you wouldn't just sell it for the sake of selling it. You would sell it under a 1031 exchange, meaning you can sell it and have a tax-deferred exchange and use that equity in the property to buy more that you could leverage. You could finance. You don't have to, but generally speaking, you're going to build up or leverage up from that initial property. And what that does is it gets rid of the old property, but it allows you to step up or move up into more properties, probably increasing your cash flow and you don't lose any equity because all you're doing is moving equity from that first property that you were depreciating for 27 and a half years into two or more properties elsewhere or in the same market. And now you start the clock all over again. You now start that 27.5-year clock on depreciation, right from the beginning. And now you have those phantom deductions once again, but this time probably multiple properties and you have the multiple income streams. That's generally speaking. Each individual situation is different. And you need to certainly talk to your tax advisor about what makes the most sense, but conceptually and fundamentally, it really comes down to a, do you need that tax write off? Do you need the depreciation or are you happy with the portfolio of properties that you've built that you now have that has given you a passive income stream? Because you've been investing for however long, 10 years or more. I mean, if you've got the property for 27 and a half years, you've clearly started a long time ago and you probably have a lot of property under your belt and you have a good passive income stream.
Today's question comes from Jorge and he's really asking about being unemployed and investing during COVID. His question is I'm recently unemployed due to COVID and want to start investing in passive real estate. I heard about the government allowing COVID impacted people to pull up to $100,000 from their 401ks and retirement accounts. And I want to use this as startup funding. How feasible is it to get financing without an income or job? I have an 800 plus credit score.
Well, Jorge, I appreciate the question. You've got a couple of things in here first and foremost. I want to just apologize for the unemployment due to COVID. I feel bad. This has literally impacted multiple millions of people and, uh, for some people it's going to be permanent unemployment or displacement for others. It's going to be temporary with tourism and the service sector being impacted the most. I can understand how this would affect anybody's ability to not only live from month to month, but also qualify for financing when you are focused on building a real estate portfolio. So that is a subject for another day. But for now, to your question about being unemployed and investing during COVID, you've got two things going on here. First of all, let me just quickly touch upon what they call the CARES Act. So what they call section 2202 of the Coronavirus Aid Relief and Economic Securities Act, which is just a long title for the short acronym CARES. So I'm sure you've heard of it as the CARES Act. So section 2202 of that basically provides a special distribution option and a rollover, rule for retirement plans and IRAs. So what it does is it expands the permissible loans from certain retirement accounts, which means that essentially you can lend to yourself, you're essentially borrowing from your plan. And what that section allows for is distribution options and favorable tax treatment for up to $100,000 of what they refer to as coronavirus related distributions from eligible retirement plans. In plain English, that just means that if you qualify which most, if not many or all people do, you're able to borrow up to $100,000 from your plan without paying a penalty or a fee. And you are able to repay that back in part or in whole over the course of three years. So for someone who has a situation, a financial situation or hardship, and they need, they need to tap into that in order to be able to survive or get by or hold them over. This is a great option or opportunity that has been passed as part of the CARES Act. The key thing to keep in mind here is that although you can repay part or all of it back over the course of three years, there may be tax implications and penalties. If you don't repay the full amount after that three-year period. So my suggestion there is to talk to your tax professional or tax advisor because these laws tend to get amended and changed, especially now in this very fluid and dynamic environment. So what they have as one thing may change tomorrow, I highly doubt that this is going to be changed in the negative, meaning that if any changes come along, it'll probably be very lax and they'll extend the term or what you're able to do with it. So I don't foresee it being constricted or tightening up. I think if anything, it's going to be relaxed and loosened and that's to your benefit. So, all right, I just wanted to touch on the CARES Act and how this applies to people listening to this because if you have a 401k or an IRA or some other retirement account, you may be able to borrow monies from that tax-free fee-free for up to three years, possibly more and up to $100,000. Okay. With all that said your real question here is how do you qualify for financing without income or a job short answer and long answer. Short answer is, generally speaking, you can't, but the longer answer is if you're talking about conventional financing, a Fannie Mae, Freddie Mac loan, basically what is widely used and the largest,
Today's question comes from Rose and she says, hi Marco. I have been a subscriber for over a year and love your podcast. Thank you. I was hoping you can answer my escrow related question. I am a relatively new investor for one and a half years. I bought a three-unit property in Massachusetts in April 2019 four months ago. The loan servicer sent me an annual escrow analysis with the projected shortage that I paid. Today, I've received another letter demanding another check. Basically every time I managed to accumulate some cash, I have to give it interest-free to the mortgage company. Question, is it even worth it to try to handle the property tax payments on my own? If that path is not worth exploring, what can I do on my end to better manage the escrow? Thank you in advance and please stay safe. Sincerely Rose.
Rose, thank you for the question. Okay. You've got a simple question and I'll give you a simple answer, the best way to manage your property taxes, in my opinion, and probably in the opinion of many other real estate investors is simply this. Most, if not all lenders offer and actually encourage you to use their escrow services. So they collect the property taxes and the property insurance for the property that they have a loan on a lien on it's in their best interest and it's for their protection to make sure that the property is insured and that it doesn't get foreclosed on because you have neglected to pay your property taxes for multiple years. So it's not only in your best interest, but it's especially in their best interest because let's face it. They're taking on most of the risk. If they're giving you a loan for 80% of the property, and you're only putting 20% down, they're shouldering or carrying 80% of the risk and burden on that property. And on top of that, they're not even getting any of the benefits from the property such as cashflow equity gains or tax benefits. So they really want to make sure the property is protected. That's why they provide this service of escrowing, the property insurance, as well as the property taxes. Now, if they're doing that for you and they're doing it at no cost, then why not take advantage of it. And this is just what I like to do. It just takes away that hassle and the management of it completely, because what they will do is every single month, they will tack on the portion of the property taxes and insurance, one 12th of it onto your principal and interest payments. So what they call PITI - Principal Interest Tax Insurance, the PITI payment is your principal interest tax on a one 12th of a year basis. So every time you make a mortgage payment, you're paying one 12th of everything for that year. And that just makes it very brainless. They just hold it, they collect it, they hold it, and then they pay it for you. They will pay it directly to your insurance company. Well, I was going to say their escrow, but it's essentially your escrow. They're holding it and they'll pay the property taxes directly to the County each and every year. So to me, that's a great time saver. And if nothing else it's worth it just to eliminate the hassle and have them manage it and account for it and report it on each and every monthly statement. So the question is why not the fact that you can flip that question around and say, well, why would you want to manage it on your own? And the only thing I can think of that you're thinking of in order to do it on your own is that if you have the cash in hand, you could put it to better use, or you could invest it somewhere or put it into a savings account or something where you get interest on it until it's actually due and payable once each and every year. Well, the reality is, is I'm not sure how much you're going to be able to do with that over the course of one year from an investment perspective. And maybe you have access to some great investments that provide very healthy returns. And if that's the case great,
Welcome to another episode of Ask Marco, and I really appreciate you being here. I enjoy doing these Ask Marco episodes. I wanted to really just answer people's questions and get back to everybody on the questions that I get asked sometimes frequently because I know that if one person is asking a question, there's probably a lot of people out there thinking about the same question. So why not answer it for everybody on that note? Thank you for submitting your questions. Now today's question comes from MJ and MJ says, hi, Marco, like many listeners. I recently came across your podcast and love the concise and to the point information, I even spoke to one of your advisors. Well, thank you for that, MJ. So your question is I'm looking to buy a second home slash vacation rental, and we have enough cash to put down 20%, but I'm wondering if it's worth taking out home equity on our primary and put it to work and keep our cash in stocks and other investments. Thank you.
All right, MJ, it's a good question because I think whenever we have multiple options, we always sit back and think about which of those choices are the better, more prudent choice. In other words, which one is going to give us the greatest return and put our money or our equity to work the hardest for us. So at the end of the day, it's a matter of just laying out your options, running the numbers, and considering what the short-term and long-term gains are from those choices. So before I kind of give you an overview of what I think, let me just, first of all, quickly comment on your choice for a second home and vacation rental. I've done a couple of podcast episodes, one actually not too long ago, I think in the last month or two about this. And I don't remember the episode number, but I do remember talking about, first of all, second homes are not necessarily, and usually not investments because they're really a place for you to go for a part of the year each and every year, and then ideally, and hopefully you can lease it out. So I'm assuming what you mean here is that it's a second home, but really it's a vacation rental that you're going to use from time to time as a second home. And if that's the case, then you're talking about something like a short-term rental, like an Airbnb. I went into a great amount of detail about that again, just a couple of weeks ago. So maybe listen to that episode, but just understand the pros and cons of having short-term vacation rentals, because it is a business. It is operation intensive. It is very much dependent upon great locations and it could be impacted by local politics, local regulations, as, as things like black swan events or global pandemics. So keep that stuff in mind. Now, to your question, the answer is, it really depends. And it truly does because the first question is what are all your options? I mean, you're looking at a vacation rental, or it could be any piece of real estate for that matter. That's all well and fine. But if you're looking at that as one option and then keeping your cash in the stock market or what you refer to as other investments, the question is what are those other investments? The general categories are essentially equities, which are stocks, any kind of stock on the stock market, and that could be public or private. And then you've got fixed income vehicles, which are essentially debt like promissory notes, something that we also have been offering quite extensively this year. You've got just plain old cash, which is not an investment. It's just money in your pillow or cash equivalents, which could be just parking your money in a savings account, which is a losing proposition, or you've got real estate. And then you've got commodities. Now, commodities don't necessarily kick off income like real estate does. So ultimately real estate is probably arguably the best investment from this list because not only is it a hard asset,
Welcome to another episode of Passive Real Estate Investing. I'm your host Marco Santarelli welcome to the show. If you're a new listener or you haven't subscribed to the show yet, remember to click that subscribe button. I know there are a lot of people around the world, particularly in the United States that listen to this show and actually on a regular basis on and off, but they don't actually subscribe. They just catch it when they catch it, it would just be great if you subscribed and listened to it on your Android or your iPhone or iHeartRadio or wherever it is that you listen that way, you just never miss an episode and it's always there. And it tells you when the new episode has been uploaded.
Anyway, one quick announcement before we get to today's topic, which is all about how to prioritize the calculations on a Pro-forma on a property Pro-forma. And it's not just to prioritize them, but what does it mean? And what do I look at? What order do I look at them in? What's important to me. I'm going to share that with you today. But before I do that, just a quick announcement, this is more of a heads up, not an actual it's ready to go, but we are on the cusp of really seeing Norada Real Estate Funding. It will be a funding arm of our business, a separate company under the same brand that will allow you to essentially get an unlimited number of mortgage loans. So if you are hitting that 10 mortgage cap, that cap that Fannie Mae and Freddie Mac have in place that don't allow you to have more than 10 conventional loans with them, then you are going to need an alternative source of mortgage financing. Well, what if I could provide a 30 year fixed rate mortgage at a very competitive rate, very close to and similar to the conventional loans that you can get through Fannie and Freddie? Well, that is available here now. And today, it's just not announced. It's not on our website. We're still putting the pieces of the process in place here in the back office, but it will be coming out very, very soon, probably by the end of the month. If all things go well, knock on wood.
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All right, with that, let's talk about property performance and how to prioritize. What's being calculated on there when you're doing your due diligence and analyzing a property, whether it be in your backyard or across the country. Now, this is an important thing, and it's really a topic I never went too deep into in a previous episode, but I think it's about time that I've made at one of our main episodes here. And this really all came from an email that I got from Corbin, who was asking me a question, essentially, an Ask Marco question.
And I thought, well, you know what? This is actually a good topic. So I'll read you the question here. And then I will dive in. So Corbin writes in and says, when looking at a Pro-forma, there are so important calculations to pay attention, to and analyze when looking at the debt service coverage ratio, cash break, even ratio, loan, constant cap rate, et cetera, which would you rate from most important to least, for instance, I am looking at a property where the loan constant is a tad bit higher than the cap rate. However, the cash break-even point is 85% cash on cash return is 5.17% debt to service is 125%. I'll explain these to you in a moment here. So just hang tight. Corbin goes on to say, even with all these pros,
So today I wanted to pick a quick and simple or easy question because I wanted to just create a quick Ask Marco episode. And the reason for that is because I am very much behind the eight ball today. I fly out tomorrow morning for Baltimore for the think Realty real estate conference. And it's something that they do four times a year in different cities, but because of COVID, they've had virtual events, but believe it or not, the hotel has allowed us to host a live event right there by the Baltimore airport. So if you're listening to this before the event, great, see if you can drop in, you have to get tickets online. And there is a restriction to how many people they can have in the building. But in other cases, this is something they didn't want to give up on because it's their best live event. So I picked a quick question here. Now keep something in mind about the question. Some people send in questions that are very basic, almost like a newbie, like questions. And some people send in very complex or sophisticated questions because they're just had another level in their investing journey. And they're more sophisticated. They have more experience than they've learned, but there's no such thing as a dumb or stupid question. They're all good questions. And everybody is at a different stage in their investing journey, as well as the education and knowledge, that and experience that they've gained over time. Whether you've just been looking into this for the last week or it's been the last 10 years, it doesn't matter. I try to answer some of these questions on the podcast. I answered some of them via email directly, you know, time permitting. And now I'm starting to actually offload some of them onto my team of investment counselors here to help me out with the questions that come in.
So, but today I want to grab a quick question and it is from Leo and he says, Hey, Marco really have enjoyed your podcast. Over the last few months, opened my eyes to a lot when it comes to real estate investing. My question is in regards to financing commercial multifamily properties, I've noticed in the past that several six plexes and eight plexes were advertised on your website, how would I go about getting financing for a six-unit or eight units, small apartment building. I'm not sure if you have already covered this in one of your earlier episodes, but if you can answer this, I would certainly appreciate it. Thanks so much, Leo. You're welcome Leo. So here's the simple answer. First of all, I want to say that we don't often have anything more than a four-unit. We do have a peppering more. So this year actually have 6 unit 8, 12, and 10 unit property. So these are just small apartments. They're basically 6 to 12, maybe 14, 15 unit properties. Talk to your investment counselor here. If you're interested in that because there aren't a lot of those. And when they do come up, they will often come up quickly. When we just put them in front of the people who have interest in something larger than a four-unit. Now regarding the financing, as I've mentioned in the past, anything larger than a four-unit property is considered commercial property in the eyes of a lender. It's still residential. I don't care if you have a 500 unit apartment building, it's still a residential property, but from a financing perspective, you're dealing with a commercial loan from a commercial lender because it just falls under different guidelines. And the main reason for that is because what is defined by Fannie Mae and Freddie Mac in terms of loans, they basically call anything that is one to four-unit in size, a residential loan. And then anything outside of that, their definition is it's a commercial loan. So having said that, all you need to do is talk to one of many, many, many dozens, if not hundreds of lenders in the country, small and large, that deal with commercial lending. And often these lenders will lend directly to your LLC,
Welcome to another episode if you're new to the show, remember to subscribe because I would hate for you to miss a future episode of the content that we cover. We have passed the 300 episode mark over the last five-plus years. Yes, it's been five years. We are heard around the world in over 150 countries, but mostly in the US Canada, Great Britain, and Australia. That's the bulk of our market.
So anyway, today I wanted to talk about the predictable income that you can get from promissory note investments. Now, why am I talking about this? Well, recently I've been getting a lot of questions, even from seasoned and accredited investors about promissory notes. They have an understanding of what they are and how they work. But some of the questions that I've been getting have just led me to say, Hey, I've got to record an episode about this, so I'm not going to make it a long episode, but I want to give you some content about promissory notes and what they are and what they're not.
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And this was our sister company, Norada Capital Management has been offering throughout this year. And I think we're on our sixth or seventh round of offering note investments. That average out to be about 15% per year, paid monthly with auto-deposit into your bank account. So they've actually gone up to higher than that. I can't remember what the average was, but right now we have offerings that are going at a 16.7% average rate of return per year in terms of interest. And these are on three-year notes and I'm getting people asking me questions that seem to be coming up over and over again. So I thought, Oh, this is a good opportunity to record an episode on it. So let's just break it down and peel back the layers of the onion here. So what is a promissory note? Well, very simply put, it's just a written promise to repay a debt.
It's a contract, it's a paper instrument, a financial instrument where one party, who's the issuer also known as the maker of the note. They make a promise in writing to pay a fixed amount of money to the other party, which is the payee at some sort of agreed upon the future date, and with payment terms, that may be simple interest and it could be paid monthly. It could be paid quarterly annually in one lump sum at the maturity of the note, there are many ways to create a promissory note. So there's no standard one way, but if you're familiar with mortgages mortgage notes, then you'll understand that there's a monthly payment because the lender or the bank that gave you that mortgage, that loan on your property, they're requiring you to repay that each and every month with a payment. Now, in those cases, it's principal interest, but it doesn't have to be, it could be an interest-only note if you remember that from back in 2005, 2006, 2007, there were a lot of interest-only loans, and that's just one variation.
But the main feature of a promissory note is it's a written document. It contains a clear and unconditional promise to pay a specific sum to a specific person at a particular period of time or on a particular date. It's essentially clearly defined. It is typically drawn up and signed by the maker. The person issuing the note. So they're essentially selling quote-unquote, that note to you, the person who is the payee or the person funding that note. So the names need to be specific. Of course,
Today's question comes from Melissa and she writes in and says, hi, Marco, avid listener here and second time, I'd like to ask you a question. I've heard advantages of being an accredited investor, but how do I get to be one? Specifically, I'd like to know about the option of having a net worth of a million dollars. Since my primary residence is not included. How about the cash-out refinance pulled out if it's put away in savings, can that be included in our net worth? Why do syndications prefer an accredited investor? Thank you for all the information.
So, Melissa, thanks for the question. I had to actually read this twice because I thought it was a pretty smart question to ask. I never really stopped to think about pulling equity out of your principal residence, which is not included in the definition of being an accredited investor and then parking it away in savings, which by definition contributes to your overall net worth. So to give you a ridiculous, but hypothetical example, if you had a $10 million home that would not qualify or count towards the definition of being an accredited investor, but if let's just say you didn't qualify as an accredited investor with a $10 million home, because you just don't have the income or the assets around it, but you pulled out, let's say one and a half million dollars of equity and parked it into a savings account as liquid cash that technically qualifies you as an accredited investor. So let's talk about the definition. Well, let's start right there. First of all, the definition of accredited investor is essentially someone who either a, has a net worth that exceeds $1 million. And this does not include your primary residence. So you cannot include your principal residence. And this is why I thought her question was kind of insightful or at least very creative. So that's the first definition or qualification criteria is you have to have a net worth that exceeds $1 million, or if your income exceeds $200,000 per year over the last two years or $300,000, if you filed jointly with your spouse over the last two years, then you qualify as an accredited investor. And by the way, the 300,000 doesn't necessarily mean combined. It could be just one individual or a combination of the two, but in essence, the combined income between you and your spouse. So it's either, or, and this is really the definition from the SEC, the Securities and Exchange Commission. So under what they call Regulation D as in dog, under Regulation D to be an accredited investor, you have to meet one of these two criteria. There are some other rules and exceptions and ways to qualify, but generally speaking, this covers most situations for most people. Most of the time, it's really one or both of these two items. So that's the definition. Now I got thinking, why was Melissa asking this question? I have to imagine this because our sister company Norada Capital Management has been offering on and off for years, especially this year, we've done five or six rounds of offering short term promissory notes as an investment, but you need to be accredited to qualify, to be invested in one of those note offerings, which is pretty lucrative because the returns are up to 16.7% per year interest on those notes. And they're typically a three-year term three-year note. It could be shorter. And so, unfortunately, I can't take someone into that and offer them or sell them a promissory note unless they're accredited. So I'm guessing that that spawned this question. So does the cash out from your principal residence qualify? I can't say definitively 100%, but just based on what I know and what I'm reading in terms of what's on the SEC's website, it would appear that the cash-out refinance, meaning pulling equity out of your principal residence and parking it as savings meets the qualification criteria of it contributing to your overall net worth. Now you asked another question, you know,
So today's question came in this afternoon, shortly after the release of my episode this morning titled the real returns of real estate investing. Now as a side note, I want you to know that you should really listen to that episode. I recorded it relatively quickly, but I spent dozens of hours preparing for it in terms of crunching numbers and working on a spreadsheet because I wanted to make sure that I can illustrate it at least verbally to make the case of how powerful real estate investing really is in terms of its returns. Because at the end of the day, real estate has several pillars of returns, both realized and unrealized. And I explained that in the episode. So most people only look at it superficially. They understand cash on cash return, and they don't understand how really powerful the returns are, even in the first year of investment. And I break that down numerically, but in an easy to follow and hopefully easily digestible format. So it's one of those perennial and cornerstone episodes so that content can live forever because the principles and the formulas don't change. So I believe that's episode number 299 and it's called The REAL Returns of Real Estate Investing. But what's interesting, and this just might be pure coincidence, but I got an email this afternoon from someone I know, I certainly won't mention their entire name, asking a question, and it just seems to be triggered from that episode. So you'll understand what I mean after I go through this question, and then you go back and listen to that episode. So this email came in this afternoon from Larry, Larry. I hope you're doing well. I think you're great. I've enjoyed spending time with you. He writes in and he says, Marco, I think I screwed up huge selling my principal residence instead of turning it into a rental it's in a hip and trendy neighborhood. That's appreciating nicely. It was just built new three years ago when I bought it and moved in, plus the price I'm getting is probably 4% less than I should have. Questions - How do I recover from these mistakes and the psychological torment from making a bad decision? What's the next best move. Thanks much, Larry.
Larry, I appreciate you actually sending this in. I hope you don't mind me actually recording this as part of my episode here, but I think it's a great question because there's a lot to be learned from this for everybody. So indirectly. I think you're helping some people out there. So first and foremost, stop beating yourself up. Just stop doing it because we all make mistakes. We all go down the road of tripping and falling and picking ourselves back up. And that's assuming that you actually made a mistake because I don't have enough information and the facts to actually know if you truly made a mistake. Maybe this is a blessing in disguise. I don't know. I mean, if I had more information, I could probably give you some deeper insight but wasn't a mistake. Let's just assume for a moment that you did make a mistake. It wasn't the best decision. You always have to remember that mistakes have the power to turn us into better investors, much better than we were before. I've only become a better and stronger investor because I have fallen down on my face multiple times and I've made many mistakes and I've lost money multiple times. And it was a painful lesson and I probably could have avoided it if I had the right help or counseling, or just thought it through a little more. But you know, I like to run with all guns blazing, but you have to look at mistakes as something that will make you better and stronger. So it may not have been a mistake, but don't beat yourself up over it. And you know, if you call it a failure, which is an extreme, you always have to remember that we learn from failures. And I've said an early episode, long ago, probably four or five years ago, that if you're going to fail, you want to fail fast and fail forward.
I have an exciting episode for you today because it's something that is actually very important. And it's the real perspective of looking at the returns on real estate and realizing how powerful it can be. So this episode is really about the REAL Returns of Real Estate Investing. You know, there's a famous real estate investing quote, and it goes something like this "Don't wait to buy real estate, buy real estate and wait."
Now for most people. That just makes sense. In fact, it's probably common sense, you know, you buy and hold real estate and you increase your wealth over time, but really let's dive in and look at why the suggestion in this quote is to buy real estate and wait, why do you wait?
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Well, I'm going to illustrate that, but it's going to go way beyond that because what I'm going to show you in verbal format here is the power and the high returns that you can achieve investing in real estate, even in your first year. See, a lot of people don't believe that they can achieve returns in the 20%, 30% or even higher return on investment. I'm talking total return on investment in year one, meaning after 12 months of owning a property, it is doable. Very doable happens all the time. Of course, you want to make sure that you're investing prudently and wisely, not just going after highly speculative plays or being in very undesirable neighborhoods or investing in the war zone. You know, you just want to follow the suggestions, methods, and strategies that we talk about here all the time, not just on the show, but my investment counselors and what they talk about with you as our clients or prospective clients.
I mean, we all essentially drink the same Koolaid and follow the same investment philosophies and strategies here. So they are sound, tried, true, and proven, and they work virtually all the time. So if you stick to that, you have a formula for success. Now let's talk about the real returns of real estate investing. Basically, there are three areas that generate returns for you as a real estate investor. And this is what makes real estate such a powerful investment. So the three dimensions of real estate as an investment are income, equity, and appreciation. And I know I've talked about this on and off over time, over the last five, six years, uh, in the acronym IDEAL and that is I.D.E.A.L. You can obviously see that three of those elements are in here, the income, the equity, and the appreciation. What I'm not talking about today is the depreciation, which is a beautiful, beautiful benefit that helps to lower or eliminate the tax impact on the income from the property. And I'm not going to talk about the leverage, but I'm going to make the assumption we're using leverage. So I'll get into that. And some examples here shortly.
So the three dimensions are income equity and appreciation. Now we can break these three down into two general kinds of returns. There are the realized gains or realized returns and the unrealized gains or unrealized returns. So realized gains are realized returns, refer to the cashflow. It's the income, it's the spendable cash that you get each and every month and each and every year, those are realized because it's here, it's in your hand, it's liquid, it's spendable, it's real cash. The unrealized gains are what you gain each and every month and each and every year in terms of equity grow...
Today is an interesting question. Sandy reaches out and she's asking about longterm versus short-term rentals. This is actually a lady who is working with my team right now, and she thought that she would just send me this question to weigh out the options. So she writes to me and says my significant other, and I are considering investing in our first rental property together. Congratulations, Sandy! The investments you discuss and recommend our longterm rentals. We want it to ask your opinion on investing in short term vacation rentals and ask that you contrast the pros and cons of both types of investments. We are currently considering both long and short term rentals in the state of Florida.
Okay, well, Sandy, this is a good question. Now I know a few people who invest in vacation rentals, more specifically short term rentals that they market and advertise through places like Airbnb and a website called VRBO, and many of their properties are doing pretty well. And they do make a lot of money in terms of cash flow, but you know, it's a different type of animal. And I will be honest. I have never owned or operated a short term rental. Now I've stayed in a short term rental. It was actually a newly constructed property. So it was pretty nice, but I've seen others. And I wouldn't say that I'd feel comfortable staying in many of the short term rental properties that I've seen. And that's not to say it's good or bad. It is what it is, but the variety of short term rentals out there are pretty amazing. But keep one thing in mind, um, when it comes to short term rentals, investing in short term rental properties is mostly about maximizing your income done, right? And in the right locations, you can get a very good cashflow from these properties. And in some cases it can be two times, three times, even four times what you would make on a longterm rental. There are some people who are out there just crushing it. So there are some pros and I don't have a major issue with short term rentals, but there are some cons if you will, that make me pause and think twice about pursuing it. Now I have not pursued this Avenue and I am not intending or planning to, and I'll tell you why here in a minute now, when it comes to short term rentals, I'm just going to talk about the pros and cons, because I think most everyone listening to this show understands the pros and cons of longterm rentals. This is kind of just a quick comparison and painting the picture of what short term rentals are going to be like. But if you want to know the pros and cons of longterm rentals, it's more or less just the opposite of what I'm saying here. Just take the flip side of these arguments. So when it comes to the pros at the top of the list is just the ability to have far more cashflow than a longterm rental. So that's really the biggest benefit and the greatest motivator for people to pursue short term rentals is just that higher cashflow, whether it be monthly or annually, another benefit or pro for short term rentals has to do with the flexibility. Now flexibility in the availability of the property and more so for you as a potential vacation spot. So the idea with short term rentals is that you want to have them in the right location. That is a critically important thing. And these are often places that have high tourist traffic. So these are areas that have strong demand because there is something going on there be like Disney world Disneyland. They are located in places where there's always a lot of people coming in to visit, take vacations tourism's going on. So if that's for you and you want to have a place in a location that you plan to visit frequently, well, it gives you the flexibility to have a schedule that you can put you and your family on and visit as often as you like. And then for the days that you are not there at that vacation rental, you can simply put it up on Airbnb or VRBO or wherever it may be,
Today's question comes from John, and he's asking a question about when should he sell his rental property and buy somewhere else? And he writes and says, Marco, I've been listening to your podcast the last several months, you do a great job in explaining the different topics that you bring to the table. Well, thank you. I have a few rentals that I own, and I am wondering if I should sell them as a 1031 exchange and buy somewhere else where my return on cash is better and will appreciate better. How do I determine if you should sell and move on to another area or state? And I am sure you've gone over this before, but can you explain it again or send me the podcast so I can better understand. Thank you, John.
Well, John, I appreciate the question. I believe I have talked about this here and there. I don't think I did a dedicated episode to the subject, although that's not a bad idea. And I think ultimately that's what this is going to become. So you may have actually answered your own question as to the why, and that is the only reason you would sell your rental in one market and then buy somewhere else. Whether it's an area in the same state or outside the state and elsewhere is for either A better cash returns or B better appreciation, potential, or C a combination of both. And often it's because of both. But here is my answer to your question as to when you should sell. First of all, I'm going to just say that generally speaking, you're not going to be selling your properties and not very often, you're not in the game of trading like a stock trader where you're in and out of transactions and you might be in a market and in a property one year and then two years down the road, which in the stock world sounds like an eternity, but in the real estate world is not very long. You're not going to be buying one year and selling next year or the year after unless there are some incredible circumstances that have happened and it is pushing you in that direction. But again, generally speaking, you are not flipping properties. You're not selling your portfolio very often. You're going to build and buy and hold, build your portfolio buy and hold. But there are some times where it makes sense to sell part of your portfolio. That could be one property. It could be a couple of properties, or it could be all of your properties in a particular market and that you move that equity and build up in another market. So for me, there are three situations where it makes sense to sell off part of portfolio and move elsewhere. So the first for me is when there are strong or major market shifts in a particular market. Now, often this has to do with two main things, which are the things I talk about most often. Number one is, are the jobs moving to other markets, meaning that you are losing jobs in a particular market. And that is a trend that has been going on for a while, particularly a number of years. And the writing on the wall is basically telling you that that is not going to change kind of a crazy example, maybe. But if you look at Detroit from years ago, when jobs were being offshored to other countries, and those jobs were disappearing from the Detroit Metro area, that was clearly a sign though, that dragged on for many, many, many years. And it is still to this day, a bit of a problem because of the, uh, support industries around the automotive industry. Now some of it has come back, but when you see jobs being moved from one state to another, IE California to places like let's say Texas, or from cities like Detroit to other markets, such as whether it be Germany, China, wherever, then you have a problem because when the jobs go away, people tend to move to other places where the jobs are located. And that's also the flip side of the equation as to what markets should you be investing in? Well, obviously it's the one that has strong, ongoing and sustainable persistent job growth.
I got an interesting question here recently from a listener who submitted a question, I guess, in the hopes of me covering it as an Ask Marco episode, and for the most part, that's what I'm doing today, but I am just considering this a regular Tuesday morning episode. And the reason is that they are asking a question that basically compares partnering on a bigger deal, which is essentially a syndication, a group investment, or a partnership. Those are all the same thing versus purchasing their own deals. And their question is heavily skewed towards just the tax side of it, but really it's a comparison. And so let me read the email and then I will answer the question that he is asking. So the question comes from Jacob and he says, hi Marco, I'm a big fan of your work. I follow several other big-name real estate investors. One of which is Grant Cardone.
I happen to know Grant, by the way, he's been on my podcast. I've been on his show called Ask the Pros in his studio in Florida. So he and I have had some interesting conversations and a really good debate about the liquidity of apartment buildings versus single-family homes. And we completely don't agree with each other on that, but everything else was just an incredible conversation and a great interview.
So Jacob goes on to say he says, my question is about his opportunity for accredited investors to partner with him on large multifamily unit deals, allowing the investor to take advantage of the tax benefits, appreciation, and cash flow that the property generates for someone like myself who lives in rural America and cannot benefit from steady local property appreciation. It sounds very appealing.
I will address that in a moment.
Recently on your podcast, you have had many discussions on the topic of real estate taxes. I wonder if purchasing my own properties will allow me to take further advantage of these taxes, then investing in something like Cardon Capital. The biggest downsides I see with investing in Cardone Capital or any syndication is one the inability to choose when to sell or cash out, meaning inaccessible funds. And number two, not being able to carry your funds over to another investment when the property does sell, like using a 1031 exchange, which is a tax-deferred exchange of that realized gain coming out of the property. So to summarize, I'd like to better understand the benefits, particularly with taxes of purchasing my own deals over partnering with a large group on bigger deals. I am a heavily taxed healthcare professional employee, just trying to offset some of my income.
Thanks for reading. And I appreciate any feedback you can provide.
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Well, first of all, thank you for the question. So Jacob, you know, for any individual who is a high-income earner and has heavily taxed, you obviously want to look for ways to minimize your tax impact and take as much of that active income and convert it into passive and portfolio income. So you are at lower tax brackets and it becomes more tax efficient. And of course, you convert active to passive income, which is the key and the secret to creating long-lasting wealth. So having said that, the fundamental question you're asking here is, is it better to partner on a bigger deal through a group investment also known as syndication or to purchase your own deals? Well, let's just do a quick recap.
Today's question comes from Carlos and, you know, I love these questions. It just tells me that you guys are listening and thinking and really interested in real estate and real estate investing and what it could possibly do for you and your family and your future generations. The power is there. When you get started, it just feels a little bit slow, but as you grow your portfolio and start to gain momentum, it's very interesting to see how it starts to build and stack, especially when you're looking back after about three or four years, and you've been adding at least one property to your portfolio. And if you're in a good growing market, it really starts to pan out, but it gets really exciting when you start to get to 10 properties or more, but you just build up. And for some people, they can do that in a year or two. And for other people, it takes them literally 10 years or more, but don't compare yourself to other people, just focus on your own personal investment goals and what it is your trying to achieve, because that's going to be different for everybody. And I actually talked about goal setting to some degree on yesterday's Ask Marco episode about Smart Goals. So maybe go back to that and just check that out. Today's question comes from Carlos and he writes and he says, hi Marco. I am trying to build a real estate portfolio and I have some questions. So what's interesting here is he's got four questions. So I'm just going to call these common questions about real estate investing. His first question is, is it better to get a 15 year or a 30-year loan with a 20% down payment in order to get better returns and overall financial deal?
Um, I think I understand what you're saying here. The basic question is really, is it better to get a 15 year 30 year fixed rate mortgage, fully amortized? And that's what the traditional and standard 20% down on conventional financing. Uh, so is it better to get 15 or 30 years? Well, the answer is, it depends. The reality is, is that we all know that a 15-year mortgage can be paid off in 15 years or less. A 30-year mortgage will be paid off in 30 years or less. The 30-year mortgage, in my opinion, gives you far more flexibility. Your monthly payment is going to be lower, but of course, over time, you're going to pay more in interest over the life of that loan. But the question is, is does that really matter with inflation? You have to remember that your monthly payment is fixed. It doesn't change. So the purchasing power of the dollar each and every year becomes lower and lower. So what is essentially, let's say a $500 mortgage payment today in 10 years or in 20 years is going to be somewhat laughable, but it's just not going to have the same impact as what the purchasing power of that same amount of dollars today will be in 10 or 20 years. So you have inflation as your friend. And that is really kind of an interesting thing about debt financing is that it becomes worthless as time goes on. The other thing I like about 30 year fixed rate mortgages versus the 15, is that you can still pay more principal each and every month or every quarter and amortize it just like a 15 year mortgage. So you can still pay off that 30-year mortgage in 15 years or more or less, you can pay it on whatever schedule you like. You have complete flexibility from zero to 30 years. With the 15, you don't have that flexibility. You can pay it off sooner. You could pay it off in 12 years, but your minimum monthly mortgage payment, the principal, and interest payment is going to be fixed. So to give you kind of a real example here, if you look at a hundred thousand dollar mortgage at a 5% mortgage rate, the 15-year mortgage monthly payment, the principal and interest is $791. But if you go with a 30 year fixed-rate mortgage, it's 537, it's a difference of $254. So does that make a difference? Well, it might, it depends on the property. If your true net cash flow on a property is $300 a month,
Today's question comes in from Charms and she writes in and says, hello, Marco, your podcast is practical and with an outstanding delivery. Thank you. Please give examples of SMART Goals for real estate investors. And she says beginner real estate investors that are possibilities for 2021. And in the next five to seven years, for couples who are still working day jobs, what is the average cash flow per unit outside California? So I assume you live in California, which is a very expensive market. Is it a requirement to set up a company before? And when an investor has bought the first rental property, I want to replace my income with cashflow properties and become a full-time real estate investor. Well, that's a goal right there. Congratulations. We also appreciate your recommendations for books. Do you read actual books, Kindle or Audible? I have been listening to Rich Dad, Poor Dad on audible and motivated to grow my real estate education. Also, what personal finance tracking software would you recommend for real estate investors? Thank you, Marco. For the excellent work and helping beginner real estate investors have something productive to focus on, especially in these challenging times.
Well, you're very welcome, and thank you for the questions. There's a number of them here. The overall arching question you have is goal setting in real estate investing. So I'm going to focus more on the SMART goal setting, but just to quickly answer your other questions here. As far as books go, I actually do all three. Well, let's just call it this. I have actual books. I love paper books and I have a lot of them. I just love the feel and the smell of the paper. And I love holding books in my hand, and I like to thumb through them and just read a, an actual paper book. There's just something about the physical book, but I also happen to love eBooks and, don't use Kindle as much as I use the books app on the iPhone and on the iPad. I just prefer that app over Kindle. They're both very good by the way, but I do like eBooks because of portability. I can literally put my phone in my pocket and I can carry around 500 books in my pocket. And then on top of that, I have audible. So I have again, hundreds of audiobooks. So between all of those, I've probably got well over 3000 books and,uI just love books. Now. I haven't read all 3000 books, but I just use all of them, some of them for convenience, some of them for just the convenience and portability of audible books. Listen as you go. So anyway, enough about that glad you're listening to Rich Dad, Poor Dad, personal finance tracking software. I mean, that's maybe a conversation for another day. I used to use Quicken many, many years ago, but I just found it too time-consuming and tedious. I don't bother with it anymore. I just find that a simple spreadsheet to just keep track of your assets and liabilities, you know, from the different properties or companies that you have just thrown into one personal financial statement is just the easiest thing. It's just easier to manage things in a simple spreadsheet. And so I prefer that over tracking software, but as far as tracking software for properties, there are different options out there for that. You could use QuickBooks, you can use Quicken, you could use software, like Stessa, there are other tools as well out there. So believe it or not. I know a lot of investors just simply track it in a spreadsheet. You know, they have their bank accounts, but they track it in a spreadsheet. Um, what else do you have on here? Average cash flow per unit outside California. Okay. So let's talk about SMART Goals. This is actually a simple question but can be expanded and elaborated on in great detail. So let me just tell the audience what I see as SMART Goals. Now, SMART is an acronym I've talked about this actually in a podcast years ago, but specifically what it means is this SMART being the acronym S is Specific, M is Measurable,
One of the common misconceptions about taxes is that it is there to punish us. Guest, Tom Wheelwright, a leading expert and the bestselling author of the Rich Dad Advisors book, begs to disagree. For him, the number one goal of taxes is to incentivize you to do what the government wants you to do; and he sits down with host, Marco Santarelli, to explain why this is so and update us of the current state of real estate tax incentives—from the state to local tax laws and more. He then shares the importance of being accountable and responsible for your tax situations, emphasizing how you build your wealth determines how much tax you have to pay.
Hey, thank you, Marco. It's always good to be with you. As we were talking before we started I just, you know, we're both fans of financial education. We both believe that that is one of the cures to what ails the world right now. So I really appreciate what you're doing.
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I love the quote, “Way more money, way fewer taxes.” If I was smart enough, I would have trademarked that saying, but I wasn't smart enough to do it. My good friend and someone who I respect and admire is my guest on the show. This is his saying. He always likes to say, “Get way more money and pay way fewer taxes.” My guest is Tom Wheelwright. He's been on the show before. Tom is the visionary guy behind multiple companies that specialize in wealth and tax strategy. He loves to show entrepreneurs and investors on how to build massive amounts of wealth through practical and strategic ways to permanently reduce your taxes. He's also a leading expert and the bestselling author of the Rich Dad Advisor book, Tax-Free Wealth, which I highly recommend and it is in its second edition. With that, Tom, welcome to the show.
Thank you, Marco. It's always good to be with you. We're both fans of financial education. We both believe that is one of the cures to what ails the world. I appreciate what you're doing.
Thanks for coming on the show. It seems like we could talk for hours about taxes and all kinds of stuff. I'm intrigued by the pivot you made to your new business and the service you provide to investors and what you can do to help them. Let's start with that. For those people who don't know what you do, give us a short overview of what you do in the service you provide.
For those who don't know me, I can give a little bit of my background too. I grew up in Salt Lake City, Utah. I am a good Mormon boy. I have spent two years as a Mormon missionary in Paris, France, where I learned all about rejection. I loved the French people. One of the things I miss most is being able to go to Paris because Paris is my favorite place on Earth. When I came back, I went to the University of Utah where I got my undergraduate in accounting. I then went from there to the University of Texas, where I received my Master's degree in Professional Accounting, specifically with tax. I spent seven years with one of the largest CPA firms in the world, Ernst & Young, including three years in their National Tax Office.
In fact, when I was there, the last major Tax Act was 1986. I was in Washington DC following that Act and teaching our clients and our CPAs what that was all about. I've been in the heart of the legislation. After I left Ernst & Young, I spent four years as an in-house tax advisor for what was then a Fortune 500 company with a...
Today's question comes from David and he says, hi, Marco. I truly appreciate your show and all the work you do, David. You're very welcome. I read Rich Dad, Poor Dad because of your show. I have been building a team and found an excellent accountant, but want to know more about the legal issues I may come across. And many people have mentioned getting my real estate license with the additional benefits of access to the MLS. However, would it be more beneficial to take property management courses to at least have a base of legal knowledge to avoid expensive mistakes and be able to communicate better with my out-of-state property managers you refer. I listened to some property management podcasts, but they are not very structured.
Thank you again for your time.
David, thank you for your question. This is a good question. I guess let's just boil this down to your core question here and that is, should you be taking various courses? And my answer to that is basically always going to be yes, and I say this for the following reason. My first rule of my 10 Rules of Successful Real Estate Investing is to educate yourself. You always want to be consistently adding to your body of knowledge is going to make you hopefully more intelligent, but if you use it properly and with some experience, it will certainly make you smarter and become more effective and become more objective and prudent and ask more intelligent questions. So whether you are studying to get your real estate license and get access to the MLS, which is always a nice bonus, it's not necessary or mandatory. Don't think that you have to go down that road.
In fact, you don't even need to get the license. You can simply buy and read the books that one would read and study in order to take the test and get a real estate license without actually having the license. So if, if it's the knowledge you're looking for the body of information, just go ahead and pick and choose the books that make sense for you and read them and just learn them, study them. And now this is true for property management as well. The more, you know, the better questions you're going to be able to answer. And you're going to be able to identify problems, be able to determine the size, scale scope, and severity of the problem. You're going to be able to assess it well and quickly along with your property manager or your attorney or whoever it may be that you are communicating with about the situation or problem or issue or opportunity for that matter.
So the more, you know, the more you grow, the more you learn, the more you earn, it's just a good idea to constantly feed yourself good information from different books on different subject matters about different things, whether it be economics or precious metals or accounting or real estate fundamentals for your real estate license or property management, you name it. I mean anything to do with health, wealth, and wellness and happiness. So that's a long answer to your short question. So I would say that just educate yourself in the areas you feel weak or that you need to know more or that you would like to learn and know more about if that's property management. Fantastic. I went to amazon.com. I went to the books section just to make sure I filter everything else out. And I searched for the phrase, property management in quotes. And so I actually pulled up over 2000 results for books on property management.
If that's something you're looking for, the two books that pop to the top of my mind are one from Brandon Turner. It's a bigger pockets book called the book on Managing Rental Properties. This is more about a do it yourself perspective, but it covers a lot of the fundamentals and the important key things that you need to know. It's more than you're going to need to know. Another great book is actually from Ken McElroy. He's one of the rich dad advisors. So if you've already read Rich Dad, Poor Dad,
Today's question comes from Daniel. He says, Hey Marco, I've been considering purchasing a small portfolio of rent, ready properties from another investor, either through a wholesaler or agent, because as a package, they can be purchased at a discount. This is true. Sometimes not always.
He goes on to say, he's looking to purchase three to five single-family homes each with ARVs, or what is known as After Repair Values between $75,000 to $125,000. Okay. Those are interesting numbers. Those are pretty good. I have a pretty good idea of where you're buying those. So what you're not telling me here is whether you were buying and fixing them, or if they are being purchased as rent, ready properties right out of the gate, and you have tenants in place and they are probably under management.
Regardless, your question is, is what would be my options to finance such a deal. Okay. So in summary, you're basically buying a small portfolio of rent-ready properties. You're looking at three to five in one shot, and you are going to purchase these with one loan. So you're looking for financing, whether from a lender or from the seller to purchase this portfolio.
Well, your options, here are your options. Number one interesting thing about this question, by the way, is I'm actually in the process of doing exactly the same thing right now, I'm working on purchasing a five-pack of properties. So the seller is selling five properties all at one time. And although I'm not negotiating a great deal on it, the numbers are very attractive and he's providing me some flexibility in the purchase, which gives me a little bit more leverage, but that just gets involved in seller financing, which is what you're asking about here.
So here's your two basic options. One is seller financing. Two is using a portfolio or private lender, or you could use a combination thereof and get a little creative. That's going to come down to the numbers. If you've got the numbers, the cash flow, the ability to cover larger debt service, then you can get creative and use seller financing to put towards the purchase. In addition to the financing, you get from a private or portfolio lender. So here's basically how it works out. Assuming that the properties, the three to five single-family homes you're buying are coming from the same seller, you can work out or negotiate a deal with that person to have what they call seller financing or a seller carry mortgage, depending on the state that these are in, it is going to be referred to as either a contract for deed or a wraparound mortgage.
Essentially, what that means is is that the seller, assuming they have financing in place and they don't own them free and clear right now would essentially keep the financing in place and extend to you a new loan for these properties. And it figuratively speaking wraps around the existing financing. So they're going to keep the financing and keep paying that financing but extended financing to you under a new loan. So they're essentially back-to-back or much like a sandwich. A contract for deed is essentially the same thing. It's just different terminology. But with the contract for deed, they're essentially selling you the property. In other words, giving you the deed provided that you are paying the debt, servicing the debt that they're extending to you, but they have the right to take the properties back. Should you default so much like any other mortgage? You've got the penalty of losing the property.
If you stop paying your mortgage, but however you structure that it's seller financing. Now, if they own these properties that you're trying to buy free and clear, that makes it a lot cleaner because now the seller, if they're willing to can just extend a loan to you for any amount, for whatever you negotiate. It could be 50% of the purchase price could be a hundred percent of the purchase price. It could be 80% of the purchase price,
I have a special guest back on the show today. We just finished recording an episode and we thought we would talk about the elections that are available to you as a real estate investor that the tax code provides to help reduce, minimize, and potentially eliminate your taxes. And they're referred to as elections. So I have Chris Piccurio back on the show with me here. Welcome back, Chris.
It's awesome to be back again. I'm excited.
So just a quick little intro for you. Chris is the executive officer and the co founder of integrated financial group, and they are a nationally based financial firm and they strive to provide sound financial services to individuals, small and medium sized businesses. Chris, I really enjoyed my conversation with you on the last recording we just did about taxes and it just makes me realize, and it's a reminder of how complex it could be and how deep it goes and the importance of having a professional tax advisor or CPA on your team to help you identify all those tax deductions and ways to minimize, reduce, and eliminate taxes. And on the last episode that we just recorded, you had mentioned some elections and I got thinking, wow, there's quite a few elections. And then you and I identified five in particular that I think are well worth talking about. And I strongly believe a lot of investors are not familiar with all five of these. And so this has become the topic of this episode and that is these five elections that you can take as a real estate investor. So before we dive into that, just briefly, because this episode is going to come out shortly after the first one, just give us a quick overview of who you are and what your firm does.
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Well, I am, again, honored to be on the show, as you know, I'm a listener and, you know, I enjoy listening, listening to, to a lot of your episodes and now a lot of your guests, but, and I am a with Integrated CPA Group, I've been in practice for 18 years and we, what we do is we legally and ethically reduce the amount of taxes our clients pay over their lifetime. And our clients consist of entrepreneurs, real estate investors, and highly taxed households. And we do that using a membership-based subscription model. And so we were very proactive focusing on tax planning and strategy. Obviously there's a compliance component to our work, including tax returns maybe some like bookkeeping payroll processing, but the main focus is tax planning and strategy. And I'm just like this episode, there are so many tools available that we want to take advantage of.
And one of the things we want to consider on a tax return, in general, are the things that are not numbers on your return. And that's so important when it comes to what we're going to talk about today are tax elections. Even what your, a sector industry code is on your tax return is important. Why don't you list as your occupation can be important? So for real estate investors, there are five special election. Some of the elections do pertain to other industries, but five specifically for real estate investors that I think are important that we talk about. And hopefully, the listeners, if they think one might apply to them, could either take advantage of the election and or at least consult with their CPA or tax advisor about it.
So before we dive into those five, you know, we as real estate investors,
We've got an interesting question today. It's really more of a statement than it is a question, but it is from Anders from Denmark. Now stick with me to the end because I've got a quote-unquote free referral or suggestion for you where you can get some unbelievable books for your personal development and self-help including Think and Grow Rich for pretty much free. I mean, if you call 49 cents, really anything expensive, especially for 50. Yes. I said 50 classic self-help books. Then you'll want to stick with me to the end of the next five to seven minutes, but Anders writes in and he says, love your podcast have listened to all of them. Some don't reply to Danish regulation. Those I skip. I have got so much useful information from your podcast. Grateful. Thanks.
Well, you're welcome.
I invest in Copenhagen, myself. I have set goals. So real estate within years will replace my W2. I have read and listened to and educated myself. When I listened to Rich Dad, Poor Dad, that opened my eyes. Now I want to listen to Napoleon Hill, Think, and Grow Rich. There are many to choose from, but which edition is the best or right.
Once again, thanks for the great podcast-Anders.
Thanks for the question. And it actually is a good question because there are different additions per se of the book Think and Grow Rich, which is an absolute classic. And if you get the original book, the one that was written back in 19, I believe it was 1937. Yeah, 37. You're going to find it a little bit challenging to read because the way they used the English language back then some of the terminology and words that they used are very confusing like transmutation as an example. I just remember that off the top of my head, because I struggled with that, but I have good news for you, Think and Grow Rich has a new addition or a new word edition. It's not rewritten. And I'll tell you about it right now. But before I get to that, I just want listeners to know that I'm going to probably put three links in the show notes and on the podcast show notes and on the website, just so you have the ability to link to the following three books. And one is just an amazing, amazing, essential giveaway. So the edition of Think and Grow Rich that I recommend is the one that's called Think and Grow Rich - The Landmark Bestseller, Now Revised and Updated for the 21st Century. So the reason I recommend this is because it has all original content, but the author of this revised and updated edition has actually gone in and updated some of the words and terminology used to make it easier for someone who's reading it today, to understand the new generation of readers of Think and Grow Rich.
And he also has gone further to help illustrate all the principles that Napoleon Hill talks about in the book in each chapter. So he helps to illustrate it because when Napoleon Hill originally wrote the book, he interviewed all the greats back then like Andrew Carnegie, Thomas Edison, Henry Ford, and many other millionaires of his generation to illustrate the principles that he talks about in Think and Grow Rich. But what Arthur Pell Ph.D. did, he's a nationally known author and lecturer, and he's a consultant in human resource management. He is an expert in applying Napoleon Hill's thoughts and principles. And so what he did is he interwove anecdotes from contemporary millionaires and billionaires like Bill Gates, Mary Kay Ash, Dave Thomas, and Sir John Templeton. So that way you have more of a modern perspective and frame of reference. Think and Grow Rich has been known as the granddaddy of all motivational literature.
So that's what I would recommend. And you can find it on Amazon and I'll have a direct link for you in the show notes. That addition was actually published in 2005. I believe I'm pretty sure. And it actually has been the number one bestseller for a long, long time in entrepreneurship. Now, since we're talking about Think and Grow Rich,
Today's question comes from Raj and Raj writes in and says, hi Marco. I am very inspired by your podcast. Very valuable information in each and every episode, he says, I'm taking the equity from my rental property in Los Angeles, and planning to invest out of state, working with your team has been very helpful. My goal is to get to 20 single-family residential homes in the next few years, so I can get the cash flow to be financially independent and retire from my nine to five job I currently have. My question is when I look at a house for sale, mainly when it is out of state, how do I assess if the location is an A, B, or a C, I can currently spend almost an hour by going to multiple local websites to assess income levels, schools, crime, and other characteristics before I'm guessing if it is an A or a C or a B. Is there an easy way to search by location?
Thanks for providing valuable education - Raj.
Raj, thank you for the question, it's a good one, and one that actually kind of miss a lot of people. So the good news is that you can kind of figure this out with the information I'm going to overview for you here. I did actually cover this topic in a very early episode. Um, the fact that if I had to guess, I would say it's one of the first five episodes of this podcast that I did over five years ago. I forgot the title, but essentially it's about grading the neighborhoods. And I do talk about it a little bit here and there. I'll give you a quick overview here, enough for you to essentially assess the type of neighborhood you're looking at. And I will probably cover this topic again in greater detail in a future episode, not just for your benefit, but for everybody's benefit.
So generally speaking, when we talk about the type of neighborhood we're really referring to the grade of that neighborhood and vice versa. So we often call them A's B's C's. And sometimes these, in fact, I jokingly take that as far as calling it an F neighborhood for a failed neighborhood, and that's essentially a war zone. You don't want to be there. In fact, I would never be in a D class type of neighborhood as an investment. And I would argue that you should try and stay away from C class neighborhoods, depending on your strategy. Certainly, a C minus, because that's borderline what I would call, you know, war zone type neighborhood. But again, we're talking about your capital and you're investing it and the safety of that capital, but most people have a general idea of what we're referring to. When we talk about an A versus a B versus a C class grade neighborhood.
Now keep in mind, some people will say it's an A, B, or C property. And although you can talk about the property that way, and often what they're referring to is the neighborhood or the area, not the property itself, but if you really want to be technical and specific and put an attorney hat on and really be analytical about this, you could actually grade a property as ABC or D if you wanted to, as well as the neighborhood, as an A or a B or C class neighborhood, but we're talking about the area right now. And the other thing to keep in mind is that we're talking about something that is mostly qualitative, not quantitative. So you can attach a letter grade, but you can't necessarily attach numbers to these grades all the time. But because of this ambiguity, you know, we're really having to have, or put together a general understanding or a basic overview of what they mean.
So let me give you a quick overview, by the way, you know, when I was saying there's good news and bad news, well, the good news is that you can figure this out. The bad news is, is there's really no one location or website that can just magically give you a letter grade by punching in an address. And if there is one, I'd like to know what it is, but even if there was, I can tell you that it's not going to be completely accurate all the time. It's just like Zillow's estimate it has in many cases,
This is a special episode because we're going to talk about asset protection, but not asset protection from the basics. We're going to get a little more advanced. So I wanted to bring a guest back on that ahead a few years ago, and he is a very smart guy. He's actually one of Robert Kiyosaki's Rich Dad advisors. In fact, he's Robert Kiyosaki's asset protection attorney, a very smart guy that can talk to you about corporate governance and the different states and how they apply to asset protection and how to set up your structure and what to do. What not to do the thing is is none of us want to ever be in a lawsuit and nobody wants to get sued. But the problem, I think some people run into is they know they need to put an asset protection plan in place and they put it off, but they understand why they need it.
And then the day comes where they get into trouble, or they have some sort of lawsuit crop up and they realize, Oh my, I didn't put an asset protection plan in place, or I didn't protect a particular asset or I kind of dried my feet and this is something I should have done. The reality is is that it is not complicated to set up. It doesn't take a long time. It is not an expensive thing to do. And it really is a lot of simplicity. It's mostly paperwork and a couple of formalities and just some renewals that you do every year. And really your attorney can take care of that. You don't even have to do it. You could just put it in your calendar, so you know about it, but what happens if you don't have that in place? So I wanted to bring Garrett Sutton on today and talk to him about some of the stuff about asset protection, and also ask him a few more advanced questions as it relates to asset protection planning and what people should do, and maybe the land mines they step on and the pitfalls they fall into along the way.
So maybe, you know what is the biggest mistake? Let's talk about that. So with that, let me bring my guest on, and I hope you enjoy this episode. And if you haven't subscribed to the show already, please go ahead and do that and let's get started.
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All right, guys, it's my pleasure to introduce a very special guest today. It's Garrett Sutton and Garrett has been practicing corporate law for more than 35 years. He's assisted entrepreneurs and real estate investors around the world and protecting their assets, maximizing their financial goals through his two companies, corporate direct and Sutton Law Center, as you probably know, is a highly sought after guest speaker. And he serves as a member on the elite group of rich dad advisors for the bestselling author, Robert Kiyosaki, and with that Garrett, welcome to the show.
Thanks, Marco. Good to be with you again.
It was great having you back on, it's been, I think a couple of years since I've had you on. So you are long overdue and the whole topic of corporate governance and asset protection never goes away. It's something that we just deal with, whether foreground or background all the time, especially if you're a business for a real estate investor. So let's get into that maybe a little bit more advanced stuff today. And I know you can talk for hours about this, but we're not going to torture you like that.
Torture your listeners.
Torture them either. Let's start off with you. Most people, I think know who you are or at least I've heard of you.
Today's question comes from Jake and Jake says, hi, Marco, thank you for the great podcast I've been listening for several months. Now, I purchased my first two rental properties in June of this year. I also refinanced my primary residence and plan to borrow from my 401k to purchase additional properties. By the end of the year, my goal is to have between seven to 10 properties around the new year with my longterm goal of building a 50 door portfolio in approximately 10 years' time.
That's a great goal, Jake, and congratulations on getting started and having that momentum.
So he goes on to say, I have been researching methods of acquiring additional properties for when my pot of cash runs out. I came across a company called fund and grow who advertise getting business credit cards with 0% interest for one year. I understand the power of leverage. So this idea is intriguing, but I have concerns with becoming over-leveraged and with this method being speculative and relying too heavily on appreciation. Is there a place in turnkey investing with business credit cards?
Respectfully - Jake
Well, Jake, this is a very good question. I understand your concern and your obvious desire to grow your portfolio as quickly as you can. What's interesting about your question is I've received several similar questions from others. So if I don't cover everybody's question that has emailed me about this. The general answer and concept is the same here. So first of all, I like the fact that you use the word speculative because I don't want you speculating. I want you to think logically about your real estate investing, be considerate about the property itself, the location, the numbers on the property, what you have today versus what is expected over the next year or so, just be methodical and thoughtful in your investing.
Don't be emotional or irrational, and you'll certainly save yourself a lot of grief and headache down the road. The other thing you mentioned here is about being over-leveraged and that's actually my concern leverage is a two-edged sword. It's useful. It's powerful. It can be your best friend. It's great when used properly, but it's no different than carrying around a sharp knife or a gun or any other dangerous item. If you don't know how to properly use it, if you don't have the experience or the knowledge or the maturity for it, then you can get yourself into trouble. Now I know many investors who have purchased properties with literally 0% down, meaning that they finance the entire purchase. I've done this myself many times over the years. I did this just last on some property. You just have to know what you're doing and think it through.
And if you've never done it before, it doesn't mean you can't do it. You just have to think about it properly thoroughly and logically, like I told you, but my first caution is just, you know, the danger of overleveraging. You won't get into that problem of being over-leveraged. If you avoid the problem of over-leveraging for the wrong reasons. So know what you're doing and plan it properly because if you know what you're doing, you can get more property sooner and ride that out to the point where you can either pay off the additional leverage that what you use for your down payment, or you can be in a position where you've either an added value or you're in a strongly appreciating area, neighborhood market, whatever it is that you can now refinance and pay off that second loan or that extra leverage with a new first mortgage.
And now you have essentially a stabilized property. That's cashflow positive with only one mortgage on it. And you've paid off the extra leverage that you use to acquire that property. Now, when you do this, you have to have the expectation of paying it off within a certain period of time. And the answer to that is it depends as far as the length of time, it could be two years. It could be as much as 10 years.
Today's question comes from Khayla and Khayla says, hi, Marco, I'm Khayla. I'm a huge fan of your podcast. I've listened to all the episodes so far. Can't wait for the next ones to drop this week. And I have learned so much. Here's my question. My best friend and I are both interested in real estate. We have similar wealth, longterm, and investment goals and are considering going at this as a team. Our thinking is that we can combine resources such as capital to purchase our first few properties and accelerate our success. We are fully aware that doing this without a plan could get messy. So we're hoping to gain some knowledge from you about how to educate and position ourselves for success here. For example, should we set up a business entity and find separate attorneys to represent us? How can we start to think about splitting profit? What legal factors should we consider? I realize this is a broad question that requires a specific understanding of our unique situations, but what we're really looking for is a starting point for us to gain more knowledge that will help us ultimately make the decision about whether or not doing this as a team would work for us. We only want to go about it this way, if it makes sense. So any information you have to offer would be greatly appreciated.
Thank you so much for your time. Khayla,
Kayla. Great question. And thank you for taking the time to write in. So I've been trying to keep these Ask Marco episodes a little shorter than I normally have been recording. I've always had the goal of keeping them from 5 to 10 minutes and I ended up recording as much as 12 to 15.
So with your question, I think I can keep it short. So I think this is great that you're looking to partner with someone who is a friend and hopefully someone that you trust very well. And if this can help springboard you to real estate investing success, great work together, especially if you support each other and you work with each other like accountability partners to keep the ball rolling forward, because you'll probably get more done in a shorter period of time, just knowing that you're both there for each other and you support each other and you're encouraging each other, not just in taking action, but also educating yourselves. So I think this is great. Now there's a saying that the hardest ship to sail is a partnership. So you'll of course want to do this the right way and think about it well and plan in advance.
And so your comment about having an attorney is probably a very smart idea in the beginning because what you'll probably end up doing is forming a company like a limited liability company or LLC. And you're both member partners in that. So that essentially your partnership, two different members automatically form a partnership and the entity you would use could use, I shouldn't say you would use but would be an LLC. That's typically the simplest structure, the easiest formation. It provides you a lot of simplicity and flexibility. Now, of course, you can get complex and it's outside of the scope of this conversation, like setting up a C Corp, but it doesn't sound like that is ultimately the best tool or entity to use. But again, I'm not an attorney and not giving you legal advice. I just going off of what I've learned over the years in my own personal experience, but a great starting point from an educational perspective would be to pick up a book.
You can find this on Amazon, it'll be shipped to you the next day. It's very inexpensive from my friend Garrett Sutton. And he wrote a book called How to Use Limited Liability Companies and Limited Partnerships. the subtitle is Getting the Most Out of Your Legal Structure and it's now in its fifth edition. Quincy incidentally. I'm actually interviewing Garrett Sutton again tomorrow morning. So timely question, but the book really simplifies what you should know about the different entity structures and how they work and the formalities rela...
You know, many of us are fine with paying our fair share of taxes as long as it's legal, ethical, and moral, but really nobody wants to pay more in taxes than they have to. And I personally believe that you should always be learning ways to legally, ethically, and morally save on your taxes because really we don't want to be overpaying. And one of the reasons we invest in real estate, especially income-producing real estate is because it is such a tax-favored asset class. It allows us to reduce and potentially even eliminate at least temporarily if not forever, our tax impact. And it's been a while since I've had my next guest on, he's just a brilliant guy when it comes to taxes and taxation, especially in the area of real estate. So I just thought it'd be a good timing to bring him back on and talk about the subject. So my guest today is Chris. You're going to have to correct me if I pronounce your last name wrong. Is it a Picciurro, but a very clear Picciurro.
But a very clear Picciurro. I've been called worse.
Well, Chris is the executive officer and co-founder at integrated financial group, and they are a nationally based financial firm that strives to provide sound financial services to individuals, small businesses, and mid-sized businesses. So, Chris, I'm sorry for butchering your last name, but welcome to the show.
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Well, it is a pleasure to be here. I'm not only excited to be a participant, but I also really liked podcast. And it's been a while since I've been on. And I think reached out a few weeks ago. Cause I literally on my, on my Sunday run was listening to a couple of your Ask Marco episodes and they're always really good by 90 to 95% of our client base are real estate investors. So I actually always liked listening to those because that's telling me what people are asking. So it's a really good tip for me and it's an honor to be on this podcast.
Awesome. Well, Hey, I didn't know you were using my episodes to help you out, but that's awesome. That's great. Thank you for that by the way. So Chris, Hey, tell us a little bit about yourself and your firm because it's been a couple of years, I think since I had you on. And I think we have a lot of new listeners. So tell us about you and your company.
Yes. So our firm name is Integrated CPA Group. And what we do is we legally and ethically reduce the amount of taxes our clients pay in a lifetime and our clients are entrepreneurs, real estate investors, and highly taxed households. And we do that using an exclusively, a membership-based subscription model. So it's a little different model than most. But we really focus on tax planning and strategy because, with every person's situation, you have a compliance piece, which would be your tax return. Preparation could be bookkeeping payroll. So obviously we offer those services, but the strategy planning and open lines of communications that we've kind of feel like in almost all relationships, communication solves all problems. So we like to be planners. We like to be proactive instead of putting fires out all the time.
Perfect. I love it. That's great. It's an interesting model because so many companies are moving to the SAS model, you know, software as a subscription. And even though yours is really personal service, it's not service online. It's interesting how many companies are going to the subscription model.
Today's question comes from Andrew and he says, hi Marco, thanks for doing this podcast. Can you please do an episode on how to continue growing your portfolio of rentals past the 10 mortgage limit for each spouse? So after 20 mortgages for a couple, I guess that's to imply that we can continue investing, what kind of lending should you take advantage of after 20 mortgages on the way to 100 properties, if you continue acquiring turnkey properties, let's assume the scenario includes continuing to buy properties, using our W2 income and also taking advantage of 1031 exchanges and cash-out refinances, if appropriate on the way to grow from two 20 to 100 properties, at some point in your growth, you may want to pull equity out and it may involve selling a property with a mortgage on it to 1031 exchange into two properties that use a commercial loan. And I'd like to hear how that would play out. One key assumption is I would continue to buy single-family homes due to higher quality tenants and higher rents on average over multi-families.
Thanks, Andrey.
Thanks for the question. So your basic question here is how do I get past the 10 mortgage limit to continue growing my portfolio? So the first thing I want to say is that if you're doing a 1031 exchange into two properties, as you laid out in your question here, it doesn't mean that you have to use a commercial loan. In fact, that is not true. You would still be using conventional financing more often than not unless you've reached that mortgage limit, you're concerned about in which case you're going to use some sort of portfolio lender. So here's the basic rule you are allowed to have up to 10 loans from Fannie Mae, Freddie Mac, basically what we refer to as a GSE or government-sponsored entity.
So Fannie Mae Freddie Mac are basically underwriting or insuring these mortgage loans that you're going to get from your lender. And you are allowed to have 10 per credit score. So you can have 10, your spouse can have another 10. So theoretically between the two of you, you can have up to 20 conventional loans and that now reaches kind of a hard limit and you just can't get any more conventional loans. Why do you want to start with conventional loans? Well, the simple answer is because they are the best. They are typically the lowest rate and they have 30 year fixed rate terms. You could also do a 15 year fixed rate as well, but for most situations, I happen to prefer the 30 years fixed-rate mortgage. So it's cheap money. So if you can get cheap financing and you can get 10 yourself and 10 for your spouse, great, you've got 20 mortgages to work with there 20 slots, if you will, on your credit. So once you fill those 20 slots, 10 and 10, then what do you do? And that's the basis of your question here. So what you would do at that point is one of two things. The best answer is to start working with a lender who does not work with Fannie or Freddie, and they are often referred to as portfolio lenders. And that's because they just have their own portfolio of notes that they service. And they have typically their own funds and their own lines of credit. So they may not necessarily be selling that loan of to another lender or servicer, with conventional loans, the lender will typically at some point, sooner than later, sell that mortgage off into the securities market. And then it becomes just a bundle of mortgages. And that becomes securitized on wall street. And people are essentially investing in that bundle of mortgages.
So with a portfolio lender, they control their own money and they essentially write their own rules. So therefore they can give you virtually an unlimited number of loans. So as long as you qualify or the property qualifies, if they're more assets based, as opposed to personal credit score or credit profile based or income-based, you can theoretically have an unlimited number of mortgage loans from these lenders.
Today's question is an interesting one and it comes from Victor. He's basically wondering what should we pay ourselves from our rental property? Now, this is a good question. And one that will come up at some point in time. It's not a matter of if, but when as you start to invest or continue to invest in real estate, but Victor goes on to say, Marco, I'm an avid listener of your podcast. The content has been very helpful, influential, and actually has helped me structure my first deal.
You're very welcome, Victor.
My sister and I are partners, and just recently closed on our first deal together.
Congratulations!
It is a seller-financed mortgage of three single-family homes. Two of which are occupied. The third will be ready in a couple of weeks. The projected net operating income is about $10,000 a year. This is only deducting principal, interest tax, and insurance, which let me correct you on that. That is not how you calculate an ROI, but I'll get to that after I read your email here. We are managing the properties ourselves. I'm not sure if that is the standard way to calculate your NOI, because I know most successful investors like to factor vacancy reserves for repairs and other miscellaneous categories. But to us, it seems more simplistic at least in the beginning to not spend anything and keep every dollar earned from the rents after principal interest tax and insurance also known as PITI as a reserve for any repairs and also as capital to continue buying more properties. We're thinking when we get 20 properties, we will start paying ourselves probably $150 per unit split between us. Obviously that's $75 per unit.
Everything else, like I said, we'd keep in reserve for all expenses and capital for purchasing. So two questions. Do you think we would be underpaying ourselves or even overpaying ourselves? Question two, do you think I'm oversimplifying the expense part, but not tediously calculating every single possible expense, like vacancies, et cetera. We both have W2 jobs, so we would not be dependent on the rental income, but we do want to retire and live off income from rentals as soon as possible. We're thinking 100 units would allow us to do that. Thanks for taking a moment to read this and I wish you all the best Victor.
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Victor. Thanks for the question.
This is a great question. And there's actually a couple of different topics within your question that I have covered on and off over the last five-plus years on this podcast. But it also just tells me that I should probably go back and cover some of these more in-depth, such as the size of the portfolio in order to achieve a particular income goal. And I will do that. And some other things in here as well, maybe just the basics of how to calculate your net operating income and your cashflow. So maybe I need to do kind of an analysis episode, but in the meantime, let me just quickly answer that your two basic questions here. And then I will take the time to go deeper into the rest of the stuff in other episodes that are more topic-specific instead of these quick ask Marco episodes.
So let's break this down. First of all, how much you pay yourself is a personal decision. So for some people, they're just going to hold off, they don't need the cash. Just like you said, you don't need the rental income. At this point in time, you both have W2 jobs,
Today's question comes from Dale and Dale says, hi, Marco. I stumbled into you and your tutelage. Very recently. I currently have no investment properties, but looking into a duplex in my old college town where our kids might presumably attend in six years, the student population is approximately 50,000. My plan is to buy now cash flow and build equity for six years, then own a residence we can occupy while kids are in school while still renting out the other unit. My question with the revolt and revolution currently going on with the higher education system, as they deal with COVID hotspots, reduced admissions, remote learning, and the ridiculous increases in tuition. Do you think this scenario is a good investment now, later, never?
Thanks for your help in making me feel a little wiser after every episode - Dale
Well, Dale, thank you very much for the question and for your kind words. So your basic question is, should I buy a rental property in my college town? Obviously, you have some connection there and your kids will probably go to school there, I would assume in six years. So here's how I would look at this. This actually is kind of a difficult question. Believe it or not, because there's so many, it depends, but regarding, you know, does it make sense now? Does the scenario make sense today? Well, first of all, you have to do the same kind of market analysis. If you will, that you do with any other investment property. Look at the market, look at the area and the neighborhood, and then the property. So let's just assume that the neighborhood and the market all check the boxes. Okay. So it makes sense that pretty much every level fundamentally, and you're happy with the area and the location, et cetera, et cetera, you know, it's obviously a school district.
So the next step is to run the numbers. You want to make sure that the numbers make sense today from an investment perspective. So if you're buying a duplex, you have two tenants, you look at the gross rents, subtract your vacancy, allowance, your expenses. You end up with your net operating income and then figure out what your mortgage payment's going to deduct that, and what's left over is your net cash flow. So do the numbers make sense today. And then you start to make some assumptions and predictions about the next six years and see if the numbers continue to make sense. And this is where it starts to get more and more nebulous. So as far as this year goes, you've got this covert thing going on and we all know that things are not going to be the same. This fall 2020. The attendance is probably going to be lower.
A lot of students are going to class virtually they're going to be at home. So they're not necessarily traveling to school or living by the schools. And that's a big problem. Especially if you have a rental property that you are depending on students to come and occupy your property. The flip side of that is if you're looking to buy in these areas, and there are people who are selling, it might be a little bit more of a soft market or a buyer's market where you may be able to pick up properties at a better price, because the demand isn't going to be as strong people may be avoiding investing in those areas. And the people who are trying to sell are just going to give in and say, okay, well, I'm not going to get full price. I'm not going to make $300,000 on my property. I'm going to sell it for 280 or 270 or whatever you can negotiate. So I guess it works both ways as a buyer investor. It might be to your advantage as a landlord owner, it might be a problem because you're going to have higher vacancies. So having said that we are seeing studies come out where the effects of this pandemic in the student housing market is certainly having an impact. And we're all expecting fall 2020 to be softer. So property vacancies in student housing last year in 2019 in the fall, the vacancy rate was 5.2%. And this is coming from a study by Ries,
Today's question is a cool one and it comes from Clint and he asks the basic question of how much cash should I keep in reserve for my rental properties. This is a good question. It hasn't come up in a long time. Interestingly enough, maybe I've talked about it on previous episodes, and in terms of my general rule of thumb, I'll share that with you here in a couple of minutes, but let me read his question and give you some comments before I get to that. So Clint says, hi Marco. I've been listening to the podcast for a few months now. Thank you for all the great info and you're welcome my wife and I own a single-family rental home in Kansas city and are starting plans to acquire three to five more properties in Kansas city within the next year and plan to continue expanding our portfolio further after that I've read and heard a lot of various ideas on how much should be kept in reserves to weather unexpected hard times or vacancies.
And I'm curious to know what your take or philosophy is on that. And how do you scale that reserve as you acquire more properties? For example, if I decided to hold six months of reserve on our current single-family residential property, it seems like it would be a significant chunk of idle cash. If I carry that same logic to five to 10 plus properties, and that's a very good point. And that's where you have to essentially determine how much to keep in how much to scale back. He goes on to say for context on our situation, I'm looking into using a heat lock or a cashout refi on our principal residence here in Las Vegas to fund that these next investments since we have equity built up in the home and are currently limited on available cash, I want to make sure I don't overextend and put us into a significant bind.
Thank you again for the podcast, the advice and the time sincerely - Clint.
You're very welcome. So first of all, I love Kansas City, Missouri. I've got five properties there myself, and it has been a very strong market for the last five-plus years. I think it's a great place going forward too. And we don't always have inventory there, but most of the time we have inventory in Kansas City. So if that's a market that anybody's interested in, just check in with your investment counselor here and we can tell you what is available and what's coming up back to your question about how much should I keep in reserve for my rental properties? So this is a darn good question because you definitely want reserves. The question is, is how much and how much is too much. And at what point do I scale that back?
So let me begin by saying that there really is no magic formula that you can use to determine how much you should keep in reserve in your business as a real estate investor. When you rent these properties, the four key factors that you should consider at least at a high level are the strength of the local rental market, the eviction timeline, and cost, which is often state-specific the age of the property and any deferred maintenance items that you're carrying with that property and the type of neighborhood, which determines the general demographics of the tenants that you serve. And therefore what to expect on average over the long term from behavior in that tenant base. So the strength of the local market, generally speaking, the lower, the vacancy rates in a particular area, the fewer in reserve you'll need for future vacancies. And you can find this information online or through the city's housing department.
They typically carry statistics on vacancy rates. And certainly property management companies will know that from the various areas within the market, but you should at a minimum have enough cash reserves to pay for at least a minimum one month's worth of vacancy. And that's normally budgeted into most proformas, you know, by default, we use 5% and you can adjust that up or down on our website. I always like to use 5% is just the starting point and then bump it up....
Today's question comes from Charmes and I hope I'm pronouncing that name properly because I'm not sure if it's French, but in either case, she writes in and says, hi, Marco just found your excellent podcast today. My spouse and I are in the home buying process and desire to be a real estate investor of single-family home rental properties. Is it necessary to be a real estate agent or broker to become a successful real estate investor in other States? If yes, which real estate school can you go to, to become an agent or broker for California? And if no, how can a newbie build a team? As you mentioned in episode 253.
Thank you, Marco, and good health to you. Thanks, Charmes.
Again, Charmes, thanks for the question.
I'm not sure if I pronounce your name properly, but if I didn't, I apologize, in any case, this is a good question because it comes up often. And I used to think about this question a long time ago, myself. I didn't get licensed right away here in California when I started investing in real estate, but ultimately I did. And that was really a recommendation from someone that I knew at the time. And he said, you're kind of crazy not to, even though I wasn't investing in the state of California, but long story short, there were pros and cons to getting your real estate license. And I'm not going to say that it's a good or bad idea. It really depends on what you want. And what's important to you at the time. Right off the top, I will say that if you're looking to invest locally in the state of California and you're going to be doing work within the state of California, then it probably makes sense for you.
If you're looking to invest in other States, then it probably won't carry a lot of weight because you're going to be working with a team in another state and they will be licensed and be your team. If you don't have a license in the state that you're actually working in, it probably doesn't provide you a lot of benefit. Long story short. If you have a license in the state that you are buying property as investment rentals, then it gives you direct access to the MLS. And that's really the main benefit more often than not aside from the money, the commissions, but if you have access to the local MLS in the state or city that you're investing in, then you can find the deals you're looking for, supposedly the good deals. But if you're looking for certain types of deals, it'll give you access to it very quickly. Plus if you're local, it gives you the access to go to those properties and go in anytime you want, because there's going to be a lockbox and you just set an appointment with the listing agent and you can go in and check those deals right away.
So direct access to the local MLS is a huge factor because if you don't have access to the MLS, the multiple listing service, then you're going to have to gain access to it through someone else. Or you're just gonna comb high-level information on websites like Zillow or Trulia or Redfin or whatever It may be. realtor.com. The other benefit of having a license is that you can share in the real estate commission. So the total commission might be anywhere from five to 6%. That's split between the buying and selling agents. I usually three and three. And if you're working with a brokerage, you're going to share in most, if not all, but most or all of that commission. And so you can put that towards your down payment or repairs or whatever you need the funds for. And so having your own license, you can represent yourself and therefore you earn the commission and you could use that towards the purchase and or sale of your properties. I'm assuming you're thinking about the license as a tool and not as a career because a lot of people get a real estate license to become a licensed real estate agent or broker and turn that into a source of income. If that's what you want to do, then you have no choice. You have to be licensed.
We have a very special episode today because we are doing another market spotlight. And as you guys know, we have been in Florida for over a decade, probably close to 15 years. In fact, I remember back when in 2005, we were in Southwest Florida and we were selling a lot of property to clients back then. And it was a great time because these properties not only cash flowed, but we were building new construction homes and we were benefiting from the strong growth and price appreciation. At that time back when there was just all this growth and momentum and population migration down to Florida, especially in Southwest Florida. Well, it seems like history is repeating itself because we are back in Florida, in multiple markets. And as you know, we've been in Jacksonville for a long time, but we have a strong emphasis right now in Southwest Florida. And one of the markets is many of, you know, we are in is Cape coral. However, if you just go 40 minutes North of Cape Coral, there are some other great pockets experiencing growth with new construction homes, such as North port and port Charlotte. So what I am doing today is bringing on our amazing and fantastic property provider down there in Collier County. And his name is Reed.
So Reed, welcome to the show.
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Hey, thanks a lot Marco for having me on today. I really appreciate it.
Well, it's great having you on this episode actually is long overdue because you know, we've got you on board as a property provider and we're working with you and we want to ramp things up because there's a lot of opportunities down in your neck of the woods in Southwest Florida. And your timing is great because we're finding it more difficult to find inventory in other markets where clients want an inventory, but we just can't get it on a consistent basis. So the opportunities down there is we've got great new construction that you guys are providing great rent, strong rent growth. In fact, it's in the top 10% of the country from the data that I'm pulling. There's been strong price appreciation over the last five years, and that is expected to continue just because of the number of people down there. So today I want to talk about the market, the neighborhoods, and the properties that you guys are providing. So how does that all sound?
Let's talk about it. It's a, it's a pretty exciting time here in Southwest Florida, even with all the craziness in the world right now, we're pretty close to back to normal, you know, whatever normal is for Florida.
Okay. yeah, no, Florida's been interesting cause it's just been such a strong state for growth, low taxes, great business climate. People are moving down there from all over the US especially the Northeast, you know, that's just the migration trends. So, but you also have industry, you have jobs to support it. So let's just start off at a high level. I always like to start off asking the question from a high level, why invest in a Collier County, you know, specifically the markets that you're in,
You know, and we'll start with employment. The employment climate here is really, really good. I mean, obviously Southwest Florida, we are a destination for retirees. So healthcare jobs are plentiful. They're out there. And that industry just continues to grow. My wife works in that industry. So I'm very tuned into it. Also, of course,
Welcome to another episode of Ask Marco where I answer your investing related questions. I'm your host Marco Santarelli, welcome to the show and the episode. Thank you for listening and being a subscriber. If you haven't subscribed to the show, click that subscribe button, and I hope everybody's doing great. We're in the middle of the summer. And even though we have this Coronavirus craziness going on around the planet, I just hope that you and your family are all doing well.
Today's question is pretty interesting, comes from Brian and he asks, How to Invest When You're a Nomad? That's interesting. I think this is the first time I've ever heard something like this. Although I know people who are nomads and do invest from all over the planet, wherever they may be. So Brian says, hi, Marco, my wife and I just recently sold our primary residence to have more time with our kids and live between my in-laws, our vacation rental, and on the road, camping.
We want to invest in more real estate with the capital from the house, which is approximately $200,000, but we don't show an income. My wife's remote consulting job is on hold until next year. And I work as a handyman while in town staying at my in-laws. So we currently don't show much or any income after business expenses. We do have a vacation rental, but because we manage it ourselves, there is no to little profit after expenses as well. What are our options for getting a loan to purchase either another vacation rental we can manage or a duplex we can live in on one side and rent the other, or two full-time rentals in areas like on your website, noradarealestate.com. I don't want to put more than 50% down. Thanks for what you do and what you're doing and hope to hear from you.
Thanks, Brian.
Brian, thank you for the question. So this is an interesting, but not an unusual question first and foremost, who cares if you're a nomad, it really doesn't matter where you live, or even if you're a resident of the US although that helps with a lot of the financing options, but literally you can invest in the United States real estate market from virtually anywhere in the world. So if you're a nomad within the US that's a great situation to be in the question is really about your qualification rather than the fact that you are a nomad and you're not anchored to one physical address somewhere in this country. So I'm not sure when your income stopped. I wasn't sure if you alluded to that. But my first question is when was your last return tax return? Was it 2019? If it was 2019 and you can show income, you probably qualify for financing. So that would be my first question. And if that's a good thing, then we could probably stop the answer to the question right here, because you probably qualify. If you can show the income and you have good credit, depending on the lender and what kind of loan you're getting, you might need to show your last two months or three months worth of bank statements to show that you have something in there or something coming in. So they may want to verify that you actually still have income coming in. With conventional loans, they'll often ask for your recent tax returns and, or your recent W2 statements or whatever it may be. Anyway, talk to your mortgage broker about that. I'm not going to get into the weeds about that, but it really comes down to qualification. So if you can document your income right now, even though it may not be a lot, I don't know what a lot is, that's a relative term, but if you can show income and you've got good credit, and you had qualifying income over the last two years, you may be able to do something on the conventional side but don't quote me on that. Talk to one of your lenders or mortgage brokers, or just talk to my team here. We'll put you in touch with several of them.
The next thing is understanding the different types of loans that may be out there. Now, historically, we've had four basic kinds.
Today's question comes from Martin. But before I get to his question, just as a reminder, this is going to be a quick five-minute episode. And if you like these short Ask Marco episodes, remember to subscribe to the show. That way I can keep getting these out to you and keep recording them. And you will be notified when they come out and you'll just see it in your stream. All right, Martin asks, is it a good idea to buy a multi-unit, live in one unit, and rent the others?
So he says, hi, Marco, I've listened to you for about four of your episodes. And I really appreciate how informative and quick your episodes are. My question to you is me and my wife are getting rid of some loans that we've carried ever since we got married and we are about three to four months out to pay them off. We are planning to move from central California to central Oregon, currently renting and planning to get our first property as we move to central Oregon. Is it a good idea to acquire a duplex or triplex through an FHA loan as a primary residence, due to the low-interest rate, live in one of the units and rent the others? Then after a year, turn it into a rental property, move out and acquire another residential property?
Thank you again and best regards- Martin
Martin. This is a great question. And it comes up often because many people think about purchasing a property, specifically, a multiunit like a duplex triplex or fourplex, and living in one of the units and renting out the others in an effort to help cover the cost of the property, especially the mortgage, and essentially subsidized their housing, or in many cases create a rent-free or mortgage-free living environment.
So what essentially you're doing here is what many people or some people refer to as house hacking. And it's really just a hack to buy and own property and create a rental property at the same time. And sometimes it may not be a rental property immediately, but ultimately becomes a rental property. And so people just call it house hacking. So let's first of all, start off by talking about what FHA is just real quick. So FHA is the largest insurer of residential mortgages in the world. They are not a lender themselves, but lenders become F H a approved, and then they will offer you loans at a very low, low rate of interest. And they're comfortable in doing that because that mortgage will be insured by FHA. So they have very little to no risk in offering you a very aggressive loan. You probably know this, but for our listeners, you can get an FHA loan with a FICO score as low as 500 points.
So think about that. I mean, it doesn't get that much lower. I mean, it actually drops down to 350, but I mean that that's basically no credit it's below bad credit. Anyway, generally speaking, you know, you can qualify with 500 and above and think about this. If you have a credit score of only five 80, you can get a 3.5% down payment. Think about that three and a half percent. So on a hundred thousand dollar property, hypothetically that's $3,500 on a $200,000 property. That's $7,000 as a down payment. So if you can control a good property in a good area, and it's a duplex or triplex, and you're living in one of the units and you're into this thing for anywhere from 3,500 to $7,000, maybe a little more, whatever, that's pretty attractive, that's very compelling. And it's very doable. So back to your question, the short answer to your question is, heck yeah, it is a great idea.
In fact, in many cases, it can be a great idea to have a duplex or triplex or even a fourplex and living one of the units rent out the others, collect the rental income. Essentially you manage the property yourself and done right in the right area. You can essentially live there for free because your expenses and your debt service is being covered by the tenants, your tenants, living in your property, in those other units. So this gives you a great experience in owning a rental property,
I have a very special guest today. You know, the question often comes up where I get asked, Hey, you know, I'm running out of cash. I can't buy any more property and I've got great credit, but I've spent all my investible cash and now I can't buy any more properties. I have to keep working and earning and saving. And that's a normal problem because I generally break it out into two things. The two C's that people need when they invest in real estate, cash, and credit. And most of the time, the people we talk to already have the credit, but they just run out of cash. So what I want you to do today is listen carefully to this episode, because I think this episode is going to be very helpful to you to help you continue to grow and build your real estate portfolio.
So my guest today's name is Dave Dubeau, and I hope I'm pronouncing that correctly. Dave is a real estate entrepreneur. He's a best-selling author. He's a speaker and an investor attraction expert. I love that title for the last several years. Dave has been the leading authority on helping mom and pop real estate investors find additional capital and money partners to do more deals. And he uses his proprietary five-step money partner formula. Dave helps his real estate entrepreneur clients grow their portfolios significantly and in record time by attracting investors instead of chasing after them.
Dave, welcome to the show.
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Marco, thanks for having me. It's a pleasure to be here.
Well, I'm glad to have you on, I've had some great conversations with you. In fact, I was a guest on your show and I appreciate that. So we got into a conversation talking about, well, Hey, what do you really do? And tell me more about what you do because I thought, Oh, this is pretty interesting because I know that a lot of investors and clients that we work with ultimately run out of cash, right? They buy their 1, 2, 3, 5, 10 properties as fast as they can, you know, they're off to a good start, but then they run out of cash. And so I thought, well, Hey, you know what? I need to pick your brain and find out what you recommend in terms of helping people to grow and grow their portfolio. Why don't we start off by me asking you, how did you actually get into this? What I call a money niche.
Yeah. Interesting story Marco. So like most folks, most real estate mom and pop real estate entrepreneurs. I sell to finance my first few deals when I was focusing on client-first rent own deals. So in that case, we're finding a tenant-buyer, then go buy them a house and rent on it to the motor of the next two to three years. So I did the first couple of my own under my own financial steam. Then like most folks, I ran out of cash and I remember this vividly because of a terrible experience. I had the perfect tenant-buyers come into my life, went out, found a really nice house. Got it under contract. And the only thing I was missing was the down payment. All right. So I need about $85,000 to close on that property. And I don't know about you, but I always heard this expression just find a good deal and the money will find you. Have you ever heard that one?
Yeah, very often. And I was gonna actually ask you to elaborate on that. So you might as well talk about it.
Yeah, exactly. So we hear those all the time. So I had heard that, but I knew I was going to have to do something.
Today's question comes from Steve and Steve is basically asking, should I stay, or should I go? And for those of you old enough, like I am you'll remember that was a song by The Clash. Anyway, it was an interesting band, but, Steve writes in and he says, Marco, we have spoken a few times on the phone and I have sincerely appreciated your time. The genius-ness that I feel when listening to the podcast was ever-present during our conversation and I appreciate the fact that you are sincerely trying to help others achieve some of the success you have enjoyed.
Thank you, Steve.
I have a question that I have been struggling with for some time and hoping for a little friendly advice. Here's the situation, my family and I live in a nice neighborhood on what is referred to as the North shore of Chicago. Our home is average for the neighborhood and has a market value of around $400,000. When we purchased eight years ago, we put down 20% and have been aggressively paying off the house after refinancing to a 15-year loan back in 2017 for three and a quarter percent. Our current loan balance is around $245,000. We would like to move whether in or out of state in the near future, I have been contemplating refinancing my mortgage to a new 15 year because the rate has dropped over 75 basis points. Then turning it into a rental and moving elsewhere. My conundrum is this number one. Should I even consider turning this home into a rental? When the taxes remember we're in Illinois are around $12,000 a year for a 2200 square foot home. Ouch. And number two, if I were to go the rental route, should I wait to do a cash-out refinance after getting renters in place to recapitalize the estimated $120,000 into other rental properties.
Any light or wisdom you can shed would be greatly appreciated. You're your loyal listener - Steve
Well, Steve, first of all, thank you for being a loyal listener. And thank you for your question. It is a good question. So the real question here is, should you turn your primary residence into a rental? Well, I have to make one assumption before I can answer your two questions here, and that is whether or not you have the down payment for the next purchase, which will be your principal residence. So I'm just going to assume for the moment that you do have the down payment for another property, giving you the option to keep your current home, the principal residence as a rental or potentially being a rental. So that's really the big question. First and foremost, do you have a down payment for another home regardless of where it is? And then the question becomes, is it worth keeping this home as a rental, you have over $120,000 of equity in this property. What do you do with it?
All right. So as is true for every single episode, I am not an attorney or a CPA, and I cannot give you specific financial or legal advice consult with qualified professionals. And all I can give you is just my thoughts and opinions. And by no means, is this giving you specific advice or direction, but I will share my feedback. So I guess the first thing I'm going to say regarding your second question is if you're planning to refinance this property, the tenant or future tenant does not need to be in the property for you to do a refinance. It really doesn't matter. However, if you do refinance this property and you are living in the property and therefore it is your first home, your principal residence, you will get the best rate and terms on a mortgage refinance because you are claiming it as your principal residence. And those have the most favorable terms and the lowest rates. So regardless of what you plan to do, and regardless of what your intentions are, emphasis on the word intention, if you are living there and it is your principal residence, then you will not be lying on a loan application and you will get the best rates. After you move out you can claim it as a second home, as long as you live far enough away,
These questions keep getting better and better all the time. And I appreciate the questions that you guys are sending in, I'm going to keep running through them. Today's question comes from Chris, and he writes in and says, hi, Marco, I have been recently turned onto your podcast after gaining interest in real estate. I am 23 years old birthday in a few days, happy birthday, Chris, and want to get started in real estate to get time freedom for when I am older, I'm a mechanical engineer for a medical device company. And while I love what I do, I would like to have the ability, later on, to spend time with family, friends and work a job I have always wanted, to be a calculus teacher.
That's interesting. I've never heard that one before, but I'm glad you got clarity on what you want to do Chris.
I have about $30,000 cash saved up through work and several other investment accounts with various amounts. I am most interested in low-cost houses with good cashflow. Since this will be my first investment, I would love to hear what you would do if you were in my shoes. I am very confident in Dayton, Ohio, and Memphis, Tennessee markets. However, I have seen a lot of houses that fit my agenda in Jackson, Mississippi, really looking forward to hearing your response, and thanks for all the information.
You're welcome, Chris.
All right. First of all, your definition of what you call quote-unquote, low cost is different from what many other people might define it as. So let's be clear on what the differences between low cost and cheap because those are often different things. So cheap is what you find in really distressed areas. These are often distressed properties, but they're in, you know, rough neighborhoods, rough streets, they're cheap for a reason and cheapest. Like we're talking very cheap within the market. That's the context because every market is different. What's cheap and Southern California is going to be different than what's cheap in, you know, even a very inexpensive market. Let's say like in Dayton, Ohio, or Jackson, Mississippi, but low cost typically means for most people, the lower end of a particular market, the affordable housing, certainly under the median price of a market. So it's not that it's cheap property or cheap or bad neighborhoods. It's just lower cost relatively speaking. But for your example, I'm going to assume that low-cost houses are what you would find in your C class neighborhoods. They're often, well, at least within the markets that we operate in anything from 50 to a $100 So keep in mind that low cost is probably going to be in your lower-income neighborhoods. That's the type of demographic you're dealing with. They are certainly the cheaper properties on the price spectrum for a particular market. And there's nothing wrong with that. Just to understand the demographic that you're dealing with in those markets and what you might potentially be dealing with that type of tenant class. They may be a little more transient. They might skip from job to job more frequently. They're not necessarily as rooted in the community and the area as others. They, anecdotally speaking might have more tenant payment issues like late payments, skipped payments. And that doesn't necessarily mean that they get, you know, evicted often, but just understand that the possibility or probability of that happening might be a little more than dealing with a tenant class in a B, B plus neighborhood, or even, especially in A class neighborhood. So understand what you're getting into when you are going after lower-cost property.
Now often, but not always the cash flows are not as good in low-cost housing or lower costs, neighborhoods, or C class neighborhoods compared to B's and compared to A's. And that's just because the rents will go down as you go to C class neighborhoods and up towards A class neighborhoods, more expensive properties have higher rents. And so often,
What are the keys to entrepreneurial success? A lot of what it takes to answer that question requires us to go back to what the definition of “entrepreneur” is. If you haven’t read what was probably the bestselling business book of all time, then it’s bound to be way different than you imagined. Join in as host, Marco Santarelli and his guest, Michael Gerber, the author of the business classic, The E-Myth, unlock the secrets that differentiate successful entrepreneurs from the bulk of business owners. How do you ensure that you have a business and not a job? What is the difference between “working in” your business and “working on” it? What are successful entrepreneurs doing differently? These are but a few of the golden nuggets you can pick from this wonderful episode.
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Keys To Success With Bestselling Author Of The E-Myth, Michael Gerber This is something that I love doing is putting out this content that relates and connects to real estate investing personal development, and finance. I'm excited about this guest because it ties into what we do on many levels in our life, not just business and real estate investing, but these are essentially the keys to your business and real estate business success. My guest is the bestselling author of The E-Myth Michael Gerber, and he has multiple books. He has authored, I believe, 20 or 22 books. He is one of my mentors because I remember reading his books, The E-Myth Revisited specifically. The takeaways I had from that changed how I looked at things and my perspective. It affected me in not just business, but real estate investing. When you understand the simple principles and concepts in his book, you will have a new framework or a new lens that you can look at the world through that will help you become more successful in the things that you work on and what you do in terms of business and investing. With that, I want to introduce my guest and dive right into everything that we were going to talk about.
It is my pleasure to welcome Michael E. Gerber to the show. Michael is an American author and Founder of Michael E Gerber Companies, a business skills training company based in Carlsbad, California. A few of his great books include the small business classic, The E-Myth, as well as Awakening the Entrepreneur Within. Here are some interesting stats about his book, The E-Myth. It was originally published in 1986. It has sold millions upon millions of copies. In 2011, it was named the bestselling business book of all time. It has sold in 145 countries. It was translated into 29 languages and taught in 118 universities. That is unbelievable. Inc. Magazine calls Michael the World's Number One Small Business Guru. With that, Michael, welcome to the show.
I'm delighted to be here.
Michael, it's an honor to have you on. I read your book The E-Myth and it changed my perspective on business. I didn't look at the business being layered the way you have it and how you migrate from being this technician of a person and you are the business, and then to succeed in business. You morph that into becoming something that is not you anymore. You've disconnected yourself from the business, but I'm getting ahead of myself here. Let's start with you, I would assume that most of our audience know who you are or has at least heard of you. For those that don't know,
New here? Great! Hit that subscribe button so you never miss another episode. We are doing three episodes a week, and I would love for you to stay on top of the questions that people are submitting.
Today's question comes from Eric. Great question by the way, he's wondering if his future real estate plan is reasonable and he writes in and says, hello, Marco, I have been listening to your podcast for a couple of weeks and have found your delivery of information, very easy to understand, thank you for your time and teachings, Eric.
Thank you. And you're welcome.
My current future plan is to purchase a townhouse in the next two years, start a family and then purchase a longterm home within the five following years, I intend to rent out the townhouse to provide another source of income and help pay off the new home. My conservative side wants me to only have one mortgage at a time due to a fear of having too much debt. And so I can have a higher cash flow. Therefore I would pay off the townhouse completely before starting a mortgage on a new home. My goal is to own four paid off income properties to supplement my job's income. Do you think this plan is reasonable and has the potential to generate a cashflow over $2,000 a month for the townhouse and home or house? I am looking between 150,000 to 250,000 for the townhouse and 300 to 450,000 for the house, respectively. Additional rental properties can vary from say 100 to $200,000 each. Thanks again - Eric.
Okay, Eric. Well, thanks for the question. So your plan overall is great. I have a couple of issues with it, but essentially you're thinking about settling down, getting a home, starting a family, purchasing a home with a longterm perspective, but also starting off with a townhouse, which is less expensive and keeping it as a rental. That's a great way to start. So here is my comment. You're talking about your conservative side and having too much debt. So the first thing that flashed in my mind was Dave Ramsey and Susie Orman. You know, the issue I have with people saying that debt is either bad or I have too much debt is they're not defining it properly or at all. And that really leads to a problematic mindset. When you make a subtle mental shift in how you see debt and whether it's a tool or a weapon, then you will start to understand how you could use it because let's face it. You know, debt can be good or bad. It cuts both ways. When you look at debt that is used to acquire income-producing assets. It's a good thing. When you look at debt as something that you spend on what Robert Kiyosaki calls due dads, but essentially things like cars, vacations items that depreciate and become worth less or worthless, completely worthless over time. Then that is a reflection of poor decisions and using debt for things that really don't make any sense.
So first of all, define how much debt is too much, but more importantly, is define what the debt is and how it's being used. Because if you asked me the question, well, let me turn it around. Let me ask you the question. If I could lend you as much money as you want at a low-interest rate, a very low-interest rate, but you can make at least twice as much in return by borrowing that money and investing it. How much of that would you want? And if you thought about it, I mean, if you ask me, I would say as much as I could possibly get, and you kind of need to look at it that way because your uncomfort with it essentially is because you are looking at this incorrectly.
You need to learn to be comfortable with debt and not fear it because debt and leverage is your friend. It can be and is your friend when used properly. So there's no such thing in my opinion of having too much debt if that debt is actually one being paid off by other people in this case, your tenants, number two is generating passive income, monthly and annual income for you., three is increasing your wealth because your equity and net worth is grow...
Before I get to the question, two things. One, if you're new to the show, remember to subscribe, just click the subscribe button and your player. Number two is I have been trying to keep these Ask Marco episodes to 10 minutes or less, ideally set out to make them a seven to eight, maybe a 10 minute maximum episode, but I seem to talk a lot and I ended up recording 12 to 15-minute episodes. So I'm going to do my best to try and keep this one to 10 minutes or less today.
So today's question comes from Miles and he's basically asking how do I build a portfolio when my target neighborhoods are very expensive. So let me read his email.
He says, hi Marco, thanks to quarantine. I've been able to really start to go after my passions and learn some new skills. One of the skills is real estate. Your podcast has been really helpful as I am trying to learn more about the industry, how to go about investing for the long term. I'm in my mid-twenties and am getting ready to acquire my first property. I would ideally like to manage my own property and therefore I am looking in the state. I live New Jersey. That's a red flag right there. After some research, I have come to the realization that any class A or B type neighborhood is very, very expensive. I was curious how you would go about building a portfolio when the area you're targeting is in the higher price range. And would you recommend going after single-family properties or looking at apartment complexes to acquire more units at once?
Thanks in advance and keep up the great podcast. Best - Miles.
Miles, Thank you for the question. It's a good question. You actually have two of them here, but the main one is really how do you build your portfolio? So the short answer to your question of how do you build your portfolio when you're looking at neighborhoods that are very, very expensive. And I say that in quotes your quotes because I'm quoting you, the simple and short answer is you don't. And here's why it's very simple. First of all, think about it. Why are you going after those neighborhoods? My guess is it's because you live in New Jersey and you want to be in close proximity and be in driving distance. And you want to manage them yourselves, which you have clearly said that you want to do that. Why you want that brain damage. I'm not sure if that's something you want to do as a career choice or as a job or profession.
Great. You could pursue it and grow it as a business. And you can earn an income and build it as a true business. Something that is scalable and be a property manager. And then you can manage your own portfolio as well, or do it the other way around, manage your own properties and then build it into it business. That's all well and fine if that's what you really want to do. But the question is, is that, is that what you really want to do? Secondly, why are you targeting these neighborhoods? If you think you're going to be more successful because you live close by then start to ask yourself why you think that, because that may not be the case. You probably, you understand those neighborhoods very well because you grew up there or you grew up around there and you know, what's going on.
And if you know something that other people don't like, there is gentrification going on and you see new businesses coming in and things being turned around and you expect with good degree of likelihood or probability that there's going to be a lot of growth and therefore price appreciation, then maybe it's worth pursuing, but that is not investing for cash flow that is investing for price growth. And again, there's nothing wrong with that, but that may not be the best way to go about it. Especially in the beginning when you're building your portfolio, I think you should be focused more on cash flow than capital growth. And you can have both, but don't exclude the cash flow in spite of that capital growth. So ask yourself,
Today we have a very interesting question that comes from far, far away. Before I get to the question, if you haven't subscribed, remember to click that subscribe button and do so, regardless of whether you're on iTunes, pod bean, or anywhere else be a subscriber that way you'd never miss another episode.
So today's question comes from, and I hope I don't butcher your name is Mignon Smith. Anyway, she comes from a country far, far away, and she says, hi, Marco and team. I listened to your interview on Wealth Breakthroughs, and I'll stop right there for those of you who are not familiar with wealth. Breakthroughs is it's a newly released docu-series that is being played for free right now, one episode per day for a few days, I guess it's a total of 10 days, but we're in the middle of it right now.
However, they are going to be doing a full two-day free preview of all the episodes available, I believe at all at one time. So check that out. And the way you can get to that is go to our website at noradarealestate.com and right there on the homepage, scroll down about halfway and you will see a large wide section of the homepage where it says Wealth Breakthroughs, and there's a link there. If you click on the link, you can subscribe to the free preview. And again, it's going on for probably another week and it will be available until sometime late the first week of August. So check it out. There are some amazing people in this docu-series including Kim Kiyosaki, Robert Kiyosaki's wife, Dean Graziosi, and there's just a whole list of 40 wealth experts on there.
Anyway, I mean, Mignon continues here with, I'm interested in your program, just one little problem. I live in South Africa. I do not have citizenship in the USA, but if at all possible, I would rather invest there than in my own country. We have too much uncertainty and politics and policies with the ANC and land grabs. I owned two communes at the university and the class of tenant really drove me out of that business.
I'm very sorry to hear that.
I now have the capital to invest again, but not really interested in South Africa. Any ideas?
Well, thank you for the question. I appreciate that. And I'm glad you reached out. I'm also happy that you saw me on Wealth Breakthroughs from so far away. So let me touch upon a few points here. I think you're going to know where I'm going to go with this because it's that I am biased for the United States or towards the United States.
I'm just looking at data and facts and the availability of opportunity that we have here compared to the other places around the world. So let's, first of all, start off with political stability. This is clearly the reason you're reaching out to me in terms of this question of investing in another country. And you're obviously choosing what you probably put at the top of your list and that's the United States of America. So when you look at the USA, in terms of political stability, if you were to look at the globaleconomy.com, they actually have an annual ranking. It's lagging by two years, but there's other organizations and institutions that will actually rate and rank every single country in the world on different factors. The bottom line is, is that the US is ranked number 69 in that list. Now that may not sound like a lot, but they have a political stability index that goes from 2.5, meaning strong to minus 2.5, meaning weak zero being the middle.
The average for 2018 based on 195 countries was -0.05. So right around zero, the highest value on this list, even though it goes up to 2.5 was Monaco at 1.61. So Yemen was on the far end of that spectrum at minus three points. And I don't know how you get minus three on a scale that goes to minus 2.5. It must be very bad there. Anyway, Monaco is at the top of the list at 1.61, the top five would be New Zealand and second Singapore third, Liechtenstein fourth, Andorra fifth and Iceland interestingly enough, as number seven,
Today's question is quite interesting. In fact, I just got it this morning and it took me a little off guard. It's from a guy named Dan and he says, Hey Marco, I started pessimistically listening to your podcast about a year ago, thinking I'd end up listening to someone, trying to convince me of something that was too good to be true. Long story short. I'm a big fan now and listened to you just about every day in the car to and from work. I have one rental property and I'm looking for a second and a third I'm writing today because I want to let you know that as much as I'd rather work with you and your team than someone else, I don't get a warm and fuzzy feeling from your website. The inventory of homes seems small. And what you do have the information about them is vague. I believe that you would only provide houses that are in decent condition, in a good market, and provide a positive cashflow. Which is true, but it's hard to get on board with the limited info that I've seen.
Do you have plans to make your website more transparent, maybe show more pics inspection reports, that sort of thing. I hope so. Or at least I hope that I get a reply out of this, helping me to understand your process better and get the opportunity to work with you. I'm just an average guy and have never been a fan of anyone. So I'd be pretty excited to hear back from you. And I know this, isn't an Ask Marco type question that you have on your podcast, but it would still be great to hear back from you much respect - Dan.
Well, Dan, first of all, there's no such thing as an average guy, everybody is unique in their own way. So you are certainly not average. What I did is I quickly replied back to Dan and I said, and this was within minutes of seeing the email. I was just there at my laptop and I watched it come in. So I jumped on it like that. I said, Hey, Dan, surprise. I'm getting back to you with a smiley face. First off, thank you so much for being a listener and coming to like the show. I'm glad you stuck with it. Second to address your concern and observation about the inventory on the website. Let me explain it this way with the velocity of sales and the turnover in inventory, it's hard to keep everything on the site. In reality, there's only about 20% of the inventory available, posted on the website at any given time, everything else is available to you through your investment counselor here.
The other thing that's important to point out is that properties that have limited photos as in one photo and those properties that have little or no notes are properties that are not yet ready on their renovation. We post because we want you to see what's coming down the pipe, but it's not quite ready yet. A lot of investors will reserve those properties while they're being renovated so that when they are ready, they can be inspected financed and ultimately purchased. So the point here is that we only have a fraction of all available inventory on the site at any given time. It's just not humanly possible to keep up with everything all the time, across 20 or 25 different markets with different builders and providers that we work with. So we try and keep as much as we can on the site and as current and up to date as possible and turn them over with new ones as often as possible.
But the reality is, is just expect there to be only about 15 to 20, maybe 25% at any given time of what's available. And also think of it this way and look at it this way. There's probably anywhere from, let's say a hundred to, as many as 200 or more properties available at any given time across all the markets that we're in at this point in time, but they're not all on the website. So the best thing to do is what I recommended to Dan here is if you're working with an investment counselor, just ask them what is available in some of the particular markets that we're in. And we can get that information to you very quickly. If we don't already have it on hand,
Today's question is from Daniel. A great question here and one that we hear often, my team of investment counselors hear this very often. And over the years, I've heard this asked so many times and I talk about it when I'm interviewed on other people's podcasts in different media spots. And the basis of his question is how important is it to invest locally? Great question. And he says, hi Marco. I am a new real estate investor and have some concerns stopping me from investing in my first property.
Well, let's help you out with this.
One of my concerns is that I may be moving across the country for a career opportunity soon. Do you think it is important for investors to be in close proximity with their investments so that it is easier to manage tenants, manage renovations, and dealing with potential issues? How have you managed your long-distance investments?
Thank you, Daniel.
All right, Daniel. Thank you for the question. So let me ask you a question. Let's just assume you were investing in stocks and you wanted to pick the very best possible stock on the stock exchange and you determined it was Coca-Cola and you are living in, let's say Southern California, would you need to move to Atlanta or live in Atlanta in order to invest in Coke shares because that's where their headquarters is in Atlanta, Georgia. Well, if you think about a first split second, you would say, well, no, of course not. That's ridiculous. Why should I live or have to live in Atlanta or move to Atlanta to invest in Coca Cola, if that's where I think the best investment opportunity is at the moment.
Well, that's the same with real estate. It doesn't matter where you live. You have the ability to invest in real estate anywhere and can do it and should do it for the reasons I'm going to talk about here. You see the United States is a very large country and it's made up of hundreds of local real estate markets. Each of those markets move independently of one another, due to many local factors and things that drive that market, whether it be up or down. And because of that, you need to recognize there are going to be times where it makes sense to invest in a particular market. Of course, that also means there are times when it does not. So you should only be investing in markets when it actually makes sense to do so. And I'm talking about financial sense and economic sense, and not because you live there or you bought property there before, or you have family there. I've heard that before. Well, I should invest in a certain market cause I have family. And if I ever need to call on someone to drive by my property, I've got my brother in law to do that.
I mean, think about that logically for a minute. They're probably not even trained in property management and real estate investing, but yet you're going to rely on somebody to literally just drive by and take some pictures for you. That doesn't make sense. So according to census.org, which is the US Census Bureau as of March 2020, this year, there are 384 metropolitan statistical areas in the country. And if you break that down a little bit more granularly, there's 543. What they call micropolitan statistical areas in the United States. Those are a lot of areas that you can pick and choose from. Now, don't get lost in this. Let's define this real quick. Each metropolitan statistical area is an area that has at least one urbanized area of 50,000 people or more inhabiting that area. And a micropolitan statistical area has to have at least one urban cluster of at least 10,000 people, but less than 50,000 people in population. So these are obviously bedroom communities out far suburbs and reasonable sized towns tend to 50,000 people. But that just goes to show you that there are so many local markets around the country and I emphasize the word local.
Why would you even want to think about investing locally? Well, here's the reason to invest locally.
Today's question is an interesting one. It comes from Melissa and her question generally is what are the pros and cons of investing in notes? And this came about because she saw on our website recently that we have a new opportunity and that is to invest in notes more specifically promissory notes. And for those of you that don't understand what a note is. I'm going to explain it to you today.
Interestingly, this question has come up a few times because I've had this on our website for about, Oh geez, maybe three or four weeks now, and it's not something new. I've actually been offering note investments on and off for many years. In fact, I think it goes as far back as 2013. And there was a three year period in there, which I believe was 2015 through 18, if I'm not mistaken where I was offering promissory notes tied to real estate. So essentially real estate notes for properties that we were buying fixing, and either flipping or buying, fixing, and holding mostly I'd say 99% of them were for properties that we were buying fixing up and then reselling either as turnkey rentals or retail sales. So this is something that has been around in my world for a while, but note investing has been around for decades. In fact, it goes back a long, long way because in its simplest form, a note is really just an IOU. It's a loan. It's a bond is a note, a note comes in different forms and under different names. But essentially a note is just two people coming together to lend one another money that is repaid over time.
So Melissa's question is, can you discuss more about investing in promissory notes with the return rate you're offering? It makes passive investing so easy and simple with good cashflow. It's almost too good to be true with a little smiley face. What are the things that new investors like me need to watch out for to make sure it's a legitimate transaction comparing this with investing in single-family homes? I know I'm missing the tax advantage, but what are the pros and cons of investing in notes? Thank you.
Okay, Melissa, thank you for your question. So let's break this down and tackle it and I'll see if I can do this within 10 minutes, cause I usually tend to run long. So first of all, what is a note? Well in its simplest form, a note also known as a promissory note is a promise to pay off a loan. So a more detailed definition would be a promissory note as a contract where one party, the borrower agrees to repay the loan to the other party, also known as the payee or the lender, and that is done within a specific time, a period of time and under specific conditions. And those conditions are some things that you hear all the time like interest rates, what's the interest rate on that loan. And are there any fees or penalties for a delay or being late and also are there clauses to prepay that loan either with a penalty or without a penalty. And you see these all the time in mortgage loans. I mean, this is standard stuff that you see in all real estate lending or financing. And if there's a mortgage that is attached to that note, then it's essentially an Allstate in air quotes, a guaranteed loan. So that is really what a mortgage loan is, it's a note, a promissory note for a loan on a property. And then it has another document called a mortgage or in some states, a deed of trust and that deed of trust or that mortgage is the security instrument that ties that loan. In other words, the promissory note to the property. So when they say you have a lien on the property, the lien on the property is the mortgage or the deed of trust. That is basically saying that, if you don't repay that promissory note, we have the ability to go after that collateral, which is what you have pledged towards full repayment of that promissory note, and so that is why they refer to promissory notes on real estate, meaning a mortgage loan as a secured or guaranteed loan.
Okay. So let's dive a little deeper into this.
The people we let into our room are the very ones who will help us build it. As the saying goes, your network is your net worth. The quality of the people around you will have a major impact on the quality of life you have. Who is in your room? Who are the people you let in? In this episode, Marco Santarelli sits down with someone who greatly knows the importance of one's network and can help you build the right relationships to lift you up. He interviews Dr. Ivan Misner, the founder of BNI, Business Network International, to share with us how we can shape and design the life we want through his book, Who's In Your Room, where he provides great insights on how to find the right people who will help us become more successful—be that in our professional and personal lives. Plus, Dr. Misner then extends that very idea to real estate investing, reminding us of the very value of treating it as a team sport to assure your success. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Ask Marco - The Pros and Cons of Investing in Notes
Enjoy the show!
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Who's In Your Room? With Dr. Ivan Misner There are some famous quotes. One in particular that I love about your network and your net worth is simply this, “Your network is your net worth.” That has been quoted and re-quoted by so many people. I don't even know who originated that quote, but it's true. Look around, think about the people that you know that have higher than normal or average net worth. Look at their network, who they associate with, how many people they associate with and the people that they are tied into or tapping into. Meredith Mahoney also said, “Know where you want to go and make sure the right people know about it.” It's all about your network. There are two things we're going to talk about here with my special guest, Dr. Ivan Misner, and for some of you who recognize that name, you'll know that he is the Founder of BNI, Business Network International. I had a great interview with him. He’s a nice and smart guy.
Our episode is full of golden nuggets. It's interesting to know who you associate with and the people you let into your room, which is not a four-wall box, but what's going on up here in your head. What's going on between your ears has a major impact on your life, your happiness, and it's all about, how do you shape your life? How do you take control of your life and design your life? That's the first part of our interview. The second part is going to be about the power of networking and how you find the right people to let into your room that will help you to become more successful in your investing, life, relationships, and all that stuff. There's a little bit of a slant towards real estate investing, but this applies to everything and every part of your life. At the end of the day, when you look at real estate investing specifically, Robert Kiyosaki said it best that, “Real estate is a team sport.” It's important to surround yourself with the right people to help guide you and assure your success. With that, we're going to get onto our interview and I hope you enjoy it.
It is my pleasure to welcome Dr. Ivan Misner to the show. Dr. Misner is the Founder and Chief Visionary Officer of Business Network International also known as BNI, the world's largest business networking organization. Founded in 1985, the organization now has over 9,500 chapters throughout every populated continent of the world. In 2019 alone, BNI generated almost 12.
Today's question comes from Dave. Dave says fantastic podcast, Marco, and thank you for all the great information that you share.
Dave, you're very welcome.
Given the fact that I am trying to replace my everyday job income with positive cashflow. I am trying to maximize the amount of cash flow I can get on each property while also maximizing the amount of properties that I can purchase. As I see it, this leads me to think that I should focus on lower-cost properties. For example, under $90,000 with $250 to $350 per month in net cash flow.
First off, do you think this is a sound plan? If not, what holes or pitfalls do you see, and what do you think would be a better strategy if it is a good idea, which markets do you recommend investing in with your team to meet these criteria?
Thanks again - Dave
Okay, well, Dave, very good question. I'm going to summarize this question to basically this. Are low-cost properties, a good strategy for cashflow? So the short answer is yes.
So let's just be clear. Generally speaking, when you have a strategy that you turn into a plan, you are either focused on predominantly properties that generate better or above-average cash flows or you're purchasing properties in areas that you anticipate will provide solid or above average appreciation. So your strategy is cashflow versus growth or income versus growth.
Sometimes you have a little bit of both and these are transitional markets or what we might call a hybrid situation, not necessarily a hybrid market, but you're focused on generating cashflow or as much of it as you can or appreciation because you're looking at it from a medium to a longterm perspective where you just want capital growth and you're going to give up on that cash flow or that cash on cash return at least for the first year or two. So with that in mind, what you are focused on is maximizing cash flow. In fact, you've said it yourself, you're trying to maximize the amount of cash flow and you're trying to maximize the amount of properties that you can purchase. The answer here is pretty simple. In fact, you've more or less answered it yourself. And what that is is just to focus on lower-cost properties that generate as much cash flow as possible in dollar terms, because that's what you're looking for.
And it doesn't sound like you're too concerned about price growth. At least not initially, at least not right now. And that's fine. So when essentially you're making an investment to generate cash on cash return and that property will pay itself off, it'll pay down the mortgage and it will appreciate nominally over time unless things change in that market. Now, let me give you a couple of examples here, markets like Birmingham. You asked about markets, Birmingham, Dayton, Ohio, Memphis, Tennessee, Northwest Indiana. Those are great markets for this Huntsville, Alabama, Montgomery, Alabama, the York area of Pennsylvania. So these are markets that are very cashflow centric, they're smooth and stuff. Eddie linear markets. They don't appreciate radically. It's not that they're depreciating. They're just very stable, essentially boring markets. Okay. Now let's just be clear about low cost versus cheap because you brought this up. So when you're focused on cheaper properties, let's just make sure that you're focused on lower-priced properties, not cheap properties.
As a lot of people define cheap being, you know, just poorly manufactured, purely renovated in poor condition distressed. It's none of that, what you're doing is you're basically buying on one side of the price spectrum. It's really the, uh, the, the lower two fifths. If you will, if you break a market into Quintiles, it's the second quintile. It's not the cheapest stuff. It's right above that. It's not quite the middle market, although it can be. So just to throw out a couple of quick examples, cause I just went on our website@noradarealestate.
You know, Gandhi once said that if you don't ask you don't get, so what did I do? I went out and asked Mark Victor Hansen to come back on the show and he graciously accepted. So Mark is an inspirational and motivational speaker. He's a trainer and multiple times, New York Times Bestselling Author. He is best known for the book series Chicken Soup for the Soul that has sold, and Mark will correct me if I'm wrong on this over 500 million copies. And also with me today is Mark's wife, Crystal Dwyer Hansen. She is an international speaker researcher, corporate consultant, author, and entrepreneur, and she believes that all people have unlimited potential for greatness. If they only understand how to access their inner resources. So with that Mark, welcome to the show.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to How Much Leverage Is Too Much?
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Thank you. It is true. We have, which makes me according to the Guinness book of records, the world's best selling author 59 times number one, and I've been blessed with 309 bestsellers, the last of which is with my beloved beautiful wife, Crystal. We've just written this book called Ask the Bridge from your Dreams to Your Destiny.
I love it. Great title. Crystal. Welcome to the show.
Thank you. Happy to be here with you, Marco.
It's great to have you. Maybe you could take a minute and tell us a little bit about yourself since our audience knows a little bit about Mark, but we don't know who you are.
Okay. So yes, I'm a transformational life coach and clinical hypnotherapist, author, speaker, Mark, and I are blessed to travel around the world motivating and inspiring audiences and just helping people become the best version of themselves.
That's fantastic. Great. Okay. So towards the end, we'll just get some contact information from you guys and where your websites are located, but I'm excited to jump into today's topic. And I told you, Mark, that I have a little bit of a funny story to tell you. So, you know, your most recent book Ask the Bridge from Your Dreams to your Destiny. What a great title. I started reading it, a fantastic book. It reminded me of a book I used to have and I can visualize it in my head. And I remember this from back in 1994, 95. And the book on my shelf was called The Aladdin Factor. How to ask for what you want and get it. What I didn't know until today is that you were the author of that book.
Not only the author, actually the creator, what was happening is it Jack and I, when we went to sell Chicken Soup, nobody wanted it. And I know 144 people ultimately, and we took the rejection, but we brought one of the books I'd written Dare to Win and we had 14 books in the series with Berkeley dare to win all the way to dare. No God. The second of which was Dare to Ask, will they call back when we're number one and number two for 58, we actually said, one month, you've got to have this book. We've got a contract. And I went to Jack and he said, what are you going to do about 50 50. They're going to sue us. Don't do it. So what do you mean, what am I going to do? Because it was a book about asking. I immediately called up 101, what we call today, master askers, and interviewed them and put it together and ended up selling 3.6 million. And that's why our book now stands on the shoulders of that because I think we're good.
But I think as you get older and wiser and deeper and more refined, you get even better. And this book Ask, we've only had it out a month. So far as we're taping audiotaping, gear, podcasting,
Today's question comes from Henry and he says, hello, Marco. Your podcast is the best. And I look forward to new episodes every week! Henry. You are awesome. Thank you so much. I appreciate it. So Henry's question is he says, my question is in regards to choosing a property management company to work with in a given market while choosing a market to invest in being teamed up with a great property management company is imperative. What are the sort of questions that you would ask a property management company when considering to team up with them? What sort of information is the most important to receive from them?
Thank you very much – Henry.
Henry, I appreciate the question. A great question, because your property management team is critically important. In fact, I have said many times that you live and die by your property manager and they really play into your success pretty darn heavily. So you want to make the right choice. So if it's not a company that you are familiar with or working with or someone that you know is working with and they come highly, highly recommended, then essentially you are on your own to do your own due diligence in the market that you're investing in. There's literally a laundry list, a long list of questions that you could potentially ask. Now here's the problem with a lot of the lists that you can find online that may be anywhere from 25, 30 questions on the low end to I've seen lists of a hundred questions or more, well, guess what, if you were to get on the phone and try to ask a property manager a hundred questions that will take an hour to two hours long, that may be no bueno. In other words, you're probably not going to have that much time from somebody.
Not that they don't want to answer your questions. It's just, that is a pretty big investment of time. So what you want to do is pair it down to some core questions and then do some research online to just look into their reputation. And what do you want to see is that they are mostly good or clean? Not that they have tons and tons of bad reviews and more specifically bad reviews from landlords. Not so much from tenants because when tenants get upset, they tend to go online. They tend to complain and if they have something bad to say, yeah, they want the world to know if they have something good to say, they're not going to take the time to bother and, you know, go online and put a five-star review. In most cases, whether it be Yelp or any other website, bigger pockets, um, you know, there's probably many others that are more focused on tenants or, or management or whatever the case is.
But let me give you some questions that you can ask them. If you are doing an interview in no particular order, you can ask questions like, you know, how long have you been in business? In other words, have they just started three months ago? Or have they been doing full-service management for the last three years or 10 years or whatever it may be. It's about the length of their track record, not about the quality of their track record. I guess what you want to find out is just, are they new or have they been around for a number of years and have an established business? The other question I would ask is which property management services do they offer you? And in other words, are they truly a complete end to end full-service management company? Or are they just focused on the management?
And maybe the lease-up itself, maybe they'll do the evictions. Maybe they outsource the evictions to an attorney. And, you know, that might change from state to state. I think ideally like to have as a property management company that provides you a complete spectrum of services. So it's all essentially inhouse. The more, the better I do like the idea of full-service property management. I don't want it to be piecemealed with a bunch of outsiders, third party outsourced functions. Another question is how many rentals do you currently manage again,
Today's question comes from Alex and he says, Hey Marco, great show. I have been listening for a long time and look forward to each and every one of your episodes.
Well, thank you Alex. I really appreciate that. I want to chop up your email here into chunks so I can actually answer parts of it as I go through it.
So Alex goes on to say, here I am 31. And in the process of saving money for a down payment to buy my first rental, I am very interested in real estate and have a goal of building enough passive income through rental properties within the next 10, 15 years to have the financial freedom to quit my W2 job.
Alex, congratulations on your goal setting! I like the specificity. That is fantastic! It sounds like you're very clear on what you want to achieve. And I'm also glad that you know what you want. And especially with your age being 31 in your early thirties, that's a great accomplishment right then and there because a lot of people don't even set goals and many people don't even get their financial life in order until they're in their late forties and fifties. So congratulations with all that.
So Alex goes on to say, my employer offers a 401k and matches up to 5%. I currently contribute 5% so I can take advantage of the full match. I put an additional 8% in savings for a down payment on a rental property. After buying my first rental, I plan to continue saving at the same or higher rate and adding the additional rental income into the fund for buying new rentals.
Great plan and congratulations again, for being very clear on what it is you're trying to do, Alex, that is well thought out and I applaud you for that. So when we're talking about 401ks and a match, if you're getting a 5% match for every dollar you're putting in, that's actually very good. And you know, it's nothing to sneeze out because if you don't have too many other options and really it's just your W2 income and no other income, and you can save for retirement using a 401k and get a hundred percent return on whatever your contribution is. That is a very, very good rate of return. Plus, in addition to that, for those of you who are contributing to 401k, which I am not necessarily a big fan of, you have to remember that if you're getting a match up to whatever your employer matches, let's call it 5% and you get a hundred percent return on your contribution. That's great because it compounds.
So the key to making this work though is you have to have a fairly large 401k with a very good average annual rate of return that compounds over a long period of time for it to be something significant because you're going to need one, two or $3 million or more. When you get to retirement age, to be able to get a livable income off of that from a reasonable rate of interest that you're going to get, or find 10 years, 20 years, 30, 40 years down the road from that 401k. In this particular case, you are also saving 8%, which is great. Most people don't save at all. An interesting fact is 47 to 49% of Americans can't even raise $400 in cash if they came up with an emergency of some kind. And so that is clearly a problem in America.
Now, the things remember with a 401k is you have something called a contribution limit that has been relaxed in 2020 with all that has going on. So for employees this year, the contribution limits to all 401k accounts that are held by the same employee. And regardless of current employment status is $57,000 or 100% of your compensation. Whichever is less. We have to assume that you're making more than $57,000 here, but that is your limit. And that is actually a pretty high limit for a W2 contribution. Like I said before, I'm not a big fan of a 401k. There are other options and better options. In fact, I gave up my 401k a long, long time ago. I just did the math and I figured that it was worth paying the fees and taxes in pulling the cash out and reinvesting that elsewhere because what I gave up short term,
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Welcome to Passive Real Estate Investing and another episode of Ask Marco, where I answer your investing related questions.
Today's question comes from Jon and he says, Marco, I just discovered your podcast in the last couple of weeks. And I'm considering working with your firm.
Thank you.
I have my first meeting with your team this week. My question has to do with how much leverage is too much. I know leverage is largely a good thing in terms of amplifying capital to work harder for me, but I assume there is a point where an investor can be over-leveraged. How do you look at leverage in terms of how much is just enough and how much is too much?
Well, this is a great question.
Now, Jon goes on to ask another question here, which is not exactly related, but I'm going to read it out. He says, I've been listening to Bigger Pockets for several months and they tend to favor the BRRR strategy, which really minimizes the capital left in the average property. Thus theoretically, accelerating the velocity. But this strategy is high leverage.
Now that was a mouthful. And for those that don't understand it, don't worry. I'll try to explain it. I'm not sure I fully understand that question, but he goes on to say, this is something I'm trying to get clarity on how much leverage is too much. So that's the underlying question here is how much leverage is too much?
So he says, thanks for the podcast. I've learned a lot already - Jon
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Jon, you're welcome. So I'm going to cover a couple of points here, and I'm going to just start off with some general concepts, but then I'll ultimately tell you how you can determine for yourself how much leverage is too much.
We all need to understand from the beginning, fundamentally, there are two kinds of debt, good debt, and bad debt. So debt by itself is neither good nor bad. It's like saying a knife is good or bad or a gun or pistol is good or bad. It really depends on what you use it for and how you use it. And whose hands is that debt in. So generally speaking bad debt would be consumer debt. It would be something that you borrow and then apply towards something that has no residual value or does not go up in value. In other words, it depreciates things that tend to rust or just become obsolete. That would be bad debt borrowing on a credit card and going on a vacation is bad debt. But if you can take debt, whether you're borrowing a hundred dollars or a hundred thousand dollars, and you can turn that into an asset, so that debt is still there and better yet you turn that debt into an asset that generates cash flow.
So now you're receiving a return on that investment or return on the debt. Now it becomes a smart investment and real estate is the primary example of how to do that. And the best way to do that. This is where good debt becomes a very powerful tool because now you can use that debt bank lending, conventional loans, the mortgage to acquire real estate, a portfolio of real estate that now is an appreciating asset with tax benefits that generate cash flow. And it becomes a very powerful thing. So that's the first thing you have to understand the difference between good debt and bad debt because if you can borrow money that makes you more money on that money, that becomes a great investment. And then the question becomes, well, if that works and you can do that and you can do it more than once,
Today we have an interesting question because someone was asking me about how I got started. So I got an email from Addison and Addison asked me, what was your first step into the door? How did you get started in the realm of real estate? Not sure what he was asking me, I replied and asked him for clarification, and he came back. He said - I was asking about your start in real estate investing. I'm 19 and just got an internship and I was just thinking about how successful people in the business started. Thanks.
Well, Addison, thanks for asking the question. And it is a great question. So essentially what you're asking me is how did I get started in real estate investing? Well, let me start by sharing my story in brief. I'll just give you the short version of it. But this episode ultimately is going to be more so an episode of inspiration and motivation over instruction, but I will leave you with some tips and it's not just for you, it's anybody listening to this, but this is universal and this will apply to everybody. So real quick, my story is basically this. I knew at an early age, I was an entrepreneur. I had a desire. I wanted to have the freedom and I wanted to make money. And probably I felt like I wanted to make a lot of money. And I felt that I knew this at an early age, like eight or nine. I was probably observant and looking around and just seeing that there were a lot of people and families that had more than we had when I was growing up.
And it's not that I grew up poor. We were just very frugal and we didn't have any extra money. My parents both worked. In fact, my mother worked two jobs for a good part of my upbringing and early on my brother and I actually had to sleep in the living room of our house because my grandparents lived with us. And so it was only a two-bedroom house and my brother and I never had a bedroom for a very long time. There was always this desire to have freedom, time freedom, and make money. But my story was basically this. I started learning about business and entrepreneurship and investing in my teens, my mid-teens. And it was just something that was always of interest. And I wanted to learn how. And so I taught myself by ordering books and binders and courses that I would find typically on TV through some early infomercials, but wherever I can grab some information, I would just kind of pick it up and devour it.
I remember ordering a course on entrepreneurship and business and one on real estate investing. It was from the same publisher. So it was kind of easy. They probably up-sold me from one to the other, but I taught myself what I could and just learned what I could over the years as I was in school and going through school. Now, when I turned 18, that was when I bought my first rental property. And I'm kind of condensing my full story and background just to answer your question of how did I get started. I knew what I wanted to do before I was 18. I knew I wanted to invest in real estate and I knew I wanted to start a business of some kind. I didn't know what, but when I turned 18 when I could qualify for financing at the time I could get a mortgage at that age.
I saved up enough for my job that I started when I was 16, which was working at a grocery store, stocking shelves, bagging, groceries, taking groceries out for other people. I saved up enough for a down payment on a relatively inexpensive property in a less expensive area of the city I lived in. And I don't remember the numbers. I wish I remembered those numbers, but I want to say that at that time, many years ago, like we're talking decades ago, I bought an end unit townhome, two-story townhome for about $40,000 and the down payment wasn't all that much. And I probably used subsidized financing where you weren't putting a full down payment of, let's say 20, 25%. It was probably more like along the lines of 5% down. So I don't remember what kind of loan that was, but I was able to get in,
Welcome to another episode of Ask Marco where I answer your investing related questions. If you are new to this podcast, remember to click that subscribe button. So you never miss another episode of this great show. I want to teach you how to create wealth and passive income with real estate, so you can achieve financial freedom. That is the ultimate goal because that leads to time freedom. So I guess you could say time, freedom is the ultimate goal. It's not about the money and it's not so much about having all the money in the world and being rich or wealthy. It's really just to live life on your terms and enjoy it with your friends and your family and be able to do what you want to do with it, which is a good segue into today's question, which comes in from Lucy, and Lucy says, hi, Marco, I'm a 30-year-old woman living in Buffalo, New York, looking to purchase my first rental property next year. I'm having a hard time understanding the real estate lingo and therefore get discouraged from pursuing this venture.
I think Lucy, we all have this problem, even with more experience under our belt. You're always learning in this industry. There are things that are going to come across that are just new and you have to look it up, whether it be something related to cost segregation or a negative amortization loan. I mean, these are things that you don't normally hear day to day. Anyway, you go on in your email to say which educational resources would you recommend besides your very helpful podcast that can break down the real estate buying process in layman's terms.
Thank you, Lucy.
All right, Lucy. Thanks for submitting the question. Great question. I think there's a lot of people who are looking for either tips on getting started, or just, how do I begin investing in real estate?
So here are five or six things I would recommend for you and anyone else listening to this as far as getting started or strengthening your existing position because maybe you're not exactly a newbie, a beginner, maybe you've already purchased one or two properties, or maybe you have 5 or 10 and you still feel like you're just beginning and you are still green. My first rule of my 10 Rules of Successful Real Estate Investing is to educate yourself. And that applies regardless of whether you are a beginner or a seasoned real estate investor. So I'm just going to recommend three books. Now I'm not specifically recommending these three books because they are the be-all and all, or the only place to start. It's just three that I know are very good. And even if you just read one of these, you will be much further ahead, but this will help to build that real estate lingo and understand the real estate investing process, the parts, how they fit together, and what to look for and what to avoid.
And by the way, I have a book coming out later this year. In fact, it should have been out already. It's in manuscript form right now. So just keep an eye out for it. I will certainly email and notify everybody and mentioned it on the podcast when it is available, but it will be definitely yeah. A good primer for you or someone like you. That's looking for that foundation. So the three books I would recommend for now in no particular order are the ABC's of Real Estate Investing, it's by Ken McElroy, my buddy, Ken, who is a Rich Dad advisor. And it is a very, very good book. It is fairly comprehensive but doesn't cover everything. And so this is why reading two or more books is going to be helpful because you're going to have overlap, but you're going to have some additional information that is not available in just anyone book.
And this is the whole reason why you should be a perpetual student, just always be learning. The other book I would recommend. The second one at least is believe it or not a Dummies Book, Real Estate Investing for dummies. And that does not imply that you are a dummy. It covers a lot of very, very basic stuff,
An often overlooked aspect of the wealth gap in America is the fact that it is accompanied by a financial literacy gap. Most people have grown up surrounded by money myths which are the exact opposite of what the wealthy do with their money to get even richer. Andrew Cordle, the Founder and CEO of Money Is, does not buy into the money shortage myth. Andrew is an eclectic entrepreneur, an in-demand speaker, and a highly regarded wealth strategist. He believes that people have to change their mindset about money, get financially educated, and get some money movement going to be one of the nation’s wealth creators. Growing up in a working-class family, Andrew’s perspective was massively influenced by his journey towards wealth, which he achieved through real estate. Listen to him share his story with Marco Santarelli.
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Money "Secrets" Of The Wealthy We have a great and interesting show. It is the Money Secrets of the Wealthy. My guest is going to be talking about some of the things that the wealthy people know and ways that they think about money. The strategies they use to help create wealth and preserve it and grow it. This is a big topic and it is something that we could talk about for hours. It's important to know that at the end of the day, there aren't any true secrets. It's an understanding of money, how it works, how to put it to use, how to preserve it, how to grow it, how to protect it. These are topics in and of themselves, but at the end of the day, it's important to know that this stuff can be learned and implemented.
You can learn how money works, how investing works, how to become a better investor. This is nothing new and nothing that I've created. Being a shepherd of information, I’m passing it along and bringing great guests on the show like our guest who is willing to share, educate and teach the things that they have learned in their journey to becoming financially independent. Even in many cases, incredibly wealthy and rich. That is what our show is about, the so-called Money Secrets of the Wealthy. It will give you a lot of insight and perspective. You're going to enjoy the show.
It's my pleasure to welcome Andrew Cordle to the show. Andrew is an experienced real estate investor and a trainer who has fixed and flipped over 500 properties. He has done over 200 wholesale deals, over 100 lease option and subject-to deals. He invested in single-family and multifamily rentals. He is a two-time Amazon bestselling author. He's an international speaker. His businesses have generated over $100 million in sales in a three-year period, which is absolutely incredible. He's a respected thought leader in the business area of financial literacy. He is the host of the Money Is podcast. He does like to educate the 99% of people out there about money secrets, about what the 1% wealthy do. With all that, Andrew, welcome to the show.
Thank you, Marco. I’m excited to be here.
I'm glad to have you on. You are a good friend of mine. I know you and I have met long ago. We've crossed paths multiple times. Finally, we are getting together here to talk about something that you and I are passionate about. I know that our audience love to talk about money, wealth and income. Before we start going down that road, let's find out who Andrew is. Tell us a little bit about yourself.
I grew up in a very low to middle-income family that had nothing ...
Today's question is an interesting one from Jeff and it's about financing the down payment on the purchase of a rental property. And he says, Hey, Marco, really enjoy the show. Thank you for all you do. What are your thoughts on financing? The 20% to 25% down payment to buy a rental property? In my case, I have access to $80,000 at 3.5%. And this is based on a 30-year term. I would love to hear the pros and cons. Thank you, Jeff.
Thanks for the question. It's a good one. We get asked this from time to time. There are many people who consider this option and it actually does make sense. In some situations, it really depends on what it is you're trying to achieve and the conditions of the investment. Now, I don't necessarily recommend investing in properties that generate negative cashflow because then you're putting money in every month, but there are situations where it does make sense.And we're going to talk about that briefly here in a minute.
I want to start off by giving you an actual example, a hypothetical example, but to show you the numbers and illustrate the impact of doing this. And then from there, we can talk about, you know, when does it actually make sense to go with higher leverage or no down payment at all? So it's really, you know, a hundred percent financing and an infinite rate of return because when you put nothing down and you have positive cash flow, your rate of return as a percentage is infinite. So if you don't get that, maybe we need to talk. But think about that for a moment because when you put 20% down and you're getting, you know, 8, 10, 12% cash on cash returns, but you can turn that into an infinite rate of return. There's the given and take.
So that's one of the pros is that essentially you're putting in no money of your own, and you're still getting a hundred percent of the real estate and a hundred percent of the benefits that come along with that, the equity growth, the cash flow, the tax benefits, et cetera. But you have to understand that your cash flow goes down, has your debt service goes up. So there's a give and a take. I wouldn't call it necessarily pro and con it's a give and a take. Let's talk about an example. And then let's talk about when it makes sense to actually do this. And I've done this many times in the past. You just need to be sensitive about the conditions in the environment currently and going forward, because banks would refer to this as, a stress test. You have to make some assumptions that if there are going to be some hard economic times coming up and cash flows are going to scale back because maybe rents will go down in a particular market. We haven't seen that happen in a long time, by the way, just because rental demand is so strong in many markets around the country, particularly that we're in. But you know, you may want to just consider stress, testing your investment, pick to make sure that it will carry through for a year or a couple of years as you kind of weather through maybe some more difficult economic times.
So here's my example. I like to use a hundred thousand dollar rental properties as the example, most of the single-family homes that we're selling today are averaging about 125,000 median sales price, but they range from 80 to 180,000. That's the range, but the math is easy on a $100,000 rental. Okay. So here's the assumption. You're purchasing a hundred thousand dollar single-family, detached rental property, a turnkey rental property. So you're going to have an $80,000 loan if you're doing a, um, 80% leverage, 20% down, if that $80,000 loan is at 5% interest, which is pretty typical swinging from four and a half to five and a half right now for an investment property, your monthly payment is $429 a month, and you don't need to write down these numbers, just follow the example with me here.
So if you put the 20% down using the borrowed funds from your $80,000, and I assume that's a line of credit or a home equity line of ...
Today I am talking to you from Salt Lake City. I'm in a hotel room. The acoustics are not that great. So hopefully that won't show up in this particular episode, but I'm here to do a video interview for a new series on money that's coming out soon. So that's tomorrow and I figured I would tackle one of the Ask Marco questions here in my inbox.
So, today's questions are from Brock and he says, thank you, Marco, for all the great information you provide with every podcast episode.
You're welcome.
I am working towards being able to do my first deal, working with Norada Real Estate. And I can't wait! My question, it may be a bit long, but feel free to cut it up as you see fit. What are the effects you have seen in the cashflow real estate markets from COVID-19 for example, does there seem to be less, more, or the same demand for cashflow homes, and what effects have been seen in home supply? Are there certain possible changes you are keeping an extra eye on or is it too soon to see concrete effects? I guess in short, do you see now as a better worse or the same as before time to start getting involved in turnkey investing because of the effects of COVID-19 on the country? Thanks again, Brock.
Okay. Brock. Well, great question. So I can kind of boil the answer down to this. There is just as good of a time to be acquiring rental property. Now, as there was a month ago, as there was six months ago, as there was 12 months ago, the fundamentals have not changed.
The underlying demand for housing is strong across the country. Even in some of the overpriced bubble markets, there is still a lack of supply keeping prices up or pushing prices up to levels of appreciation that are above 5 to 7%. Now we've seen a lot of that slow down this year and that's okay. We need some breathers, but that is predicted and expected to continue. So we are still going to see strong growth. And the bottom line is, is that we all need food, shelter, water, and clothing, and housing is just a fundamental necessity. We need a place to live. And a lot of the markets, especially the markets that we're in, have strong demand for housing. There's a lack of supply. And this whole thing with COVID-19 has actually perpetuated the problem because people who would normally move and sell their house, haven't, there's a lot of people who are still out there and more coming out of the woodwork that actually wants buy housing and rentals that are now out there looking for a property that can't find it because supply was low to start with and now it's even tighter.
So there's not as much inventory. In fact, in a lot of markets inventory is below two months' worth of supply, meaning that if there were no new inventory coming on the market, the existing demand for the housing in that particular market is going to dry up in two months or less. So fundamentals are strong and we are just not keeping up with putting new housing units on the market and to perpetuate that problem with COVID. So many contractors and builders had to basically put the brakes on for a prolonged period of time that they weren't actually out building a new product or renovating existing products to put new housing units out on the market. Now, from a tenant perspective, when I say tenant, I mean from a rental perspective, this is maybe not what you're asking, but maybe it is a, so I'm going to throw that in there, here, the country, as we are seeing is slowly beginning to reopen, you know, a lot of States and markets are now in, you know what, they're calling phase two and phase three of this reopening with COVID-19 pandemic, but there's still a lot of industries that are affected and experiencing economic effects.
And, you know, we still see shutdowns and slowdowns. The rental industry has remained active throughout this pandemic, a very active actually. And I'm going to give you a couple of stats here, but you know, we're still not out of this upset if you will.
The 11th largest community in Florida and home to 32 Fortune 500 companies, Cape Coral has a very diverse economy and stable market, and it’s continually growing! That is why it is one of the best markets for real estate investing today. On today’s show, Marco Santarelli talks with one of his providers in multiple markets, Jim, about Cape Coral and why it’s considered one of the main markets in Southwest Florida. This is a very interesting market because it's growing, has a strong demand, and lots of population growth. Stay tuned to discover why you should be looking at Cape Coral.
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Market Spotlight: Cape Coral, Florida It's time for another market spotlight. This is to help educate yCape Coral Marketou and share the opportunities that we have around the United States. In this case, in Southwest Florida. We are talking about Cape Coral, Florida. Why is Cape Coral one of the best markets for real estate investing? In summary, it is a diverse economy and diverse market. It is a stable market. It has been continually growing. It is home to 32 Fortune 500 companies. We have these newly-built single-family homes and duplex properties available in Southwest Florida. These are in solid blue-collar areas that have relatively speaking high rents.
When you have an area with high income and high rents because those are the people who want to be renting and not buying, it makes for a very solid investment. There are high private sector employment opportunities in and around Cape Coral and Lehigh Acres. In fact, all of Lee County. It's a solid employment market and it is also one of the fastest job growth markets in the country. Cape Coral is a relatively large coastal city. It's filled with canals and located in Southwest Florida. The city core itself has a population of about 190,000 people. It's made up of about 30 constituent neighborhoods. It is the eleventh largest community in Florida, but Cape Coral is neither predominantly blue or white-collar. It is a broad mixed workforce with blue and white-collar jobs. Overall, Cape Coral is a city of sales and office workers, service providers and professionals, which for me is fantastic as a landlord.
There are especially high number of people who work in office and administrative support, roughly 14% of the population. Another 13.5% are in sales jobs. About 10% are in management-related occupations. The educational level of Cape Coral citizens is a little higher than the average for US cities and towns. Roughly 23.3% of the adults in Cape Coral have at least a Bachelor's degree. The per capita income in Cape Coral is almost $29,000 per person. The median household income is interesting. Jim has given me a slightly different number and it depends on where you look up the data and the year that it's coming from. The median household income is over $56,000, which is close to the US median household income of $60,000. Keep in mind that when you're looking at the entire country, you are factoring in all of the big tier-one markets like San Francisco, New York, Manhattan, Los Angeles, etc. It’s a very high income. When you compare that to the median price of a home in Cape Coral, which is in the upper $100,000 to low $200,000 range, those numbers are very attractive. It makes it an affordable market.
Cape Coral is an economically diverse market, but it's also a very ethnically diverse city.
Today's question comes from Phillip and he says, hi Marco. My name is Phillip from Southern California. I'm a millennial that is looking to create serious passive income through rentals. What kind of properties and what city would you recommend to invest for first-timers in real estate? Investing like myself, especially in these strange times. Thank you for providing us educational and informational content every week! - Philip.
Well, Philip, thank you for your question. It's a good one. There's a lot of new investors out there. Some of them just call themselves newbies, but we all start with our first property and we all start at someplace in the beginning. And you living in Southern California are in an unfortunate circumstance being surrounded by very expensive property. So from that perspective, it doesn't make sense to invest in your backyard.
However, good news. The good news is is that this is a very large country made up of over 500 metropolitan statistical areas or what is known as an MSA. And because of that, you have the ability to invest in any of those markets. Pretty much anytime you want, the question is what market and what are you looking for? And I think that's the basis of your question here is you're asking what kind of properties and what kind of market or cities should I invest in. And you're a first-time real estate investor. So you want to start off on the right footing and not make mistakes, or at least not costly mistakes in the beginning, but you want to have success and that's not hard to do just follow a simple formula.
And so here's the formula and it really is a top-down approach. Think of it like a funnel. In fact, I talk about this in my 10 rules of successful real estate investing. And I believe it's rule number six, which is taking a top-down approach. So what do you want to do is not start with a property, although that is important, but you want to start with the market. So you want to find a market or look for a market or have someone help you find a market, decide on a market that is healthy. It has good fundamentals. In other words, you want to market that is not in decline. You want a market that has population growth and at the heart of it, all our jobs and job growth. If you have a healthy, vibrant economy in a local market, then you will have jobs and probably job growth. That job growth means that more people will move into that market and the population will grow and that increases demand.
And that drives the market up in terms of price. And even if it doesn't go up in price, you have that stability, that upward pressure, because people need a place to live, whether they're buying it or renting it. So at the heart of it, all our jobs and job growth population growth is great. Organic is there ideally, but if you have people coming in from the outside, then you have net migration, positive migration that helps the market. And that just helps you. Now keep in mind, a lot of the markets are pretty big and you start to need to look at submarkets neighborhoods within those. And that's the funnel approach. So you start with the market, work your way down to the neighborhoods, and then the property. One more comment about markets that I want to just throw out there.
There are three general types of markets that we classify there. The tier one, two and three, uh, we don't typically use that terminology all that much, but a tier-one market is the big market like San Francisco, Los Angeles, New York, and often those very large markets tend to be overpriced, maybe not everywhere within that metropolitan area, but many parts of it. So where are you going to find the numbers, making sense and still have a diverse economy and a healthy market and a lot of supply and or demand driving the market one way or the other are in the tier two markets. These are markets that are typically in the hundreds of thousands in population to a couple of million. So Kansas City,
Today's question comes from Raphael and he says, hi Marco, thanks for the great content you provide every week. I came across your podcast after listening to another real estate investing podcast. And I am getting a ton of value since I started listening six months or so ago. My question today is in regards to LLCs and how someone would pay themselves through an LLC. If all rental real estate is held in a limited liability company for optimal asset protection, here is a scenario say I become financially free today and quit my job. I own 20 rental units and have a total net cash flow of $6,000 per month. If my rentals are held in multiple LLCs, one per state that I am invested in, and all of those LLCs are held in a Wyoming LLC as a holding company.
How do I pay myself through those entities? I'm having a difficult time wrapping my head around that and would love to hear your thoughts and comments. Thanks for doing what you do. Raphael.
Thanks for the great question. It sounds complicated and I can totally understand how this can be a bit of a brain twister. I struggled with it for a number of years. Believe it or not, until I actually saw the light, I guess I saw through the matrix, but it's really pretty simple. So really the only LLC or entity that you are paying yourself through is your Wyoming, LLC. In other words, it's that top of the pyramid holding LLC, that you are actually a direct member in, you are not a member of the title, holding LLCs in each of the States that you have a property in. So what happens is, is you just think of this as a kind of a squashed pyramid.
You have these LLCs in the different States, that whole title to your property and the rental income that comes in from your properties flows into and through those LLCs. And those LLCs are owned by your Wyoming, LLC. So income and expenses are essentially shown in your books if you will, for each of those LLCs, but the income doesn't get paid to you or anyone else other than the member that owns that LLC. And in this case, that's your Wyoming, LLC. In other words, you're holding LLC. So the income just flows from the properties through those disregarded entities, those disregarded LLCs up into your Wyoming, LLC. And then from there, you can just pay yourself or you and your partner or you and your spouse or you and all your partners or whatever the case is. Whoever is the owner or owners of that Wyoming, LLC.
So the properties that are held in those LLCs for asset protection purposes are known as disregarded LLCs, also known as pass-through entities because income and expenses essentially just pass straight through and flow right up to the Wyoming LLC. So a disregarded LLC refers to an LLC that's owned by a single member, and this is the way the IRS looks at it. And the single member, in this case, is the Wyoming LLC that you have at the top of this pyramid unless a single-member LLC chooses otherwise, the IRS treats it as a sole proprietorship and it doesn't tax it. You know, this is the beauty and the simplicity of this instead profits from those LLCs flow through right on up to the holding LLC and that holding LLC in Wyoming in your case is the owner. And you can actually have multiple layers, but to keep it simple, this is the basic structure is what you just outlined in your question to me.
So that's really it at the end of the year, you or your tax professional will file a form 1065, I believe it is. And you will give yourself a form K1, a K1 statement from that Wyoming, LLC. And then you just report whatever's on that K1 statement for income and expenses and whatever else you have coming out of that, LLC, to you on your personal tax return. So you are paying yourself monies flow from your properties on up through the title, holding LLC to your Wyoming, LLC, which is your holding company. And then you just pay yourself from that one entity and from an asset protection perspective, you really own one LLC,
We all want to be a winner, but what does it truly take to be a champion? Joining Marco Santarelli on the show today is Nicky Billou, a thought leader and high-performance guru. Having taught clients for years to help them crush their business goals, Nicky believes how you think is the decisive factor in what makes you a champion. Nicky is the author of Finish Line Thinking: How to Think and Win Like a Champion, a book packed with his insight and his years of experience in working with Olympic champions, world record holders, business champions, and thought leaders. Don’t miss this episode and start thinking and winning like a champion.
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Before we go any further, if you haven't subscribed to the show, remember to click that subscribe button and subscribe to the show so you never miss a great episode. Ask the question, "How do you think, and when like a champion?" Let's, first of all, ask, what is a champion? According to the dictionary, there are two main definitions. One is it's a person who wins a first prize or first place in a competition. The second definition of what a champion is a person who is clearly superior or has the attributes of a winner. I liked that second definition because we all want those attributes of being a winner. We all want to be a winner. You see how a champion thinks is the decisive factor in what makes them a champion. Their thoughts, attitudes, and beliefs are precise that they allow themselves to win. They ensure and virtually guarantee the path to becoming a winner and a champion. It's what you will allow yourself to become as a champion in your own right, in your chosen area of endeavor. If you take the time to learn and apply the principles we're going to talk about on this show, you can and will become a champion. My guest was on with Mark Victor Hansen, and although he didn't do a lot of the talking, he had a lot of great things to say and it was impactful. I've come to know him much better here. He's an interesting and dynamic person.
It's my pleasure to welcome back on the show, Nicky Billou. He was on the show with me when I was with Mark Victor Hansen. I'm glad to have him back on. What you guys don't know is that Nicky has spent many years figuring out the mindsets of champions, which speaks volumes, because we want to get into the minds of people who are champions and become champions ourselves. He's worked with athletes and entrepreneurs at the highest levels from Olympic gold medalists to billionaires. I know Nicky can ignite your passion and he can push you guys further than you ever thought was possible. Nicky, welcome to the show.
Marco, it's an honor to be back. I enjoyed being here the last time. I know this time is going to be as great.
It will be. I'm excited about your book that you sent me. A brilliant subtitle by the way. The book is called Finish Line Thinking and the subtitle is, How to Think and Win Like a Champion. That is extremely fitting because I know that our audience loves to become a better version of themselves to grow, expand, and be more to themselves, their family, and to the world. Before we get into some of the topics that you talk about and what you studied with athletes and billionaires, and even Mark Victor Hansen, I want you to talk about that. Tell us more about yourself. Let us know who you are.
So today's question comes in from Brock and he says, hello, Marco. I just listened to your two-part series regarding wealth growth and creation using one's IRA and found it very interesting. And I plan on listening to it multiple times. Am I able to do something similar to this concept with my 401k, or does it have to be a self-directed IRA? Thank you very much for your time and podcast Brock.
Okay, so this is a very good question. And so just as a quick recap, these are individual retirement accounts. These are retirement accounts that you can self-direct and it gives you the investor control over the buy and sell decisions of whatever you're doing with it. It permits the ability to invest in alternative investments. Other asset classes from precious metals to even cryptocurrency.
A lot of people use them to invest in notes, performing, and nonperforming notes. You can use it for real estate. There's very few limitations. It's typically art collectibles and the light. The short answer to your question is anything and everything you can do with a self-directed IRA. You can also do with a self-directed 401k, they're slightly different vehicles, but they are essentially accomplishing the same thing, which is allowing you to defer the taxes that you would normally pay on income and gains that you make from your investments to later years. And the power of that is that you can take that tax money or what you would be paying in taxes. Now today, this year and applying that towards those investments. So you actually have more purchasing power if you will, because you have more to invest from the deferral of the taxes. And so that allows you to essentially compound and accelerate the growth in your retirement account.
But what you can do in a self-directed IRA is the same as what you can do in a self-directed 401k, as long as they're both. Self-directed the thing with the 401k is often those are tied to employers. And so you're going through your HR department and whoever the administrator and custodian is, that's tied to that 401k. And so often you don't have a lot of flexibility. In fact, most of the time they're not self-directed. So you need to actually talk to your employer or HR department to find out if it can be self-directed and if it can, what you need to do sometimes they'll just tell you that it can't win an actuality. It can be some of the time. I know they don't like to turn it into a self account cause it's more administrative work. And sometimes it's just outside the lane of where they want to operate that 401k.
Now, if you leave the employer, then the 401k comes with you. It goes along with you. You don't have to cancel it. You don't have to liquidate what's in the 401k. It just becomes a 401k that is now attached to you and you are responsible for it. Your employer has nothing to do with it anymore. And if you were getting contributions where you would get a match, so for every dollar you put in, they would put another dollar or 50 cents just as a match in your contribution. You obviously lose that because you're no longer with that employer. So now you have the ability to convert that 401k into a self-directed 401k of some kind, such as a solo 401k. I would just go back to the recent podcast episode about this topic. In fact, I think it turned it into a two-part episode just because it was so long with so much detail, but it's worth going back to listening to that because we talk about wealth growth and creation strategies, using self-directed retirement accounts.
That is basically the long and the short of it. Just some last comments here, self-directed IRA is held by a custodian that you choose. So they essentially hold the IRA assets and execute the purchase and sale agreements or whatever paperwork is required for the investments that you make. So they're essentially handling that retirement vehicle on your behalf. As far as contribution limits go,
Today's question comes from Kelliane, and she says, hi Marco. I just recently discovered your podcast and have been binge-listening. Thanks for the great content. I am an attorney turned entrepreneur who recently sold my eCommerce business. My husband is in medical device sales with a high W2 income. I am now launching a new consulting business and podcast. My husband and I are trying to also ramp up our real estate investing business. After exploring many options. We are most interested in passive real estate investing example, acquiring turnkey, single and multifamily, multifamily, syndications, and hard money lending. We are working diligently to do everything we can to create a passive income, minimize taxes, and achieve financial freedom within the next five to seven years.
Great goal and congratulations on all that.
Because of my husband's high W2 income, I would love to be able to qualify as a real estate professional to take advantage of the tax benefits. However, I don't see how this is possible. If we were to pursue the passive real estate investing strategies as mentioned above, do you have any insight as to how we can get the best of both worlds? Thanks, Kelliane.
Well, Kelliane, thanks for submitting your question. And this is a great question because we are all interested in building a business and, or increasing our income, lowering our taxes, or keeping them under control and of course, achieving financial freedom within the timeframe that we set out to do it. And so this is all great. Now let me begin by first of all, giving you a disclaimer, and I'm going to probably mention again later, I am not a tax advisor or a tax professional, and I don't give out financial advice. So I'm going to give you some perspective and commentary that will at least help put this together for you in your mind and get you on the right track. But ultimately I think you're going to have to consult with a good tax professional that is knowledgeable on the real estate professional classification. But let's talk about that first because maybe you won't even get that far and there are pros and cons and you'll understand why I say that.
So let me, first of all, begin by saying that we all know real estate has an amazing ability to potentially provide tax losses and deductions with tax-free cashflow real estate is one of those investment vehicles where you can actually show a loss on paper, what we call a paper loss, but still have positive cash flow that flows into your pocket. But these deductions, sometimes they're not completely used. And the question that you're asking is how can we take maximum use of these deductions, these passive losses and apply them to all of your income, not just passive income, but active income.
I believe that's the direction you're going with this because your husband has a high income. And so you have high household income. Let's also start off by saying this for those people who are not clear on what a real estate professional classification or status is as a real estate professional, you are able to deduct 100% of your rental depreciation and your quote-unquote losses against any other type of income, whether it be ordinary income or passive income. And you do this all on the front page of your 1040 IRS tax form. So it's a beautiful thing. If you qualify for it, when you can take all of your passive losses, even those losses that are just paper losses on paper, they're not necessarily realized the losses that you actually take as a loss, and you can flow that onto your tax return and take that as a deduction against your income, all income, including ordinary income. That is the goal. The main benefit of being a real estate professional and qualifying for the real estate professional classification.
Now the IRS classifies real estate investors into three classifications. And the first classification is what is known as a passive investor. Now,
Do you ever look at big generational businesses and wonder how they made it? In this episode, Marco Santarelli is joined by someone who is more than qualified to answer that question. He invites on the show Mitzi Perdue, businesswoman, author, and master storyteller. Mitzi has not one but two business titans in her life. She is the daughter of Ernest Henderson, the founder of the Sheraton Hotel Chain, and the widow of Frank Perdue, the former President and CEO of Perdue Foods. With family members who have built generational businesses from scratch in the early 1920s and created and maintained strong value-based cultures, learning about what makes a business successful is just beyond any doubt. Here, Mitzi shares with us some of those lessons that she has learned first-hand, especially those that helped build the massive Sheraton Hotel Chain. She also addresses the current COVID-19 pandemic, giving out great insights to inspire those who are struggling not to lose heart. Whether you are in the real estate industry or not, this conversation will undeniably provide some great nuggets about success—what it means, what it entails, and how to maintain it.
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Lessons That Helped Build The Massive Sheraton Hotel Chain With Mitzi Perdue What if you had someone in your life who was a titan of real estate? I have a very special guest. Something a little different than what I normally do on the show. My guest has had not one, but two titans in her life. The first is a real estate titan. You may have heard of the Sheraton Hotel chain. It’s a massive hotel chain. It was started by Ernest Henderson. Ernest is the father of my guest, Mitzi Perdue. As you may know, the Sheraton Hotel chain, Sheraton Hotels, and Resorts, is an international hotel chain. It's owned by Marriott International. As of the end of 2018, Sheraton operated 441 hotels with 155,600-plus rooms globally. That's not all. Mitzi was also married to a business titan as her husband.
That titan was Frank Perdue, who was the President and CEO of Perdue Foods, a major chicken, turkey and pork processing company in the United States. In 2016, their annual sales were a whopping $6.7 billion. The reason Mitzi is on the show is because in both cases, if you have family members generationally that put enormous effort into creating and maintaining strong value-based cultures and building businesses literally from scratch in the early 1920s, then I'm sure they have some lessons to share. I know Mitzi has had many lessons learned. With that, I felt that it would be great to learn what helped build these massive companies. We could maybe learn from some of those lessons in helping us as individual investors and us building our businesses and our real estate portfolios.
It's my pleasure to welcome Mitzi Perdue. She is a businesswoman and author of the book, How to Make Your Family Business Last. Her family began in real estate 180 years ago with the founding of the Henderson Estate Company. Her father continued in real estate, founding the Sheraton Hotel chain in the 1930s. In continuing the family tradition of real estate investing, she invested in agricultural land in the 1970s. If you've tasted wine from Robert Mondavi, Kendall-Jackson, Gallo, Sutter Home, or Toasted Head, you may have sampled grapes grown in her California vineyards. Mitzi, welcome to the show.
Today's question is a simple one and a good one. And it comes in from Anthony and he says, Hey Marco, my fiance. And I plan to start working with your investment counselor. As soon as we gather the capital we need to get started, which I have later found out is getting close. Question for you, what are your thoughts on reinvesting the cash flow you get from the rentals into the stock market index fund. I want to do this with returns about 13% a year, inception annualized at surface level. It seems like a great way to milk more out of that money, but I'm not sure if my strategy is flawed to my understanding of depreciating tax law would allow me my cashflow to be tax-deferred in the stock market.I'd be hit for longterm capital gains at around 20%.
Would it make sense to reinvest the net cash flow into the market in an attempt to increase my overall return on investment? I'm 26 years old and our mindset right now is growth. We have a goal to buy a lot of properties in the next decade. Thank you. I did reply back to Anthony and he later sent me an email saying my fiance and I are working extra hours to get as much capital as we can to get started on a good foot with rental properties. So we've been busy as well. I've noticed that you already sort of covered my question in your podcast on episode 177, which helped give me some good advice or guidance. I appreciate all your guidance. Have a good one.
Okay, Anthony. Good question. So I don't think this is flawed advice at all.
What you're doing is a good idea. I mean, if you can get a 13% return on the cash as you save for your next property, that's a great way to go about it. And your cash is not sitting idle. It's moving it's, you've got it working. And a 13% return is not anything to sneeze at. So if you can get a 13% return on your investment or an annualized return of 13%, then go for it. I mean, that's a pretty darn good return and it's far better than it just sitting as cash or being in a savings account in a bank at, you know, a quarter percent or whatever you can get. You know, of course, you always have to remember that past performance on any of these funds like index funds and mutual funds and whatnot, that past performance is by no means a guarantee of future returns.
A lot of funds do well for many years back to back. And then all of a sudden they hit the wall and sometimes they even lose money, but for smaller amounts of cash, it is a good idea. If you have larger chunks of cash, meaning enough that you can put a down payment on your next rental property. I mean, that is your next goal. That's your ultimate goal as you build your portfolio. So you'd be better off investing that chunk of cash into the next rental. Then, you know, having larger chunks of cash sitting around the idea is really just to save a, not for the sake of saving. You never save for the sake of saving. That really is a money mistake. The only reason to save money is to one day, invest it. You want to deploy it as soon as possible for the purpose of making your next investment.
You want to turn that into cash flow and you want to turn that into an investment, an opportunity for yourself, but just don't let it sit as cash. If you can get 13%, go for it until you can build up a chunk of cash to put as a down payment on your next investment and written and repeat, just keep doing that until you get to the size of a portfolio that will make sense for you and your, your wife or your fiance. Now, one other comment, and this is another strategy, not necessarily for you, but in general, many people like you are in growth mode. They're building a portfolio and they have a goal of X number of properties, but there are people who have reached that portfolio size that makes them comfortable, that will help them get the lifestyle that they want to achieve their financial goals.
And at that point, whether that's five properties, 10 properties, 15, 20, 30, 50 properties,
A self-directed IRA is a form of individual retirement account that is designed to allow investors to diversify their retirement assets, including cash, beyond what is typically offered by many brokerage firms. The advantage of that are that you can increase the potential for growth by giving you the freedom to invest in almost any type of asset. In the second half of a two-part series, Marco Santarelli continues his conversation with Glen Mather, the President and CEO of NuView Trust Company, about building tax-free wealth using self-directed IRAs. Stay tuned to this episode and start taking control of your financial future!
This is Part Two of How to Build Tax-Free Wealth Using a Self-Directed IRA. This is my interview with Glen Mather. The episode went rather long when I was recording with Glen. I decided to chop it out into a two-part episode. This is part two. If you haven’t read the first one, go back to the previous episode and read that. What we’re talking about is how to grow your wealth in a tax-deferred or tax-free basis. You can do this through a self-directed retirement account, what we refer to loosely as Self-Directed IRAs. There are several different kinds as you have learned from Glen in the previous episode. One is to help you gain control of your capital, grow as fast as you can, diversify within your portfolio, have control of your financial future and take advantage of the tax advantage accounts that are laid out by the IRS using these particular vehicles. That allows you to defer your taxes or grow your taxes tax-free and take them out later. You can pay your taxes one way or another, either upfront or down the road. The episode is filled with valued information, so pay attention, gather what you can, read it twice and recognize how you can start, grow and leverage retirement savings. Here we go with the continuation of my interview with Glen Mather.
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How To Build Tax-Free Wealth Using A Self-Directed IRA (Part 2) Here's what I like. With the 1031 exchange, you have to hop through a lot of hoops. You’ve got to find an exchange person and go through and identify three different types of properties you can go in. There are rules and I'm not up on all of them. We are opening our 1031 exchange business because we are starting to get many people that have money in IRA money outside the IRA. They're twins, as far as I'm concerned. One has to do with continuing to roll up wealth and accumulate wealth. We're doing the same thing in IRAs, but we don't have the restriction of like-kind exchanges. I can buy insurance. I can buy a currency. A lot of people do things that I don't do in my own retirement plans, but they love it. They love to speculate on that. You can create an LLC and buy a cryptocurrency and the next day, move it into long-term assisted living and then go do something that is lending money. You can do all of this. You don't have to even stay in the same class. Because you're doing it under the umbrella of an IRA and under one custodian, you can move all the profits to all those different ventures. Whereas with 1031, you're restricted to the type of a like-kind exchange. The answer to my question is built into the self-directed IRA because with 1031, you're trying to defer your taxes, but if you already have the assets and the cash inside a self-directed IRA, it's already tax-deferred.
How would you like to grow your wealth on a tax-deferred or tax-free basis? Host, Marco Santarelli, has the answer for you: self-directed IRA. This type of retirement account is designed to allow investors to diversify their portfolio, giving you the freedom to invest in different retirement assets and, consequently, the advantage to increase the potential for growth. In this episode, Marco extends to you this amazing tool that you can add in your investment toolkit. Together with Glen Mather, the president and CEO of NuView Trust Company, they dish out some valuable info that you’ll want to pay attention to so that you can recognize how you can start, grow, and leverage your retirement savings. Follow through in this great conversation to take control of your financial future, and tax-free at that!
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How To Build Tax-Free Wealth Using A Self-Directed IRA (Part One) How would you like to grow your wealth in a tax-deferred or tax-free basis? You can with a self-directed retirement account. These are also known as self-directed IRAs. A self-directed IRA is a form of individual retirement account that is designed to allow investors to diversify their retirement assets, including cash beyond what is typically offered by many brokerage firms. The advantage of that is, you can increase the potential for growth by giving you the freedom to invest in almost any type of asset, it gives you the ability to diversify your portfolio by investing in alternative assets such as real estate and precious metals. It can hedge against market fluctuations and volatility.
As a side note, I'd like to say that the stock market and equities market are the alternative investments and that real estate being a hard asset is the true and best investment. Thirdly, it allows you to take control of your financial future because these are self-directed retirement accounts. Lastly, you can grow your savings in a tax advantage account that allows for tax deferral and/or tax-free growth. This episode is filled with valuable info. You'll want to pay attention and recognize how you can start, grow, and leverage your retirement savings.
It is my pleasure to welcome Glen Mather to the show. He is the President and CEO of NuView Trust Company. He speaks nationally on the topic of self-directed investment retirement accounts and has been featured in print and on television. It was due to Glen's passion for self-direction that NuView was opened in August of 2003. He founded the company to broadly open up the opportunity for others to participate in taking control of their IRA and the investment opportunities available to them to put into those retirement accounts. Over the course of the last several years, he has gathered a great management team that shares his enthusiasm for providing others access to the full opportunities within their retirement account. He is also a great acquaintance of mine. We've been on a couple of cruises together. Glen, welcome to the show.
Thanks, Marco. I've got that a bit. All the other stuff is true but we started NuView with the idea that was basically mine because I was self-directing my IRA with a local bank in Chicago. It took all sorts of maturations to get into the bank and allow me. I wasn't a high-net-worth individual. I didn't have this access available to me. When I learned I could buy real estate in my IRA,
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions. If this is your first time here, remember to hit that subscribe button. So each and every week you are notified of when we put out a new episode.
So today's question comes from Clay and generally his questions about diversification in multiple markets and he says, hello, Marco. Loved the podcast. Keep it up. Thank you. First question, we have five properties in New York state in the same city. The cashflow is great and reliable, mostly 10% cap rates or one and a half to 1.7% rent to value ratios, which I will explain in a moment. He's saying these are C plus to B minus neighborhoods. I'd like to buy 20 additional properties, but not sure if perhaps I would be better off diversifying away from the same city that I'm currently in, perhaps into Indianapolis or Memphis. For example. Money would not go as far and returns would be lower, but I'd be diversified.
His second question here is all of my loans are residential. As all of my properties are for family or less. I have six loans currently but will easily surpass 10 if I am to reach my 25 property goal. In this case, would you recommend commercial loans? Everything I see and hear is 10 loans or less. It seems to be the magic number for residential above which you have to go commercial, which doesn't seem to have as favorable terms. I look forward to your answers. All the best, Clay.
Clay, thank you for your two questions and there's probably more buried in there if I was to really just think it through, but let's talk about the first thing here. I guess the first question that I would ask is what is your overall strategy?
Are you focused on building a real estate portfolio strictly for the cashflow and focused on markets that will give you that? It sounds like what you have right now is producing very good returns. I don't know what the cash flows are like, but your cap rate and your rent to value ratio is very high. So that right off the bat tells me that you're probably in C class neighborhoods because it's hard to find a number of that high in better neighborhoods such as your upper B and eight class neighborhoods. And there's nothing wrong with that. Everybody has their preference and everybody has their strategy. So if you want to stay focused in your C class neighborhoods and you're, you're doing well and you're successful there, and maybe yourself managing these properties, so you have the ability to have your own personal control over the portfolio, that's great.
You know, fantastic and keep up the good work. But if you want to expand, then what you're essentially doing by applying geographic diversification is increasing your cashflow reliability and decreasing your market risk. So the goal of diversification regardless of the investment is generally to reduce an investor's overall risk. So diversification in real estate is pretty easily achieved by purchasing income, producing properties in different markets around the country. And these are markets that are geographically diversified. So typically they're going to be in another state or just far away from the existing market that you're in right now. And real estate investors also realize that diversification tends to reduce both the upside potential as well as the downside potential of their portfolios. And I know this sounds a little counterproductive or counterintuitive, but you have to remember that the reason investors want to diversify is to protect their real estate portfolios under a range of economic conditions.
They want to avoid being committed exclusively to a single market's economy. And that's the whole reason for diversification. So I guess without knowing more, I would say if you are very comfortable with your local market and you are confident about its future over the next two to five to seven to 10 years, which I know is a crystal ball question,
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
And today's question comes from Linda. Linda says, hello. I am currently in the process of saving up for an investment property but I am doing my research before I commit. I came across your website and it was very informative and clearly laid out, very user friendly. Thanks. So one of my main concerns as friends and family also advise me of is purchasing a property outside of my local area and then trusting a property manager with my investment. They do not always have my best interest at hand and will not necessarily do their job responsibly, which could lead me into more debt having to fix up a damaged property. I have a friend who signed her property off with a contract to a management company who acted irresponsibly and she couldn't follow through because she lived halfway across the world.
What can you say about this or what has been your experience? Thank you, Linda.
Okay, Linda, thanks for the question. Let me begin by saying that property management is very, very important. In fact, I kind of jokingly say at times that you live and die by your property manager. Property management is critically important and I like to think of my property manager as an asset manager because they are not just managing and taking care of my property, but they're managing and taking care of my assets. And those assets are important to me because my assets generate income and cash flow. And so I want them to continue to generate income and cash flow for me. And as long as they're properly managed, then they will continue to do so for decades to come. Understand the importance of property management right from the beginning, it's your property manager and the management team.
They're one of the most important team players on your team. Now what you'll want to look for is a full-service management company or a full-service property management firm. And I like to avoid real estate agents, not because I have any problem with real estate agents and brokers. They are qualified, often qualified to do property management and in many States, depending on the state, the fact that they have a license like a real estate broker's license qualifies them to do property management, provide property management services for a fee. But the problem that I've had in my own personal experience and what I hear as well from others is that property brokers and agents that are doing property management are often in moonlighting as you might say. So they're splitting their time between selling and listing residential real estate, doing property management, and potentially something else.
They may have, you know, a fuller part-time job on the side as well. I try to avoid real estate agents as property managers. I've been there and I've found out that it wasn't the best experience. Now speaking of experience, you want to look at the experience of your property managers, but also their experience with the property type that you have. So if they are experienced with single-family homes and duplexes or let's just say residential property, which are one to four-unit properties, great. That's the type of property manager you want. You don't want a commercial management company because they are managing commercial buildings, retail space, office space or whatever. Also with full-service property management firms, you'll want to consider the number of properties under management. Are they managing 10 or 20 properties or is it more like one or 200 properties? The more the better.
Typically speaking because it gives them a broader range of experience and if they have over a hundred units under management, odds are they've probably got a team of two or three people that are going to be spread across the actual leasing or management side of it as well as the maintenance side of it. And so now you've got that diversification of skills that a...
The Phoenix metropolitan area is becoming one of the most lucrative markets for real estate this year as it outgrows its dependence on tourism and construction and sees the growth of a broader employment base. In this episode, Marco Santarelli and senior investment counselor Steve Olson talk about the prospects of the Phoenix real estate market, specifically in rental properties and new construction of triplex properties. Phoenix is a growth market that will ensure prospective investors massive returns in the short term. If you’re looking to make money quickly in real estate this year, Phoenix might just be the right market for you. Listen in and take a sneak peek into this vibrant market.
It's time for another market spotlight. I do these episodes to educate you and to also share the opportunities that are available around the United States that you may or may not be aware of. A lot of people are focused on their local market or what is going on in their own state, that they don't realize that there are over 400 metropolitan areas around the country that you can look at and find great investment opportunities. Before I get into things, remember to subscribe to the show so you don't miss another opportunity, another market spotlight or any other type of education that we are passing along here lovingly and freely.
I have this bad habit of keeping Christmas cards. I had a small pile stacked up on my desk here. I picked one up here from a very nice lady, Teresa, a client of ours. I reread it and she said, “Marco and team, I wish you all a wonderful holiday celebration and a prosperous 2020 year.” I am thankful for stuff like this. This is the great part, she goes, “Thank you, Marco, for all you do to help us in believing that anybody can invest in real estate. It is possible. It is not rocket science. I have done it, thanks for your show and great help from your team. Sincerely, Teresa.” You're very welcome, Teresa. Thanks for your trust and your business. We hope that we can help build a large real estate portfolio for you so you have your financial goals achieved.
We have a market spotlight on Phoenix, Arizona. The Phoenix housing market was headline news when the housing crisis of 2007 and 2008 caused home values there to fall by as much as 50%. Nowadays, we see the Arizona real estate market thriving. The Phoenix Metro is expected to be among the top five housing markets in 2020. The favorable living conditions there have comforted real estate investors to invest in the Phoenix real estate market. Phoenix is a very large city. It's located in the state of Arizona. It has a population of over 1.6 million people and about 360 constituent neighborhoods. Phoenix is the largest community in Arizona.
Unlike some cities, Phoenix isn't mainly white or blue-collar. Instead, most prevailing occupations for people in Phoenix are a mix of both white and blue-collar jobs. Overall, Phoenix is a city of sales and office workers, service providers and professionals. There are a lot of people living in Phoenix who work in office and administrative support. That makes roughly about 14% of the jobs there. Another 11% or so are sales jobs and another 9% are management-based occupations. Also of interest is that Phoenix has more people living there who work in computers and math compared to 95% of the other markets across the United States. It is a well-educated metropolitan area because people are into computers and math in terms of their jobs and careers.
What about the Phoenix home market in terms of appreciation rates and whatnot? In the last several years, Phoenix has experienced some of the highest home appreciation rates of any community in the nation. Phoenix real estate appreciated about 105% over the years, which is an average home appreciation rate of about 7.5%, which puts Phoenix in the top 10% nationally for real estate appreciation. If you are a home buyer or a real estate investor,
Hello, friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Jamie and Jamie. He or she says, hi Marco, huge fan and longtime listener of the show here. I have pondered the idea of reaching out to your counselors for a very long time now and haven't pulled the trigger yet. I have had several friends and friends of friends, et cetera, contact me over the years to let me know that they can help me get my portfolio started. Much like your counselor's offer. My question for today is how would you suggest we as investors evaluate our options of the service providers like your company out there? What are some of the factors that some can offer, offer better than others? Thanks very much for your thoughts and your continued efforts to help upcoming investors like myself enter the world.
Well, Jamie, thanks for the question and I appreciate this. Uh, it's a good question because there are options out there, several, not a lot, but there are different options to approach your real estate investing journey and building your portfolio. So I'll just kind of break this down into two general categories if you will. What are your options and then I'm going to maybe spin off a little bit and just kind of cover some of the benefits that are available to you as you get to the top of the food chain if you will. Think of these options like escalating value added services and there's essentially four layers. If as I like to look at it, you could make this very simple but this is certainly not the best option, but you can search online and you can go to one of many websites like zillow.com or realtor.com that's plugged into the different MLS, multiple listing services around the country and it just aggregates all that listing data.
Of course, all these listings, if they're listed by real estate agents or brokers, you may ultimately be connected to a real estate agent or broker, whether it's the listing agent or not. But someone is going to be involved in the transaction if it's listed on the multiple listing service, but shopping on Zillow or realtor.com or Trulia or you know, some of these other property websites is really just nothing more than searching online. It's like going to amazon.com if you're searching for a product, be it earbuds for your smartphone or a new TV, you're not going to get a lot of guidance and counseling and advice and recommendations. Sure, there's reviews online, which is helpful, but you're not going to get a whole heck of a lot more than that. The next layer up, if you want to call it that, it's really your agents and brokers.
The reality is, and this is not only my own personal experience, but just conversations with many, many people over the years in the industry, the majority, great majority of real estate agents and brokers are not well versed, if at all when it comes to real estate investing. They're great salespeople. They understand real estate laws and listing and selling property. And you know what makes a home sell to a home owner? And this is great, I used to sell real estate myself, but they often don't have a great knowledge or a lot of knowledge when it comes to investment property and how investments work and all the different ways to analyze financial performance and your rates of return and all that good stuff. And that's not a knock in any way, shape or form. In fact, a friend of mine, uh, an elderly gentlemen who has been a real estate broker for most of his life actually wrote a book and I forgot the title, but it's something about the 1% and what he's referring to and specifically geared towards real estate agents.
But it's really a book about how 1% of real estate agents understand real estate investing and actually invest in real estate. The other 99% know about it or know nothing about it at all. And I don't know where you know he gets those stats, but I've heard those stats many times over the ...
Welcome to passive real estate investing. I'm your host Marco Santarelli.
We have two guests today and one very special guest, a guy you probably have heard of, Mark Victor Hansen. He is a well-known author. He's the guy who has sold over 500 million copies of the chicken soup for the soul book series. With everything going on today in the economy and with this coronavirus pandemic, a lot of people are maybe misguided, depressed, and feeling a little stir crazy. Today's episode is about turning adversity into opportunity.
Maybe it should have come sooner, but they're providing an absolutely free two-day online event that is going to be great. I just signed up for it. It's an event they're calling Your Finest Hour Summit. And I will let them explain to you why it is called that. But it's essentially a one of a kind virtual summit that will show you how others are overcoming obstacles in today's economy. And with all the negativity out there that you're hearing from other people in the media, the event that they created is to show people that others are using this time to create success. So don't look at it as negativity or adversity. Look at it as an opportunity or a way to just do more and be able to get further ahead. The world has changed and maybe forever and in ways that we don't fully understand. So now more than ever, you need a way to create order out of the chaos and to collect your thoughts and be able to do more with you, your friends, your family, the resources you have, et cetera, et cetera.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Enjoy the show!
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So it is not a long episode. Listen through to the end. We're going to mention the event a couple of times and we will bring Mark Victor Hansen back on to talk about his new book here in a few weeks. So this won't be the first or the last time that you hear him on this show. So with that, let's get to the interview. All right, well it's my pleasure to welcome two special guests. My first guest is Mark Victor Hansen. He's an American inspirational and motivational speaker, trainer, and multiple times bestselling author. He is best known as the founder and co-creator of chicken soup for the soul, that great book series selling over 500 million copies. My other guest is Nikki Ballou. He is a number one international bestselling author, the founder of East circle Academy where he runs a yearlong educational program working with coaches and consultants and entrepreneurs, positioning them as authorities in their niche. Welcome guys. Thank you. Thank you for having us, Marco. Well, it's a, it's an honor and it's my pleasure. And Mark, I just want you to know I love your books and I have many of them on my bookshelf here, so thank you for writing those.
My kids are very happy they have shoes because you Marco
Hey, I got to help somebody. Right? That's it.
We're glad that our book serve. As you know, when Jack and I wrote the chicken soup for the soul series, we thought the soul of America was in trouble. What we discovered is just some of the world's in trouble and now now we're doing a summit called your finest hour summit.com and we think the whole world's in trouble having been a sort of incarcerated government imposed for the last eight weeks or more, and we're going to do everything we can to get people going again. How's that?
Well, that's perfect because that's exactly what I want to talk about today.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Carlos and he says, Hey Marco, I recently found your podcast and have been eating episodes trying to get myself educated on real estate and passive income while following a lot of these episodes. There is one question that keeps popping into my head. How can I get financing for two, three, or say even six or seven properties? As the years go by and I save enough money to keep acquiring more houses, but my salary does not change much over the same number of years. Let me explain with an example and I am going to borrow your always easy to digest $100,000 example. To illustrate my point, let's say I make $100,000 a year from my regular job's salary. Let's assume I already have a mortgage on my primary home and a second one on an investment house.
I am able to save $20,000 from my salary every year, which conveniently enough it represents the exact down payment needed to buy one $100,000 house every year. The problem is my salary doesn't go up very much every year. To make things simple, let's say it remained unchanged for the next five years. In those five years, I would be planning to purchase five $100,000 houses, which would bring the total count of mortgages under my name to seven. In addition, let's say the first two houses I acquire have enough equity to tap into because of their growth in the last few years. At which point it could give me access to purchase another two houses, bringing the total number of loans needed to nine. The question is how would anybody lend me money for nine loans when my income is still just $100,000? Thank you for the great show.
Personally, you have opened my eyes to a whole new world and have given me a light to follow to get out of this dark and confusing place. I was regarding my finances for the first time. I feel it is possible to reach financial freedom.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Ask Marco – Buying Turnkey Properties With a 15-Year Mortgage?.
Enjoy the show!
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Carlos, thank you so much for submitting this great well-articulated question and I know that other people are thinking the same thing and also thank you for your kind words and I am incredibly happy and encouraged to hear that the podcast has been helping you and opening your eyes and providing a guiding light of sorts. Again, thank you very much for everything. So essentially what you're asking is how is it possible to finance multiple properties with only one salary? Well, the answer lies in your rental income from your properties and your DTI ratio, and that means your debt to income ratio.
So lets at these two things. So you see rental income can be counted when you're applying for a mortgage or refinancing an investment property. However, like all other sources of income, you must properly document it of course, and meet specific qualifying guidelines. If you already own the rental and you can document the income that comes from that rental, then your income is considered real rather than projected by the lender looking at your application and real rental income will be considered by the underwriters looking at your loan for rental properties, the lender will also look at the net cash flow and in most cases or most situations, net cash flow is represented by subtracting all your expenses from your income, the property's income. However, when it comes to rental scenarios,
Hello my friends and welcome to another episode of ask Marco where I answer your investing related questions.
I hope everyone is keeping well and staying safe, I know a lot of Californians here have made their way to the beaches again, now they're keeping their social distancing. But I believe a lot of people are getting stir-crazy and have gotten a little tired of the lockdown and nationwide quarantine that has been going on. I mean, how many weeks can you be locked up in your house? So anyway, people are enjoying themselves while still trying to do what they think is right in terms of staying safe. So good for them.
So today's question comes from Ivan and he's wondering if it's possible to refinance a property that is held in an LLC. And it's a good question because it's a common question and a lot of people hold their properties in an entity like an LLC for the sake of asset protection, but that could be challenging when it comes time to finance or refinance that property.
So Ivan writes in and he says, Marco, I started listening to your podcast about three weeks ago and I am inspired to grow my passive real estate income portfolio. I currently own one single-family investment property that is cash flowing $375 monthly. I owe $50,000 at 3.6% over 30 year fixed and the property is worth a $171, 080 as per zillow.com and realtor.com the home is in my name. After listening to an episode of yours about asset protection, I am considering transferring the investment into an LLC. However, I am concerned about the ability to refinance if the home is owned by a newly formed LLC. Is this a concern or not? Also is an LLC, the right move or should I consider an S Corp or maybe even involve a land trust? Thanks, Ivan.
Ivan, thanks for your question. Thanks for being a new subscriber to the show and congratulations on your investment property and your desire to build your passive income through a portfolio of income-producing real estate.
So let's break this down. You're really asking two main questions. Is it a concern to have the property in an entity like a newly formed LLC? Well, my first comment to that is, and this is, this holds true for pretty much everybody that holds any kind of asset, especially if it's worth something or generates income. It's not smart to hold assets in your name personally. And any asset protection attorney will tell you that now their approaches might be slightly different. They'll pretty much all advise that you hold your assets in a title holding entity like an LLC. So you're thinking the right thing and on the right path. And I'm not an asset protection attorney. I have learned a lot from many asset protection attorneys and there's common threads or common denominators between them. All the LLC, a pass-through entity in the state of the asset is a pretty common way to hold title and start your asset protection plan so you're on the right path.
Now is that an issue or concern when it comes to financing? Yes and no. If you are after conventional financings such as Fannie Mae or Freddie Mac, basically these GSM or government-sponsored entities, the GSE entities then yes, because conventional financing requires you to hold title in your name or your spouse's name, but basically you as the borrower or borrowers need to be tied to that property. This is just for the qualification. After you have the property financed or refinanced, then as long as you are within the guidelines of that loan, there's no reason why you can't hold title in something like a land trust or and or an entity. So keep that in mind. Now, these are just very general suggestions if you will, because there is a clause in most loan agreements or notes that is called due on sale clause, which means that if you have one of these loans like a conventional loan and you transfer the title to an entity, that transfer can technically trigger the due on sale clause, which means that the lender has the option to call the...
In terms of real estate investing in the various great Southern cities, people don't think as often about investing in Richmond, and that's a huge missed opportunity. Prices and properties in Richmond are great, and more investors out there should definitely take a look at what this city has to offer. Marco Santarelli shines a spotlight on why you should be investing in Richmond, Virginia. It's a very diverse market and definitely deserves the spotlight after having been in the shadows of other Southern cities for so long. See what Richmond might be able to offer you!
In this episode, our focus is on the Richmond Virginia market. Richmond is the capital city in the State of Virginia. The Richmond Metropolitan Statistical Area, the MSA, is the 44th largest in the United States. It includes independent cities such as Richmond, Colonial Heights, Hopewell, Petersburg, as well as a number of surrounding counties. The population of the Richmond Metropolitan Statistical Area is very close to 1.3 million people and a growing international community adds to the areas of cultural diversity and cosmopolitan character. It's a metropolitan area that is strong, vibrant and growing. Richmond's economy is primarily driven by law, finance and government with federal state and local government agencies located there as well as multiple legal and banking firms in the Downtown area.
The city is home to both a US Court of Appeals, 1 of 13 such courts and a Federal Reserve bank, 1 of 12 such banks. Also, Dominion Energy and WestRock are there. Fortune 500 companies are there and many others in the metropolitan area adding to the economic diversity. As far as regional trends, population growth has been very positive. It's grown by about 2% and job growth has been over 4% putting it in the top 80% nationally. Income trends have been strong. Incomes have increased by over 5.6%. The unemployment trend is also very strong, dropping about 1% and putting it in the top 80%. That market continues to add housing units which are needed and have very low vacancy trends so there is strong demand for rentals.
The market has seen about a 4.5% appreciation growth. It is a fairly strong market. I would call it a growth market when you're at that 5% range. What's interesting is it has seen over 14% appreciation putting it at the top of the country. This isn't top 10% of appreciating markets or at least has been for the last ten years and very much so in the last five. I don't expect that to continue in any market around the country, primarily because of the Coronavirus thing and the effect on the economy that it has had.
When we bounce back, we tend to bounce back strong. I am very excited and bullish about this market. Last but not least, in terms of national rankings, the median house cost in this market is 68%. That means compared to all markets across the United States, this is in the 68% mark. Cashflow potential for this market is very strong. It's at 79% in terms of a national ranking so it's in the top 20%. Rent growth has been very strong, certainly above the midway point at 57%. It is also a strong rental growth market.
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Enjoy the show!
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Market Spotlight: Richmond, Virginia With me now is Frank. He is one of our fantastic new providers in the Richmond, Virginia Metropolitan Area. We are excited to have him on. I've known Frank for many years.
Hello friends and welcome to another episode of Ask Marco where I answer your investing related questions. Now remember, if you haven't subscribed to the show, please click that subscribe button and remember to subscribe.
Today's question comes from Jim and Jim says, hi Marco. I'm one of your listeners in the Southern California market who has benefited from equity appreciation on my primary residence. I'm considering refinancing to use this idle equity in cashflow markets as a 60 year old. I'd like to accelerate the amortization on the newly purchased turnkey property. From a numbers perspective, would it ever make sense to purchase one of Norada's turnkey properties by putting down a greater down payment, say 40% and financing your investment over 15 years as a way of accelerating amortization.
Jim, good question, and thanks for sending that in. The first question, I guess you need to ask yourself and what I would ask you is what is your overall goal?
It sounds to me pretty clearly that cash flow is your primary focus here. Cashflow overgrowth, because these are kind of opposite ends of the spectrum, although you can kind of target both of these at the same time, but really you have to give up a little bit on one to gain more on the other. Typically, let's just assume cashflow is your focus because that's what it sounds like, but you're also trying to achieve something which impacts your monthly and annual cash flow and that is going from a 30 year fixed rate mortgage to a 15-year mortgage to accelerate the amortization. When you do that, it increases the debt service and therefore less monthly cashflow, less annual cashflow. So these were kind of opposing forces if you will. So let's take a hypothetical example here and do a little bit of math. You don't need to write all this down.
I'm going to kind of give you the numbers. It might sound like a lot, but I'll bottom line it for you here in a second. Let's just do the math on a $100,000 property because it's just an easy number to work with and easy to remember. Let's look at four scenarios. 20% down on a 15 and a 30 year and 40% down on a 30 and 15 year. And here's basically what it looks like. So 20% down is an $80,000 loan and these are all at 5% interest. So a 30-year mortgage would be 429 a month. If you did a 15-year amortization instead of four 29 it's six 33 it's a $204 difference. So that means your cash flow is $204 less per month going from a 30 to a 15 year. Now, what if you did 40% down instead of 20% down just because you had asked, so that means your mortgage is now 60,000 instead of 80,000 again, at 5% a 30 year fixed rate mortgage would be $322 per month.
It's considerably different obviously. And a 15-year amortization would take that to $474 a month. Now the difference between the 30 and 15 years, $152 now those were a lot of numbers, but let's look at this range. The lowest number in that range was $322 per month on that mortgage payment. The highest number was $633 and that was what the 20% down and a 15-year amortization. The bottom line is this 40% down over 30 years will give you the highest cash flow, but the lowest cash on cash return. So we're talking something that's measured in terms of dollars and something that's measured in terms of percentages. So the highest cashflow, lowest cash on cash return is with the larger down payment over a longer-term. The flip side of that is a 20% down payment over 15 years. That's going to give you the lowest cash flow and the highest cash on cash return.
So if your focus is cash flow, then your goal might be to finance these with the longer term, the 30-year amortization, and a slightly larger down payment, let's say 40% in your case. However, keep this in mind, lower down payments can provide you more properties with higher total aggregate cash flows. And some people don't think about this, you know I always use that a hundred thousand dollar hypothetical example.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Jorge and he writes and says, Marco, I have one shot to convince my wife that investing in passive income with a turnkey out of state situation will work. I have $75,000 to invest. We have paid off our home and ready to retire in a year or two. She sees getting into debt now is too risky. I've listened to a lot of your podcast. I understand the process. We own a nice California rental free and clear worth $550,000 again, no debt. What deal on a B class property with good cash flow, low debt ratio could work in your system. Looking forward to hear what you come up with.
Well Jorge, thank you for the question. First off, I emailed you and your investment counselor and I will let him reply to you about the many different B class properties that we have that will generate cash flow in a very positive rate of return for you.
That is not what I'm going to address on the show here. What I would like to address is just your general question here about good debt versus bad debt risk tolerance and your wife. Now I can't help you with your wife, but I can give you some suggestions. So I'm sure there are many people by the way, that have this situation where their spouse is maybe averse or doesn't completely understand investing in general, let alone real estate investing and the ability and power that it brings to you as far as being able to liberate yourself and create financial freedom. Because if you have enough passive income, you are financially independent and that brings freedoms along with it. So here's what I'm going to suggest and comment on. First of all, I want to say that I am not a financial advisor. I've said this on many episodes and I just want to keep reminding people so I'm not giving you any kind of financial advice, nor am I telling you what to do.
I will also say that I don't know what your age is, your income current past future, if you have any existing pensions, retirement plans, I really don't know your financial situation so I can only talk in generalities here. First of all, let's just make a few comments as it relates to your spouse. What I would possibly do is ask her, do we honey, do we have enough to retire on? And you just need to take a very objective view and analysis of your current situation. Also where you expect to be realistically around the time of your retirement and if you are in a situation where you're going to have enough income to live off and be comfortable, then great. Maybe you don't have to be stressing about anything, but if you feel that you can do better and that you should be investing regardless of whether it's real estate or something else, then take a hard look at that.
There's nothing wrong with investing. As long as you do it intelligently. You have the right team. You don't put your capital or cash flow at risk. Now granted, I will say that there is no such thing as an investment that has zero risks. It's virtually impossible, but you can control risk and you can make investments that have very minimal risk if you have control of the situation and you have very good understanding of what you're investing in and you are an intelligent investor. Uh, you know, I remember Robert Kiyosaki saying that there are no bad investments, an investor could be looking at a particular investment opportunity or a deal and lose money and make a mess of it. Whereas another investor can come along and take that exact same deal and know exactly what to do or position themselves in it so they actually make a profit.
So a lot of it rests on you or you as a couple and the investment. So ask yourselves, do you have enough tthere's just bad investors because one o retire on at the time that you are retired? The second thing that you guys need to ask yourself are what are your options either right now or and or in the future?
Welcome to Passive Real Estate Investing. I’m your host Marco Santarelli.
Ask some investors what they think about the housing market going forward and they will simply shrug their shoulders or give you some wild prediction based on media misinformation or personal concerns. The reality is, housing markets around the country had made a substantial recovery since the great recession ended in June 2009, and many real estate markets began turning around in 2012 and 2013.
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After the Coronavirus pandemic came into being, housing market predictions for 2020 and beyond ran the gamut from optimistic to pessimistic. The housing market overall was running at a record pace in the early stages of this outbreak in February 2020, with sellers continuing to make gains and buyers benefiting from lower mortgage rates.
The pace of home sales relative to inventory reached a new record high in February, although hints of deceleration were beginning to surface. Realtor.com’s recent report in April 2020 shows that while still posting a double-digit drop over last year, February marked the smallest yearly decline in the monthly supply of inventory since October of last year.
Nine of the largest 50 markets are slowing down on a yearly basis, with 20 of the top 50 doing so on a monthly basis.
While the effect of lower mortgage rates reignited housing market activity toward the end of 2019 and the start of 2020, February showed some early signs of the Coronavirus outbreak, particularly in markets that were hit early and hard
The latest housing market indicators point to a shift towards more balanced conditions in the short term.
As of February, the top 5 markets favoring sellers are Phoenix, Salt Lake City, San Diego, Riverside and Baltimore. These markets are heating up the fastest on a yearly basis, with a month’s supply of homes down by at least 52 percent year over year (as compared to last February).
As of February, the top 5 markets favoring buyers are Pittsburgh, Rochester, Minneapolis, San Francisco and Tampa. These markets are cooling off the fastest on a yearly basis, with a month’s supply of homes up at least 26 percent year over year (as compared to last February).
The Response
The response to the Coronavirus crisis is unprecedented. The federal government ordered a de facto shutdown of the entire private economy, closing an estimated eighty percent of businesses. It has caused unemployment to soar with more than 30 million Americans recently filing first-time unemployment claims, smashing all previous records.
Updated disease models and new information on the Coronavirus death rate show that this was probably an over-reaction to a new disease. However, we can draw from prior economic crises to predict the impact this government shutdown on large portions of the economy will have on the housing market.
2020 Housing Market Forecast Before The Outbreak
Realtor.com said in their national housing forecast that home price growth will flatten, with an expected increase of 0.8 percent. Inventory will remain constrained, especially at the entry-level price segment. Mortgage rates are likely to bump up to 3.88 percent by the end of the year. Tight inventory coupled with rising mortgage rates will lead to dropping sales. Buyers will continue to move to affordability, benefiting smaller and mid-sized markets.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question is about How to Invest in US Real Estate from another country than that means any country. Before I get to that question, remember to subscribe. Just smash that subscribe button on your mobile device or your laptop computer and you will get notified of every episode that comes out each and every week. Today's question comes from AIJ and he says, hi, I'm a new listener to your podcast and read rich dad poor dad after you mentioned it multiple times in many of your episodes. Amazing read. Yes, it is a great book. I'm 27 years old and totally sold on the idea of real estate investing for wealth creation. How can I invest in US markets when I am based out of India? Would US-based banks be able to lend me money after I make a down payment for 20% and thirdly can investments made from outside the US also take advantage of 1031 tax-deferred exchanges? Thanks, love your podcast. AJ.
Thanks for the questions and these are great questions because we do get a number of people contacting us from other countries, particularly from Canada, the UK, Australia, sometimes in Europe and these are actually some of the common questions. So let me just break these three down. First and foremost, if you're a foreign investor, meaning that you are a non-citizen or non-resident to the U S in other words, you're out of the country, the process is exactly the same. You are still going to go through the same step by step process with our team or investment counselors or if even if you're doing this on your own, you're still going to go through the same process that you would as if you were here locally. So you're going to decide on what market makes the most sense for you and then narrow that down to the areas and neighborhoods that make the most sense for you based on your investment goals.
And then you're going to start looking at properties and you're going to just underwriter vet those and decide which one or which ones you're going to put under contract because you like them, you like the numbers, you like the location, everything checks the box. So the process is exactly the same. In fact, you're going to assemble the same team whether you're working with my team here and all the people that we work with, all the different service providers, from lenders to property managers, or if you're going to assemble your own team, you're going to build a team around you. And Robert Kiyosaki in his books talks about this all the time. That real estate is a team sport. So I'm pretty sure he mentioned that in rich dad, poor dad, but it's the same process, same team. So the same rules apply and the same laws to you.
All the laws that we have here within the country apply to you regardless of where you live. That's why a lot of people from foreign countries invest in the United States is because we have very strong rule of law. Things are very clearly defined and it makes real estate as an asset or an asset class, a very stable sound investment vehicle. The one thing that does change if you're a foreign investor is the financing. So let's kind of segue to that. If you do not have us credit and you are not a resident or citizen, then essentially you are going to be working with portfolio lenders or non QM lenders and non QM simply means non-qualified mortgage lenders. And these are lenders that do loans that are typically for borrowers that have unique income qualifying circumstances or they just don't have credit that they can show, but they have enough in terms of their profile in terms of cash reserves and the property that qualifies for financing.
So these lenders typically look at property that you're purchasing and they underwrite that and put more of the weight on the property or the asset that you are acquiring, which is their collateral. Then they do on you as an individual borrower,
South Central Pennsylvania is the third-largest region in the state by both population and number of businesses, consisting of eight counties along Pennsylvania’s southern border.In this Market Spotlight, we talk about the best features of Harrisburg and the reasons why so many people working in Baltimore, Pittsburg, Washington DC, and other nearby cities choose to live there. Join host, Marco Santarelli, and our market specialists as they discuss why Harrisburg, PA is a lucrative market for those who want to invest in real estate.
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Market Spotlight - Harrisburg, Pennsylvania Harrisburg, Pennsylvania is a medium-sized city located in the State of Pennsylvania. It has a population of roughly 50,000 people, 36 constituent neighborhoods, and it's the 11th largest community in Pennsylvania. Harrisburg has a large stock of pre-World War II architecture making it one of the older and more historic cities in the county there. Unlike some cities, Harrisburg isn't mainly just white or blue-collar, instead most prevalent is occupations that are a mix of white and blue-collar jobs. Overall, Harrisburg is a city of sales and office workers, service providers professionals, and there are especially a lot of people living in Harrisburg who work in office and administrative support. Many of them commute to a nearby city such as Baltimore because it's not that far away. Real estate is certainly less expensive in these outlying areas.
It's what we refer to as a tertiary market. It doesn't have the size or population big enough to make it what we call a tier-two market. It's more of what we refer to as a tier-three or tertiary market. Nonetheless, it is a stable and linear market. Nothing overly exciting. It is one of those markets that provide stability. I refer to it loosely like a blue-chip stock. With me are some of the team members that we work with out there. It's overdue but we want to talk about this market because there have been a lot of opportunities there. The properties that we have been moving in that market have been moving quickly. We have these guys perpetually out of stock. Demand is high from where we sit.
It is my pleasure to welcome Eric and Liz to the show. They are one of our superstar property providers in Pennsylvania, specifically the Harrisburg area. We have been doing a lot of business with them. They produce fantastic products, they're in great areas and it's been an exciting opportunity for us and our clients. Having said that, Eric and Liz, welcome to the show.
Thanks.
Thanks for having us.
It's an honor to have both of you on the show because you are awesome to work with. My team is constantly complimenting and bragging about how wonderful it is to work with you and our clients are happy. I'm excited to have you on. Let's talk about your local market because a lot of people are not only not familiar with the Pennsylvania market being way up there in the northeast but Harrisburg, where in the heck is Harrisburg? Tell us about your local market there.
We consider it South Central Pennsylvania. Four of our counties border the Maryland, Pennsylvania line. Harrisburg is a little bit north of York where our office is located. We’re about one hour and twenty minutes from Philadelphia, one hour from Baltimore, four hours from Pittsburgh and four hours from New York.
Hello and welcome to another episode of Ask Marco where I answer your investing related questions.
Before I get to today's question from Jason, I just want to remind everybody to smash that subscribe button. Remember to subscribe to the show so you never miss an episode. And that way I can continue to put these out and you won't miss a great question from listeners like yourself. So I hope everybody is doing well and not going stir crazy with the crazy times that we are living in right now. So I will continue to do these episodes. And today's question comes from Jason. He says, dear Marco, we are looking to take out a HELOC, a Home Equity Line of Crediton our primary residence for the purpose of buying our next home. And I assume he meant property here. Since I am a licensed residential contractor, I would like to find a new construction opportunity or a fixer upper fixer property.
To renovate with the plan to refinance both of those properties into a conventional 30 year fixed rate loan at the end of the project. Currently we have around $80,000 available through a Home Equity Line of Credit and that's assuming you have an 80% loan to value, which is typical and some cash. My question for you is two parts. First, would we be able to get better loan terms as a construction loan and he says here slash line of credit, which are really two different things through my business or would it be more favorable to finance this as a personal loan? I know a big part of the answer depends on the deal Credit, but any input you have is appreciated. Secondly, there are a lot of HELOC Home Equity Line of Credit products out there. What terms should we be looking for in a favorable agreement and are there terms we should try avoid? Thanks for taking my question, Jason.
Well, Jason, thanks for the question. Here's my quick thoughts on this. You mentioned a couple different things, so you have a couple of different scenarios going on here. First of all, if you're looking at a new construction, literally new construction, meaning you're building from the ground up project, then what I suggest you do is shop around if you can find it today, I know a lot of lenders have tightened up, but these loans are still out there. See if you can get yourself a construction loan, either a construction loan, which is just one type of loan or what's known as a CP loan, a construction to perm short for permanent loan, which means that you have one close but two loans. So it becomes permanent loan, a 30 year fixed rate mortgage at the end of the construction and that starts off as a construction loan.
That's the better way to go if you can find it because it's really one close and you go right from construction to perm. So if you can find that, fantastic, uh, that's probably the best way to go if you're doing new construction because you're not going to be able to get other types of loans, like a hard money loan because there's no existing property. So you really don't have much of a choice there. It has to be some sort of construction loan unless you have the cash on hand, which leads to the second option. If you're doing a fixer upper, if you're buying a property that you intend to keep as a rental or a home and you want to finance that, then you're going to need cash or you're going to need cash and some credit, which can come from your home equity line of credit.
Sounds like you can do around $80,000 and you've got some cash on the side. That's great. Assuming that's enough, I don't know where you are looking at these properties, but if $80,000 plus your cash is enough to buy, fix, and then refinance that property to pull your cash out and or repay your line of credit, then do it that way. That's similar to what we call a Burr strategy. B, R, R, R, R, which is short for buy, renovate, refinance, rent and repeat. So that's one way to go with a quote unquote fixer upper property. The other option which you may want to consider has harde...
Today's question comes in from Janice and she says, hi Marco. I've been educating myself on real estate investing. Congratulations. Your podcast is very informative and straightforward, which I love. Thank you for taking the time to educate. My question is specifically about age. At the time of investing, I listened to episodes 224 and 225 which had to do with using your principal's home equity to invest, which is what I'm interested in. You briefly mentioned age in one of the episodes but didn't go into detail. Hypothetically, I want to invest equity from my primary residence and rental properties. What recommendations would you give a 30 year old versus a 50 year old if each had $200,000 to invest in case you're wondering, I'm 49 my husband 54 I was initially interested in flipping because of the faster turnaround, but have recently come to understand the long term value of buy and hold properties, but maybe that applies more to the younger generation?
Being 5 to 10 years from retirement makes my husband worry about the potential risk and he says, quote, it's too late to start something this risky. Now, close quote, my goal with investing is to possibly retire earlier and be more comfortable plus have something to keep busy once I'm retired for reference, we have seven more years until our primary home is paid for.
Thank you for your input, Janice. Well, Janice, the answer to your question does age matter is yes and no. Yes, it matters in the sense that the earlier you get started in real estate investing or any investing for that matter, you have the advantage of time on your side, time to build, time to grow and compound your cashflows and compound your returns, compound the equity that you build in. Having that real estate earlier on which you can now leverage and take advantage of moving forward.
So yes, it does help the earlier you get started and that's true with so many things when it comes to investing and even with your education, but at the same time, no, it doesn't matter because as you get older you have certain things that you don't have in your younger years. For example, you have greater wisdom and the ability to ask better and more intelligent questions, time to educate yourself, more investment capital, probably higher income as you get older because you just tend to find your way into better positions and through promotions or building a business where your income is higher resources available to you, your network of people and contacts may play a part in that. There are advantages but it's not something that is or should hold you back. If you really want to look at the difference between a 30 and 50 year old at a high level, a 30 year old essentially has a longer runway and more time on their side to build that portfolio and to allow appreciation to take place or for returns to be utilized and compounded so there's more time to grow equity and compound that equity, but as a 50 year old or whether that's 45 or 55 it doesn't matter.
As you get older, sometimes you find yourself using real estate investing or other forms of investing to supplement what you already have and I don't know what you already have in place in terms of an existing business or any kind of passive income you have, but a lot of people might have social security and or a pension or other investments and annuities that are providing or will be providing a monthly or annual form of income. Call it cashflow, personal cashflow. But most of us, believe it or not, start late in life. A lot of our clients that contact us are actually in their forties and 50s we have clients that are as young as 18 some of them are in their twenties but the reality is that most people who work with us and contact us are in their forties and 50s and we've even had people in their sixties and seventies so let me give you a couple of examples.
It seems like whenever I do these short episodes of ask Marco,
While the value is tremendous from learning about the great strategies and tactics shared on the show, much can also be said about their application. In this episode, Marco Santarelli lets us in on how the theories from the show are applied in this Client Spotlight special. He invites over Tim, a new client who is off to a roaring start with five closings. They talk about Tim’s journey along with some of his tips and advice for other investors out there, both seasoned and new alike. Looking into the future, Tim shares his goal of getting 50 properties in the next five years, laying down his plans to achieve that and going over some of the learning experiences he has had that will help him face the challenges along the way. Whether you are in this journey a long time or not, the wisdom you gain will always remain invaluable. Read about Tim’s story and learn a thing or two or more about navigating your way through real estate investing.
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Fifty Rental Properties In Five Years (Client Spotlight) I hope everyone is staying safe and well as many of us have to be quarantined during these interesting times. I received a message from one of our new clients and he reached out to me and said, "Your show significantly impacted my real estate purchases. I worked with one of your investment counselors and we closed on five houses. Thank you for the information you provide for us to reach our financial dreams. I picked up the book, The Wealthy Gardener, and I can't wait to dive in. Keep the show flowing. Thanks so much." This person is Tim. He’s a new client and I realized that he started working with us a few months ago. He's off to a roaring start with five closings in a few months. I thought this guy has a lot of energy and he's goal-driven. I thought it would be a great idea to get him on the show. It's been a while since I had an investor client on. I thought I'd invite him and I did, and he graciously accepted. With that, I'd like to go straight to the interview and find out what Tim has been doing and have him share some of his background, his journey and some of his tips and advice for investors, whether you are a new investor or a seasoned investor. Let's get straight to the interview.
It is my pleasure to welcome one of our clients. His name is Tim. He is a great guy and I know that he is excited about what he is doing in terms of investing because from the messages I got from him, I can tell that he was passionate about what he's doing. He grew up in Southern California. He went to California State University in Long Beach. He got a career in the fire service. He's a married person with three beautiful kids and he's got some lofty goals that I'll let him share with you. Tim, welcome to the show.
Thanks for having me, Marco. It's an honor and a privilege.
I was excited to get you on because to be quite honest with you, I don't bring too many clients or investors onto the show. It's more of the show about the tactics and strategies but a lot of readers like to know what other investors are doing, what they're thinking and how they made their decisions. This is why I was excited to get you on the show because I thought, "This guy has passion. He's got some clear goals. He knows what he wants to do and where he wants to go." I know that because you shared it with me, but I'm going to let you do the sharing. Let's begin with you.
Hello again and welcome to another episode of Ask Marco where I answer your investing related questions.
Before I get to today's question, remember to hit that subscribe button. If you haven't subscribed to the show, please do so. Just take 30 seconds to do that right now. Today's question comes from Charlie and he says, hi Marco. I'm a longtime listener and love the show. I'm looking to make my first few investments in the era of Coronavirus and would like some advice. The headlines today read that the banks are bracing for large scale mortgage defaults. What can investors do to turn this into an opportunity? What else can we do to use this downturn to help us come out ahead?
Okay Charlie. So let me begin by saying that I am still trying to figure out the size, scope, and scale of what this impact might be. Every time I read an article and try and figure this out, I get kind of opposing opinions as to how deep and how wide and how long it's gonna take to unfold and to ultimately settle. My personal opinion is that we're going to see a few months here of probably some tough times, not for everybody, but for a lot of people it's really a matter of getting businesses back to business and once people are back to work and it's business as usual and the economy's working again and we have money circulating and essentially what is velocity of capital, then we're going to see things get back to normal. An important thing is that we don't want to see credit and the credit markets tighten up or dry up. They are tightening up a little bit right now, which is not good for people and businesses who need to borrow money.
But I believe that's gonna start to loosen up again in the summer or the fall and it's really hard to tell at this point in time. It's my hope that it's not going to be longterm, but what I think is probably going to be true is that the fourth quarter of this year is going to open up and be kind of a mini boom, if you will, maybe a rebound or a bounce back from the tightening up that we're seeing right now. And I know that Vegas certainly is bracing for a very busy fourth quarter this year just because of pent up demand. That will be a fallout of what we're seeing going on. But uh, will there be an impact? Most certainly how big, nobody really knows. A lot of people are anticipating a very deep pullback. I think what that really means is that people are anticipating a wave of delinquencies and defaults as it relates to mortgages and business loans.
And certainly as this induced shutdown of the economy unfolds, we're going to see the impact of that come through. But one thing we know for sure is that the federal government has been very liberal in providing aid in the form of stimulus. And as it relates to banks and lending institutions, potentially bail outs of some kind. Now they're not saying that right now, but they're certainly not going to let major banks fail. One of the things that banks are doing in anticipation of increasing defaults and delinquencies is offering forbearance. And this is really coming from the top down top, meaning the government sponsored entities like Fannie Mae, Freddie Mac. This is what they're talking about. And so what a forbearance is, or under a forbearance, your loan payments are essentially postponed or reduced, but the interest continues to accrue during that period of the forbearance. And it's essentially tacked onto your loan, whether you're paying for it upfront, during or after.
But if you don't pay the interest during that period, that interest becomes capitalized, which means that it's just simply added to the principal balance. So it's tacked on and uh, either lengthens the loan or it'll be a balloon payment that's due towards the end of the loan. So what does this all mean in terms of opportunities? Well, I see a couple of opportunities here. First, if you haven't done so already, now might be a great time to refinance. Interest rates are very,
There probably is no hotter market now than Kansas City. A large, prosperous, self-sufficient, and culturally-rich city, it is no wonder why it has seen a continuous rise in its employment, directly impacting the local real estate. In today’s Market Spotlight, Marco Santarelli takes us across the Kansas City market that he has been investing in since 2005. He talks with one of his property providers in the area to further discuss the market and the opportunities there. They tap into the combination of cash flow markets and appreciation markets found in the city, the rental demand and rent growth, as well as the desirability of its neighborhoods. Tune in further to this episode to discover why Kansas has long been the envy of many and more.
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Market Spotlight - Kansas City, MO The Midwest is one of the most affordable places to live in the country, and Kansas City is right at the heart of this region. Kansas City is a large, prosperous, self-sufficient and culturally rich city located right along the Missouri River. It is the largest city in the state of Missouri, famous for its distinct barbecue cuisine and jazz heritage. It's nicknamed the City of Fountains for obvious reasons. They have hundreds if not thousands of fountains throughout the city. Kansas City has seen a continuous rise in its employment over the last few years, a trend that directly impacts the local real estate market. The market is still in a wealth phase where the inflation-adjusted rate of appreciation is greater than zero.
In the past years, real estate has appreciated about 3.5%. The real estate market forecast is that home prices will continue to increase somewhere roughly by about 3.9% over the next several months according to the real estate data coming out from Zillow, as demand continues to exceed the supply. The Kansas City real estate market is hot. In many ways, it's the envy of many people on both coasts. It is also one of the hottest real estate markets for affordable rental real estate investments. That is why we've been in this market for so long. We've been selling rental property in the Kansas City, Missouri metropolitan area since 2005. We have onboarded a new property provider, someone I've known for many years. They have great properties in good locations and with solid returns. I felt it was appropriate to revisit the Kansas City market and talk about the opportunities there.
With me now is Nathan. He is one of our newest and exciting property providers in the Kansas City Metro area. We're happy to have him on board. Nathan, welcome to the show.
Marco, thank you so much for having me.
It's great to have you on. We've always loved Kansas City. I've been an investor there for a long time. I like to refer to some of the markets we're in as perennial markets that we've been in for what seems like forever. I can tell you that we've been selling property in Kansas City since 2005. It is a favorite market. I know you like it too. Let's talk about the market. What can you tell us about Kansas City? It's very popular with investors. From a high level, why invest in Kansas City, Missouri?
We love Kansas City for several reasons. First, a lot of times investors think about cashflow markets versus appreciation markets. One of the things I like about it and a lot of investors like about it is that you get a balance of both.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Jonathan and he says: "Hi Marco. I've been enjoying your podcast for a few months now. Answers from a professional to questions, many have has been quite educational and you are welcome. My question involves analyzing the risk-reward of a cash-out refinance to utilize a portion of the equity from our primary residence to hopefully launch into real estate investing. My wife and I have lived in this home in Oregon for the past 10 years. Current equity is about $200,000 but recently tied this to a HELOC for $46,000 which was used to remodel a large portion of our home. We are both around the age of 50 and have been paying into 401k's from our W2 jobs but do not have a longterm investment strategy beyond that, single-family homes or small multi-units would be of interest and not necessarily in our current market with a structured goal to scale over time. Thank you for your time! ~Jonathan."
Thanks for the question. Jonathan. This is a good one and if you haven't seen or heard the episode that I released just recently, I believe it was number 224 titled $700,000 Equity to Invest - A "Live" Client Call. I went into this in a fair amount of detail on that call, but that was a live call that I had recorded. So I'm going to answer your question and give you the bullet points and I actually suggest you listen to that episode. But I will give you a good overview right now just to compare and contrast what you might call the risk versus the reward. And I've talked about this on and off over the years on other episodes. Just touching upon it and diving into some of the detail here and there, but I'll just kind of paint a very simple hypothetical example here using round numbers.
Just to give you the answer to your question about the risk and reward. I guess let's look at this as two phases. In phase one you're going to have a hilar, a home equity line of credit and there's a cost in using that equity. You don't actually pay anything until you draw from that line of credit, but once you do, you're paying typically an interest-only monthly payment, but what you need to consider is what is the gain in using that equity for investment purposes. In other words, if you can unlock that dead dormant or idle equity that you have in your principal property or for that matter any property, it doesn't have to be your principle residence. If you can take that equity and turn it into liquid investible capital and turn that into income-producing assets that produce more in terms of cash flow than the cost of using that equity.
Then what you've done is you've arbitraged the cost of using that equity in the form of a HELOC against the gains you're going to receive from your new investments, your new rental portfolio or whatever that might be. So let me give you an example here. We're going to make a couple of assumptions. First of all, the average interest rate as of today on a home equity line of credit is 4.75% so if you, let's say, tap into $100,000 of your idle equity in your property and turn that $100,000 all of it into a used line of credit. So you're pulling out $100,000 through the hilar, you're looking at an interest-only payment of $4,750 per year. Divide that by 12 it's roughly about a $400 per month interest payment. It's actually $394 in change. But let's call it $400 a month on the hundred thousand dollars of liquidated equity from your property.
Now let's also make an assumption that you are going to take that a hundred thousand and turn that into for single-family homes of $100,000 each. You can slice and dice this different ways. You can turn it into five properties of let's say $80,000 each or three properties of about $130,000 each, whatever the case is, let's call it for single-family homes. Let's also say that the net cash flow from each of those properties is $300 a mont...
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
So today's question comes from Jason and he sends this question in with some urgency. Jason, I'm going to provide you some direction. As you know, we don't give financial advice and sometimes it's hard to know what advice to actually give somebody without specifics on the situation. But I understand what is going on here from your email and I can feel your pain because I've been there many times myself. Anyway, Jason writes in and he says, Hey Marco, first of all, thank you for being not just a voice but the voice for us real estate investors. I have spent the last two years consuming as many books, podcasts and all things real estate investing. In my opinion, you are the authority that you're way too kind. I've been networking with other investors and your name keeps coming up.
So from all of us. Thank you. Well, you're very welcome. So he goes on to say, I closed on a property just as the coronavirus pandemic started. This property is in the Phoenix market and I think we both know this market is susceptible to a decline in values. I will be all in for $250,000 and I paid cash. This includes the rehab or renovation and all other costs including selling costs, as my intention was to flip it. If I don't sell all in, it will be around $235,000 it will rent for 1400 to $1,500 a month. Obviously doesn't come close to the 1% rule. I'm worried with what's going on with coronavirus. I will not be able to sell it at a profit. The estimated after repair value at the time of closing was $270,000 so only a $20,000 profit margin. I feel like my biggest loss will be the opportunity cost.
If I leave $250,000 cash during what possibly could be a great time to buy? The return on investment is not attractive as a conventional mortgage and renter. My question is, what other strategies should I be considering such as a lease option providing owner financing, a home equity line of credit or a cash-out refinance. I greatly appreciate you taking the time to read this and I am open to a conversation since I am asking a big question. Thank you and stay healthy, Jason.
Alright, Jason. Great question. I can feel your pain and I empathize so I don't have enough detail obviously to give you specifics because so much of this is going to be neighborhood-specific or neighborhood dependent. Phoenix is a big, big market had it has been a great market for many years just because of the tremendous growth that has been going on there.
However, having said that, as a flip property, that's a pretty thin margin of 20,000 assuming you sell it for the 270,000 being a retail flip, you always have to account for fluctuations in negotiation with your potential buyers. If the market softens during the period of time that you are renovating your property, that 20,000 could be enough pretty quick. Ideally, you want to see a minimum of a 10% profit margin on a flip, and I'm talking about a net profit. Ideally, you want to be well above that, so I'm not sure where you got it or how you purchase this or how come you're so deep into this property. But that doesn't matter because that's not your question. In regards to Phoenix, just a quick comment. You know, Phoenix has been one of the highest appreciating communities or markets, well not only in Arizona but nationwide and Phoenix.
Home prices were up roughly 7% over the last 12 months, which is a very strong price growth and that's probably why you pick the Phoenix market as far as finding a distressed property to fix and flip. But despite the increase in property prices, the Phoenix market still is a good market even though it has been softening. And that's actually what has been happening. So according to some websites, and these are automated models like Zillow's model, they're only expecting that market to appreciate about 1.7% as a whole over the next 12 months,
In recent years especially, homeschooling children has become an increasingly popular method of providing kids with the education they need to gain wealth and success in their future. If you know where to look, there are countless resources to support your child's continuous scholastic environment outside of a traditional public or private school setting. Marco Santarelli is joined by Sherry, a retired Fortune 100 healthcare executive, and a local homeschool mom who's active in her community. Sherry talks about the joys of homeschooling your children, and the flexibility that such a system affords your child's education. There are plenty of benefits to homeschooling, so if you've ever considered it, Sherry can provide a great primer to start today.
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Homeschooling For Wealth And Success Mark Twain once said, “I never let my schooling interfere with my education.” The genius writer and the father of American literature was not educated beyond elementary school. He expressed cynicism toward the mediocre education system in his many quotes about education. He believed that schooling was different from education and learning. He warned us of the hazards of following the education system with completely blind faith. Education is more important now than it has been at any other time in history. As we leave the industrial age behind and continue through the information age, the value of education continues to increase. Is the education system that you or your children receive in the school system now adequate enough to meet the challenges of this so-called brave new world?
The education system covers two main areas, academic and professional, but we need more new education. It's what I call the third leg of the stool or financial education. That's the education that you turn to, to turn the money you earn from your job or profession into lifelong wealth and financial security. As Robert Kiyosaki says, “The rules have changed.” In the industrial age, the rules were go to school, get good grades, find a safe and secure job with benefits, and then stay there your whole life. After many years, you retire from the company and hopefully, the company will give you a pension and the government would take care of you for the rest of your life. That's not true nowadays. It hasn't been true for decades.
The rules are go to school, get good grades, find a job, and then retrain yourself for a new job or career. You find yourself a new company and a new job and you retrain again. This could go on multiple times in a person's lifetime. Think about all the people that you know that have gone from one job or career and after some time, that could be even a decade or more, they've changed their career path. They're doing something completely different. All along, you're hopping or at least hoping you have enough money set aside to last you well into your senior years. I've had some people reach out to me asking me about homeschooling. In case you don't know, we've homeschooled our daughter, Angelina, since first grade. I've decided to interview 1 or 2 homeschool moms here in Orange County where I live. My wife ended up introducing me to a few of them from one of her local homeschool groups.
This episode should be of interest to you whether you homeschool or not, whether you're thinking about it or not. At the core of it is your ability to provide your kids...
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question is a great one and it comes in from Kramer and he says, Hey Marco, quick question for you. It's really more of a viewpoint that I'd like you to address for me. Maybe there is something I'm not seeing or considering if I'm going to buy a $100,000 investment property where I have to put $20,000 of my own money down for it and my cash flow is going to be around $200 per month based on several properties listed on your site. I'm having a hard time getting excited about that. It would take just over eight years to recover my initial investment through the property's cash flow in quotes. More to the point I'm having a hard time considering it cashflow when I already had $20,000 in my bank account.
Does that make sense? It reminds me of the concept of an annuity except I'm not earning interest unless I raise rents every year, but even then, how much can I reasonably raise rents without losing tenants. It seems like the real reward or gain comes from the price appreciation and equity accumulation over time, which I could then use to either cash out for a windfall or 1031 for more property, 1031 being the tax-deferred exchange. Perhaps at that point, the cashflow would see more attractive. Is this about right or is there something I'm missing from the concept of the near future cashflow? Thanks for reading. I love the podcast and plan to work with you.
Okay, so Kramer, this is a great question. Yes, you are overlooking something very basic and fundamental, but I can see how this would trip up a lot of people.
So I'm going to break it down for you and I'm going to begin by saying that in order to change your viewpoint on this, you have to understand that your $20,000 that you currently have probably in a savings account at the bank, is not money that is actually being spent. You're simply investing it and you're investing it by moving it and putting it to better use. So you're taking it out of the bank in the form of liquid cash, and you're using that as a down payment towards the purchase or investment in a piece of real estate. In this case, a rental property. So that liquid cash now becomes equity. It's still yours. It's still on your personal financial statement. It's on your personal balance sheet. It's under the asset column. But now instead of being listed as cash, it is listed as equity in the form of property.
So your quote-unquote recovery is not eight years. It's not any years. There is no recovery because that $20,000 is still yours. It's still on your balance sheet. You still own it. But now instead of losing money in the bank because your purchasing power is being eroded every year from the effects of inflation, you are now actually getting a real rate of return in the real world because you have real assets that are generating real returns for you. Real cashflow. So that's the major viewpoint. That's the hopefully the aha moment here is again, you're not spending that $20,000 a year investing that $20,000 by simply moving it out of the bank and into real estate. And that means that you're simply turning liquid cash, which by the way is inflated away into the real estate, which will hopefully appreciate for you. So hopefully that changes your understanding and your viewpoint.
So you understand that you are making money from day one, you are generating a return. So let's break that down and use some real-world numbers here. So first of all, in order to break this down, you have to remember that real estate is the ideal investment. Now I say that half-jokingly, it really is an ideal investment. In fact, it is by far the best investment, but I use the word IDEAL because it's an acronym I D, E, a, L and those all represent something different. So that represents income depreciation appreciation, which is equity growth, the amortization,
Today's episode was a recent client call recording. Ashley, who's working with one of our Investment Counselors, requested a live "Ask Marco" answer to her big question below.
So she writes in and says, "Hi Marco. A big question for you. I'm at the point in my investing where I'm ready to cash out, refinance my primary residence here in Massachusetts that will Net me about $700,000 in proceeds and I really want to move that "dead equity" into real estate. My goal is cash flow to help cover our larger primary mortgage and also get me closer to leaving my six-figure W2 job. So the big question, what would you do with $700,000 to invest to maximize cash flow?"
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Then she's got some sub-questions here or comments. The first bullet being, I don't think I'm ready to jump into apartment complexes yet. The thought of buying seven $100,000 single-family residentials outright without financing sounds like the quickest path to cash flow, but I would miss out on the power of leverage. Perhaps it's 14 $100,000 single-family residential homes that are 50% financed.
Third bullet. Any other suggestions for me. All is looking good to close on the two Pennsylvania properties next week. This is outside of the $700,000. Thanks for the suggestion to look at Pennsylvania. They've been so great to work with as you said, they would be and she's referring to the provider team that we work without there. And she finally concludes by saying happy to jump on the phone if you have time to talk this big question through appreciated Ashley. All right. When we jumped on the phone call and just before I started recording the call, she was basically saying that she's been listening to the podcast now for a few months. She loves it. She was, uh, just essentially saying thank you for putting out such great content. And then she was starting to go into her story and that's when I remember to click the record button. Uh, so I have talked to her after the recording and she has given me her permission to edit and publish the content as a podcast episode. So here is the call with Ashley.
Well, as quit my day job and just be more available for them and do real estate full time.
Yeah. Well awesome. Well, um, first of all, just real quick, I just want to say thanks for your comments. I'm glad you liked the show and I'm happy to hear that you've been listening to all the episodes you've downloaded all of them. I need to make some things and make some changes on a few of the earlier episodes, but no big deal. Just one, one of them I want to take down. Yeah. So, no, I'm, I'm glad you're getting a lot from it and I'm glad you read rich dad, poor dad, that that was a game-changing book for me too, even though I was already all-in into real estate and just changed the way I thought about certain things. And so yeah, that's kind of a foundational book. Um, you know, now I've just literally, I've got 2000 books and of course I didn't read all of them, but you know, they just look good on my bookshelf. Yeah. Um, but yeah, so that equity that you are talking about, is that in your principal residence? Was that a second home? Cause I didn't catch that.
It's in our primary, so I, I do have a second home that I just finished, um, two months ago refinancing that as well and pulled all that cash out and amusing that to buy two Pennsylvania properties through you guys.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Samantha and she says, hi Marco. I am currently trying to study up on the real estate in San Antonio. And while your article helped me a lot with the residential areas, I was just curious about how the market looks with non-residential or is it the same?
Great question Samantha. So there are a lot of similarities and overlap between residential and nonresidential or what we would call commercial real estate, but there are some differences. And so I will give you a quick overview here of what those differences are.
So there are plenty of forces that dictate the real estate market. Some of them being political, some of them being economic, some of them being psychographic, these are all influencers. Um, but those are the major ones.
So these influences are better measured by what we'll call market drivers. And they are the underlying force behind the actions of a real estate market. So when it comes to commercial real estate, there are three key drivers. The first one being yield, the second one being business confidence. And the third one being the occupancy rates are what some people might look at as being vacancy rates. But let's begin with kind of a basic and define what a market driver is. Simply put, a driver is a principal force that is positively influencing a market. So when a market driver is present, there is likely to be a positive market or industry trend that's showing up. And when that happens, you see values go up and down because demand may increase or it could just decrease. But when a market driver is not there or it's there but weak, you have less force behind that market.
And what ends up happening is that demand drops and you see prices drop along with it or the yields go down with it. And with commercial real estate yield determines market value. Now if you talk to some sharp real estate investors, they'll tell you that that's a good time to go into a market. It's the, you know that whole saying of BI-LO sell high or just buy low and keep forever. But when you're going in with low demand, the theory is that you can get a better deal. So let's just talk about these real quick. The first key driver being yield is simply based on income. When you are a commercial real estate investor, you want income from your investment. Obviously it's not really just the big payoff from the principal because with commercial you may eventually sell that property and you get a capital return, but it's really an income-based investment.
And so in the commercial world, the income is called yield and it is the annual return on an investment, not including any capital growth. So yield is a big deal and a key focus area in the commercial space. The second key driver is business confidence. You'll often hear people on TV in the media, in other words, talking heads. Commentators often talking about their view on commercial real estate and commercial properties. By looking at business confidence. If those businesses are confident, the economy will perform better in the coming year, it's likely they're going to see a good flow of foot traffic. If they're a retailer or plenty of work coming in. If they're in the industrial sector or if they're an investment based business, then they'll see good returns, whether it be in the stock market or whatever it may be. So business confidence is also a driver that drives the commercial space.
And then that third driver, our occupancy rates true with any investor. Investors in the commercial space don't like to seek empty properties. And because the underlying value of a commercial asset is actually aligned to its tenants, having a vacancy is arguably the biggest fear in the commercial property investment space. And so it's one that has to be avoided. And this is why management is so critical in the commercial world.
Do you want to know how to grow your wealth and grow it faster? If so, then this very special episode is for you. Host, Marco Santarelli, and his guest, Dave Foster, share with you an incredible tool out there: the 1031 Exchange. Unknown by many, the IRS allows you to defer your taxes and grow your wealth faster through it. Having been using 1031 Exchanges as the cornerstone of his own personal real estate portfolio, Dave takes you into a deeper look at using a tax-deferred exchange that you can use to invest your money forward in more properties. Through this, you'll discover your equity snowballing your wealth and cash flow. Take advantage of this information now. Know more details from this conversation with Marco and Dave.
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How To Use Equity To Snowball Your Wealth And Cash Flow We've got a special episode. Why? If you're interested in growing your wealth and growing it faster, the question is how do you do it? There is an incredible tool out there that many people don't even know about, but the IRS allows you to defer your taxes and grow your wealth faster. It's called a 1031 Exchange. The whole point of a 1031 Exchange is to move your investment money forward to invest in more property. Why wouldn't you want to be able to grow your portfolio faster? With me is a special guest. His name is Dave Foster. Dave has been using 1031 Exchanges as the cornerstone of his own personal real estate portfolio. He decided to get into real estate investing right after his first son was born. He specializes in helping others take advantage of using a tax-deferred exchange to grow their wealth faster. Dave, welcome to the show.
Thanks, Marco. It's great to be here.
I'm glad to have you on because this is something that a lot of people don't understand because they see the label 1031 Exchange and they're wondering, "What is that?" A lot of people are clueless to even what that means. It's totally boring. It's an IRS Tax Code, it's Section 1031 of the Tax Code. Rather than talk about the dry stuff, let's talk about what is it and how we can use it to help benefit me and you and all our audience when it comes to growing their wealth and growing it faster.
The funny thing about boring is not fun until it stings you. That's how I got into the whole industry of 1031. It was years ago, back to even before we called them fix and flips. I bought a duplex in Denver, did a renovation and sold it. I was all fat and sassy going to my accountant. He presented me with a not so lovely tax bill. I hit the roof, I was like, "How in the world could I have worked this hard to make this little?" It was crazy. Right at that moment in time, this was 1996, there had been a major change in the IRS statutes that made this thing called 1031 user-friendly. I call my accountants and the two said, "I'm sorry, you've got to pay all the tax." I had some friends who said, "Dave, we're starting a business and that business is going to help people use this tool so that you won't have to pay tax on that gain next time." I said, "Count me in. I'm to count it and I get it. Let's do it."
Many years ago, we started working with those four clients as well as for myself. It has been awesome. You can read the story about what I've done but all that though, the 1031 Exchange does exactly what you said. It lets you take those tax dollars that you'd normally would have paid and you get to...
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Cornelius and he says, hello Marco. My name is Cornelius excellent podcast. I'm currently just dissecting real estate investment tips and information in an effort to someday soon begin my investing journey. I've been listening to your podcast and have found it to be extremely informative and helpful. Well, thank you Cornelius.
In episode two zero five you were mentioning the different types of real estate investment strategies. My question is, is there a difference between buy and hold and buy and hold turnkey properties? Thanks for all your insight, Cornelius.
Thanks for the question. I will give you a a good but broad answer to this question because I'm actually thinking about doing a full episode on the different types of real estate investing strategies, which we'll go into more detail than what I'll cover here today.
But it also encompasses many other types of quote unquote strategies because some people confuse strategies with tactics and sometimes they confuse strategies with things that are really not investing, which I'll explain here in a minute. So generally speaking, there are two broad camps, if you will. There's the active and the passive side, and I've titled this podcast passive real estate investing because we focus on buy and hold strategies to create wealth. So the way to look at this is like having two buckets, the active strategies, if you will, our business strategies with emphasis on the word business. The passive side of this is the wealth building strategies with emphasis on the word wealth building. So here's what that looks like on the active side of real estate investing. Those strategies are typically your fix and flip. You're fixing hold and you're wholesaling. So what those mean are essentially fix and flip.
That is a business. You are in the business of finding properties that need work, doing those repairs, getting involved, in other words, rolling up your sleeves and you're doing the work where you're managing people that will be doing the work and then ultimately reselling them for a profit. In other words, you're buying low and selling high. That's the whole idea of buying, fixing and flipping property. But that's a business activity. It's not exactly investing because you're not generating cashflow or streams of cash. You're building chunks of cash. And there's nothing wrong with that if you put that chunk of cash to work, but that's a fix and flip business. Now, if you are doing that and you're buying, fixing, and holding, well now you're converting an active activity, a business strategy, into a passive investment, which is a wealth building strategy. And there's nothing wrong with that.
Many people do that. If you've got the ambition, the knowledge, the understanding, the time, the resources to do that and get involved on the active side of it and turn it into passive investments. Great. Uh, the goal there is to build additional equity because you're forcing equity and that's what you know the whole buy, fix and hold process is all about. So you've got buy, fix and flip, buy, fix and hold. Now the third category under the business strategy side of it, which is the active real estate investing is wholesaling. And this again is a business and this is where you go out and you're finding good deals on investment properties or for any property for that matter. And then you're reselling that property for a quick profit and you're going to put a markup on it and you're going to sell it. Technically speaking, you're actually not selling the property, you're selling the contract on the property.
So you will often lock up a property under contract, Mark it up and then sell it to another investor. You're making a small profit and you're moving that paper over to the other person and they take it over from there,
Today I’d like to talk a bit about the Short-Term Impact and Long-Term impact of the Coronavirus on the Housing and Rental Markets. Pay attention as I’m going to give you some insight and key takeaways on this episode.
I’ll have more to add in upcoming episodes, so if you haven’t already, now is a great time to click that subscribe button so you don’t miss out.
Keep in mind that this is evolving day-by-day, and although I’m not a fan of the main-stream media, it is my opinion that they are doing more harm than good by adding fuel to the fire of concern to those paying attention to them.
If you missed our last episode, be sure to listen to Asset Protection For Real Estate Investors.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Enjoy the show!
The coronavirus pandemic has already caused a decline in the stock market, though that was more out of fear than anything else. However, we can look back to recent historical events like the swine flu, the SARS epidemic, MERS and other aggressive flu strains to make reasonable predictions of the impact of the covid-19 pandemic on the housing market. We can also use history to predict the impact of unusual responses to this pandemic, such as Italy suspending mortgage and rent payments.
Historically speaking, the housing market is relatively stable during market disruptions like a recession. Since 1980, there have been five official recessions in the United States. In all but the 2008 financial crisis, inflation-adjusted home prices only declined an average of 2.7 percent from the month before the recession began to the final month of the recession.
There’s a good chance the market will remain hot for some, but cool for others. The coronavirus is leading to fewer homebuyers searching in the marketplace, as well as some listings being delayed. In the latest flash survey, 11% of Realtors indicated a reduction in buyer traffic and 7% are reporting lower seller traffic when asked directly about the coronavirus impact on the market. The fear of the coronavirus outbreak is definitely giving pause to some buyers and sellers. But in this low inventory seller’s market, even as some potential buyers drop out of the market, there are others who remain eager to get a home under contract while rates are so low.
Local real estate markets may act as a buffer against potentially larger declines in the financial markets. The recent turbulence in the stock market has already impacted the household wealth of many people to the tune of billions of dollars. This could reduce the demand for luxury homes. However, with fewer buyers for luxury real estate, there could be opportunities for steep price discounts for buyers who choose to remain in the market for high-end properties.
The weaker financial markets can affect stability in the real estate markets. However, times like these do provide an opportunity for investors with money and the willingness to ignore the short-term fluctuations and talking heads on the main-stream media, to scoop up properties that may not appreciate as quickly as when the financial markets are running strong.
KEY TAKEAWAYS:
Smart investors often take advantage of these opportunities, while some would-be investors may finally pull the trigger on purchasing that first or second investment property. Sometimes, you have to take advantage of these market disruptions to see that many investors will pump the brakes on investing out of fear and other illogical emotional reasons while others see the opportunity of having access to more real estate inventory, possibly better pricing, and still historically low-interest rates.
Before this coronavirus threatened the global economy, the state of the U.S. real estate market was great. The median home price nationwide hit a record high of just over 300,000 dollars. This is nearly seven percent higher than in 2019. The number of home sales was up nearly ten percent year...
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Sarah. Sarah says, hi, I stumbled across your article on IRAs and real estate investing. I'm wondering if you have information on the pros and cons for using my 401k from a job 15 years ago for investing in rental properties. We currently have two rentals, wondering if it's even an option to use the 401k investment for purchasing rental properties and the pros and cons in doing so. I'm assuming one major contributing factor is how the 401k is growing currently.
Okay, Sarah? Well, thanks for the question. There's some things I just don't know that you haven't given me as far as information to be able to thoroughly answer your question, but I'll give you a 30,000 foot view answer to the question because you're going to have to check with your tax advisor about some of the options you have.
But it's good to know what some of those options are. So I'm assuming from your question that when you mentioned a job 15 years ago, I'm assuming that you don't mean that you've been in this job for 15 years, you just have held onto the 401k from a previous job and you haven't done anything with the funds and that's all well and fine if you are getting a good rate of return and you've just kept it in there. So one option is to roll the funds over into an IRA individual retirement account. Here's what I mean by that. So 401k plans are essentially longterm savings account and they offer tax advantages at least during the growth period of it to grow. Whatever savings you put in there between you and your employer. But with a 401k, you typically can make transfers or take loans against the 401k to access the funds and the investment because you can't pull the funds out without paying a penalty and taxes on it prior to age 59 and a half.
So what you're going to need to do here, especially if you are still employed in this 401k, is under management's being managed by your company or your retirement plan administrator. You're going to have to talk to them about this, but your 401k is restricted by law from investing in real estate. However, if you have this 401k and you're not tied to the original employer, so it's just sitting there and you haven't done anything with it, what you can do is you can roll it over, roll over your 401k into an IRA. Now, although you cannot invest directly in real estate with a 401k account, rolling it over into an IRA tax free, a self directed IRA will allow you to use those proceeds to invest in real estate. So that kind of frees up the shackles of what you can and can't do with it.
So that's something to seriously consider. Now, if that's not an option, you can usually borrow half of the value of your account up to about $50,000 if I'm not mistaken. However, if you purchase real estate with those funds outside of your 401k, you no longer have any tax advantages that are attached to the purchases made from the funds coming out of your 401k. Again, I'm going to repeat this a few times, but you need to talk to both the plan administrator for your 401k as well as your tax advisor because there are other rules and regulations and tax codes that come into play here. So you know this is a tax related question by far. If you roll it over into an IRA, then you are now able to self direct that IRA and purchase and invest in real estate income producing real estate within that IRA.
But if you do that, you need to monitor the cashflow. That's very important because if you purchase real estate through a retirement account, like a self directed IRA, all the funds used to purchase the property must come from that account. It all has to be arms length and any proceeds such as rental income or sales proceeds. If you sell that property must be returned back into the IRA. If you follow these restrictions, which is essentially what they are,
Welcome back to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Aaron and he asks, hi Marco. I'm a big fan of your podcast and I've been doing my due diligence and research on real estate investing for a couple of months. Now. I really want to be a real estate investor, but my financial and credit situation is not good. Can I still be a real estate investor with low income and poor credit?
Interesting question, Aaron. Short answer, no, but don't be discouraged because I want to explain what you need and what you need to do so it just makes it tough. If you have low income, it might make it difficult to qualify for financing. Maybe there are loans out there. Again, believe it or not, that are asset based and they don't even look at your income. So you could literally have no income, no assets may be no job and qualify.
Does that sound familiar? Sounds like history repeating itself from the a 2008 great recession. Remember the housing market crash of 2006 but that's not where we are today. That's actually not the case. So let me break this down for you. When it comes to real estate investing, you need what I call the three CS, the three CS, and that is cash, credit and competence. Let's break this down. The first thing you need is cash. So this can be a function of your income, but if you don't have enough income to save up the investible cash, the savings that you need for the down payments to purchase your real estate, then you obviously need to do something about that. So what do you do? Well, you need to focus on building your top line, meaning the revenue or income you get from your job, your profession, your business, whatever it may be.
And if that's not easy to do because you have a ceiling that you can't get through, you're capped at an hourly wage or you just have limitations, then what you need to do is one of maybe two things. One is add additional streams of income, meaning another job starting up a small business or you need to increase what you're making. If you run a small business or you're professional, how can you build or scale your existing revenue and income and increase your cash flows? So the point is is you need to rapidly increase what you can save. Save as much as you can, as quick as you can do that, however you need to do that. So second job, third job, a scale your business partner with somebody. Whatever it takes, you need to increase the amount of income and revenue that you have so you can save more.
So that's the cash. The credit piece is also critically important. Why? Because today, so many things depend on your credit profile and your credit score. So whether you're applying for a credit, a car loan, a lease, you're renting a property and they pull credit to check your credit history or even a mortgage loan, whether for your principle residence or for an investment property. At the end of the day, all roads lead back to your credit profile. And so it's important to have good credit. If you don't have good credit, you need to start working on that and start building it. And that's a topic for another day. In fact, I've actually did an episode last year, 2019 about credit and credit repair and you might want to look that one up, but it is important to have strong or good credit. You know, anything over six 80 is good. If you're seven 20 as far as a score is concerned, that is much better.
In fact, over seven 20 is considered excellent credit. Some people will say seven 40 but you're in that range. But you can qualify for financing, mortgage financing, even with a credit score below six 80. Uh, keep in mind it's not just about the score, it's about your entire credit profile. It's really what is on your credit reports. That is important, not just the score itself and besides, there's probably about 12 different scores as well. There's only one in particular that lenders use from a mortgage perspective.
In real estate, the only thing that's truly certain is that in any situation where you own assets, there's always the risk of losing those same assets for whatever reason. This is why real estate asset protection is such a vital necessity to you as a real estate investor - you don't want to be losing the assets and properties that you know you worked hard to acquire. Clint Coons is the Founding Partner at Anderson Business Advisors. Using his experience as a real estate asset protection expert and as an avid real estate investor, he speaks to Marco Santarelli about why getting asset protection should be the top priority of absolutely anyone acquiring assets.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Asset Protection For Real Estate Investors Do you take asset protection seriously? The importance of protecting your assets as an investor is completely unparalleled. If you're looking for ways to ensure the success of your real estate business, you have the following tools and options available to you and there are four. The first is debt. This strategy works like this. If you continue to pull the equity out of your existing properties and reinvest that money into new properties, you're building your portfolio, but you're also continually avoiding the excess liquid capital that sits around in your properties. This is a form of protecting yourself because you are not showing that you have equity or wealth. This is otherwise known as equity stripping. Most people will follow through with this strategy by either refinancing their properties to pull that equity out or using a home equity line of credit, also known as a HELOC.
The second tool and option you have available to you are LLCs or Limited Liability Companies widely available in every state in the United States. The benefits of setting up an LLC are almost unparalleled there. They’re next to none. No one will be able to see the assets that are hidden behind an LLC. That's the beautiful thing about having a limited liability company. For one, an LLC will limit your personal vulnerability. When your investment properties are owned by an LLC, your risk exposure would be insulated by the protection of that company or that entity. It will leave only the assets owned by the LLC as opposed to all of your own personal assets exposed to potential lawsuits. The third tool is insurance. This is what most people think about first and foremost. Unfortunately, sometimes they stop thinking about it at that point. Insurance is the easiest way to ensure your real estate assets are protected. That's simply purchase insurance. It is important to have insurance in place for your primary residence, but it's as equally important, if not more important to consider insurance for your rental properties, all of them.
Last but not least, you have trusts. This is an area that a lot of people get a little confused or there's misunderstandings or misinformation about trusts and what they are and how they work. We're going to talk about that with my guest. If your real estate business continues to grow, there's a chance you may end up needing to one-up your real estate asset protection. The debt strategy and insurance can only go so far but eventually, you'll need to consider expanding into trusts, other entities and other structures. A combination of these tools together may be the best option for advanced real estate investors.
Hello my friends and welcome to another episode of Ask Marco where I love answering your investing related questions.
Today's question is kind of simple, but I feel bad for this person. Her name is Grace and she writes in and says, hi Marco. Thank you for your amazing podcast. It is very informative and educational. It's been a few weeks now since I started listening and I gained a lot from it. I am new to real estate investing and this is my first adventure. Not sure why she called it an adventure. I took some friend's advice and bought some vacant properties in Baltimore with a price range of 10,000 to $20,000 hoping to rehab and sell or rent out in the areas that are expected to grow. I don't have any real data, but it is possible in a couple of years maybe, but that was a year ago. Unfortunately or fortunately maybe I need to be educated first in brackets.
I was not able to do any of that due to finances and other circumstances. Now since I started listening to your podcast, I thought it would be wise to seek advice before I go too far with it. The area will be considered a class D neighborhood. I think my question is how should I proceed now? Should I try to sell them as is even if I lose money and use the cash for a down payment for a turnkey rental property or should I try to rehab and rent out or sell the properties? Thank you for your suggestions and keep up the amazing work you are doing in educating everyone who is interested to learn kindly - Grace.
Grace, thank you for writing in. I appreciate the question. This is a difficult question to ask in a harder question to answer for two reasons. One, I feel bad for your situation and two, I don't actually have enough information to give you a complete answer but I'll make a few assumptions and I'll answer to the best of my ability.
First and foremost, this friend that gave you the advice to buy these two vacant properties, is she really, are he really a friend? In some ways, I'm thinking that this is a way to uh, punish your enemy. But it really depends on what you bought because they could be two great properties with minimal work in a decent area, although I don't know if decent and D class neighborhoods go hand in hand in the same sentence. But anyway, you did what you did and you have what you have. So on the surface, this sounds like you made a mistake, but smart investors, intelligent investors, good entrepreneurs have the ability to turn lemons into lemonade. It's just finding the opportunity in a situation where others don't see it. And that's really the skill of great business owners and entrepreneurs and dealmakers is they're able to identify opportunities in things, situations that others, most people don't find or don't see.
So let's just assume you did make a mistake, but here are your two options. This is really the broad answer to your question. I think you have two general answers here. Maybe three. First is, I don't know if you bought these from a wholesaler or through the MLS through a real estate agent, but option one is since you're sitting on it, and I assume you probably just bought these with your own cash, you didn't borrow other people's money so you're not accruing interest on the funds that you use to purchase these properties. If that's the case and you can just ride it out, you might want to try selling them on your own, on the MLS and just, you know, Mark them as investor specials and just sell them for enough to cover your costs, whatever you know that commission is and your carry costs.
That's one option. The other option is you can find some wholesalers in your area. Uh, maybe visit a real estate investor club meeting. Probably have more than one in the Baltimore market, but go there with some information. You don't need to tell them what you paid for it, but just ask them if they'd be willing to take them off your hands as a wholesaler and sell them to the investors that they know because they will have a li...
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
This is going to be the main episode of the passive real estate investing podcast and the reason for that is is because the question here is an Ask Marco question submitted by someone by the name of Conrado. I hope I pronounced that correctly, but because it's such an in-depth question, I wanted to expand on it.
Conrado writes in and he says, hi, Marco. Loved the podcast. Very informative with the right level of information, especially for investors starting like me, my situation is the following. I'm looking to buy my first investment property soon, looking to deploy $200,000 of my portfolio to start investing in real estate. My goal is to reach 10 units in 10 years, buying one per year. That's a great goal.
My question is, should I buy cash to get the better price upfront and refinance this first property when you're from now to raise cash for the second one or should I finance this first one with 20% down and save the cash to finance the second one year from now? I feel like if I buy cash I could get a better deal in this case. How easy is it to refinance to raise cash one year from now to buy the second one? Thanks and great job with the podcast.
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If you missed our last episode, be sure to listen to The Wealthy Gardener – Lessons On Prosperity (Part 2)
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Okay, so thanks for the questions Conrado this is a very good question and I think a lot of people think about this because when you talk about buying a property all-cash, a lot of people are under the belief falsely or otherwise that you can get a better price or a better deal if you come to the seller with an all-cash offer. And so let's define that for those people who don't understand what all cash means.
An all-cash deal or an all-cash offer is one where you are purchasing without financing, meaning the seller is getting all cash from you, not from a lending institution.
So look at this way. Regardless of whether you're financing a property or not, the seller is always going to end up getting quote-unquote all cash because the funds are coming from one or more places, but at the end of the day, their proceeds from that sale is going to be all cash. They don't really care where the financing or funds come from, although they might care if it's being financed because that typically takes a little bit longer from your perspective. You're either coming to the table, the closing table with a down payment, a percentage of the purchase price or 100% of the purchase price. And if you're purchasing with 100% of the purchase price, that's typically what they refer to as all cash. Now, why would you want to purchase all cash? The idea is is that if you come to the closing table or approach a seller saying, Hey, I'm going to purchase your property all cash and you think you're going to get a better price, that may be true, but a better price typically comes from two main situations or conditions.
One is when you are in a buyer's market, which we are not in today, we are in predominantly a seller's market right across the country in virtually all markets and that means the sellers have the upper hand. They know that demand is strong and buying activity is strong. Credit is widely available and it's relatively cheap, so there's more demand for the property than there are sellers to fulfill the demand that's created by the buyers in the market right now. The other situation is when you are dealing with a motivated seller,
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Jayco, I believe that's how you pronounce your name. Uh, he says, Hey Marco, this is Jayco from Indianapolis. Thank you so much for your good information that you bring to us for free. I want to buy properties at foreclosure auctions at the county sheriff sale, but I don't know how to finance them since they want all the money up front. If you have any suggestions I will greatly appreciate it. Well Jayco thanks for the question.
Simple one here, but things to consider. So how do you finance a foreclosure that you purchase at the County Sheriff's sale or any courthouse steps for that matter across the country? So this is true in pretty much every state. Um, there are judicial, non judicial States. Often, it's a trustee that's selling the properties that are have been foreclosed or taken back by the lenders in the non-judicial States and in the judicial States.
They are typically done by, well often the trustees at the courthouse steps. You just have to check your jurisdiction, but how do you finance these properties? The answer to that question is you typically don't, so if you don't have the capital for it, and most people don't walk around with tens of thousands or hundreds of thousands of dollars in their pocket. Although I did know one individual who actually did that, you will have to finance it with your own cash or friends and family or other people's money. Essentially it's private money meaning non-institutional money. You have to accumulate these funds through your own efforts through friends, family, other investors or partners. It's all private money. Now there are people out there that want to lend and will lend under the right terms and conditions. If you know what you're doing and you're providing them a favorable return and it is backed by that real estate, meaning that they have a lien on it, like a first lien position for the monies that they're lending to you.
However, a lot of people are going to be pretty reluctant when it comes to foreclosure auctions. They're more likely to want to lend you capital if you're purchasing it through the MLS because you have the ability to do more due diligence. And I'll get to that in a minute, but first, ask yourself why you want to buy a foreclosed property? Is it because you want to buy, fix and flip properties and create yourself a flipping business, essentially a transactional business where you are flipping property to create chunks of cash and then you take those chunks of cash and you reinvested into other properties that you buy and hold in a portfolio that you own? Or are you looking to equity buying a distressed asset, fixing it up and essentially creating or forcing equity in that property where you're essentially putting in the sweat equity to create the equity in the property?
And there's nothing wrong with that. It's just, it requires certain skills and tolerances and team of people and an understanding of how it all works and it's doable. But there are a lot of moving parts and it can be stressful and sometimes there's a lot of brain damage and I've done many of those. I've probably flipped close to 300 properties since January of 2015 I don't do that anymore. I pretty much have gotten out of that. It was just too draining and stressful and a lot of brain damage, a lot of moving parts and getting ripped off by contractors and on and on the list go. So there are a lot of negatives, if you will. And I'm not saying it's a bad thing, it's just not for everybody. Just understand who you are and understand what you want and your risk tolerance and your resources and your level of knowledge and the people that you would have on your team and what you would be doing.
So again, full circle, it goes back to the whole question of why, ask yourself why you want to buy foreclosures and make sure you understa...
Hello again my friends and welcome to another episode of Ask Marco where I answer or at least try to answer your investing related questions.
Today's question comes from Michelle and Michelle says, hello. I've been listening to your podcast for a couple of months now and I think in one episode you said you help people figure out a clear plan for real estate investing. Question Mark, I want to do this, but my ideas are scattered and this real estate investing stuff can be really overwhelming because there are so many options and all of these rules to follow. I can relate because we all start there, Michelle, but you will find that it gets easier as you go. Believe me, she concludes by saying, if I could get a chance to speak to someone about my goal so that I can have a clearer understanding of what I want to do and invest in, that would be great. If not, do you know of anyone that does? I really want to do this, but I want to know somewhat what I'm doing.
Okay. This is a great question and this is actually a very common question, especially for people who are just getting started, knew what some of us call newbies, but essentially your green behind the ears and you're trying to get clear on all this stuff that just looks and seems and sounds overwhelming and you just want to get clear on your investment goals. So for a lot of people it's really just finding the right direction, just knowing what direction they need to go in and just someone to be a compass for you, point you in the right direction and then you will figure it out and learn what to do as you go because you're going to have the tools, resources, the education and the team of people around you to help you get there.
And it's just a matter of first pointing in the right direction, facing the right way, and then starting with little baby steps and moving forward. And then you'll find that you'll feel more competent and confident and you'll grow and you'll start to take bigger and bigger action steps. So the bottom line here is in what I'm saying is to educate yourself because your confidence is equal to your competence. And if you don't have the competence level right now to give you that confidence, then it all starts with my first rule of my 10 rules of successful real estate investing, which are posted on both of our websites. And that is to educate yourself. The more you learn, the more you earn. You've heard that saying before, it is very true because when you start to know what you need to do and what to look for and what to avoid, you can't help but to start taking action steps that will propel you in the right direction and get you to do the things you need to do.
So educate yourself because again, your confidence is equal to your competence and then you will find that that will magnify and accelerate as you start to get successes under your belt. When you get that first rental property, it's a big learning curve, but you'll feel great about it. And then you'll look back and you say, Oh okay well I get it. That wasn't so bad. And the next one is going to be a little easier. And then the next one is a little easier. And then you get to the point where you don't even think about most of the steps. You just are so in tune with the process. So the question I have now is what do you consider investing? Because for some people they think that buying, fixing and flipping properties, investing and in a way it is cause you're putting capital up in real estate and you're turning around and flipping it for what you hope to be a chunk of cash.
And so in a way it is an investment but it's very transactional. It's short lived. And so I don't actually consider that investing. For me, investing is something that creates long term, ongoing, predictable cash flow. But for some people they like to buy, fix and hold. And that's an active approach to investing. That ultimately becomes a passive approach. Because once you're done with the renovations,
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Alan and he says, hi Marco. I have seen on the MLS a house for sale with owner financing. I know houses on the MLS are listed at or near their max value and everyone says you make your money on the buy. My question is, would you pay full price for a house with owner financing if it meets the 1% rule and still makes some cash flow? Also, do you have to tell the bank about this owner financing deal when trying to buy another property using conventional financing? Thanks Allan.
Thanks for your questions Allan.
So essentially your main question here is about buying an owner finance property. So let's break this down. So first of all, to your first comment, you don't always make money on the buy.
I know a lot of people say that, but that comment is especially true for someone who is more of an active real estate investor, or let's just call them a flipper or someone who buys fixes and then keeps the property because you obviously want to get the best price possible on the front end so you can budget for renovations and contingencies and hopefully some equity in there, which is your forced equity, meaning the profit or the value that you build into the property. If you can find a nice rent ready property or a turnkey rental or a property that is essentially a performing asset, meaning it's leased and generating income, and you can get at a discount for whatever reason, great. Uh, and that's just a better deal because you're not only getting the property you want with positive cash flow, but you're getting some equity as a kicker on the front end, but you don't always make your money on the buy.
In fact, if you look at most investments in prudent markets, you will find that the appreciation and equity growth in that property over time is really where you have your greatest gains. If you get that on the front end as a kicker, that's fantastic. Call that icing on the cake or a bonus, but your wealth has created over time as the equity grows in your property. I could do an episode on that alone, but I just wanted to comment on that while you brought it up. So your question about would you pay full price for house with owner financing? My answer is yes. It depends what I mean by that. Is the owner financing a first or a second? Assuming that it's a first, the question is how much of a first, is it a hundred percent financing, 80% financing, like a conventional mortgage where maybe they're only offering, let's say 50 or 60% owner financing and then you have to come up with the rest and that's, you know, a sizable down payment compared to your other options, like getting conventional financing or some other mortgage financing that allows you to finance up to 80% but let's just assume it's a first.
So if the seller is willing to finance 80% or maybe even 90 or 100% of it with no down payment, fantastic. As long as you've got positive cash flow or ideally close to positive cash flow. I mean, if you're getting a hundred percent financing, meaning full leverage, no down payment, um, and it's a break even and there's no deferred maintenance, well, what is your return on zero down when you have positive cash flow? Well, the answer to that question is your rate of return is infinite. You put nothing down. So it's not that it's 1% or 5% or 10% or 100% it's infinite and so that is the ultimate leverage. However, just be careful because with a hundred percent financing, if you're buying at full price, you have you know no equity there. If you are forced to sell or you need to sell, it is what it is. It's just a house with no equity generating income.
But if you're keeping it for a longer period of time, let's say three, five, seven, 10 years or more, that equity will come in time. Now if you are actually finding a property that is close to 1% meaning it rents for 1% of the purchase ...
At the very core of finding one's prosperity is establishing the sort of financial freedom that affords you a powerful peace inside. If it's prosperity you seek at the end of the day, there's a lot of sacrifice required, and you have to be ready to put in those long hours if it truly is something you want. John Soforic, the author of The Wealthy Gardener, is back to talk about his book with Marco Santarelli. John focuses on the concept of sacrifice, doing what you have to do in order for you and the people you love to live a prosperous life. If that is indeed what you're looking for in life, learn from John, and find your way to this special prosperity.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to The Wealthy Gardener - Lessons on Prosperity (Part 1) With John Soforic
Enjoy the show!
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The Wealthy Gardener - Lessons On Prosperity (Part 2) This is part two of my interview with John Soforic, the author of The Wealthy Gardener, Lessons on Prosperity Between Father and Son. It’s lessons on prosperity for anybody and everybody regardless of who you are and your age. This is an incredible book. If you didn't read part one, I strongly suggest you stop this episode, go back, read part one of my interview with John and the book The Wealthy Gardener. It is chock-full of great information and it continues to stack on top of each other and get better and better. The book is a great book. It's written in a story format but it's built on 55 principles and lessons that are great for you, for your children and their children and so on because principles are timeless. It's a heartwarming story full of practical wisdom on entrepreneurship and wealth. Each lesson unfolds as the story goes on and it builds on top of each other. I was taken back and touched by it. I had some great conversations with John outside of the interview and all of that shows through in the interview that I had with him. Without further ado, let us get on to part two of my interview with John Soforic. I hope you enjoy it and let me know what you think of it.
Your book is full of lessons. There are 55 lessons, is that correct?
Yes, on the powers of wealth, that alone.
What people might not realize and I have this conversation is that we've already covered a small number of the lessons that you go into in the book. We're talking about it conversationally and not laying it out in bullet point form but this is how the book unfolds and we're going to talk about a few more of them here. I know I've told my wife this and I've certainly told my daughter is that I never want to be average because being average in the US is being broke. I don't want to be there. You talk about this lesson of being unrealistic. My question to you is, why do you say that it is impossible for an average person to achieve wealth?
I wrote a book for my son, Marco. If you're writing a book for your son, you want to give the harshest truths. I wasn't writing a book that I wanted to say, “I am going to try to massage the mass population. I'm going to try to make people feel good and hopefully, that'll help me sell a book.” I need him to know the truth. This is all an unintended consequence. Me speaking to you, what an honor it is, but I didn't intend this. I intended to give him the truth. One of the truths that he needs to understand fundamentally upfront is that you must be different. Being average in our society is dangerous. You have to be an outlier of our culture.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question is a great one. It's from Kelly. It's basically should I use a heat lock for my down payment and she writes in and says, hi, Marco. I just would like to start with how amazing your podcast is and you have really helped me outline a plan for financial freedom while Kelly, you're welcome. I just purchased a home that I live in and I'm interested in using a HELOC to purchase a rental property. This seems risky to use my home like this but would love your thoughts
Okay, so for those listening and are wondering what HELOC is, I think many of you understand what he lock is, but for those that don't, a HELOC is a home equity line of credit. So it's just the acronym for home equity line of credit and it's really just a loan.
Actually, it's not even a loan. It's a line that you can draw from that is secured by your home. Typically it's recorded as a second or third lien on your property and you draw from it just like you would a credit card. Uh, you don't pay any interest on it while you have it until you actually use it. And typically these are issued for a term of 10 years and after that, you have to renew it or it just closes. So the HELOC is interesting because it's typically a line of credit that you can draw from any time at will for as much as you want. You use it and whatever you don't use, you don't pay for, it's typically a very low-interest rate and it's just secured by your property, which is the reason why you can get them for such a low rate of interest.
And in addition to that, the terms are typically interest only. So you can draw out say $1,000 or $20,000 or whatever it is up to your limit and just pay the interest-only payment each and every month until you pay it off in whole or in part with no penalty. So it provides for a ton of flexibility. And for those of you that this actually makes sense for, you should look into it because if you have enough equity in your home or even in a second home or a rental property, there are lenders out there willing and wanting to provide these lines of credit that you can use for anything. They could be used for a home, improvements for investments, they can be used for travel. Although you know the the whole idea of using a HELOC for consumer debt is really pretty stupid. I wouldn't use it for anything that is considered consumer expenses or in consumer debt.
So using it for a vacation or a car or anything that's a depreciating asset is pretty silly. But for investment purposes, it can make a lot of sense because there's a lot of people out there, particularly in coastal markets that have a lot of equity tied up in their property or properties, and you can call that equity dormant, dead idle, but whatever you call it, it's not doing you any good. It's sure it's on your personal balance sheet. It's part of your net worth. That's fantastic. But now the question is, is how can I put that to work to increase my wealth, maybe increase my cash flow and do more good for me and my family. So that's the gist of this question from Kelly. And here's what I have to say about that. Well, I've already told you half of it and you know, that's basically how it works.
Currently, HELOC rates range between a low of about 2.9% to as high as 21% if you have decent credit, you're not going to be anywhere near that. But it does depend on the borrower's creditworthiness and obviously some other factors. But as of this recording, the average HELOC rate is about 6% just right around 6% so very inexpensive rate for a line of credit that you can draw from at will for whatever you need. Now let's take an example. I always love using the example of the a hundred thousand dollars property. So if you are purchasing or investing in a $100,000 rental property, getting an 80% loan and you need a 20% down payment, then you would just draw from your line of credi...
Just going through our every day, we pick up so many life lessons that we feel the need to pass on to the people we love. These lessons, wherever they come from, are always so valuable because of the lived experiences they emerge from. This is exactly why John Soforic, the author of The Wealthy Gardener, has collected all that wisdom in his book, which he discusses with Marco Santarelli. Prosperity is an end result that can be achieved by going through certain processes. John shares the some lessons on prosperity and other life lessons he's learned so you can do the same.
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The Wealthy Gardener - Lessons On Prosperity (Part 1) I am very excited about this next episode. In fact, this went so long, I've actually cut this into two episodes because it is full of great content stories and lessons that it made it worthwhile to turn it into two episodes. I received a book in the mail and opened up a package. I pulled out a book called The Wealthy Gardener, and I was taken aback by the title. The subtitle is Life Lessons on Prosperity Between Father and Son. As I looked at the image in the book, it was a silhouette of a father holding his son's hand, walking off into the distance. You don't see anything more than that other than a very warm colored beige book with a silhouette of father and son.
I was taken aback by that because it made me think of my daughter and the lessons on prosperity that I want to pass on to her and other life lessons. I didn't read the book right away, but then I purchased the audiobook. I started going through that and I couldn't stop listening to it. It is a book of heartwarming stories and practical wisdom on entrepreneurship and wealth. It's pretty much everything that you would want to pass onto your kids regardless of their age. Even if you're not passing it on, a lot of stuff that we all should know regardless of our age, whether we're in our 20s, 30s, 40s or 50s. I highly recommend this book. It was written in the vein of Rich Dad Poor Dad, written by a financially independent father and he wrote it for his son.
I was taken aback and impressed by the book. I was touched by the story. It was very genuine. When I finally got to talk to John, the author, I realized how down to earth, straightforward and genuine he is. For him to take what I think was ultimately about four years of his life to compile and write this book is amazing. I'm going to go out on a limb and make a very bold prediction. I think that this book has the possibility and the potential to become another one of those perennial books you put on your bookshelf along with Think and Grow Rich and Rich Dad Poor Dad. I'm not saying that it's better than any of those books. I'm just saying it's on the same caliber because of the lessons that are in the book and the way it's written and presented. They're timeless.
This is going to be one of those timeless books. It will go on for generations. I'm very excited to share this interview with you, John Soforic, the author of the book, The Wealthy Gardener. It is a great read. I highly recommend you pick it up. You're going to get a lot from this. We will do that over the course of two episodes. Enjoy and give me your feedback. If you learned anything from this and loved it, liked it, by all means, send me an email and let me know what you thought. I wouldn't mind sharing that with John and also,
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli
You know this is time for another sparse market spotlight. Baltimore, Maryland is the next exciting market that we are entering into. And for those of you that don't know, Baltimore is a very large coastal city located in the state of Maryland. It's actually not that far from Washington DC and it has a core population of about 600,000 and we're going to find out more about that here today as we learn about this market. But it's made up of over 200 neighborhoods. And when you get out into the suburbs, you'll realize that it is actually a very large market. It's also the largest community in the state of Maryland. But what's interesting about Baltimore, I've come to find out it has a very, very large stock of pre-world war II architecture and it makes it one of the older and more historic cities in the country. And I'm actually looking forward to going out there as kind of an educational tour for myself and my family about US history.
But with me today is Zander and Eric, they are our newest trusted local property partners. So welcome to the show guys.
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Thanks Marco. Appreciate it. Nice to, uh, to be on here. Appreciate you having us.
Absolutely. So you know, whenever we open up a new market and then every once in awhile thereafter we kind of have these market spotlights to learn about the market and then update ourselves about the market. So we've been actually having requests for Baltimore interestingly enough. And as we were talking about the market before we started recording here, sometimes there's a little bit of negative stigma with a particular market, but then you come to realize that you have to put everything in context. I like to start off with the most general of questions and that is to ask you guys why would I or anyone want to invest in Baltimore?
Sure. That's a great question, Marco. And I, I think, uh, as we mentioned before, a lot of people paint the entire area, with one brush. I'm actually a lifelong Baltimore resident, so, uh, I can speak from the heart when, when I say and believe in investing here in Baltimore, we've built a substantial run a portfolio ourselves. And needless to say, if we didn't believe in the market, probably wouldn't do that. So it is centrally located. It is really close to DC in a way. We're probably DC's little brother, but that's not a bad thing with the 95 corridors and our proximity to the coast, having the port of Baltimore and then having all the major technology and hospitals and universities that we have here in Baltimore, it is a really strong market and even better rental market from the landlord investor standpoint of view.
So, as I mentioned before, Baltimore has become very popular among investors and there's probably a lot of reasons for that. And one that I'm learning about right now is that it is or has a booming business sector. There's a lot of businesses that are coming in or starting up entrepreneurs or expanding or starting new businesses there. I don't know if you can shed some light or color in that particular part of the market, but what's going on there? What's driving the market?
Sure. Well, it's definitely a couple of different things, but that brings up a key story that's been in development for a few years. Under Armour who owned by Kevin plank, who is a Baltimore native also is actually their development arm.
We are constantly reaching for something, whether it's more money, more experiences, more knowledge, more status, more stuff. What would be possible if you followed through on your best intentions? What could you accomplish if you could just stay focused and overcome distractions? If you care about your work, your family, and your physical and mental wellbeing, you must learn how to become indistractable and control your attention as Marco Santarelli’s guest, Nir Eyal, puts it. Nir Eyal writes, consults, and teaches about the intersection of psychology, technology and business. His latest book Indistractable: How to Control Your Attention and Choose Your Life, received critical acclaim, winning the 2019 Outstanding Works of Literature Award as well as being named one of the best business and leadership books of the year by Amazon.
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The ancient Greeks immortalized the story of a man who was perpetually distracted. We call something that is desirable but out of reach, tantalizing after his name. The story goes that Tantalus was banished to the underworld by his father, Zeus, as punishment. There he found himself waiting in a pool of water well above his head, dangled the tree ripe with fruit, ready for the picking. The curse seems benign, but when Tantalus tried to pluck the fruit from the tree, the branch moved away from him, always out of reach. When he bent down to drink the cool water, it receded so that he could never quench his thirst. Tantalus’ punishment was to yearn for things he desired but can never grasp.
We are constantly reaching for something, whether it's more money, more experiences, more knowledge, more status, more stuff. The ancient Greeks thought that this was part of the curse of being a fallible mortal and use this story to portray the power of our incessant desires. What would be possible if you followed through on your best intentions? What could you accomplish if you could just stay focused and overcome distractions? If you care about your work, your family and your physical and mental wellbeing, you must learn how to become indistractable, as my guest, Nir Eyal, puts it and that's what this is all about.
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How To Control Your Attention And Choose Your Life - Nir Eyal It's my pleasure to welcome, Nir Eyal. Nir writes, consults and teaches about the intersection of psychology, technology and business. He is the author of two bestselling books, Hooked: How to Build Habit Forming Products and Indistractable: How to Control Your Attention and Choose Your Life. Indistractable received critical acclaim winning the 2019 Outstanding Works of Literature Award, as well as being named one of the best business and leadership books of the year by Amazon. In addition to that, it's one of the best personal development books of the year by Audible. In addition to blogging at NirAndFar.com, Nir’s writing has been featured in Time Magazine, Psychology Today and the Harvard Business Review. Nir, welcome.
Thanks, Marco. It’s great to be here.
It's great to have you on. I first got exposed to you and met you at the Inc. 5000 conference. We got talking about your book and I basically loved it so much. After listening to your talk,
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Phil and today's episode, I titled Ready but Slightly Hesitant to Invest. Phil says, Hey, Marco, love your podcast. My primary goal is to invest in real estate to earn passive income. Just finished reading Rich dad, Poor dad, great book by the way. I feel like I'm ready to go. But taking action is the hardest part. My wife and I live in San Diego. We own one rental property worth about $550,000 we only owe 250,000 excuse me, 215,000 on this property. So my plan is to do a cash-out refinance and potentially sell within two years to avoid capital gains tax. We moved this past year in 2019 I hope to start an LLC, a limited liability company this month, and obtain the cash to start investing. I would like to use Norada as a turnkey property provider if the resources and properties you offer are as advertised. I'd love to invest between a $100 to $150,000 using Norada. Generally speaking, I'm slightly hesitant to fully trust anyone who's trying to sell me something. No offense, any advice for me with my plan? Anything you'd say to someone like me who was on the verge of picking up the phone to call Norada. I'm a huge fan of yours. Thanks for your time - Phil.
Phil, thank you for the email and thanks for your trust and thanks for being a podcast listener. I'm glad you're a fan. Um, that's very flattering. So here's a number of comments and thoughts for you. So first of all, action is the hardest part. You know, you mentioned that it's taking action. It is, it is for a lot of people, especially for something new and something that is as big of an investment or purchase as rental property. So my suggestion, at least this is what I do for myself and I know it works for a lot of people, is there's that old saying, how do you eat an elephant?One bite at a time.
Just take whatever that project or task is however large, and just break it down into smaller and smaller and smaller pieces. I call them bite-sized pieces. Something that is ridiculously easy to take action on because that tiny little step builds some confidence and momentum. And then once you have that momentum, even if it's literally just taking a pad of paper and a pen and just jotting some stuff down, but just taking that baby step if you will, helps to build a little bit of forward momentum. And that's what you need because that will allow you to take that next tiny little baby step. And I know it sounds ridiculously simple and oversimplified. But trust me, starting is the hardest part is that step even of journey of a thousand steps starts with that first step. So if you take that first little step, it will help.
Secondly is related to that is to take small steps. Don't try to jump or leap. You know, you can't run before you walk and you can't walk until you crawl and you can't crawl until you start making these little, you know, motions to start moving forward at least in the right direction. So next is build a team. Now you can do this on your own. You could do the vetting and due diligence on your own, but one way or another you're going to have to build a team. You're not going to do this by yourself or solo. So you have to understand that you're going to need to rely on people and build the trust with the people that you are going to be working with. So when you feel comfortable and you've been building trust with the right team, what's going to happen is you're going to have the team that's going to help you succeed.
Now, whether that's us or us and a combination of other people or just other people all together, you need to build that team so we can be a starting point for you. We already have all the resources and the people that you would need. They're already vetted and many of them, in fact, most of them we've worked with for years. So why reinvent the wheel? And I'm just saying it's on the table.
Welcome to Passive Real Estate Investing. And another episode of Ask Marco where I answer your investing related questions.
So I'm going to cover about three questions here today on this Tuesday episode. And the first one comes from Raphael. He says, Hey Marco, I've been listening to your podcast and it has motivated me to start investing in condos. Why condos? I'm not exactly sure, but that's cool. Let's move on. He says I have already purchased one condo in the past year in a good location and still waiting for the turnover. Uh, I recently stumbled upon a new condo in a great location, good developer, and a good deal. The only problem is that it is a leasehold property being leased by the city. What he means there is the, a property is owned by the city and it's being leased to whoever has the rights to that property. He goes on to say the developers had at least for 50 years but already used 10 for construction. That's a long construction cycle and other delays. Now only 40 years remain. I plan to buy this property purely as an investment and to maximize rentals and I have no intention of living here. I've been reading about leasehold properties and saw that it does not affect the rentals.
Do you think it is a good idea to purchase the condominium? If I compute correctly, I will break even in 20 years. Well earning about $100 of passive income a month. This is deducted already from the monthly amortization from the bank. My fear is that I won't be able to sell it to anyone if it only has a few years left after I maximize the rentals. Hope to hear from you. Thank you.
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Okay. I struggled to read that last paragraph here cause it was a little bit broken up so, uh, I apologize if I was choppy. Okay. Raphael right off the top before I even get into an explanation here.
If your break even on this property is 20 years and I'm not sure if you're just looking at cashflow only or if you are looking at the potential forecasted appreciation in terms of equity growth in this property as time goes on, but regardless, either way if your break even is 20 years right off the bat I would say pass. The other thing that concerns me is that it is a leasehold property and I'll explain that for the listeners here in a moment, but a leasehold property in only very rare occasions actually makes sense as a true investment and now let's understand what we're talking about here. You have two types of title or ways to hold property. There's freehold and leasehold. Freehold is what most investors as in 99.9% of the time have and are used to, which means you actually own title, hold title. With a leasehold property, you essentially are leasing the property from the actual title holder, so you are the tenant.
Let's just look at it that way. You are leasing from the person or company or city that owns the property and they are agreeing to lease the property back to you for 50 years or 99 years often with the option to renew but not necessarily true. My concern with a leasehold property is that when it comes time to sell the property, whether to another investor or someone who wants to be a homeowner, they may look at the title work and the paperwork and say, well there's only five years or 10 years left.
Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli.
And today we're going to talk about something that has come up in the past and I've had some experience with over the years. But that is the question of how can you do something to help guarantee your rental income to guarantee the outcome of what you expect your property to produce or how you want it to perform. And up until recently, there was really no way to ensure, if you will, your rental income until now. And so what we've done is we've partnered with a person who I've known for quite a while, a trusted individual in the insurance space to essentially provide an opportunity for you to insure against your rent loss. It's essentially rent default insurance.
For more information and inquiries please visit: https://www.noradarealestate.com/rent-guarantee-insurance/
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And so today I have John on the episode with me here. He's my insurance partner and he administers the landlord rent default insurance. And so we're going to have a conversation about what this is all about and how you can use it. So, John, welcome to the show. Thanks, Mark. I'll have it to be here. Well, that's great. So this is something that we started talking about, if I'm not mistaken, about a year and a half ago when we were down at one of the IMN events and I believe in Florida. Is that about right?
That's correct. And um, you know, things have happened always more slowly than you want, but we're happy to be here today, not a podcast, I guess roughly 18 months later.
Well, it's come a long way and I know you've been putting a lot of time and energy and work into building this thing and making it happen with the underwriter. So, you know, I like to always start with the most basic of questions and that really is what is landlord rent default insurance.
So rent default insurance or landlord rent fall insurance is a product. Um, that's actually a pretty well adopted around the world but never really took off in the US essentially what it does is it protects property owners against lost rental income in the event of tenant nonpayment. As you know, Marco being a, you know, a landlord for a long time, no matter how long or how good you are picking tenants, sometimes good tenants go bad, you know, someone loses their job, their break up with their spouse, et cetera. And what these types of insurance programs do is they indemnify that owner against that loss rental income. So similar to your house burns down and you've got loss of rents on your rental unit, burns down, it's covered, it's covered peril. And because of that, you'll collect your loss rental income, but no one offers if your tenant just stops paying. And really that's what we've created here at my firm and are excited to be working with groups such as yourself and the neurotic team.
Well, I appreciate that. So let's talk about what this actually covers. Cause some people are probably listening to this thinking, Hey, this sounds really interesting and it might be a good fit for what I'm doing in terms of the portfolio that I've built in the properties that I own. So what does this actually cover? Let's talk about that. So these rental fault insurance programs cover the nonpayment of rent by the tenant. So if a tenant skips town, you know, disappears in the middle of the night or just as a bad tenant, as you know,
There are $6 trillion trapped in IRAs because most people are underutilizing the funds that they have in their retirement accounts. Are you one of them? In this episode, let attorney and CEO of Directed IRA Mat Sorensen educate you on IRAs. Mat joins host Marco Santarelli and answers the top ten frequently asked questions about self-directed IRAs. Get through the confusion and jargon as they bring clarity and simplicity to understanding IRAs and how you can take advantage of it.
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Top 10 Frequently Asked Questions About Self-Directed IRAs This is the time when a lot of people think about their retirement accounts, specifically their IRAs. With over $9 trillion out there in IRA accounts in the United States, this is a staggering amount of money. It makes IRAs one of the largest sections of investible cash in the world. What does this have to do with real estate? Contrary to popular belief, IRAs have always been able to invest in real estate and own real estate. They can own anything from single-family homes to a commercial real estate, to multiunit properties to apartments. You could even flip properties in an IRA. You can own LLCs or limited liability companies that own single-family homes or multifamily properties, even commercial real estate. In fact, they can even invest as a private lender in real estate, meaning that it becomes the bank, the lender, lending money on real estate deals to other people. There are many ways to make money from the capital you have within your retirement account.
At this point in the IRA, the real estate conversation usually goes like this, “Why have I never heard of this before?” The majority of providers out there, the IRA custodians, if you will have generally found that real estate is an administratively unfeasible asset class. It takes more work to handle and administer a real estate transaction than it does to just have publicly traded stock or a REIT. In other words, the brokerage or insurance firm who administers most IRAs simply restrict their IRAs to the stuff that they sell, like publicly traded stock or mutual funds or annuities. You've always been able to own real estate in an IRA, but there are few IRA custodians who allow it. As a result, it isn't as widely known as it should be. With increased awareness, IRAs will continue to own more and more real estate. It's an education in what you can and can't do with a self-directed IRA, how it works, how you set one up. Hopefully, we'll just refer to this as the top ten frequently asked questions about self-directed IRAs. Join me and my guest and we're going to explore this topic in greater detail.
It's my pleasure to welcome Mat Sorensen. He is an attorney and the CEO of Directed IRA. He is a bestselling author, a national speaker and expert on self-directed retirement accounts. He has been at the forefront of the self-directed IRA industry since 2006. He wrote the book, The Self Directed IRA Handbook, which is the most widely used book in the self-directed IRA industry. Mat, welcome.
Thanks so much for having me. I don't know what else people may want to know about me, but I do like to have long walks on the beach and hold hands.
Hello friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's questions from Max. Max says, hi Marco, great podcast, the latest Ask Marco episode, which actually dates back a few weeks, resonated so much about the same position with me. The episode was Should I Buy a Home in California or Invest Out of State? That was episode one 183, he said, I am also 30 years old single living in the Bay area in Northern California. I also do not own a house now, but still shopping and waiting for the foreseeable economic cycle downturn and in (which may or may not come). That's why I'm holding some cash at hand and waiting for the good entry point. After listening to the episode, the analysis you gave comparing 20% down payment on an expensive single-family home in the Bay area or investing in four properties out of state cashflow positive from day one opened my mind.
I'm fairly new to the housing market and never been a landlord before. But after listening to the episode, I started to get interested in investing out of state properties and earning cash flow. That's why I'm writing this email to you. Before I forget, what service could you provide to help me get started?
Well Max, sounds like you've already started. The fact that you are thinking about it is putting you on the right track and opening your mind and getting the right mindset. The other thing you're doing is educating yourself. I don't know if you're reading any books, which I highly recommend, but you're listening to at least my podcast and there are a few other good ones. I know a lot of people tend to listen to Robert Kiyosaki, although that's not always about real estate, but there's over 500,000 podcasts today. It's a lot, thankfully. And fortunately we rank very highly when it comes to investing and real estate investing podcasts, but you're doing the right thing.
So my suggestion is continue to educate yourself, continue to listen to this podcast and audiobooks, which are fantastic. There's a ton of good as well as bad, but a ton of good information online that you can tap into. And of course, as I mentioned, there are a lot of great, great books out there on everything from real estate investing to creating wealth, financial freedom, passive income, all that kind of stuff. I would probably stick to, you know, the major books from some of the more well-known authors like the rich dad series of books. That's a great start. Gary Keller's millionaire real estate investor. It's a blue and white book. That's a very, very good one. There is a number of books from the bigger pockets library. Just go to Amazon or somewhere like that. Do a search for one word, bigger pockets, and you'll find the books that are published under that label.
That's what I would continue to do. In fact, you should always be a lifelong student. So never stop learning. You know, my recent acronym is able A. B. L. E and that's Always Be Learning. Just always be learning. But as far as what services we provide to help you get started, if you don't already have a team built around you to help guide you and get you started or investing further in the markets that are good for you, then you need to build that team. Now, of course, you know, shameless self-promotion, but that's exactly what our company at Norada Real Estate Investments does. We've already created those teams in all the markets and you know, we as a team member on your acquisition and financing side and even on the insurance and inspection and management side, we've put it all together for you.
So when you talk about services that we can provide, it's really almost a done for you. But I'd like to say it's done with you, model and service and there's no cost. We provide a lot of that education that you need as well as the resources and the properties at no cost. You really just need the willingness and desire, the cash and the credit.
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Lorenzo and this actually came in through our website blog. It wasn't through the contact form where you click on the Ask Marco link at the top of the website and his question is basically around asset protection for my real estate empire. So Lorenzo goes on to say, I am in the process of building my real estate empire. Congratulations Lorenzo! I'm trying to do it the right way so it would not cost me later down the line. My questions are, and then he lists out five questions. So I'll take these one at a time just to keep things in a good flow and clear and really there could be an entire episode on really just some of these questions, let alone all five. But I'll give you a good overview of what the answer to the questions are.
So the first question is what type of entity should I form if I want to hold properties development or flip? Okay. There's no one answer to this question because the type of entity you would use for buying hold properties, in essence, your real estate portfolio would be different in almost every case. Uh, if you are doing a development and or a flip because one is a transactional business versus buying and holding properties where you're just having income-producing assets that you want to hold for asset protection purposes. So before I go any further, I just want to make clear to everybody that I am not an attorney, I not an asset protection attorney. I've just learned this through my own personal experience and working with real estate attorneys and studying asset protection on my own. And really it's just years of experience. So my answer to your question is not necessarily the right answer for you specifically, but in general terms, it's what a lot of real estate investors use or do and what most asset protection attorneys would set up for most real estate investors.
So I say most because again there are exceptions to every rule. So in terms of the type of entity at a high level and generally speaking, properties are held in the US in LLCs, a disregarded entity. The LLC is not set up as a partnership. It's not set up as an S corporation. It's set up just plain and simple as an asset holding entity. It's an LLC in the state, typically in the state where the property is held and it is not run as a business. It's simply held as a disregarded entity for tax filing purposes, but you title over the property or properties depending on how many you want to hold in that entity. You title the properties over and they are held and you just maintain the books and you file a return. A, it's actually a form with the IRS every year just stating that you know, this is the status of that entity and it will not pay taxes.
It's a flow-through entity. So any income that is generated from that entity holding your real estate property or properties flow through to the owning member that has the interest in that LLC. So that was a mouthful, but I hope that made sense. Now that is different with an active business such as a flipping business where you have many transactions and you have income and expenses could be a lot of expenses and there's a profit and loss statement. So anyway, that's about as deep as I can get into that. Lorenzo. Second question is, would this be considered a holding company? To a large degree, yes, because it's holding your asset or assets the property. So yes it is a holding company, but the way people use the term holding company in most cases is it's a top-level entity that actually holds title to one or more of your other entities or businesses.
So you have like at the top of a pyramid you have a holding entity and that holding entity is what has title or interests in your other entities that hold assets and or run businesses. That's really the simplest way to think of that. Um, but yes, it is a holding entity.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Joey, is it worth paying a coach or mentor? He says, hello Marco. My name is Joey. I'm currently 24 years old and looking to get into passive real estate investing. I've been looking hard for a mentor recently I found a local company, I won't mention the company's name here in Arizona, which is where I currently live. They will have open houses Saturdays for the rehabs they are doing and we'll have many events during the week. I attend, I attended one and found out they are partnered with a company called Renatu's, I believe that's how you pronounce it, R E N A T U S and they didn't seem to be a part of that company, but they show their prices ranging anywhere from $2000 to $20,000 prices as in like a tuition is what I believe he's saying here.
What am I asking is what's the best way to find a mentor and is it worth paying for this type of coaching? They seemed legit and the people who were leading this as well as the members seemed like they were enjoying working together. I don't want to pay an amount, I shouldn't just for networking. Thank you for your time.
Joey, this is a great question. I actually did a Google search for Renata's and I just wanted to learn about them and I don't know much if anything at all about who they are. In fact, I think I came across them years ago, but I pretty much never hear about this company. And again, I want to be very clear that I am not saying it's good, bad or, or otherwise I am indifferent. But when I did a Google search, the first page of the search results were a bunch of things about people asking is Renatus a scam.
The Better Business Bureau was one of the first things that came up. Renatu's reviews is Renatu's the real deal or a scam on Bigger Pockets, uh, Renatu's LLC complaints at the Better Business Bureau, all that kind of stuff. But that doesn't necessarily suggest that, you know, the are a bad company. I want to be clear that I'm being very indifferent here. You need to do your own due diligence and research and check online to see what other people are saying and what you can find out about them. However, having said that, I want to comment on a couple of things. Uh, first of all, I don't want to talk about Renatu. I want to answer your question, but I do want to point out that although some people feel that the company is a bit of a pyramid type system, they really have people who join Renatu's that get paid to recruit and bring in other people.
So they have a very high tuition, but it looks like a good percentage of that tuition is paid back out as a referral fee or commission to you as a member to bring in other new students into their education program. And it actually says here on the about us page on their website that you will get paid from a $1000 to $10,000 in commission simply for helping them grow and enroll new students into their education program. So whenever I read that, I get a little bit suspicious, you know, my, eyebrows go up and uh, I pay a little bit more attention because I realize that there is another motivating factor to bring you in. It's not always about the education or the mentoring or coaching if that even exists. It really plays heavily in people, psychology, and psyche when they're getting paid up to $10,000 in commissions for recruiting you.
And that's why it can feel like a pyramid scheme, if you will, to some people. Again, I'm not saying, you know, it's good-bad, I'm being indifferent. You have to do your own research. Personally, I would not pay that, uh, that $20,000 to join, which is what I'm going to get into here. To answer your question and your main question is, is it worth paying for a coach or a mentor? What I'm going to say is this, first of all, regarding networking, networking typically, and usually not always, but usually,
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from John and John is from New Zealand. He says, hi Marco. We have been listening to your great podcast for a couple of years and have purchased two properties through your Dallas Fort worth provider. Congratulations John. We have had good growth with these properties and are wanting to purchase more, but we are struggling to find that stateside financing so we can finance them in the US we have found a couple of companies that will finance us, but the rates are North of 8% which kills the cashflow. Can you help with this? As we have funds we can use for deposits, I assume you meant down payments to make another four purchases immediately. If we can get financing in terms of around 6% we love your show and have learned a lot from the great podcast you have released. Keep up the good work. Thanks, kind regards. John.
John, thank you so much and thanks for being a client and for your trust. I'm not sure if you spoke to your investment counselor here about this already. If you have, great, if you haven't that would be your next step. I'm just checking my notes here to see when you submitted this question. So this was in the second half of October so I apologize for the delay in answering this question but for you and for everyone else, let me just say this, there are lenders, a number of lenders right now that are lending to foreign nationals, meaning an investor that is outside the US meaning a non-resident of the United States. So it's gotten fairly loose or I shouldn't say loose but liberal five six, seven years ago there was virtually no loan programs that we liked or that were available for foreign national investors.
But if you are a real estate investor or want to be a real estate investor and you're not a resident of the United States, there are a number of lending programs, so that's the good news. The better news is that many of these loan programs are very attractive, meaning that these lenders will go as high as 80% loan to value, but typically it's in the range of 70% I've seen 70 I've seen 75 I've seen 65% loan to value and I've even seen 80% they come and they go and they change somewhat frequently. What's interesting is that many of these lenders will offer 30 year fixed rate loans just like our conventional loans here in the United States. So that means that you can get a loan that's somewhat similar to what as us citizens and us residents can get at through conventional financing, which is a fixed-rate mortgage that is for 30 years and amortized over 30 years and for us at least at the time of this recording, the conventional loans are somewhere around 5% they're as low as four, three quarters as high as five and a quarter, five and a half percent for these non-owners occupied loans and that's what you know that's just the going rate, which is a good rate, but that's the going rate for a 30 year fixed rate mortgage with four national financing.
Those rates can be similar. There are never as low as, but they're similar. I, I've actually seen six point something percent for 30 year fixed rate mortgages for non-owner occupied for national loans. That is still great depending on the property and the numbers. Even an interest rate that's above 7% or even North of 8% as you mentioned, can work. It just depends on uh, the numbers on the property and also your strategy. If your investment strategy is growth in a high growth area, then what you're making up in that growth far exceeds the lack of cash flow or even in some cases negative cashflow. Uh, and also depending on your tax situation, the tax benefits that come off the depreciation of a property, if it applies to you, will actually wipe out the negative cashflow. So on paper, you actually have a positive cash flow because of the tax savings.
This is true for us residents,
Hello, again my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Mike. The general theme here is that his question is will a real estate license help or hinder my real estate investing? Good question. Mike says, hi Marco. I'm a relatively newly licensed real estate agent in Northwest Arkansas. My work history is mostly in construction. About a month ago I read Rich Dad Poor Dad, which is the Robert Kiyosaki book. Then I found you through a Google search and have since immersed myself in all things passive income. I'm 53 and I want out of the rat race, ASAP and he capitalizes as soon as possible. Thanks so much for all the great info and inspiration that you and your team provide. I have scheduled a call with one of your investment counselors for me and my fiancée. We are very excited about that.
My question for you today is how can being a real estate agent help or hinder my goals for real estate investing in general? Does there ever come a point where it can get in the way of investing full time? So this is a good question. So any concludes by saying thanks again. I look forward to your response. Okay, so well here it is. First of all, congratulations on reading the book, getting your license and wanting to get out of the rat race. I know that book is basically a head Turner for so many people. It just changes your mindset and really wakes you up to so many things and although literally millions of people have read the book, there are still tens of millions, if not hundreds of millions of people who have not read the book. And it's such a foundational book, not so much for tactics but for mindset.
So great upon you for reading the book and congratulations on getting your license. So little bit of history on this question because I remember this question from 1516 years ago, if not longer, and there was always a negative stigma. If you will with getting a real estate license, if you want it to be a real estate investor, whether part-time or full time. And I think the reason for that is because in some cases held you back in your ability to negotiate with prospective sellers when you want it to purchase their property. Why? Because it is a law probably in every state that you need to disclose that you are a licensed real estate professional because you supposedly know more than the average Joe. So if you are in a situation where you're dealing directly with a seller and trying to negotiate on the purchase of their property, you have certain responsibilities being a licensed real estate agent and that is fiduciary responsibility.
So you cannot supposedly take advantage of a seller regardless of their situation. So, the fact is that you need to disclose the fact that you are licensed and that you have a certain amount of knowledge which is probably more than the person you're dealing with. And so just to keep things on a level playing field and fair, you're supposed to disclose that, especially on a purchase contract. Now if you're working through another brokerage or agent, then you should still disclose but it's probably not mandatory. Now don't quote me on that part because that probably changes from state to state when you're one party removed, but the benefit today is that if you are planning to fix and flip, in other words, you're out on the hunt looking for deals. It gives you access to the MLS, it gives you access to other resources, people within, you know, within the larger network of your real estate agents to get your hands on, on deals that are coming down the pipeline.
But if your plans are not to be an active real estate investor and meaning you're buying and negotiating directly with sellers for buy and hold properties or you are looking to buy fix and flip properties where you still are dealing directly with sellers and in some cases wholesalers, but still you're contractually getting involved directly with a...
With significant job and population growth over the last several years, the real estate market in Atlanta, Georgia is not one to be ignored. We shine the Market Spotlight on this city in this episode as host Marco Santarelli brings in the ever-trusted local property partner, Jim, back to the show. Together, they discuss the reasons why Atlanta is a great market to invest in, providing statistical data to match. Ranked in the top 25% of all the US markets, Marco and Jim talk about its growth in terms of cashflow and opportunity. They further share some demographic information, turnover and its cost, and building new construction in its neighborhoods.
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Market Spotlight: Atlanta, Georgia Atlanta has experienced significant job growth and population growth over the last several years, which is a good sign of the housing market there. Although prices have increased considerably over those last years, Atlanta still offers affordable investment properties in various parts of the area, all over the metro area. These properties rent for under 1% of the purchased price along with that strong appreciation potential. That still makes Atlanta a great market to invest in. The problem is that we've had a challenge getting inventory there over the last few years, even though we've been in the Atlanta market for over a decade. It's a perennial market for us. We love the market and there's strong growth. Fortunately, we have some new inventory and coming up in the near future. With me again is Jim, one of our trusted local property partners. Jim, welcome back to the show.
Thanks, Marco. It is good to be here.
It's great having you back on. We did an interview ago about one of your other markets, but we want to focus on Atlanta, it being the third-largest metro region in the Southeast. For decades, the metro area experienced this rapid population growth to match the demand for all the new jobs being created there. Many of those jobs were in high paying sectors. Give us an overview from your perspective of why you chose Atlanta. Why are you building new construction there? Tell us what your take is on it.
Jacksonville has always been my hub. I've been wanting to go up to Atlanta, but I didn't want to go until the new construction model would work up there. As you said, the growth there has been incredible. In fact, Atlanta is the fifth fastest-growing metro in the country. There are lots of reasons behind that between tech, being Georgia as a business-friendly and landlord-friendly state. Also, the Hollywood stuff has been quite surprising there. It's almost like a second Hollywood in Atlanta. The things like that and other things we'll talk about have kept it an affordable city but also with job growth, the affordability index is healthy. We're seeing great growth. We've been wanting to get in there and finally, we’ve found the right deals to make it happen.
Were you always focused on Atlanta? Were you looking at other markets, valuing other markets, then you chose Atlanta because it was strongest and highest on your list?
I've looked at lots of markets, Jacksonville being the hub. We've branched out from there to Ocala and to the...
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Max. He says, hi, my name is Max and I was wondering what kind of strategy you would use given my financial position. I am turning 25 and finally moved out of my parents' home from New Jersey to beautiful and cheap Memphis, Tennessee. I make $35,000 per year before taxes and my rent and utilities are about 900 a month. I also have about $25,000 saved up in my bank account. I budget every cent that comes in and out of my pocket and saves as much as I can after taxes, food, and rent. I'm only able to save about $400 a month. I'm thinking about buying my first property now but I am a little hesitant given where the housing market may be headed. What would you do if you were me, please? Thank you - Max.
Okay. I think you have two comments or questions in here that need addressing. Overall what you're asking is how do I start investing with a low salary? So first and foremost, given what you're saving, that's great. You know, if you're saving $4,800 a year, it's gonna take you a little while to get up to 18,20 $22,000 to make up enough for a down payment on a good quality rental property and probably a B class neighborhood. Um, because that's what it's going to take. Somewhere around 18 to $25,000 is what you're looking at on a per property basis. And typically we're talking about middle of the road, middle-class bread, and butter housing, three-bedroom, one and a half, two baths. Now first and foremost, the thing I want to say is that if you've got $25,000 saved up, that's great before you deploy those funds into an investment and leave yourself with nothing in savings or on the side and cash.
The first thing I would do is make sure you have some reserves for yourself for emergencies in case you lose your job or you have to move or you get transferred or you have an unexpected expense come up, be it. You know with your car, a medical emergency, you know you always want to have reserves for yourself personally before you spend every last cent you have in savings for an investment. You just got to put yourself first. Your income is okay, it's just on the low end. Of course of the spectrum that you are on and you could do better. So how do you do that? Well, it's going to be challenging to cut your expenses, especially if there's not much to cut. What you want to do is increase your income. You want to focus on the top, not so much the expenses.
Focus on income. So how do you increase your income so you have more to save and you can save faster? Well, there's really two basic ways to do that. The first would be to change your employment. In other words, get a new job or a promotion where you are earning more. I'm sure there's a lot of opportunities. I don't know what your uh, skills are or your education or what line of business you're in, but you know, stop and think about what other opportunities there might be available to you given your skillset and your knowledge that can increase your income can. Because sometimes that could be a sizable jump right away. Just finding new employment where you can apply yourself. The other way is to get a second job and that doesn't mean a full-time job. It means just additional employment. And that could be a small sideline business.
It could be literally a, a job, a job, it could be anything that increases your income, where you have the time and the ability to do that. So you want to increase your income. Now, if that's going to be challenging or hard to do, then uh, what you might want to consider is wholesaling if you have the time to do it. So if you understand wholesaling, it's essentially finding distressed sellers or distressed properties that you can put under contract at a deeply discounted rate where you flip the contract. In other words, you assign that contract to another real estate investor for a fee.
Hello and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Armen and he says, hi Marco, I'm a long-time listener. Thanks for all that you've done with your podcast. I have a question about how to efficiently invest my money that I am saving for a down payment. I allocate a chunk of each paycheck to saving for a rental property down payment and I was wondering what you think is the most efficient way to invest that money such as CD's, T-bills, or just in a regular brokerage account in stocks. I've been doing a lot of research and I can't decide what is best. Thanks so much! - Arman
So, Arman, that's a good question. I guess you have to look at the time horizon. Are you saving with the intention of deploying these funds in a relatively short period of time, let's say 90 days or less? Or are you saving at a pace where you won't need the funds for let's say a year or more?
That could make a a difference in how you actually save the funds. So if you need the funds to be fairly liquid, then you'll want to put them in what are essentially referred to as cash equivalents. And these are typically investments that have short term maturities of less than 90 days and they're considered very liquid because they can be readily converted to cash. And so common examples are things like stocks and marketable securities, things that are publicly traded and easy to get in and out of us. Treasuries and bonds mutual funds are typically less volatile than stocks. And so they probably, and possibly can give you a better return than just putting it into, let's say US treasury or a bond. But then of course there are money market funds and this is a type of mutual fund that invest in very low risk, low yielding investments like municipal bonds.
So it's similar to a mutual fund and a money market fund and they're very liquid. So these are the types of things that are very liquid but produce very little in terms of a rate of return. In fact, some of these are so low, you know, it could be half percent one, 2% in terms of rates of return that you're actually losing money when you factor in the real rate of inflation. So if inflation is like 3% 4% 5% whatever number you want to believe, but you're getting a 1% return on your, your savings, your cash, you're actually losing money. Now is this a big deal? Possibly not. If you need the funds right away or in a relatively short period of time, this is not going to make or break anybody. So it's not that big of a deal. Uh, so if you need them liquid and in a short period of time, 90 days or less, cash equivalent is probably the best place to keep it.
A savings account. You don't get anything from a savings account, but it's just there. So it's easily easy to access. Now, if you're talking about a time horizon that is more than a year and less than five years, that's what you might define as a short term investment. So there's no formal definition or official definition of what that means, but essentially short term means one to five years and if that's what you're looking to do, then there are various options out there depending on your comfort level. I mean, I'm not a big fan of the stock market. There's a lot of volatility, but of course, you could park it in an ETF or an index fund, which is relatively stable, but it does fluctuate from year to year depending on what the market's doing. And let's face it, we've seen years where we've seen big drops in terms of the overall market.
So that's why it's not a favorite place for my, you know, my cash. If I'm going to just park cash for a short period of time, I'm okay with keeping it in an FDC insured account and the bank knowing that it's just there for the purposes of safety, liquidity and easy access and deployment. But if you're looking for higher rates of returns, you're going to have to look at some, you know, alternative investments there.
When you're new to a particular industry, it's always nice to have a little voice in your ear telling you what you have to do in order to be successful. In the field of investment, there are investment counselors that give new investors a better idea of the path they have to take. Melissa Nash, an investment counselor at Norada, answers some of the most common questions about working with an investment counselor as well as investment in general. Investment can be a tough, complicated business, but with an investment counselor by your side, you might just find the strength to go about it confidently. Looking to get your start in the industry? This might just be your shot at it!
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Common Questions Answered With Investment Counselor, Melissa Nash This is the second episode where I have one of our investment counselors on to talk about some common questions, concerns, fears that our clients have. Even not our clients, even people who are thinking about investing in turnkey real estate or just barking on their own journey to become a real estate investor with their own team, in their own markets, doing whatever they want. We want to share some common questions, fears and concerns that investors have, as well as questions around how to work with us, how to best work with us? What do you need to know? How much cash do I need? I recorded an episode before this with one of our other investment counselors. It was a great conversation. I was left with a bunch of questions that I wanted to bring up and discuss that never got answered because we were going along. I'm going to maybe pick up from that last episode conversation as well as maybe as some of the common questions that I've already asked in the previous episode to flesh it out and get some other people's perspectives. With me is one of our investment counselors. It's Melissa. Melissa, welcome to the show.
Thank you, Marco. I’m excited to be here with you.
It's great to have you on. It's been a long time since I did an episode with one of our team members. I'm planning to do at least three, if not more. One each with a different investment counselor of our six. I want to start by asking you, how would you describe your role as an investment counselor and your role with our investor clients here at Norada?
I would say that my role is to have a system in place where I like to talk to my potential investor clients first about them and their goals. What are they looking to do? Maybe it's short-term, maybe it's long-term, maybe they want to invest for retirement. Maybe they want to invest for their children's college costs or a number of things. I like to start with that first because that's going to help us know where to take direction and how to take direction. My role is number one, helping them think about their goals. Number two is taking action. That's how I view my biggest strengths. How do they take action? We do a lot of things here. We're going to counsel them on the strategies and the different markets. We're in a lot of different markets and it can get very confusing out there. You listen to a lot of people and people are listening to other podcasts,
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Ryan. He says, Hey Marco, I have been listening to your podcast for a few months. What? That's all, I'm only kidding. When you mentioned you're tracking over 400 Realestate markets, is that available on your site? What you said in your Kansas city market spotlight about being a city in the top 100 is a good thing. How do you find that data? Okay, so couple questions here and I think it's centered around finding or asking the question, where are the hot markets? So my first comment is, what is a quote-unquote hot market? Sometimes people ask this question, not only to me but just openly everywhere, whether it be in the media or online. And people ask, where are the hot markets? What is a hot market?
I've been asked to write articles about hot markets, you know, where are, what are the hot markets? The question is, is how are you defining a hot market hot in what sense? In terms of a price appreciation, historic or current, what is the trend? Is there a certain percentage of year over year price increase? Does hot mean that there's a high level of investor interest is hot mean that it's um, it's just a great cashflow market and people are very interested in it. And that doesn't necessarily mean that it's appreciating in double digit territory year over year. I think generally speaking, a lot of people define a hot market as a market where prices are appreciating or increasing at a fast rate, a rate that is above historical averages, whether nationally or for that local market. So when that happens, people take notice of it and the media starts reporting on it on a regular basis to the point where that market becomes inflated, pricey, overpriced, overvalued, unaffordable.
And now all of a sudden we have a bubble market, not just a hot market. So we have to talk about this in terms of you know, how we define a hot market. Having said that, your first question is, is this available on our website? No, not yet. And I say yet, but we were, I am planning to post some sort of summary information on our new website, which is again, like I've said before, launching soon has been delayed a few times because of some bugs and a couple of changes that I wanted to make. It will be a dynamic ongoing morphing website from this day forward, but I do plan to have regular, whether it's monthly or quarterly summaries of the so-called quote unquote hot markets. So that is coming. It's not there yet. I will put something up. I'm just not sure how I want to do it yet.
Now to your second question, how do you find the data? Well, complicated answer because we actually aggregate, the data comes from multiple sources, not just one source. All markets are ranked using a proprietary scoring system that we use. That's something just helps us aggregate the data and then rank them in a particular order based on the weighting of different elements. However, the data is your question, how do you find the data? So my point is the data is not in one place, but the data is out there. Most of it is free. So I'll give you some websites here which are great and you can go and find more information than you'll ever want and put it together for yourself so you can find the pieces of the puzzle. So the first one is, this is kind of a little bit more of a basic one.
The website is known as the Department of Numbers. Yes, you heard that right? It's the Department of Numbers and the URL is DEPT as in short for a department, DEPT of Numbers. So Department of Numbers, but the department is abbreviated, D E P T, deptofnumbers.com and on there you will find information about pretty much every major Metro area by state and Metro. And you will also find information about employment, unemployment, income, rent, GDP as in gross domestic product. The even have information on inflation, rents, rent trends,
Hello friends, and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know I love this quote from James W. Frick. He said, don't tell me where your priorities are, show me where you spend your money, and I'll tell you where they are. So today we're going to talk about financial literacy and why financial literacy is so important. So first of all, what is financial literacy? Well, financial literacy is the education and understanding of various financial areas, including things such as managing your personal finances, money, borrowing, and very importantly, something I talk about all the time investing. But in the United States, in America, we spend literally billions of dollars helping our children master reading, writing, and arithmetic. And then we send them out into the world lacking the basic skills to prosper in life. Things such as understanding personal finance and economics. Did you know that in the US more than one in six students do not reach the baseline level of proficiency in financial literacy?
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Nearly a quarter of all millennials spend more than they earn, which is unbelievable to me. And 67% of generation Y have less than three months' worth of emergency funds. And that's scary because all you need is one car accident or medical emergency and you're essentially bankrupt. So there are only seven states in the United States that require standardized testing today for personal finance education for high school graduation. And those seven States are Colorado, Georgia, Michigan, Missouri, Oregon, Texas, and Utah. So that means that 43 other States plus DC don't have high school courses and testing requirements. So every two years, the council for economic education and we have a website, you can go and look this stuff up. It's pretty interesting. So the CE or the council for economic education, they conduct a comprehensive look into the state of the K through 12 economic and financial education in the United States.
And they collect data from all 50 States and the district of Columbia. So in their most recent survey in 2018 they show that there has been little increase in economic education in recent years and no growth in personal financial education. So since 2016, not one single state has added personal finance to its K through 12 standards. Only 22 of those states require high school students to take a course in economics. Only 17 of those states require high school students to take a course in personal finance. And ever since 2014 there has been no change in the number of states requiring standardized testing of economic concepts of any kind. So the consequence of not addressing financial literacy in students graduating from college is really daunting amounts of credit card and student loan debt. Today, student loan debt in 2019 is higher than ever before. Americans own over 1.5 $6 trillion in student loan debt.
That's trillion with a T, that means it's one thousand five hundred and sixty billion dollars worth of student loan debt and that's spread out amongst 44.7 million borrowers are almost 45 million student borrowers. If you do the math, that's roughly $35,000 in student loan debt per graduate. Now for some of you that may not seem like a lot,
On today’s show, trusted investment counselor Oliver Fu joins host Marco Santarelli for an unscripted conversation about working with Norada Real Estate and the common questions, fears, and issues that come up. Whether you are working with NRE already, have worked with them in the past, or have experienced working with them, discover things that you can go back to and improve about your portfolio. Get your investment questions answered as you continue to build that portfolio. Listen to this episode to become a sharper, more seasoned, and smarter investor.
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Common Questions Answered With Investment Counselor, Oliver Fu I was talking to some of my investment counselors like Oliver, Melissa and Steve. We got thinking, “It's been a while since we've done an episode that talks about what we do and questions our clients and ask issues that they run into and some of the common questions.” I thought, “This is a great opportunity to get all of them on separately, ask these questions and have a good conversation about what are our investors experiencing? What should you know?” All of this is coming from the perspective of the investment counselor. With me is Oliver, one of our investment counselors here. We're going to have an unscripted conversation about working with us, common questions, fears and issues that come up, things that you didn't think about. Even if you are working with us already or have worked with us in the past or have experienced working with us, maybe these are things that in hindsight you can go back to and think about and maybe improve what you're doing with your portfolio. As you continue to build that portfolio with us, you are going to be a sharper, more seasoned and smarter investor. With all that, Oliver, welcome to the show.
Thank you for that introduction, Marco. A lot of our investors are going to get a lot out of this episode because we're going to go over a lot of the questions that hundreds, if not, thousands of you out there have.
I love having this conversation. We seem to get on the phone from time to time and we end up talking about one thing. That one thing mushrooms into all these different conversations, topics, questions, and ideas. It's like a brainstorming session. It's a lot of fun. We were joking about this, but we should click a record button and record our conversations because they would make fantastic episodes.
Almost every conversation that we've had, we've left it off by saying, “We absolutely should have recorded that.” That means that we're having great conversations that hopefully a lot of people would find useful. Hopefully, this is going to help a lot of people out there and we're going to have fun while doing it too.
That's my hope. I'm sure this is going to turn out great. I like starting with the basics. Let's point the spotlight on you. Let’s talk about the counselor's role. Share with us how you would describe your role with your investor clients here at Norada.
The way that I like to explain my role to a new investor is that I more or less help advise the investor, the new client, or individual on what it is that they can potentially do with some capital that they may have saved up.
Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Sandesh and he says, hi Marco. I have heard you and other REI experts talking about making a biweekly payment on your mortgage. I get the reasoning behind it and that is to get an extra payment over the course of 52 weeks. I wanted to know if someone is already paying down the extra principal on a monthly basis to splitting it into two payments. Make sense? His example here is if the amount due is $600 every month and he's paying $600 plus $50 extra in principle towards that principal and interest payment on the first of every month is splitting it into two equal payments of $325 each every two weeks better. As always, I appreciate your help and keep that awesome content coming through. Thank you.
This is a very good question and it's really a question of whether you should be making monthly or biweekly payments. In fact, really you can pay off your mortgage in any way you choose. You can make additional bonus payments during the course of the month thru the year. You could do biweekly. You can even do weekly payments if you wanted to. And what essentially is happening here is most people pay their mortgage off in monthly mortgage payments. So you're essentially making 12 equal payments throughout the year, so 12 months, 12 payments. But if you enroll yourself through your lender in a biweekly payment program, what essentially you're doing is you're paying an extra month over the course of a 12 month year. So what happens is, is there's 52 weeks in a year. So this works out to be 26 biweekly payments or in effect, it's 13 monthly payments. And what happens is, is you're just accelerating the payment of the principal, which lowers the amount of total interest paid over the life of the loan, which is the amortization period.
So essentially what you end up doing by simply changing over to biweekly payments is you're lowering your mortgage by five years, so instead of a 30-year amortization, you're going to have it paid off in approximately 25 years. So obviously if you run the math, depending on the size of your mortgage, you're saving yourself interest and in many cases that can add up to be a lot of interest. Now is it worth doing this? Well that's up to you if your strategy, if your plan with your investment portfolio is to accelerate the payments or get them paid off as soon as possible so you have a free and clear portfolio, therefore no debt service and therefore higher cash flows coming from your properties, then yes, this would make sense, especially if you have healthy cash flow coming in from your properties and you've got lots margin there.
Something as a side is referred to as the debt service coverage ratio and you might see this abbreviated from time to time as the acronym D S C R - Debt Service Coverage Ratio. This is actually pretty popular with commercial loans in the commercial space. But if you have a high enough debt service coverage ratio, then there's no reason why you couldn't do that because what you're going to end up doing is you're going to increase the equity in your property faster over time, short term and longterm by just accelerating the payment, which ultimately will end up being a more favorable for you than just a taking that cash flow from the property. The benefit of keeping the cash flow is really to save up, cross all of your properties in your portfolio to do one of two things. One is to accelerate the payments on your property. So you are in a position of having a large free and clear portfolio sooner or two, aggregate all that cashflow, pool it together and come up with the down payment for your next rental property as soon as possible.
So you're essentially just saving all the cash flows to make up the next down payment for the next property. So that is assuming that you are in a growth or acquisition mode as opposed to um,
Hello and welcome another episode of Passive Real Estate Investing. I am your host Marco Santarelli.
I am proud to say that we made the list! That's right! We made the list that is the list of America's fastest-growing private companies. And so this quick little episode is just a thank you to everybody who has been along for this ride and this journey with us over the last 15 plus years. And we are proud to announce that we have made the prestigious Inc 5,000 list of the fastest-growing private companies in America this year. So Inc Magazine ranked Norada Real Estate Investments as number 925 on its annual list of the top 5,000 fastest-growing private companies in America. The list represents a unique look at the most successful companies within the American economy and it's a very dynamic segment. It's all the independent small businesses, which is a major driver or engine for the US economy
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So we're honored to be ranked amongst some of the world's most recognizable companies. I'm very proud to be a part of a team here that has achieved this while being true to our mission. We've built a very special company and we remain excited about pursuing our mission of helping 1 million people create wealth and passive income by putting them on a path to financial freedom with real estate. You know, not only have the companies on the 2019 list, the Inc. 5,000 list been very competitive within their markets, but the list as a whole showed staggering growth compared to prior lists of years before the 2019 Inc. 5,000 list achieved an astounding three year average growth of 454% and a median rate of 157% that's a lot. Think about it. That means over a three year period, that's almost a 500% average growth. So the Inc. 5,000 aggregate revenue, if you think about this, of these 5,000 companies was 237.7 billion dollars last year.
So what does that mean in terms of jobs? Well, like I said, you know, these small businesses drive help drive the US economy and they created over 1.2 million jobs over the past three years. So, you know, it's amazing. I'm personally amazed at our good fortune to be growing as fast as we are. I am grateful for the trust of you, our clients and listeners and I am proud of the great team that we have here that has helped us get there. And of course I value your input and I love your feedback. So when I get emails or inquiries from you guys, I take it personally. I read them, I may not cover everything on the show, I've just been behind the eight ball. But, um, but I'm always looking for feedback on how we can improve. And, uh, one of those things is a brand new website, which is going live here very soon.
And, um, you know, that's just one of the many things that we're providing, uh, to, um, create additional value for you. So if you have any, uh, feedback or input for us to make next year, even better, please let me and my team know, you know, share it with your investment counselor or, uh, just send that to info@noradarealestate.com or just go to our passiverealestateinvesting.com website. Anyway, that's all I wanted to say today. I just wanted to pass along a thank you. Share the exciting news that we made the list....
Welcome to Passive Real Estate Investing.
I'm your host Marco Santarelli. Well if you are watching this on video, you can see the windows behind me in my office here are completely black. And the reason for that is it's 2:05 am Monday morning early in the morning. So the reason I'm up so late it is because I just finished an interview with the one and the only Jim Rogers. He is one of the world's greatest and most renowned investors. Jim is the guy who co-founded the Quantum Fund with his partner George Soros. And he established a very strong reputation as an authority on investing and the markets he recommends saving money, cultivating good habits, working hard, studying and thinking about the future. And it's because of this that he had such tremendous success. And I actually suggest you go and look him up. Um, you can go to his website, it's jimrogers.com, but if you look them up on Wikipedia among other websites, you can learn a lot about his, uh, supposedly net wealth.
I think his net worth as much higher than what's stated on a lot of the public websites, but, he's extremely successful. He lives in Singapore. Uh, and this was just a great interview and a must-listen for a more macro and global perspective on investing in the markets. And for those of you listening to this and are sitting heavy in the stock market, you might pick up a few insights from my interview and my conversation with Jim. You know, one of his quotes is I don't think I own any US stocks and if I do, it's very few, so few, I can't even remember. So maybe that's a hint, but I think it's worth listening to what he has to say. And he's gotten many great books out there. So you're going to enjoy this interview with Mr. Jim Rogers, the one in the only, and we'll be right back after this message.
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It is my pleasure to welcome Mr. Jim Rogers to the show. Jim is an American businessman and financial commentator based in Singapore. You've probably seen or heard him on the media. He's a frequent guest on radio and TV including worth Fox News and CNBC. He was the co-founder of the Quantum Fund, a global investment partnership where over a 10 year period, the portfolio gained an amazing 4200% while the S and P 500 rules, just a measly 50%. He has established himself a great reputation as an authority on economics, investing in the markets. And Jim is also the author of a number of great books, including A Bull in China, a Gift to My Children, and more recently Street Smarts to name a few. Jim, welcome to the show.
I'm delighted to be here, Marco, or we don't need all that introduction. Let's just go.
Well, it's an honor to have you on the show. Jim. You know, you have a very colorful and successful life and many people admire you. I've been following you for years. Um, you know, some people might chuckle, but you literally started by selling peanuts at the age of six.
I did indeed. Actually I started at the age of five picking up the empty bottles at the games. Oh wow. Then I started my own business when I was six. So yes, yes. It's been a long story.
So you, you've had a long journey and I'm sure we could fill hours about, you know, your,
Hello friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from Lester and Lester writes in and he says, hi Marco. I discovered your podcast this year and have been an active listener ever since. In my opinion, it has been exceptional content among the number of real estate investing podcasts I'm subscribed to because the information is succinctly delivered in each episode. We'll thank you for that. Similar to you, I'm located here in Southern California, specifically on the border of Los Angeles and Orange County. I understand that out of state real estate investing is the way to go, but I'm 30 years old, not a homeowner, and I have plans to be married and have kids within five years. Wow. A very specific goal, Lester. That's great. So he goes on to say, I have about 20% of a median home price in LA saved up and I am weighing my options.
Should I rent my whole life? If I plan to stay in SoCal and invest out of state, should I buy a home with a lot of rooms in California and quote-unquote house hack and or pursue ADU eligible homes, ADU meaning, uh, additional dwelling unit, ADU eligible homes or homes with Ady use in California to makes sense of the numbers. What would you suggest I do? Is there another path I'm overlooking? At any rate, I appreciate you and the work you do with the podcast. Passive real estate investing. Sincerely, Lester Lester, thank you so much for the kind compliments and for writing in, and this is a brilliant question because a lot of people have a similar situation in terms of affordability in expensive markets such as California or New Jersey, New York, Washington, D, C, Denver, Colorado. And the list goes on. Uh, it just happens to be very expensive here in the Southern part of California and in the Bay area up North.
So here's my quick take on this. You know, it's always nice and even sexy to think that you know you're a homeowner and you've got that pride of homeownership and you can tell your friends and family, yeah, I own my home and really I say own in quotes because you actually don't technically own the whole thing. If you have debt on it, you know the bank could take it away from you if you don't pay your property taxes or your mortgage payments. Ultimately you call it your own home and, and if it's free and clear, then yeah, I guess you own it free and clear. But let's look at it this way. So in orange County where you border and I live, the median price in Orange County is about $720,000 and that is very expensive. And for most people listening to this, it probably sounds very high.
If you consider a 20% down payment, that's $144,000 now let's just clarify something here. The minimum down payment requirement for a conventional loan is technically 3% and the minimum down payment for an FHA loan is three and a half percent and then there are some special loan programs out there that even allow for 0% down payments. Now before you get too excited, understand something 20% down is considered ideal when purchasing a home and some people refer to this as the 20% rule and there's really a basic reason for this and that is is because when you are under at or below 80% of the value of the property with your financing, you avoid paying mortgage insurance, which is not something you really want to pay. So I actually ran the math very quickly before I started recording here. If you were to purchase a property with 20% down, you would obviously avoid mortgage insurance.
But if you hypothetically put only 5% down on that property, the $720,000 median-priced home in Orange County, comparing that to putting 20% down over the course of 30 years, you would save $129,880 in interest and mortgage insurance. So basically $130,000 extra is what it would cost you to save quote-unquote, that 15% difference between a 20% down payment versus a 5% down payment, which is certainly more realistic and palatable for most pe...
In this episode, one of the show's trusted local property partners, Makaylee, talks about the real estate scene in Kansas City, Missouri. Learn why the city is considered as one of the perennial cities for real estate with great cash flow and strong appreciation rates. Makaylee shares why people should invest in the city's real estate as she talks about its stable economy over the years and what could be expected from it in the future. Lastly, Makaylee dives into the rental market in the city and the benefits of having a great economy.
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Market Spotlight: Kansas City, Missouri The Midwest is one of the most affordable places to live in the country and Kansas City is at the heart of this region. Kansas City is a large, prosperous, self-sufficient and culture-rich city located along the Missouri River. Cashflow has been very good for the longest time in Kansas City and appreciation rates have been strong. Kansas City has been one of those perennial markets that we've been in for several years. With me is Mackaylee, one of our trusted local property partners. Mackaylee, welcome to the show.
Thank you for having me.
It's great having you on. I love Kansas City. I have five rentals in there myself. I love to invest in the markets that I love and Kansas City happens to be one of those things. Let's talk about Kansas City. I know that you are ingrained to that market and you provide us some great inventory. Let's begin with the question of why do you like Kansas City? Tell us about the market.
For a variety of reasons, but I myself have been in the real estate industry for the past few years in Kansas City. I've gotten to watch the market appreciate a lot with the rental demand and also with the home prices as well. A lot of investors who I've been working with years ago experienced a lot of equity in their houses. While that's not always expected with real estate investing, it's definitely an added benefit. That's been a lot of fun. The market has been growing. There’s a growing population, new jobs, our unemployment rate is well below 4%, which is lower than the average in the US. At the same time, rental demand is still there. You may personally live here. The Midwest is very affordable. Everybody would agree with that. It's very easy to get around. Overall, there are a lot of things to do out here as well. That's a few reasons why.
Kansas City is a beautiful city. I get up there once or twice a year. I'm amazed at how many fountains there are all over the place. What is the story with all the fountains?
There are a lot of fountains everywhere. There are most fountains in Kansas City than in any other city. You'll see them whether you're coming down from the airport or if you're on Country Club Plaza or different parts of the area. They'll do cool things. We have the Chiefs and the Royals here. During St. Patrick's Day, they'll change the color of the fountains so there will be green, red or blue. It’s definitely a cool attraction.
Kansas City is a pretty large city. I don't remember what the population is. I recall it being over about two million people, but you can correct me on that. How big is the city population-wise and maybe geograph...
Every market has a story. Today, we focus on Birmingham, Alabama. In this episode, Marco Santarelli talks to two of his trusted local property partners to reveal how the state of Alabama has become successful in attracting foreign automotive companies and other big employers that draw a lot of current tenants. They discuss property values and why Birmingham can be called 'a linear market.' They also touch on clientele demographics and how to grow your rental property business. If you're a Millennial, opportunity awaits you in Birmingham.
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If you missed our last episode, be sure to listen to Market Spotlight: Houston, Texas.
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Market Spotlight: Birmingham, Alabama Birmingham has been one of those perennial markets where property values have been low relative to all the other markets that we're in. It's been a consistent perennial cashflow market for us. Property prices are still at historic low levels there and relative to the rents you can get, it makes it a very attractive market. It's an affordable city. It's in the South, there's a lot of people move into the South as many of our audience know. It is also one of those great important business centers that reside in the Southeast US. We have been in Birmingham for many years and we move a lot of product there. We have very happy clients because of the cashflow and the opportunities that it provides us. I wanted to do a market spotlight. We're long overdue for market spotlight on Birmingham, Alabama. With me are two of my trusted local property partners out there, Merv and Stephanie. Welcome to the show.
Thank you, Marco. It’s good to be here.
It's great to have you on. I'm excited about this interview because Birmingham is one of those markets that I've been putting off for a long time and it's a long overdue to have a fresh market spotlight on it. Let's jump right into this thing. Every market has a story and there's a reason why I should be considering a particular market. Why do you like Birmingham? Sell me on it at that 40,000-foot level.
We like Birmingham because it's one of those markets where the property values don't change up a whole lot. When we look at what's going on here and there are a few other cities around the country like this, we get an appreciation of let's say 2% to 2.5% a year, even when times are rocking like they are now when other markets are going up 10% to 12%, we're 2% to 2.5%. It makes it what we call a linear market, which doesn't change much, but it also makes it very predictable. When we get a house that's let's say $85,000, it's probably going to rent for somewhere around $850 a month. We've been able to do that time and time again. That's why we like the market and there's been a good inventory here. It's a little tighter now than it has been.
The other thing about the market is that there are a lot of good, solid employers here. Our automotive industry here is pretty strong. We've got a Mercedes plant down the road. We've got a Honda plant down the road. We've got a Toyota engine factory here. Obviously, I never mentioned any American brands. They're all foreign brands, which is interesting because Alabama has worked hard over the years to attract those kinds of industries, which gives us a solid underpinning.
Why should we invest in Houston? In this episode, Marco Santarelli interviews Brian, an experienced investor, about investing in Houston and all the reasons why we should put our money in this city. Covering one of the greatest markets in the entire country, they unpack some investment opportunities in real estate and give the reasons why property management companies are necessary for investment growth. Sit back as Marco and Brian tackle the property mix in Houston, the price range of new construction, and so much more.
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If you missed our last episode, be sure to listen to Market Spotlight: Jacksonville, Florida.
Enjoy the show!
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Market Spotlight: Houston, Texas Houston, with its fascinating history, is considered to be one of the most desirable locations to invest in real estate, not only in the US but in the entire world. Houston’s housing market has been booming for many years and become one of the favorite destinations for those looking to invest. Every once in a while, we'd like to do these market spotlights. We come back to our team and boots on the ground to learn what is going on, why should we be looking at the market and why should we be investing there. With me is Brian. He’s one of our trusted local property partners out there. Welcome to the show, Brian.
Thanks, Marco. It is a pleasure to be here.
It's great to have you back on. We're going to cover one of the greatest markets in the entire country. Let's talk about Houston. The thing with Houston with me is it's a very large market. I don't remember exactly how large it is geographically, but I know from a population perspective, it's got something around seven million people and growing. Is that true?
Yes, it was in 2018 that we went over the seven million mark. It is big and that's one of the things when people come out and visit us, they're struck by the sheer size and the amount of time that it takes to visit and drive to different places. If you take Harris County, which is what Houston sits in and it's seven counties that touch it, you're looking at a landmass about half the size of the state of New Jersey. It is really big. The Greater Houston Area, which is that seven million people number, is a huge land area. From my office now where I'm sitting down to NASA, which is in Houston, it's an hour and fifteen-minute drive to get there.
Every market has a story or at least what I like to call a story. Why do you like Houston? What's the big deal?
I've been lucky to be here for many years. I got here in the mid-'90s. The economy went through a pretty dramatic change away from oil and gas. Back then, the economy was about 75% to 80% oil and gas. Now, that's a much different number. That number is between 33% to 40% oil and gas. At the time, they did it with tax breaks and tax abatement to other industries to entice them to come here. It worked extremely well. There are a lot of other businesses here. We now have the Texas Medical Center down on the south side of downtown. It's the largest medical center in the world with seven different teaching hospitals down there. We've had a tremendous increase in transportation and manufacturing jobs that came here. We're now a much more diversified economy. We're a much more diversified population.
In this market spotlight episode, be ready to hear all things real estate investing in Jacksonville, Florida. Host, Marco Santarelli, talks to a trusted local property partner about why the city's growing and why it's such a vibrant, energetic city for real estate. A coastal city with a population of 1.2 million, it is boasting an affordability index that is unheard of. They talk about the intricacies of building in a growth market and what makes Jacksonville attractive to baby boomers. Discover Jacksonville's story to find out if it is the investment haven everybody is talking about.
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If you missed our last episode, be sure to listen to Ask Marco - Calculators for Evaluating Investment Properties.
Enjoy the show!
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Market Spotlight: Jacksonville, Florida It's time to do a market spotlight. We haven't done one and I figured we should start spotlighting all the markets that we're in. We're going to start with one of my favorites, it's Jacksonville, Florida. Jacksonville is a very large coastal city located in the northeast corner of Florida. Unlike some cities, what I like about Jacksonville is it's mainly a white and blue-collar type of market. Instead, the most prevailing occupations for people in Jacksonville I have found are a mix of both white and blue-collar type jobs. Overall, Jacksonville is a city of sales and office workers, professionals and service providers. It's one of the reasons why I like that market so much. With me is Jim. He's one of our trusted local property partners down there and he's going to be able to get into the weeds with all this stuff that I’m talking about and what I’ve been looking at it in the Jacksonville market. With that, welcome, Jim.
Thanks, Marco. It’s good to be here.
It's great to have you back on. I got a little excited talking about Jacksonville because I got thinking about all of the things that are going on there, why the city's growing and why it's such a vibrant, energetic growing city. I’m going to leave that for you to share. Why don't we start off by talking about the market? As I recall, and correct me on this, Jacksonville is a very large coastal city has a population of close to 1 million people. I think it was over 900,000 the last time I checked. Tell us about the market. Why do you like the Jacksonville market?
I’ve been there full-time for fifteen years. The Jacksonville market brought me from where I was originally in California because it was something that you don't normally hear together, Marco, and that's an affordable coastal city. Those words don’t normally go together and Jacksonville had an affordability index that was very helpful. People are wondering what’s the average salary compared to the average price of a home. We had a very healthy equilibrium there, which you don't normally find in large coastal cities, especially one with Jacksonville with such a diverse economy. What originally brought me here was that inexpensive housing with high rents and being so affordable, there's a large population influx happening right here. There are about 75 families a day moving to Jacksonville because of that affordable coastal lifestyle and the amount of job source. That's what originally attracted me here and still continues to be my most exciting projects here in Jackson.
Hello friends, and welcome to another episode of Ask Marco where I answer your investing related questions.
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions. Today's question comes from David and David says, hi Marco. Would you have a good calculator or set of calculators you use to determine good investment opportunities that you could recommend? Your podcast is awesome by the way. Content, rocks, exclamation Mark. Thanks David. Well David, thanks for the compliment. And um, I think I understand your question because uh, when you talk about calculators to determine good investment opportunities, I'm going to assume here that you're looking to do essentially a cash flow and rate of return analysis to see whether a deal is good, bad, uh, neutral or great. Um, so yes, there are a couple of recommendations I can give you. Um, I'm going to give you two. And uh, the third is really gonna be our website because everything I'm going to show you or tell you about, at least here is available using the analysis tool that's really tied to every single property on our website.
There's a little button by every, uh, rental property that says analyze or analyze this. And if you click that, it opens up a light box window, just a pop up window in the front of the screen and you can edit all those numbers. Anything that's in a light blue box can be changed so you can essentially borrow from one deal on the site and put in your own numbers and create your own scenario. Uh, however, I, I don't, depending on when you listen to this, uh, we are launching a completely brand new built from scratch ground up website, which has the same tool but made better with some additional functionality and tools. And we hope to have that up. Um, probably by October 1st. Um, but it's going to be within the next few weeks, two to three weeks. So keep an eye out for that because you're gonna like and appreciate that even more than what we have up today.
But in the meantime, aside from our website being, um, a resource or a tool, uh, I do know that bigger pockets, the bigger pockets website has a couple of calculators. Uh, there's some good stuff there. There's some things I like about it and some things I don't, um, I would have formatted some of the stuff differently, but the tool was functional. I don't remember if you can use them as a nonmember. I, I, it's been a while since I've been on there, but I think you might have to have their very basic minimum subscription to be able to access that. However, all that aside, uh, the first website I'm going to give you is, um, I'm going to talk about a mortgage calculator first and I'm going to give you the other one, which I think appreciate for your analysis. But if you go to mortgage calculator.org, O R G mortgage calculator.org, uh, you will find a great mortgage calculator, very functional.
Uh, it shows you a graph that breaks down principal interest, the total balance and taxes and fees. A few include that in your calculation, but it gives you a great repayment summary and it breaks down principle interest generate amortization table. So you could see year by year exactly what you're paying down in principle as well as the interest for each and every year. And you can see how that is shaped on a curve. Um, because interest obviously is a large on the front end and minimal on the back end. So you're actually paying off very little principle in the early years of your mortgage. And then that curve, um, goes up and you pay off more and more principal faster as the, uh, as the loan amortizes. So, um, but yes, it's, it's a great site. It's very simplistic but it has a lot of great tools. But the site you're probably looking for, the tool you're looking for as far as the calculator is actually on a website called calculator.net.
Now they have a whole bunch of different calculators there. The one you're looking for is called a rental pro...
One of the beauties of real estate investing is how you can either do it alone or have a team with you. If you are thinking of doing the latter, this episode is going to give you the information on whether it is for you or not. Guest expert Laurence Jankelow is here to tell us all about it. Laurence is the Cofounder and Chief Operating Officer of Avail, the first and only online platform for independent landlords and their tenants. Laurence gets down into the scale of managing a property by yourself as an independent landlord and how they, at Avail, could help you jumpstart on this path either as a landlord or tenant.
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I came across a website that allowed you to be a do-it-yourself landlord. I'm not suggesting or advocating that it is something that everybody should do. It's up to you if you have the time and the inclination to self-manage or be essentially a do-it-yourself landlord. This website or platform allows you to help find the tenants, view credit history, sign leases, collect rent and you can do that on any computer or device. They've got tools built-in specifically for those people who want to be do-it-yourself landlords. I personally know people who manage a portfolio of properties from afar, literally hundreds and sometimes thousands of miles away, and do it successfully. These people are typically people who are in real estate one way or another full-time. It's not that they have full-time jobs or careers and doing their things with their families and following their hobbies and have all that “extra time.”
It's something that's a matter of choice and it's a question of how much do you value your time? Is it something you want to outsource to a professional property management company, which is what most of at least our clients do? It's certainly something I do. I have thought about doing self-management in the past and I have managed some of my own properties. What I wanted to do is contact one of the cofounders of this company. The company's called Avail and bring them on for an episode to talk about what it is they do and how they do it and what it is and what it isn't. That way you can be well-informed and make the educated decision on your own as to whether it's something you want to do on your own or not. With that, let us get to the interview and learn more about the Avail platform.
If you missed our last episode, be sure to listen to Don’t Save For Retirement – Daniel Ameduri.
Enjoy the show!
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Do-It-Yourself Property Management - Laurence Jankelow It’s my pleasure to welcome Laurence Jankelow to the show. Laurence is the Cofounder and Chief Operating Officer of Avail. Avail is the first and only online platform for independent landlords and their tenants that provides the tools, education and support to make renting your properties easy. Laurence, welcome.
Thanks a lot for having me here.
It's great to have you on. I don't remember exactly how I came across you and your website, but I thought it was very interesting and a different take on landlording. I decided this is probably something that our readers might be interested in, at least not everybody, but a good percentage of them at least to look into. I wanted to share it with our readers. Let's start off with a little bit about yourself.
The concept of wealth has evolved throughout the years. In today’s world, it is often understood as something to look forward to in the future, that is, retirement. We all get pressured into working for that financial freedom that is often misconstrued as a faraway goal to work away for. Daniel Ameduri, a self-made multimillionaire and Cofounder of Future Money Trends, believes that retirement is a failed experiment. A full-time skeptic of conventional thought, Daniel says it is possible to enjoy a great life now and also live the life of a retiree by focusing on what the wealthy invest in. He tells us, Don’t Save for Retirement, and through his book of the same name, he takes us deeper into the reasons why.
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From the moment we have even a small understanding of money, most of us believe that being wealthy means financially successful. In practice, wealth means something different to each of us and we each must undergo a personal journey to reach that understanding. We are in a tough situation as a society. As the economy inflated, our expectations inflated as well. It's difficult to overcome peer pressure when we are young and it's just as hard when we are older. We never learned how to manage money in school and we were conditioned into a certain lifestyle by our parents based on how they were raised. Our idea of wealth may change throughout our life and our plan should reflect those changes. Like a diet, you have a plan to follow to achieve real wealth, but it's about making behavioral changes and shifting your mindset. Start by asking yourself how you want to spend your time and whom you want to spend your time with. We all need an occasional reminder of the goals we've set and the reasons we've chosen our paths. You will enjoy my guest as he's been down this road and he has figured it out.
If you missed our last episode, be sure to listen to Lessons Learned From Jim Rohn and Other Great Legends with Kyle Wilson.
Enjoy the show!
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Don't Save For Retirement - Daniel Ameduri It’s my pleasure to welcome Daniel Ameduri to the show. Daniel is a self-made multimillionaire and a full-time skeptic of conventional thought. He's also a proud father of three. He is the Cofounder of Future Money Trends, a newsletter with nearly 150,000 subscribers, which is unbelievable. It is one of the most widely-recognized online authority sites and channels in the investment area, as well as a site where you can get economic advice. Daniel has been featured in the Wall Street Journal, on ABC World News Tonight, on Russian Today TV. He has correctly predicted the collapse of Lehman Brothers, AIG and Washington Mutual on his Victory Channel back in the day. His YouTube channel was launched back in 2007, which now has more than thirteen million views. I can also proudly say that I’ve been a fan, friend and subscriber of his for several years. Daniel, welcome.
Thanks for having me.
I met you a long time ago. I think we first met in Palm Springs and I’ve always been fascinated by all the topics that you talk about on your show and the things that you do. You're a guy who's young, successful, you've got your head screwed on right. You've got a great family. You travel the world. Tell us a little bit more about yourself because you're just a well-rounded person.
Welcome to passive real estate investing. I'm your host, Marco Santarelli. You know, will Rogers once said, don't wait to buy real estate, buy real estate and wait.
You know, there's a lot of truth to that because all markets, both economic and real estate cycle up and down over time. When the housing market crashed back in 2008 it led to one of the worst economic periods since the Great Depression. And we often refer to this period as the great recession. The economy has not just recovered from that period, but today it has steadily grown each and every year since that crash. And over the last decade or so after the great recession, unemployment is now at its lowest in the last 50 years according to government statistics, wages are rising at a faster rate and consumers continue to spend more and more, which all fuels the economy as a whole. So paying attention to housing market trends can serve you well as a real estate investor.
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And that's what we're going to learn more about today with my great guest Daren Bloomquist. All right, it's my pleasure to welcome Daren Bloomquist to the show. Daren is the new vice president and market economist at Auction.com the nation's largest online real estate transaction marketplace focused on the sale of bank owned and foreclosure properties. Now recently Daren served as the vice president at ATTOM where he was widely recognized as an authority in the housing and mortgage industries. Today at Auction.com he is focused on analyzing and forecasting complex economic trends within the marketplace and within the industry. And what I love about Daren is he loves data and he's a super smart guy.
So Daren and welcome to the show.
Thank you for having me Marco. It's great to be here.
Well I'm glad you're on the show. I've been actually wanting to get you on for a couple of years. And that's just my, uh, my fault for not getting you on sooner. Cause I remember following you when you were back at Adam. Um, and just all the articles and data that you pulled in and you just put out so much great content and I thought it would be brilliant for our audience to listen to and learn more about. But here we are today, so we have you on the show. Tell us a little bit more about yourself and your background, Erin.
Sure. I'm, I've been here six months at auction.com approximately a little bit more and that came from Adam data solutions where I spent 17 years, believe it or not, a previous, uh, it went through several iterations prior to being named Adam data solutions. It was realty track, which folks may be familiar with. Really, I've been a part of an exciting ride getting to see the evolution of what I would call the marketplace for real estate investors. And realty track was a first form of that with putting foreclosure properties out there publicly that that used to be very kind of hidden for folks. And that was one step in the direction of kind of democratizing, I would say real estate investing. And we've seen that since the last housing crash. And then this last recovery, I think one of the big storylines has been how real estate investors have helped the market recover I think and stepped in enabled by technology and tools and data that have helped, um, democratize the process and allow someone in California where I live to be buying properties in Alabama or wherever and those investors stepping in and different formats, um, has really created a floor for the housing market after the recode or after the bust and has helped rebalance.
It's the marketplace from one that is was way too homeownership driven to...
Thomas Stanley, the author of The Millionaire Next Door wrote, “Before you can become a millionaire, you must learn to think like one.” Clark Sheffield and Jace Mattinson, hosts of the Millionaires Unveiled podcast, have talked to over 100 millionaires about their stories and strategies of success in real estate. Tapping into their brain, they have pulled out amazing nuggets of information of how they started their journey and how they got to become millionaires. In this episode, Clark and Jace share how they came up with the idea for their podcast and reveal the common denominators they have found amongst all these millionaires they’ve interviewed.
Thomas Stanley, the author of The Millionaire Next Door wrote, “Before you can become a millionaire, you must learn to think like one.” What would it be like if you could interview successful everyday millionaires and hear their stories on how they got to where they are? What were they investing in? What were their investment strategies? How did they allocate their portfolio? How did they get started and what decisions did they make along the way? My two guests did just that. They've interviewed over 100 everyday millionaires to ask them those very questions and many others. What I wanted to do is ask them what they learned from their many interviews that they did with those same millionaires. Maybe think of this interview as a cliff notes version of lessons learned from everyday millionaires. I hope you enjoy this.
If you missed our last episode, be sure to listen to Lessons Learned From Jim Rohn and Other Great Legends with Kyle Wilson.
Enjoy the show!
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Lessons From Millionaires It's my pleasure to welcome Clark and Jace to the show. Clark Sheffield is a CPA and completed his undergrad in accounting from Brigham Young University and his Master’s in Accounting from the University of Notre Dame. Jace Mattinson graduated in Accounting from Brigham Young University as well and started his career with PricewaterhouseCoopers. He's an active CPA and the current CFO of his company. They are both the hosts of the Millionaires Unveiled podcast where they have talked to over 100 everyday millionaires about their stories and strategies of success and real estate. Guys, welcome.
Thanks for having us. We appreciate it.
I'm excited to have you on because who else do I know, which is nobody, that has interviewed over 100 millionaires and tapped into their brain to pull out those amazing nuggets of information of how they started their journey and how they got to become a millionaire. I'm excited to ask you some questions here.
We're at 100 interviews or so. It's been a good journey so far.
Why don't you both tell us a little bit more about your background, what you guys do and give my readers a sense of who you are.
I went to BYU, Master’s from Notre Dame and then came out to New York and started working in accounting at KPMG, just a big accounting firm. I left after a couple of years to lead the accounting and finance at a multifamily real estate investing in a property management company here in New York City. We buy multifamily assets of about 35 buildings all in northern Manhattan and the Bronx. I lead the accounting team here and then Jace and I decided to start the podcast and have been working on that on the side.
I graduated from BYU and accounting as well and started my career at PWC or formerly known as Pricewaterhouse.
There are influential people and there are super influential people. In this episode, host Marco Santarelli interviews Kyle Wilson, the Founder of Jim Rohn International and KyleWilson.com among others, about the people that greatly influenced him in his business. He recounts how he met his business partner, Jim Rohn, and shares the most important things he has taught him. In the same manner, Kyle was an agent of other influential individuals including Denis Waitley, Chris Weidener, and Ron White; and he shares the common thing about these great people that made them who they are today. Introducing the book he co-authored with Mark Victor Hansen and Jack Canfield, Chicken Soup for the Entrepreneur’s Soul, Kyle offers some great takeaways for those entrepreneurs who are striving to achieve.
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From time to time, I’ll go to iTunes or some of the other platforms and I’ll read the reviews you leave. There are new reviews every week. I find them not only inspiring, but humbling. I thank you for all the great reviews you've left. I wanted to read this one because from time to time I’ll pluck one out and read it here on the episode. This person says, “As a practicing CPA who services larger non-real estate clients, I found this show to be excellent as a way to get caught up to speed regarding real estate investing before I ultimately dip my feet into the world of real estate. I have already recommended it to friends and family and look forward to continuing to read the blog.” Whoever you are, because there was no name, I greatly appreciate that.
You're going to love this episode. I’m sure most, if not all of you, have heard of the concept of personal development. What is it? Personal development is essentially a lifelong process. It is a way for people to assess their skills and their qualities and consider their objectives or desires in life, and then work towards realizing and maximizing their personal potential. It's an ongoing effort to maximize your personal potential. Why is personal development important? There are many ideas that surround personal development and one of which you may have learned back in school, if you remember this far back, is Abraham Maslow’s process of self-actualization. Maslow was an American psychologist who was best known for creating what many of us refer to as his Hierarchy of Needs. It's simply referred to as Maslow's Hierarchy of Needs.
Maslow suggested that all individuals have a built-in need for personal development, which occurs through a process called self-actualization. He described human needs as ordered in a stacked hierarchy with each level being dependent on the previous one. It's only when one level of need is satisfied can a higher one be developed. Think of it as a pyramid. You've got six or seven different layers, like an Egyptian pyramid, stacked from the bottom being the largest up to the top being the point. At the bottom of the hierarchy are the basic psychological needs for food, water, sleep and even sex. In other words, these are basics for survival. You need food, water, sleep and sex to survive. Above that, the second layer is the need for safety and security in both the physical sense and the economic sense.
Above that, you have the third layer and that would be the need for love and belonging. Above that, you would have a fourth layer and that refers to meeting the need for self-esteem and self-worth. This is the level most closely related to what we call self-empowerment. Above that, you have that fifth level, and that relates to the need to understand. This level includes more abstract ideas such as our need for curiosity, wanting to learn more, the search for meaning,
Wealth Factory founder Garrett Gunderson believes that the only way to protect your wealth is to make an impact in the world and face the future armed with the right gear and knowledge. In this episode, he talks about investing in and treating yourself as your greatest asset. Garrett goes deep into defining what is the investor DNA and why it matters when looking for things to invest in. Furthermore, he talks about economic independence and how it differs from financial freedom, all the while tackling how to avoid deferral and spending, build up your liquidity, and expand your means.
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Robert Kiyosaki, the author of Rich Dad, Poor Dad once said, if you want to stay poor or middle-class, listen to Suze Orman or Dave Ramsey. If you want to improve yourself and get a financial education of the rich, listen to Garrett Gunderson. That’s my guest. Garrett is an amazing guy, a wealth of information. One of the things he talks about is to invest in yourself and to treat yourself as your greatest asset. You invest only in things that align with what he refers to as your Investor DNA. That's something we'll talk about. What he's saying is you put everything into things you know about and nothing outside of that. You go and let go of all the noise that surrounds you when everyone else is telling you you're crazy. The only way to get wealthy and make an impact in the world is to be crazy enough to face the future with confidence when everyone else's cowering with fear. This is going to be an amazing interview. You're going to learn a lot. I know Garrett has an absolute wealth of knowledge.
If you missed our last episode, be sure to listen to Three Immutable Laws Of Real Estate Investing
Enjoy the show!
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How To Grow And Protect Your Wealth with Garrett Gunderson Garrett is an entrepreneur, a financial advocate, and the Founder of Wealth Factory. Garrett brings a bunch of energy and excitement to debunking the many widely accepted myths and fabrications that undermine prosperity. Even the joy of millions of people, including investors, professionals and business owners. You may know him and he is the New York Times bestselling author of a very well-known book called Killing Sacred Cows, and What Would the Rockefellers Do? He's appeared on TV shows, including ABC's Good Money, Your World with Neil Cavuto on Fox and CNBC's Squawk on the Street. His firm was also named to the Inc. 500 which is impressive. Most importantly, Garrett makes personal finance simple, immediately actionable and even enjoyable. With all that, Garrett, welcome.
Thanks for having me, Marco. I appreciate it.
It's an honor to have you on, Garrett. I’ve been following you for several years since you came out with Killing Sacred Cows back on July 1st of 2008. It’s a great book. You've got ten myths in there that you dispel that are so widely misunderstood. Congratulations on having such great content and educating the world like we love to do.
I felt like that book is a classic from the standpoint. I did the audiobook and I was wondering as I read it, I was like, “What am I going to think? I can't believe I knew this back then.” I thought I was still learning this stuff and it was brand new material. It's stuff I'd shared several years ago. That book is like permission to succeed. It's like,
Real estate has laws that you can follow to make your job regulated and meaningful. Full-time real estate investor Joe Fairless walks us through the three immutable laws of real estate investing, going deep into buying for cashflow, securing long-term and low leveraged debt, and having adequate cash reserves. Joe notes that being aware of these laws and implementing these into action can bring significant progress to your real estate endeavors. On the side, he also shares his journey and the catalyst that brought him towards syndication along with the great real estate lessons he learned from the 2008 downturn.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Philosophers like John Locke argued that without laws, human societies would be brutal places. From this view, laws exist in order to protect our most fundamental human rights. As real estate investors, we could benefit from having certain laws that help guide our investing activities and protect and grow our investment capital. My returning guest and I will talk about what he calls his Three Immutable Laws of Real Estate Investing. First, I was scanning the reviews on iTunes. I check these from time to time. I enjoy reading them because for the most part, 99% of them are all five-star, great positive reviews. This one was in the form of a question and I thought, “It’s probably a question that many people ask so I would publish it.” This person goes by the initial V. He or she says, “I love this podcast. I’ve been researching the idea of investing outside of California. I wonder why that is. Who do I reach out to set up a tour? Thank you.”
It’s a simple question and a simple answer. Contact anyone here at our office, any one of our six investment counselors or our support team can help you with that. We’ll connect you with our team on the ground in one of the 22 or so markets that we operate in where we have property. They and us together would be happy to show you around, introduce you to the neighborhood and show you some properties, some that are under renovation, some are under construction and some that are completely ready to go. Many of them have tenants in place, so that may not be a part of the tour. We would certainly love to meet you, shake your hand, show you around, give you an education and present you some great investment potential opportunities. That’s it. Give us a call and talk to an investment counselor or fill out the form on our website. Let’s get right into the interview.
If you missed our last episode, be sure to listen to Going From Full-Time Job To Full-Time Investor.
Enjoy the show!
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Three Immutable Laws Of Real Estate Investing It’s my pleasure to welcome back a great guest, Joe Fairless. Joe is a full-time real estate investor. He controls over $610 million worth of residential real estates. He’s also the author of two great books titled the Best Real Estate Investing Advice Ever, volumes one and two, and a third book called Best Ever Apartment Syndication Book. He is also the host of the world’s longest-running daily real estate podcast of the same name. Joe, welcome back to the show.
Thank you so much. I’m looking forward to our conversation.
It’s great having you back. There is a ton of subject matter and topics that we can talk about. You and I have no end in terms of how much in what we can talk about. That’s exciting because there’s a lot to share with my audience and your audience. Let’s start with your story. I love your story. Everybody’s got a story and everybody has a different starting point.
Hello friends, and welcome to another episode of Ask Marco where I answer your investing related questions.
You know, I love the questions I get, unfortunately, I get so many of them. I'm having a hard time keeping up, but I do plan on booking an afternoon or a day just to record a whole bunch of them all at one time. So if you've submitted a question and I haven't gotten to it yet, and I know I have some that date back about a month or so ago, a, I apologize in advance and I will try to get through all of them. So just hang in there. Today's question comes from Jebrelle and he says, Hello Marco. I love your podcast. It provides so much actionable content for all levels of investors. My question is purely seeking your opinion. I have purchased a turnkey rental with Norada in Jackson, Mississippi and a property through another provider in St Louis, Missouri.
I listened to a lot of podcasts and read a lot of articles and books. I often hear how using turnkey as your strategy is similar to quote riding a bike with training wheels. I've heard others say how an investor can't get the equity capture, which is true and how that can slow down his or her progression. Okay, so I'm going to clarify that here in a minute. He says, I'm a w two employee. I teach middle school and I'm a part-time real estate agent in North Carolina. I have a wife and no kids, but I do value my free time in the evenings, away from work. I've been struggling with the idea of using turnkey throughout my investment journey or eventually stepping away and doing some more active things like the bur method and for those listening, the bird method is spelled BRRRR and that simply is an abbreviation for buy, rehab, rent, refinance, and repeat.
It's, it's an act of very active approach to real estate investing. He goes on to say, I really enjoyed working with one of your counselors throughout my buying process. It was so easy. That's the thing. Turnkey worked so well for my lifestyle right now, but I'm torn between the potential equity capture and acceleration of my portfolio by using more active methods. I feel like a squirrel in the middle of the street not able to make up his mind so I'll close now. Your input will be greatly appreciated. Thank you. All right. Jebrelle great question. Well very well-articulated so turnkey investing works very well for a lot of people. It is not ideal for everybody but it does work for everybody. It really is going to come down to two things. I think one are your expectations and two is what is your strategy? Are you a passive real estate investor and want to build it as quote unquote easily and passively you've done in working with us and your investment counselor here or are you a more hands-on slash active real estate investor and the, and that's really the given the take there.
Do you want to take a passive role in investing or an active role? If you want to take a mostly passive investment role, then work with your team or work with a company like ours to build your, your portfolio as passively as possible, whether they're rent-ready properties or turnkey properties. And I've talked about that in a previous episode. The flip side of that is if you have the time, the willingness, the desire, the resources, um, a certain level of education or, or understanding or knowledge the capital and the risk tolerance to be involved on the active side, whether it's the bird method or something else, then try it out or maybe just go down that road. Now I, I will say this with strategies like the burn method where you're buying, renovating, renting, refinancing and repeating that process. You need the right team and you definitely need to be in the right market or submarket.
So the numbers work and you certainly can't make this work in a market where you have a lot of competition and or low inventory. The other thing with active methodologies is they don't always work out the exact way you want them to. Now,
Leaving your full-time job to become a full-time investor certainly has pros and cons, and it's not necessarily for everybody. In this episode, Marco Santarelli talks to Lane Kawaoka about the pros and cons of going into full-time real estate investing, what he's learned from the journey, and some things that you never thought about to help you see if it's the direction you want to go. Lane Kawaoka is the Principal at Simple Passive Cashflow. He was a full-time civil engineer from Honolulu, Hawaii who is now a full-time real estate investor with a portfolio of single-family homes in Seattle, Birmingham, Atlanta, Indianapolis and Pennsylvania. Join Marco and Lane to understand the beauty of the real estate world through Lane’s investing journey.
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I have a returning guest who has gone from a full-time professional career, essentially what he calls his job, to be a full-time real estate investor. There are certainly pros and cons and it's not necessarily for everybody. It may be a goal for you but it may not be a goal for someone else. We're going to talk to Lane about the pros and cons, what he's learned, his journey and maybe talk about some things that you never thought about and see if it's the direction you want to go. At the end of the day, what we do agree on is that passive income is great. Being a passive real estate investor shouldn't take a lot of your time and get involved in passive real estate investments is nothing complicated. It's a matter of having the desire and the ability and the right team and knowledge to move forward. That doesn't take a whole lot. Let’s explore that with Lane.
If you missed our last episode, be sure to listen to Financial Preparedness – Is Your Financial House In Order?
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Going From Full-Time Job To Full-Time Investor It's my pleasure to welcome Lane Kawaoka back to the show. He was a full-time civil engineer from Honolulu, Hawaii and he quit his full-time. He's now a full-time real estate investor with a portfolio of single-family homes in Seattle, Birmingham, Atlanta, Indianapolis and Pennsylvania. He's also a partner in syndication that controls over 2,600 apartments and RV units. After Lane’s, parents got duped with their 401(k) in stock market investments, he made it a mission of his to help people get off of what he calls the corrupt Wall Street roller coaster and start focusing on main street investments with safer, higher returns that benefit the American middle class. Welcome back to the show, Lane.
Thanks for having me, Marco.
We had you on the show back in episode number 107. You were working full-time as a civil engineer and investing on the side in real estate and trying to build a passive income portfolio for yourself. You've achieved that. Why don't we start off as a refresher, learning about you and telling us about your background and how you got started in real estate investing?
I graduated from college in 2007 from engineering school but at that point, just like everybody else told to go to school, get a good job, work at the said job and buy that primary residence because it’s supposedly the way to get on to escalate your wealth. I bought that first home in 2009. I was never at home because I was working at a job that was 100% travel. I started to rent it out. The rent is for $2,200, the mortgage was $1,600 and for a young twenty-year-old kid, that was a lot of beer money. I knew nothing about the One Percent Rule. That house was $350,
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today's question comes from John and John says, Hi Marco, love your podcast and the great resources you have on your site. Wondering if you can answer a question. I seem to get conflicting and full-on. I understand. To be an accredited investor, you either have to make $200,000 a year for at least the last two years or have a net worth of $1 million minus your primary residence. Is that the total value of your primary residence or minus the equity in your primary residence factoring in your mortgage balance? First off, for those that are wondering, what is an accredited investor? An accredited investor is someone who meets a certain income and net worth designation, which is defined by the Securities and Exchange Commission. The Sec, I'm sure many of you, if not all of you, have heard of the sec and more specifically as part of their regulations, it's under what's known as Rule 501 of Regulation D.
I know that sounds pretty technical, you don't need to worry about that part, but being an accredited investor allows you to invest in private offerings which are exempt from sec registration. So publicly traded securities are examples of securities that require sec registration. So think of the stock market, Nasdaq, New York Stock Exchange, all that stuff. They have to register with the SEC and go through a long regulation process to get their securities registered. An investment in a private company, however, or a private investment through what's known as a private placement is an example of a private offering that does not need to be registered with the SEC. That doesn't mean they don't need to file, but they don't need to go through the registration process like a publicly traded company does. So the reasoning behind or reasoning for being an accredited investor is so people can prove that they have sufficient financial knowledge to protect themselves and their own interests and also have sufficient financial assets to weather investment losses.
So I don't know if I truly believe that was their motivation long ago, decades ago, when they put these regulations in place. I don't know if it was really to protect the individual investor, but that's an opinion and a comment and a debate for another time. But to qualify as an accredited investor, a person must meet one of two tests there. There are other rules that apply. There's about eight of them, but these are the key ones, the two that apply to individuals because trusts and companies or corporations can qualify on their own. So to qualify, number one, you have to have an annual income of at least $200,000 or $300,000 for joint income with your spouse for the last two years with the expectation of earning the same or higher income in the current year. Or number two, you must have a net worth that exceeds $1 million either individually or jointly with your spouse.
But here's the key, the value of your primary residence, your home, it cannot be included when calculating net worth, so it doesn't matter how much equity you have in it. The primary residence does not partake in your ability to qualify or be designated an accredited investor. But on the flip side, you are mortgage doesn't count against you either. So whatever that may be up to the fair market value. So if you're calculating joint net worth with your spouse, it is not necessary that property be held jointly, if that makes sense. Being an accredited investor can give you certain advantages when it comes to building wealth, higher rates of return and better diversification are really two main benefits for investing in private placements. These are private offerings that are not available to the general public or through public offerings. These two drivers can potentially compress the time that it takes to generate wealth because these are offerings that may have higher risk,
Many brilliant men are doing so many brilliant things, yet many of them can't say that their family's most important financial information would be easily found if something happened. Many of them don't even have a written will. Learn how to remove the stress of not being prepared financially for you and your family and prepare to think about things you haven't thought about before as host Marco Santarelli is joined by successful real estate investor Jay Gabrani to talk about financial preparedness and getting your financial house in order. This is an episode you don’t want to miss.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Ask Marco – Do Providers Mark Up the Price to Hit the 1% Rule?.
Enjoy the show!
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Financial Preparedness - Is Your Financial House In Order? Being a father who was responsible for their family's financial decisions is a task that we were never trained on. Many brilliant men are doing so many brilliant things, yet many of them can't say that their family's most important financial information would be easily found if something happened. Many of them don't even have a written will. The sad truth is that your family will have to deal with the financial stuff. Wouldn't it be better to remove the stress of not being prepared financially for you and your family? That's what we're going to learn now and this is not an episode you want to miss. You're going to think about things you haven't thought about before. It's my pleasure to welcome Jay Gabrani to the show. Jay is a successful real estate investor and the Founder of Prepared Fathers. Despite several challenges along the way, Jay built himself a multi-seven-figure real estate portfolio and he is also the person who turned a personal tragedy into a mission and empowering and fathers to secure their family's financial future. Jay, welcome to the show.
Marco, it’s great to be with you.
I'm glad you're here. You have a very interesting story. I don't exactly remember how we connected, but somewhere along the way, we got into a conversation on the phone and I thought it was an incredible story. I want to share it with our audience because you have a lot to contribute, especially to people who are fathers who are thinking about our financial future, especially for our kids. Tell us a little bit about yourself and your whole story.
I'm located in Toronto, Canada. I was born and raised here. I went to university in the early ‘90s for chartered accounting. The reason I did that was simply that I promised my parents that I'd never work for anyone else after the age of 25. They rolled their eyes and then they said, “Just go get an education.” I went and got that education. The day before my 25th, I went and did all the exams, got my designation and became a professional accountant. The day before my 25th birthday, I left the world of accounting. Let's say in the twenty-plus years since I've been on my own when it comes to entrepreneurial ventures and real estate investing. I'm a single father of three kids and I enjoy what I do and look to impact fathers who want to secure their family's financial future.
Jay, you were talking about a tragedy that happened. I know it's part of your story so you're willing to share it. Why don't you tell us what happened? I call that a defining moment. It changes the course of your life and changes the trajectory of what you do and how you look at everything. Tell us what happened and then tell us why you ultimately took a four-year sabbati...
Hello my friends in welcome to another episode of Ask Marco where I answer your investing related questions.
So today we get a question coming in from Dave. In fact, this came in yesterday or the day before and it is related to the ask Marco episode I did last week about the rent to value ratio. And this one is actually a little bit more specific cause he's referring to it as the 1% rule, which a lot of people refer to it as and he says, Hi Marco. I've been a fan of your podcast for years now you provide great investing insight and knowledge in a trustful non-objective manner. Thank you for that. As you being in the turnkey business, can you explain why the 1% rule seems to be the baseline in the rent to value ratio? Sometimes it's a little over and under, but usually close when looking at the turnkey listing.
Nine Times out of 10 I can guess the rent based on the asking price, which is close to 1% do turnkey providers typically mark up the price to hit the 1% mark? Thanks Dave. Okay, great question. So as you can see this question is very closely related to the topic we had last week about the rent to value ratio because the 1% rule is about the rent to value ratio and as I mentioned last week, generally speaking we want a target of about 1% it can go as low as about 0.8% and as high as 1.1 1.2% when you're outside of that range you have to start asking some pretty important questions such as where is it located? More specifically, what type of neighborhood is it in? If it's on the outside of a range being in the upper a class neighborhoods or the lower sees and below, it's going to skew that rent to value ratio just naturally because of its location and how the purchase price in those areas relate to the typical or average rent in those areas.
They start to separate tremendously as you get outside of that bell curve outside of that range. So the 1% rent to value ratio or what they refer to as the 1% rule is in the sweet spot. It's in the range of what works for most investors, meaning that we're looking at buying hold rentals that we want to produce cash flow and generate a reasonable rate of return. Often these are cap rates or capitalization rates in the six to 9% range. So you've got to understand that when you have a target and a criteria for an investment property that works, meaning that it's located in a good area and generates a reasonable rate of return, naturally going to fall in that range. And this is why the 1% rule keeps coming up time and time and time again. So number one, it works for investors. Number two, you see it often because it's in within our range.
Um, and within our criteria, meaning that what we typically work with and look for as a company Norada real estate investments, helping our clients identify and purchase these properties. It's going to be in that range because we expect the builders and the providers that we work with to provide us with that inventory that meets a list of criteria and one of those items happens to be that 1% rule, so we're okay if a property is 0.8% ish, a plus or minus or or higher, you're going to find those lower numbers with often the new construction properties, the duplexes, even single family homes and fourplexes that it just naturally is lower and there's a give and take there. The the give and the take is that you typically will have a lower rent to value ratio, a lower rent to price ratio, but what you're getting typically is sometimes equity in the transaction right upfront or you are in an area that has strong growth and is strongly expected to continue.
So you make it up in that appreciation over the next year, two, three again, there's no guarantees here and there are no crystal balls just to understand the give and the take theirs. There's an ebb and a flow. Nothing is ever in equilibrium. If you give up something somewhere, you tend to gain it elsewhere. And the third point I'm going to make about this 1% rule and this ratio is th...
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions. Today's question comes from Jade. Thank you very much, jade. She says, excellent podcast. I wish that I'd found it sooner. As you mentioned, ignorance is expensive. We paid off most of our rental home, but we'd like to retire soon, which means we need more cash flow. We're considering refinancing the rental in order to fund the down payment of additional rental properties in a different state that have a better cash flow. Any thoughts on this? And Jay goes on to say we're nearing retirement age, so the thought of a refinance with a 30-year mortgage seems like a long time, but it would give us the best cash flow. What are your thoughts on this? Any other things we might want to consider? So this is a great question, but there's not enough information here to really give you a more specific or targeted answer, but I can answer it generally.
And here's what I would say. If you have a rental property right now that is mostly, if not entirely free and clear, so that means you have a mortgage on it but it is not paid off, that's fine. But if you've got a lot of equity that you can pull out through a refinance, which is essentially a cash-out refinance and there's no tax implication on that at the time than what you can do is you can take that equity and turn it into down payments on additional rental properties. And if you do the math, more often than not, what you will find is that the net income you have from that one rental property or rental property is typically increased sometimes considerably by taking the equity out and multiplying the number of properties you have from that one too. Let's say three, four, potentially even five rental properties.
And so when you run the numbers, even though you now have increased debt service on that first rental and you now have debt service, meaning the mortgages on the additional rentals, you will find that if you add up your net cashflow from each of those rentals after paying all the expenses and after paying your debt service, that the aggregate total of those individual cash flows will be larger than what you have on that single rental. And this is a math question, all you have to do is just tick, sit down with a few assumptions, grab a pen pad and a calculator and just run those numbers. You could also go to our website and use our online tool. The cashflow analysis tool that's really attached to every single property just changed the numbers and you can see for yourself how this will pan out for you.
And so the bottom line is that yes, more often than not you will get more cashflow and yes you will have these new mortgages, but this and generally speaking, that's a great idea. Now to Segway to your second question about these 30-year mortgages seems like quote unquote a long time. Yes. If you're amortizing them over 30 years, that is a long time, but you have to ask yourself the question, what is your longterm strategy? What? What is the intention of these properties? If in the near term you've increased your cash flow and that that's good for you, it's doing you benefit not harm, which it would of course. What is your strategy? Are you trying to pay off these properties as quickly as possible or are you essentially keeping them in your estate and you are going to pass them on or we'll them to your, your kids or your family, whoever that may be.
So if it doesn't impact you only benefits you now and in the near future and the 30-year mortgage is really a moot point because you'd never planned on selling these properties and paying them off now is really not going to change much materially then it's irrelevant. You're going to have financing on them. You have to remember that the financing allows you to multiply the number of properties you can have. It multiplies your income. And when you factor in equity growth over time,
Passing on a wealth of wisdom about various topics, Paul Moore, a Managing Partner of Wellings Capital, takes us into an eclectic ride that sheds light on what is going on in his life, how he attained success, and what is taking place in the world that very much affects us without our knowledge. As a finalist for the Ernst & Young Michigan Entrepreneur of the Year for two years straight, Paul shares his rags-to-riches story from having $1.5 million in the bank to $2.5 million in debt, and then back again. He also talks about his monumental task of raising money to thwart human trafficking while telling us the importance of the “big why” for investors, entrepreneurs, and executives. Going deeper into his life as an investor, Paul broke down the three subcategories of the passive real estate investing model. Discover great insights from Paul and create wealth for yourself that is far-reaching.
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This episode is a little different than most. I was talking to a colleague of mine, Paul Moore and we got talking about random things. He's an interesting character. This episode is going to be somewhat eclectic because we're touching on different things from human trafficking to mentorship to whatever. I break real estate investing into two general categories and that's passive and active. Active being hands-on, more involved, taking on a little more risk and hopefully getting a little more reward but being more actively involved in it. Passive being an investment that you make that generates income and cashflow and it doesn't require any active involvement. It doesn't mean you're not engaged. There is engagement but you more or less sit back and get the checks in the mail as they say.
Paul broke the passive real estate investing model down into three subcategories and I don't want to steal his thunder. We didn't talk about it for a long time but enough to basically say, “There are different paths to take down the passive real estate investing road.” I am going to let the conversation unfold and we'll see where it goes. Anyway, if you have a question about real estate investing, don't forget, you can submit that to me. Click Ask Marco! at the top of the PassiveRealEstateInvesting.com website. If you are in the market or looking to invest in real estate or even thinking about it, remember my team is here to help you. We offer free strategy sessions. They are free. We will spend as much as an hour or more if necessary in working with you to help you clarify your goals and take you to the next level.
Even if you're starting or whether you have 20 to 100 or whatever the case may be, if you're looking to grow that portfolio and do more with what you have, let's explore the possibilities. They may not be a good fit but you won't know until you take that next step. Don't forget about the strategy sessions. Other than that, download our free report. The Ultimate Guide to Passive Real Estate Investing has been downloaded tens of thousands of times. It is a fantastic primer. Last but not least, if you haven't done so already, remember to subscribe whether it's on iTunes, Google Play, iHeartRadio, Stitcher and SoundCloud by all means, get these weekly episodes automatically. Remember to subscribe. That's it for me. Let's get to our interview here with Paul Moore.
If you missed our last episode, be sure to listen to Ask Marco – Do Providers Mark Up the Price to Hit the 1% Rule?.
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Three Paths to Passive Real Estate Investing Success
These days, the real estate market has already gone back up its feet. Using equity for refinancing has been one of the smartest solutions for real estate success. Aaron Chapman who is a 21-year veteran of the finance industry talks about how to use the equity that you have to buy more rentals. He discusses what HELOC is and why he doesn’t advocate using it for down payments on more properties. Aaron also shares his opinion as to when a refinancing rental portfolio does not make sense and gives some tips on how to make good rate of returns.
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If you missed our last episode, be sure to listen to Market Spotlight: Chicago, Illinois.
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Using Your Equity To Buy More Rentals It's my pleasure to welcome Aaron Chapman to the show. He is a 21-year veteran in the finance industry with a focus on the real estate investor. He has a great team of eleven staff members who help him finance investment loans all over the country. He's been married for over 22 years, has four great children, and has been a volunteer with the local Sheriff's Department Rescue Unit for many years. Aaron, welcome back to the show.
How are you doing, Marco?
I'm doing great. How about you?
I’m doing well. I retired from the Sheriff's Office. I’m no longer participating in the day-to-day rescue stuff. My travel and all the business that has been going on is not a giving me the availability to be there as often as I could. I hated people having to rely on me to be there when I couldn't. I have since retired from that. I have four more people assigned to me directly that are closers and underwriters. My team consists of people from the initial phone call with the real estate investor all the way to check it and cut, including all the processing and underwriting. All that is part of my whole group of people that work very closely together. It's been an exciting couple of months.
I didn't know you made those changes, congratulations. Let's talk about using the equity that you have to buy more rentals. This is of interest to a lot of people and one of the reasons is this. Many of the clients that you and I work with, whether together or separately seem to come from these expensive states. They have properties. Often they have rentals that have a lot of equity in there and they don't know how to tap into that equity. Many times these people, particularly from California, people I call equity-rich and cashflow-poor, have a lot of equity in their principal residence that they're not utilizing. I often refer to that as dead equity or dormant equity. You could turn it into cashflow but it’s sitting there in your residence or in your properties and is generating a rate of return equal to zero. Let's educate our audience a little bit here into the ways that they can do that. Let's talk about the different options available to them in order to tap or strip that equity from their properties. Do you want to comment on that?
I'm going to back you up on one thing you said about the equity itself. Unused equity is useless equity and if you're not putting it to work and doing anything. It's a figment of your imagination until you access it and use it. As far as different ways, I've seen people strip that equity or put it to work mainly through refinance. There's always the 1031. You can always sell, then use 1031 and deploy them into multiple properties. That is one strategy that’s commonly used. The other is doing the refinancing and many people get hung up. Sometimes they’re like,
Hello and my friends and welcome to another episode of Ask Marco where I answer your investing related questions. My question today comes from Amir and Amir says, hello. I just finished listening to all your podcasts episodes from back in 2014 up to the very last one that was posted last week. The contents were so great in educational. I really appreciate it. I can't wait to have my first property with you guys, although I am not there yet and I need to save some capital. I want to plan my strategies and pave my way to that goal. I have some questions. Two most important questions are as follows. Number one, I was wondering if it's better to partner with one or two of my friends were my brothers to purchase the first property. In that case, we can raise $20,000 much faster than what I would need to be able to save if that is a good idea.
How does the mortgage work? Okay, so there's actually two questions in this first question and he does have a second question, which I will try to get to here based on time. So what he's really asking here is if it's better to partner with his friends or his family, ultimately that's what he's asking. And the only reason he'd be asking this question from what I can tell is because it would allow him to raise that initial capital for the down payment and closing costs much quicker. So if he's sitting there with $10,000 and he can partner with his friends or his brothers, uh, and come up with 20, 20 to 25,000 to get that first three bedroom rental, single-family detached property, then yeah, he could certainly achieve that initial goal a lot quicker. The thing is, is you first of all have to ask yourself, are you comfortable with a partner?
And I'm not saying that's good or bad, it's really just the personalities and who the person is and you have a relationship, a good working relationship. Uh, even if their family, you know, sometimes businesses create and ruffle feathers within a family and it creates problems and, and upset and then all of a sudden people don't talk to each other and it's kind of like going through a bad divorce in a way because ultimately that's what might happen from that perspective. But there are a lot of people who do partner on businesses and partner on investing in many different things, particularly real estate. So the first question is not so much about the capital or the finances, it's more about the compatibility of you and your partner, whoever that may be. You know, I've heard somewhere in the past that the toughest ship to sail is a partnership.
And so if that's true, then you want to make sure that you're picking the right partner. It's no different than picking a spouse. You want to make sure that whoever you partner with, it's for life, that you want to pick the right partner. Having said, if you do partner with friends or family and you're able to raise more investment capital than you would on your own, or at least maybe quicker than you can on your own, then that might be a good idea. And so when you get to 20, 25, even $30,000, you've got enough there for the down payment and closing costs to get that first property. And of course, the down payment will differ depending on the location and the price point of the property. But it'll get you going. And if you are expecting to be able to save more faster as time goes on, whether it's through your employment or through a small business or growing your existing business, then great.
You know, just keep stacking and building that portfolio and letting it grow and watching it grow. So that's the first part of the question. Uh, the second part is how does the mortgage work? Well, somebody's going to need to qualify for the financing, especially if you're going after conventional financing. Someone needs to qualify. And that's pretty much the case most if not all of the time. So you just need to decide between the partners who would be the better person to qualify.
Chicago real estate is known to be among the most expensive in the US. Despite this, many investors are still attracted to its market. In this episode, Marco is joined by John, one of their local property providers and property managers in the Greater Chicago market as they examine the overall rental market in Cook County. They talk about why we should be investing in Chicago and Cook County and who are the major employers in the area. They note why it is crucial that you know the street itself and the property in general before making any final investment and discuss the price range of Chicago apartments. As they talk about the typical neighborhood classification, they ultimately point out the reasons for succeeding and failing in the single-family rental business.
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Market Spotlight: Chicago, Illinois Chicago has long been one of those major markets we've been able to recommend to our clients where we have attractive inventory, solid returns and good appreciation potential. With me in this episode is one of our local property providers and property managers in the greater Chicago market. We're going to find out what makes the Chicago market such an attractive place to invest in real estate. John, welcome to the show.
Good to be here, Marco. Thanks for the invite. I always love talking about Chicago.
Chicago is an interesting city. It's a very large metropolitan area. In fact, the last time I checked, it was the third largest metro area in the country with nearly ten million people. Why do you like Chicago?
You don't have to really sell Chicago to people looking for an investment property. There are other markets where it's a hard sell. You say a lot of things to help them feel comfortable. I like Chicago because it sells itself soon as the facts get out.
I've been to Chicago multiple times. It's such a big area. You have Cook County in the middle where the city of Chicago is located. Then you have all these major suburbs surrounding that region and people don't realize that Chicago goes all the way down to Indiana. How many regions should we be looking at when we're looking at the Chicago Metro area?
You've brought up a major point about Chicago. We can't talk about it as “Chicago.” There are 795 neighborhoods in Chicago. If you're looking to invest in that market, it's got to be narrowed down from ten million people in 795 neighborhoods. I'm going to be talking about what I know and that's the Cook County and the opportunities that reside in that county.
Why should we invest in Chicago?
As I look at Chicago, they have this enormous gross regional product, $575 billion. To put it in perspective, my daughter married a gentleman from Belgium. The entire country of Belgium, including Poland, has $575 billion. This city is equaling two countries in Europe. They have a lot of Fortune 500 companies based there. They have 31 of them and they're all names you know Boeing, United Airlines, Walgreens, Allstate, Kraft and it goes on and on. They have a beautifully diversified economy. There's not one industry that has more than 14% of the concentration of those industries, which means there's not going to be a big player that leaves Chicago and it then crashes and your renters are leaving town because that one industry crashed. This is so diverse and insulated protected.
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions. Today's question comes in from Reggie and he has a question about turnkey property promoters. He says, Hi Marco, thanks for the great educational information that you put forth on your podcast. It's helped me learn so much in just a short period of time. One question that I had for you and many of your other listeners probably have a similar question, is the following. I generally understand the difference between a turnkey promoter such as Norada real estate investments and a turnkey provider. And I generally understand how a turnkey provider makes their money in brackets, value add through renovations, profit by selling the properties that they themselves own, potential ongoing property management fees, et cetera. However, I don't quite understand how, you know, rata earn money through helping individual investors.
Do individual investors pay no rata a dedicated fee for your help or service or advice? Do you get a commission from the turnkey provider as the equivalent of a finder's fee or realtor's fee? Does Norada Real Estate Investments take a little quote meat off the bone close quote from the deal? Please don't misinterpret this as being hostile in any way. And I don't, I am simply trying to understand how a turnkey promoter like no rata makes money in the process because I think it's important to understand different parties, financial incentives in brackets. He says there's nothing wrong with having financial incentives. Everyone has them. Thanks so much for your clarification and keep up the great content, Reggie. So Reggie, great question. And I, I know I've kind of addressed this just a couple of times over the years here and there in the podcast, but of course not everybody would've caught that and that's not a big deal.
So this is a great question and actually I'm glad you bring it up because it emphasizes one of my 10 rules of successful real estate investing, uh, directly and indirectly about being agnostic. I talk about it as being market agnostic. We're going to talk about it from the context of being completely agnostic, whether it be markets, neighborhoods, uh, properties, providers, et Cetera, et cetera. And I'll get to that here in a moment. But here's the answer to your question. So, so Norada real estate for the most part is a property promoter. Much like any other real estate agent or brokerage would, you know, be promoting a property that they have available for sale or that's available through the multiple listing service, which we don't work with. But, uh, and that's because we have exclusive off market properties, but a brokerage would get compensated on the sale of that property from the sale.
It's what they refer to as a commission. And both the real estate broker on the buy side and the real estate broker on the sales side would split whatever that commission there is. That's traditional real estate with our model. It works somewhat like that. However, we as the turnkey property promoter gets compensated by and only by the turnkey provider or builder that we are working with, they are essentially paying a marketing fee. It's a, it's a marketing expense, uh, to them regardless of how or who they sell it through. So whether it's their own salesperson, whether it's on the mls and they're paying another broker or agent on the buy side, or whether they are selling it through some sort of online platform, regardless, they have some sort of marketing budget in place. And so whether they pay that as a marketing fee or a marketing commission or whatever you want to label it, essentially something they're paying out.
So if we procure the sale and we're working with you as a client and we're educating you and guiding you and helping you build that portfolio and, and guiding you through your plan, whatever your plan is, then at the end of the day when we've helped to create and...
Little thinking is for selfish people, while big thinking is for an unselfish person because 10,000 units require tremendous responsibility. The New York Times bestselling author of Sell To Survive, The 10X Rule and Be Obsessed Or Be Average, Grant Cardone cracks the code to achieving massive success. A successful multi-family investor and sales trainer, he dives into the impact of setting the bar higher with bigger goals and deciding to go all in. A firm believer that being average is a formula for failure, Grant reveals the four levels of action and the top reason why you should be obsessed about your passions.
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I came back from Florida, where I did a video shoot in studio with Grant Cardone. For those of you who don't know Grant, he's a successful multi-family investor. He's also a sales trainer and the author of several fairly well-known books, including The 10X Rule. He loves to talk about achieving massive success. He's not a motivational speaker, but he's so driven to the point where he drives some people a little back, in the sense that they need to take a break from him from time to time. He is about achieving massive success. He says, “Average is failing to plan. Average doesn't work in any area of life. Anything that you give only average attention to will start to subside and will eventually cease to exist.”
The 10X Rule is based on the idea that you should figure out what it is you want to do. What goal you have, what amount of money you want to make, finding your ideal loved one or achieving a certain body fat percentage and multiply that effort and time that you think it will take by a factor of ten. That way, you have a more accurate idea of how much time and effort it will take. If it doesn't take ten times as long or take ten times the amount of effort that you originally anticipated, then it's good. It's better to be pleasantly surprised than to be greatly disappointed. At least that's the idea. This is just one part of The 10X Rule. The other side of the coin is 10X Thinking, how you think. We talk about this a lot. I've even talked about Napoleon Hill's book, Think and Grow Rich a few years back. We did an episode on that. We as humans tend to have a tendency to underestimate what we can accomplish. Therefore, we set lower goals. We don't reach our full potential. Our conversation is about achieving success. You'll get a lot of value from this episode.
If you missed our last episode, be sure to listen to The Creature From Jekyll Island – A MUST Listen.
Enjoy the show!
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Achieving Massive Success: The 10X Rule with Grant Cardone The 10X Rule: The Only Difference Between Success and Failure
It's my pleasure to welcome, Grant Cardone, to the show. Grant is an American author, sales trainer, real estate investor and motivational speaker. He is also a radio host and a multiple New York Times best-selling author of books such as Sell To Survive, The 10X Rule and Be Obsessed Or Be Average. Grant, welcome to the show.
Thank you for having me. I'm looking forward to it.
It's great having you on. I admire the amount of information and great content that you put out there on a daily basis. You're a very successful real estate investor. That's where my heart is, real estate. You're a great role model for so many people. It's interesting because you wrote all these great books, but some people still don't know who you are. What's your background? How did you become the person you are now?
Everybody should know real estate.
It's only when discovering the true answer to that question that you have that "red pill or blue pill" moment, to use a Hollywood movie meme. That's the Matrix moment because what you're about to discover in this episode is not taught in any school or any university, and probably for good reason.
I highly encourage you to listen to this entire episode. I want you to think about what you hear, and maybe question some other long-held beliefs about things that are simply taken for granted or accepted as fact.
Enjoy the show!
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Welcome to passive real estate investing, the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. And now here's your host Marco [inaudible]. Welcome to passive real estate investing. I'm your host Marco [inaudible].
You know it is believed that Mayer Amschel Rothschild, a German Jewish banker, and the founder of the world-famous Rothschild Banking Dynasty said back in the late 17 hundreds give me control of a nation's money and I care not who makes its laws. Well today the U.S. dollar is the world reserve currency and since 1971 and it's been backed by nothing but the faith and confidence of the same US dollar. So how is money or more specifically currency created? It's only when you discover the true answer to that question that you have that red pill or blue pill moment to use a Hollywood movie meme. Of course, that's the matrix moment because what you're about to discover in this episode is not taught in any school or university and probably for good reason. I highly encourage you to listen to this episode right through to the end.
I want you to think about what you hear and maybe question some of the other long-held beliefs about things that are simply just taken for granted or accepted as fact.
So, before we joined today's guests, a quick reminder that you can download a free copy of the ultimate guide to passive real estate investing. Just go to passive real estate investing.com and click on the free download.
It's my pleasure today to welcome G. Edward Griffin to the show. Ed, as he goes by, is a well-known author, a documentary film producer and the founder of freedom force international listed on the WHO's who in America. He is well known because of his talent for researching difficult topics and presenting them in clear terms. He has dealt with such diverse subjects as archeology and the ancient earth history, the Federal Reserve System and international banking terrorism, the history of taxation, US foreign policy, the science and politics of cancer therapy, the supreme court. And last but not least, the United Nations, one of Ed's most influential and better-known works includes his book, the creature from Jekyll Island, a second look at the Federal Reserve. Ed, welcome to the show.
Oh, thank you. Thanks for inviting me, Marco. I much appreciate it.
Well, it's great to have you on. You have a very long bio. I had to actually cut it all down because you've done so much as a researcher.
Well, that's what happens when you live a long time.
Oh, well you're amazing. I mean, I not gonna tell anybody your age, but I've had, you know, a fair share of conversations with you and dinner with you and you're in amazing health. It's unbelievable.
Yeah, I think so too. I keep waiting for the other shoe to drop.
Well, we have a very, very interesting topic to talk about here today and it's something that most people really haven't heard much about, if anything at all. But what struck me about you is I met you a little over a year...
Welcome to passive real estate investing, the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. And now here's your host Marco Santa [inaudible]. Hello and welcome to another or episode of Ask Marco where I answer your investing related questions. Today's question is a good one and it comes from Billy and Billy says, Hi Marco. Love the podcast. Great stuff for sure. Quick personal background. I'm 30 some years old and live in Vail, Colorado. I have an Undergrad degree in architecture and a master's in real estate and construction management. I have been working for a real estate developer here in the Vail Valley for eight years now. Ever since I finished Grad School, I've been very interested in developing a passive real estate portfolio or real estate values and rent to value ratios and Vail resembled the California coastal markets if not more expensive and in balance. Therefore investing locally is not an option. I feel your pain. I have been doing a lot of research about investing in other markets and agree that this is very possible with the right research analysis and working with the right team.
And you're absolutely correct about that. I understand that buying $100,000 properties is a great way to start, but I'm wondering what you would suggest if you have a lot more money to invest and would like to build a portfolio a little bit quicker. For conversation's sake. Let's say you had $1 million. Do you think buying $100,000 ish Holmes is the most efficient and viable way to go about creating passive income? And are there other strategies you like more in this scenario? Thanks for your time. I look forward to hearing back from you Billy. Well, Billy, I hope you don't mind me answering your question here on the show. Um, I think it's a great question and probably one that applies to a lot of people who are either equity rich, uh, or actually have a chunk, a large chunk of investible cash. So I'm going to give you an answer.
I'm probably going to give you four scenarios here. Um, and again, this is for conversation's sake because there's a lot of variables and here's the thing. It is a good problem to have when you have a lot of investible cash, but it's a great place to be because it gives you lots of options, so it's really a matter of evaluating your options, penciling out the numbers and making objective decisions as to what markets make the most sense and what you can get in those markets in terms of inventory, cash flow, rates of return. What is an overarching theme or question here is what is your overall objective or goal? Are you focused more on appreciation potential? In other words, you want large gains in terms of equity and that's what you're striving for without giving up positive cashflow. Of course, you're going to sacrifice some cash in order to do that in many markets just because they may be more expensive or heated or are you looking for just stable passive income or something in between.
The other thing too, I have to consider here is are we talking about like you said, $100,000 ish properties or our 125 $150,000 ish properties. And I say ish because you know it's plus or minus. I mean I've seen a range and we have a range from 80,000 to $150,000 single family homes plus and then there are the occasional duplexes which almost double that number. And then there are the fourplexes which come close to the 650 to $700,000 price range for a premium higher end neighborhood type of fourplex. So I ran some numbers for you and I'm just going to give you some general scenarios to give you an idea of what's possible really at the end of the day I suggest two things, consider different scenarios and pencil the numbers and look at, look at it like I'm doing here, making some basic assumptions and or a number to talk to one of our investment counselors who can run through these scenarios with you and give you some more color.
A quote goes that if you don't take good care of your credit, then your credit won't take good care of you. Knowing full well the truth in that statement is Merrill Chandler, CEO and Chief Strategist at CreditSense. Merrill digs deep and highlights the importance of having not only a good but also a powerful credit profile. After all, what your credit looks like will determine whether you can get business lines. Merrill shares how we can build a powerful credit profile of our own and talks about credit repair, the FICO score, and the common mistakes people make with their credit profiles.
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There was a quote that once said, “If you don't take good care of your credit, then your credit won't take good care of you.” Why is your credit score and profile important? Your credit profile determines whether you get loans, the rates you pay and the types of loans that you can get. Your credit determines a lot more than the loans you can get and the interest rates you pay. Insurers use credit to set premiums for your auto and homeowners coverage. Landlords use them to decide who gets to rent their properties. Credit also determines whether you can get business lines of credit that can be in the millions of dollars and can be used for some of your real estate investing strategies. Since credit has become such an important part of our lives, it pays to keep track of your credit profile and understand how your actions affect it.
On this episode, we're going to learn about the differences between your credit score and credit profile and the importance of it all in every part of your personal and business life. Before we get to the episode, I want to read a review that I found on iTunes. iTunes is where we get probably 80% to 90% of our traffic and most of the reviews show up there, but we get great reviews every week. I truly appreciate it. It is inspiring and motivating for me personally. Someone posted a review. It was titled Amazing Podcast. They go on to say, “I have been listening to the podcast. It has good content for new investors like myself. I sometimes listen to episodes two or three times. It is good content and I want to get as much content as possible. Marco provides knowledge, education and confidence to the audience. Thanks a lot to the whole Norada Real Estate team.”
I appreciate that review. It meant a lot to me as they all do. I do read them. Thanks in advance to everybody who plans to post a review and thanks to everybody who has posted a review. Last but not least, if you have a question about real estate investing, I plan to cover most if not all of them on the show in an Ask Marco! episode. I try to reply to everybody in an email, but feel free to click the Ask Marco! link at the top of the website at PassiveRealEstateInvesting.com. I will be happy to reply and do my best to cover those questions. If you haven't already, please remember to subscribe. It only takes about three seconds. Click the subscribe button or link in your podcast player. Let's get to our interview.
If you missed our last episode, be sure to listen to 7 Powerful Tools To Create Legacy Wealth From Real Estate (Part 2).
Enjoy the show!
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Sign Up for Their FREE Web Class. Sign Up for Their Fundability Bootcamp. How To Build A Powerful Credit Profile It's my pleasure to welcome Merrill Chandler to the show. He is the CEO and Chief Strategist at CreditSense. He has been an influential player in the credit restoration industry for many years.
If you look at some of the wealthiest people in this country, you will notice that a lot of them are real estate owners. Picking up from where we left off, we finish laying down the seven powerful tools that these real estate tycoons have used to create and build legacy wealth. Still with Kirk Chisholm from Innovative Advisory Group, we talk about inflation and deflation and how you can take advantage of those, as well as debt reduction and the tax benefits of real estate. Learn more about these tools as you discover why real estate is considered as one of the best investments to be in. Combine what you have learned in this two-part series and create your own long-term strategy to start building wealth.
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This is part two of the Seven Powerful Tools to Create Legacy Wealth from Real Estate. On our previous episode, we were talking with Kirk Chisholm. We are going to pick up where we left off.
If you missed our last episode, be sure to listen to 7 Powerful Tools To Create Legacy Wealth From Real Estate.
Enjoy the show!
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Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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7 Powerful Tools To Create Legacy Wealth From Real Estate (Part 2) Inflation is very closely tied to virtually all these seven benefits that we're talking about, but it's very closely tied to everything about real estate. I was actually with Peter Schiff, hanging out with him and a few other people. He's always about doomsday. Everything's going to hell in a handbasket. He is very much in the camp that we have inflation. We're going to continue to have inflation and we could potentially even see hyperinflation. It may sound great if you're a real estate investor, but it has its other blowback and implications. The thing is, as far as I understand it, we live in this country, in this economy, in this world market that we have. We live in an inflationary environment.
Even the Federal Reserve has a stated mandate of having a 2% annual inflation rate. Real inflation is probably higher than 2%. It is probably closer to 4% to 5%, maybe more. If we have to have an inflationary environment in order to sustain the type of economy and economic structure that we have, I don't think there are a lot to worry about as a real estate investor when it comes to inflation. You listen to a guy like Harry Dent who is also very much of the mind that we will have a long-term inflationary environment. He's the type of person to believe that we're going to see a deflationary environment first. We're going to see deflation and then followed by a strong inflationary environment or hyperinflation. I'd like to ask you what you think. What are your long-term predictions for inflation? Do you think we're going to have a deflation before a continued inflationary environment? Do you have any opinion on that?
Harry Dent and Peter Schiff must be very smart and a lot smarter than me if they can predict the future because I can't. I could tell you this, I'd love to be hanging outside their offices selling caves because they're telling everybody to go live in a cave with their guns and their gold and protect themselves. That sells a lot of newspapers. I'm picking on them. It's not just them. A lot of people are out there saying it’s the end of the world. We're going to have hyperinflation or we're going to have deflation. It's going to destroy everything. The point is, it sells newsletters, it sells newspapers. The reality is usually much more nuanced than that. When 2008 happened, I predicted that we'd have higher unemployment than we did and ended up getting there.
The principle of owning real estate to become wealthy has never been more true today than it was back then. Simply think of the many investors who have built enormous wealth and rose up to create their own legacy from it. In this two-part series, we go deep into the ways these real estate tycoons were able to succeed. We cover the seven powerful tools that they’ve used to create legacy wealth, starting with why cashflow is king and how you can introduce leverage into the equation. We also delve into the benefits and power of real estate with Kirk Chisholm, a Wealth Manager and Principal at Innovative Advisory Group. Kirk takes us into what they do over at the company, sharing some advice on investing and more.
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Marshall Field once said, “Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.” Marshall Field was an American entrepreneur who lived in the 1800s. His quote was obviously made it an era before tech stocks, hedge funds and excess money printing by the Federal Reserve. However, the principle of owning real estate to become wealthy still holds true now. In fact, we can make a strong case that it is far truer now than it was back then. Real estate is arguably the best asset class if you want to build enormous wealth. While you often hear about well-known real estate investors such as Donald Trump or even Sam Zell, there are countless more who are relatively unknown and very wealthy. What we're going to cover in this show are the seven powerful tools that these real estate tycoons were able to use to build legacy wealth from real estate.
While most of these tools apply to both the real estate investors and homeowners, there are more benefits to owning real estate as an investor rather than a homeowner. As we jump into that interview, I want to remind you of two quick things. First, if this resonates with you and everything we talk about on this show, by all means contact one of our investment counselors and set up a free strategy session for yourself. That way you can discuss where you are now, where you want to go, what that would look like in terms of a roadmap or a plan of action. Then breaking that into a criteria to follow that will make it super easy for you to identify the markets and properties that will meet your investment criteria. That is something we do virtually every day with real estate investors all around the country. Lastly, if you haven't already done so, please remember to subscribe to the show, whether it's on Google Play or iTunes, just subscribe. If you can, by all means leave us a rating and review. We will certainly appreciate that.
If you missed our last episode, be sure to listen to Lessons Learned Going From Local To Nationwide Investing - A Client Interview.
Enjoy the show!
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7 Powerful Tools To Create Legacy Wealth From Real Estate It's my pleasure to welcome Kirk Chisholm to the show. He is a Principal and Wealth Manager at Innovative Advisory Group, an independent registered investment advisor. He's located in Lexington, Massachusetts and he's been providing financial advice to individuals and families since 1999. His influence and innovation have promoted change in many areas of wealth management and the industry itself. He was acknowledged as the number seven most influential financial advisor on Investopedia’s Top 100. Kirk, welcome to the show.
Thanks for having me on, Marco.
It's my pleasure. I don't have registered investment advisors on t...
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions. So today we get a question coming in from Dave and it is related to the ask Marco episode I did last week about the rent to value ratio and this one is actually a little bit more specific cause he's referring to it as the 1% rule, which a lot of people refer to it as and he says, Hi Marco, I've been a fan of your podcast for years now you provide great investing insight and knowledge in a trustful non objective manner. Thank you for that. As you being in the turnkey business, can you explain why the 1% rule seems to be the baseline in the rent to value ratio? Sometimes it's a little over and under but usually close when looking at the turnkey listing. Nine Times out of 10 I can guess the rent based on the asking price, which is close to 1% do turnkey providers typically mark up the price to hit the 1% mark?
Thanks Dave. Okay, great question. So as you can see, this question is very closely related to the topic we had last week about the rent to value ratio because the 1% rule is about the rent to value ratio and as I mentioned last week, generally speaking we want a target of about 1% it can go as low as about 0.8% and as high as 1.1 1.2% when you're outside of that range, you have to start asking some pretty important questions such as where is it located? More specifically, what type of neighborhood is it in? If it's on the outside of a range, being in the upper A-class neighborhoods or the lower sees and below, it's going to skew that rent to value ratio just naturally because of its location and how the purchase price in those areas relate to the typical or average rent in those areas.
They start to separate tremendously as you get outside of that bell curve outside of that range. So the 1% rent to value ratio or what they refer to as the 1% rule is in the sweet spot. It's in the range of what works for most investors, meaning that we're looking at buy and hold rentals that we want to produce cash flow and generate a reasonable rate of return. Often these are cap rates or capitalization rates in the six to 9% range, so you got to understand that when you have a target and a criteria for an investment property that works, meaning that it's located in a good area and generates a reasonable rate of return, it's naturally going to fall in that range. And this is why the 1% rule keeps coming up time and time and time again. So number one, it works for investors.
Number two, you see it often because it's in within an hour range and within our criteria, meaning that what we typically work with and look for as a company, helping our clients, our investors identify and purchase these portfolio properties. It's going to be in that range because we expect the builders and the providers that we work with to provide us with that inventory that meets a list of criteria and one of those items happens to be that 1% rule, so we're okay if a property is 0.8% ish, a plus or minus or higher, you're going to find those lower numbers with often the new construction properties at the duplexes, even single family homes, and fourplexes that it just naturally is lower and there's a give and take there. The give and the take is that you typically will have a lower rent to value ratio, a lower, in other words, rent to price ratio, but what you're getting typically is sometimes equity in the transaction right upfront or you are in an area that has strong growth and is strongly expect it to continue so you make it up in that appreciation over the next year, two, three again, there's no guarantees here and there are no crystal balls.
Just understand the give and the take theirs. There's an ebb and a flow. Nothing has ever in equilibrium. If you give up something somewhere, you tend to gain it elsewhere. And the third point I'm going to make about this 1% rule and this ratio is that providers,
One of the common practices of a new real estate investor is investing in your local area so that you can manage the property and see it. Marco is joined by Stephanie, one of their clients, to talk about the frustrations with self-managing, the false belief of having to invest in the local area, and the whole purchase process. Stephanie shares how she discovered turnkey real estate investing and turnkey rentals which opened a world where she can actually go to multiple markets and diversify the cash flow. Learn how you can choose the best markets to maximize your returns and put your capital to the best use possible as Stephanie shares her journey from local to nationwide investing.
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What goes on in the minds of people who invest in their local market or think that their local market is the best place to invest, then discover a different or better way? I received an email from one of our past and current clients that said, “I wanted to reach out and say how grateful I am to you and your team. I've been working with your team for almost a year now and I'm in the process of buying my fourth, fifth and sixth turnkey property.” It got me thinking, the most successful investors were not made in a day. Learning the ins and outs of the financial world and your personality as an investor takes time and patience. It can be broken down into some key points here. That is successful investing is a journey, not a one-time event. You'll need to prepare yourself as if you were going on a long trip. This is not a sprint, this is more of a marathon.
Second, it involves reading books and taking investment courses. Essentially, my first rule of successful real estate investing is to educate yourself because you want to build your knowledge. Thirdly, nobody knows you or your situation better than you do. You'll find out in this interview that that is especially the case. That means you may be the most qualified person to do your own investing, but most of the time we all need some help. Fourth, your level of knowledge, personality and resources help to or should determine the path you choose. We're all at a different place on a spectrum and we're trying to get to a different piece of that spectrum or a different part. That's just part of the journey. When you have focus and you work with the right people, it moves you along that journey and sometimes a lot faster, as you will learn in this interview.
Fifth, you need to be in this for the long-term. Sticking with an optimal long-term strategy may not be the most exciting thing to do or the most exciting investment choice. However, your chances of success should increase dramatically by doing so. Last, but not least, be willing to learn. Learning to be a successful investor is a gradual process. The investment journey is typically a long one. The bottom line is what you achieve as an investor will depend on your goals, but sticking to a solid plan will help get you there. In this episode, we'll explore the thought process and journey of someone who started investing locally and has her share her discoveries and her revelations along the way.
If you missed our last episode, be sure to listen to How Blockchain Could Transform Real Estate.
Enjoy the show!
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Lessons Learned Going From Local To Nationwide Investing - A Client Interview It's my pleasure to welcome Stephanie. Welcome to the show. Stephanie is a busy mother with a full-time job and she happens to be a passionate real estate investor.
Welcome to passive real estate investing, the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. And now here's your host Marco Santarelli.
Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions this week we have an interesting question, one that I get asked quite often and my team gets asked this question quite often and I think it's a good one to address because it's important, but I don't want people to misunderstand it and it's really the RV or rent to value ratio. And so the question this week comes from Pratik. I hope I'm pronouncing that correctly. Uh, product says hi, I just started listening to your podcast. I am really learning a lot of things about real estate investment. You mentioned the rent to value ratio in your podcast. You said start with 0.7 to 1% ideally, but I am living in Montreal and I don't see the rent to value ratio anywhere around that. What I found realistically in Montreal is around 0.5% how does the people who invest in real estate in Montreal make a profit and monthly cashflow?
Because all you will get from monthly rent is almost the same as your mortgage installment. I'm really sorry if this is a stupid question. I am new to this. Thanks in advance. First of all, let me just say that this is not a stupid question. It's a great question and often there are no stupid questions because if you think you have a stupid question, chances are someone else has the same question as you and they're wondering the same thing. And at one point in time we didn't know the answer to all the questions that are out there. So we learn as we go. And if you don't ask, you're not going to get the answer. So ask. That's why we do this. So let's start off by defining it is the ratio of the monthly rent to the purchase price. That's it. So let me give you an example so you can easily understand this.
I like to use the example of the hundred thousand dollar property and maybe in Montreal or coastal California or the northeast. There are many parts of the country where you don't find a hundred thousand dollars properties, but let's just say there are a lot of them throughout the country and it's not atypical, but $100,000 property that rents for $1,000 per month has a 1% rent to value ratio or rent to price ratio, however you want to call it, and what that means is simply this, that you've taken that monthly rent of $1,000 divided it into the a hundred thousand dollars purchase price or that could be your acquisition price, whatever that number is because you may have not purchased it new. You may have a cost basis in a property of $100,000 and so your rent to value ratio is still going to be 1% but that's all it is, is just dividing the monthly rent into the market value or purchase price.
Now let's talk about the range in the target. Often. What you're going to find is that number will range from the very low zero point x percent on up to as high as 2% or more. That's not your target. Don't get mesmerized or seduced by very high numbers and I'll tell you why here in a second. Basically, most markets that make sense financially, fundamentally, economically are going to have rent to value ratios that range from roughly 0.7% on up to about 1.2 1.3% we find that a rent to value ratio of around 1% is typically the middle of the bell curve is the sweet spot. It's what you're going to find in good markets and good neighborhoods. Again, the 1% is a target. It's what you would ideally like to have, but if you are looking at property that has an RV ratio of 0.7 0.8 0.9 those numbers can still work, especially if you're in a growth area, a very desirable neighborhood or a neighborhood that's above what I'll call the middle of the bell curve.
Something like an a minus type of neighborhood. Something that is a little bit more premium, you're going to find that RV ratio drops,
What makes blockchain universal is how it can be implemented for just about anything anywhere. Penetrating even to real estate, it proves its own flexibility and adaptability when it comes to transactions, record keeping, asset management, and more. Taking us in between the two is Craig Cobb. He is the founder of Trader Cobb, a cryptocurrency trading and training firm, and a host of the top-ranked show, The Trader Cobb Crypto Podcast. He talks about blockchain technology and how the real estate industry could be benefitting from it, touching on topics from tokenization and the SEC to smart contract and title insurance.
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I did an episode on the blockchain and real estate and how those two things are connected and interact. If you think about it as the original internet, the blockchain is a revolution in technology that will touch all people and all businesses. For many real estate investors and professionals, this is part of the brave new and confusing world of technology. In its most simple sense, the blockchain is a series of computers with thousands to potentially millions of them that each keeps the same record of an event or transaction in a ledger that is open to the public. Each one of those records is encrypted, which means it's all scrambled it cannot be read without the right key and the ledger is virtually hack-proof.
Since all these computers see the same thing, they offer consensus that the recorded event or transaction is valid. The most important value of the blockchain is that it allows two or more parties to interact with a financial transaction with no middleman. What makes the blockchain universal is how it can be implemented for just about any kind of transaction, record keeping or an agreement between one or more parties. From asset management or an investment perspective to operating and managing companies, blockchain technology could potentially have a profound impact on real estate. That can be seen by the number of companies that are already emerging with their feet firmly planted in blockchain. There are publicly-traded companies that are raising capital for blockchain technology.
There are opportunities for blockchain in many facets of real estate transactions. It includes a property entitled trust searches, financing, leasing, purchasing, selling and doing due diligence, managing cashflows, payment systems, payment management and cross border transactions. New definitions of property ownership and rental contracts are going to arise from all this and there's going to be a shift in the way real estate and real estate business is conducted in this country. On this episode, I brought in a person who I've met based in Australia who specializes in blockchain, blockchain technology and teaching people about blockchain and blockchain technology and trading. With that, we're going to have him on here.
If you missed our last episode, be sure to listen to Active Real Estate Investing with Joe McCall (Part 2).
Enjoy the show!
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How Blockchain Could Transform Real Estate It's my pleasure to welcome Craig Cobb to the show. Craig is the Founder of TraderCobb, a cryptocurrency trading and training firm based in Melbourne, Australia. He has been a trader, an educator and a market commentator since 2007. Craig is also a globally sought-after international speaker on the topics of financial markets, cryptocurrency, entrepreneurship and trading. He's also the host of the top-ranked show, The TraderCobb Crypto Podcast. Craig,
Picking up with more nuggets of information from Joe McCall, we continue exploring active real estate investing as we look into his favorite strategy - doing lease options. He gets down to its two-part component of buying and leasing with a tenant while discussing its relation to wholesaling as well as holding titles and payment. Tapping into simpler things, Joe shares his thoughts about private lending and whether or not it is active or passive. He also compares the risks involved between the two kinds of real estate investing and gives his advice to those who are thinking about transitioning from being an active investor to a passive investor.
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We are having a conversation about active and passive real estate investing. We're doing a comparison and contrast of each and if you haven't read part one, be sure to stop here and go back to the first part of this episode and read that because it's going to give you a great overview and introduction to the different strategies involved with active real estate investing. With that, we're going to continue with our interview with Joe McCall.
If you missed our last episode, be sure to listen to Active Real Estate Investing with Joe McCall.
Enjoy the show!
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Active Real Estate Investing with Joe McCall (Part 2) Let's transition to what I believe is your favorite strategy and that is doing lease options, which is essentially a two-part component. You’ve got an option to buy and lease with a tenant. Tell us what a lease option is and why would someone want to use that strategy?
I love lease options for a couple of reasons. A lease option is where you lease a property with an option to buy it in the future. If you own a property, maybe you want to sell it but you don't want to sell it as cheap as you would need to another investor. Maybe you want to sell it to a tenant buyer or you don't want it listed to the MLS and pay all the commissions so you can sell your property on a lease option. I only recommend doing lease options on median-priced homes. In the Midwest, I only want to do lease options on homes that are between $100,000 and $200,000, that median price range. I don't like doing lease options on lower-end rental properties because if a tenant was in there and they got their credit fixed and they could get a mortgage, they're probably not going to want to buy that $50,000 house. They're going to want to buy something in a nicer area with better school district.
I only recommend doing lease options on median-priced homes in good school districts, good neighborhoods and blue-collar working class areas. I was doing a lot of wholesaling, failing at rehabbing and failed before with the properties that I bought. The reason why I failed at those, it wasn't as much that the market changed, it's because I didn't buy them right to begin with. Because if I bought them right to begin with, even though the market changed, I would have been fine. One of the things I appreciate about you and your podcast and what you're teaching people how to invest in passive real estate is you force them to focus on the fundamentals like it’s got a cashflow. You can't count on appreciation. It's got a cashflow and the fundamentals need to be there. You need to be at certain cash-on-cash return or an ROI or whatever.
When I was buying them, I was counting on appreciation and I was okay with just $100 a month in cashflow because I didn't think anything could go wrong. I didn't think anything bad could happen.
Exploring the other side of passive real estate investing, we turn our attention to learn more about the different ways, methods, and strategies of active real estate investing. Learning both sides of the investing coin, we look at what active real estate investing is, what is involved, and how it compares to the pros and cons of its opposite. Sharing his expertise and experience is Joe McCall, investor, coach, and podcast host. He takes us deeper into wholesaling, leasing, and flipping - discussing and differentiating lease options, private lending, and more.
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Most of what we talk about on this show relate to passive real estate investing. Anything from acquisition to management to taxes to retirement accounts to market selection, neighborhood selection, all that good stuff. Some of that does apply to active real estate investing where you're more actively involved and take greater responsibility. I don't think I've ever done a show or an episode where we compare and contrast the different strategies related to active real estate investing and compare that at least at a high level to you as an investor on the passive side. This episode is dedicated to learning more about the different ways, methods and strategies about active real estate investing. Not so much to teach you how to do it, but what it is and what's involved and how that compares the pros and cons to passive real estate investing.
That doesn't mean that one is better than the other. There are pros and cons and you could argue and debate both and everybody has their preference. However, they have a different end result. Some are very short-term and some are long-term in terms of the investment horizon. How they're treated from a tax perspective is different. Short-term capital gains versus long-term capital gains. Active real estate investors purchase and renovate. Typically, there are other strategies but purchase and renovate properties to flip them and to resell them as quickly as possible to maximize their profits. Sometimes they do the same but hold them in their portfolio. These investors are involved in every part of the deal, from selection to obtaining financing to personally guaranteeing the loan and managing the investment. The investor is hands-on and actively participating in making the investment pay off.
Active investing is significant from an undertaking perspective. It's very involved and house flipping is essentially a full-time job for many people while renting out the property may require less time, especially if the investor hires a management company. Essentially, you're rolling up your sleeves and getting involved in the many facets or parts that are involved in that process. There is a difference and for many people, they may love all the different strategies on the active side but for many people, they prefer to buy and hold and build a passive portfolio. That may start with active real estate investing and transition into more of a passive role. That's what we're going to talk about. With that, I'm going to introduce my guest who's going to talk to us about everything that he has done and he has a very interesting story.
If you missed our last episode, be sure to listen to How to Overcome the Fear of Out-of-State Real Estate Investing.
Enjoy the show!
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Active Real Estate Investing with Joe McCall It's my pleasure to welcome Joe McCall to the show. Joe has flipped over 100 properties. I'm sure it's a lot more than that now and he's helped students flip hund...
Hundreds, if not thousands of people are investing every week. However, some real estate investors have this fear or reluctance to invest out of state or what some people call long distance real estate investing. Marco is joined by Oliver, one of his investment counselors, to talk about why people invest out of state, but more importantly, why there's a fear or reluctance and why that's crippling you from achieving far more with your investment capital than you could otherwise.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Tracking Your Income And Expenses On Autopilot with Heath Silverman.
Enjoy the show!
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How to Overcome the Fear of Out-of-State Real Estate Investing I have one of my investment counselors here with me, Oliver. We were talking about how some real estate investors have this fear or reluctance to invest out-of-state or what some people call long distance real estate investing. The fact is that hundreds, if not thousands of people, are investing every week and probably every day in markets that are not local to them. They’re long distance real estate investors. I wanted to talk about why people do this but more importantly, why there's a fear or reluctance. Why that's crippling you in a way or holding you back from achieving far more with your investment capital than you could otherwise. The question becomes how do you overcome that reluctance or that fear? There are a lot of reasons and that's what we're going to talk with Oliver about now. Oliver, welcome to the show.
Thanks, Marco. It’s great to be on the show here with you. It's my first time on the show. I look forward to diving in on this topic together.
It's great to have you on. I know you're a super smart guy, a successful real estate investor and valuable addition to our team. When you brought up the subject of the fear of investing out-of-state or the fear of investing outside of your local market, it begs the question of why are people reluctant. Why do they have this fear? Why don't we start there and we'll end this episode with suggestions and recommendations for people to overcome what might be false evidence appearing real.
Out-Of-State Real Estate Investing: If you live locally in a market that makes sense numbers-wise, you're lucky.
Many investors when they're initially starting and they're interested in investing in real estate, they start looking locally. That appears to be the trend most people do. Sometimes investing locally doesn't make a whole lot of sense, but that may be what all of your friends and family have done as well so maybe that's all you know. When someone talks to you about going out-of-state, that brings up a lot of fear because it brings up a lot of insecurities you may have about who is doing what to your property? Who's living there? Who's overseeing it? To get an idea from what is going on at the property at any point in time and trying to get that security and that safety blanket to ensure it's being taken care of at almost all points in time.
One of the factors that a lot of investors tend to be fearful of is going out-of-state and not having that “drivability factor” to the property. This means that at any point in time you can drive by the property. See what it looks like, see what the tenants are up to and making sure they're keeping the property in good standing and that it's looking good. That's one factor that I find a lot of people tend to have as an issue, not being able to do that.
Like any business venture, the ability to be able to track the performance and success or failure of your rental properties with a good system is vital. For some of us, that means tracking everything in a spreadsheet or maybe even QuickBooks or TurboTax. Whatever the case may be, keeping good records of your financials will help you secure future funds as well as keep excellent records for tax purposes. After years of frustration around the lack of technology available to the individual investor, Heath Silverman was inspired to streamline the entire real estate ownership life cycle. Heath is a part-time real estate investor and the CEO of Stessa, a software platform that gives millions of real estate investors a powerful new way of managing and tracking their income and expenses as well as communicating the performance of their real estate assets. He talks about that in this episode.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Eight Principles To Be Rich, Wealthy, And Live The Dream Life with Dustin Heiner.
Enjoy the show!
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Tracking Your Income And Expenses On Autopilot with Heath Silverman Like any business venture, you need the ability to be able to track the performance and success or failure of your rental properties with a good system. For some of us, that means tracking everything in a spreadsheet or maybe even QuickBooks or TurboTax, whatever the case may be. Keeping good records of your financials will help you secure future funds when you go to purchase additional properties as banks may want to see records of your cashflow and the reserves from your current investments. You will also need to keep excellent records for tax purposes, especially if you go through a tax audit. You need to have everything in order and well documented. Some investors rely solely on spreadsheets or even pen and paper to track their rental property accounting, income, expenses, whatever may be happening.
The system is okay if you have one or two or maybe as many as five properties, but it tends to breakdown and become laborious after that third and fourth and even fifth property. QuickBooks, which I do use, not all the time but for general accounting, is great and it's one of the top picks for professionals. It's at the top of the list when you think about accounting software. QuickBooks has its limitations for managing rentals. It's great for general accounting, but it misses all the tools that truly make it stand out as potentially being the best property management system. It works but it doesn't work great. It's extremely detailed. It's somewhat complex. It's not designed for real estate investors. What if there was an easier way to track income and expenses as a real estate owner and investor, something that saves you time and makes it simple? That's what we're going to discuss and share with you here.
It's my pleasure to welcome, Heath Silverman, to the show. Heath is a part-time real estate investor and the CEO of Stessa with nearly twenty years of experience working with investment properties. Heath has dealt with all aspects of residential and multifamily acquisition, rehab, management and the disposition of those properties. He actively maintains a portfolio of ten buildings comprised of over 60 units across the United States. After years of frustration around the lack of technology available to the individual investor, Heath was inspired to streamline the entire real estate ownership life cycl...
There's a reason why the majority of people in this world are poor. It is because they are not taught to be rich. They don't know the principles that the rich already know and implement in their lives. If you knew the principles of the rich, you could change your life and be rich as well. Copy what already works; it's that simple. The principles of the rich apply to everybody. They apply now, tomorrow, and far into the future. They're timeless and no matter when you learn these principles, they will help you to become wealthy. Dustin Heiner is a real estate investor who went from working the grind to living the dream. Join me and Dustin as we talk about the eight principles to be rich, wealthy, and live the dream life.
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Every single week, I get reviews from my incredible audience out there about how much they love the show and what they're learning. I'm very humbled and I want to thank each and every one of you for the great reviews and the five-star ratings. I read them all. Thank you. There's one I want to read. In fact, I might just randomly grab one here and there and read them on each episode. This review I wanted to read because I thought it was great. I don't have the person's alias. I'm not sure that would mean all that much if you don't know who the person is. This person for this particular review says, “I've been listening to your podcast for a couple of months now and I have learned more in that time than I have listening and reading for the past six months. It's the total package of info that enhances my motivation and the appetite for more exposure to your knowledge. Thanks for all you do!” That is a great review because it motivates me, it's touching and it inspires me to do more for you. I'm glad you're learning. I'm glad that this has been useful for you. Thank you so much. I will try to keep putting out some good content.
The segue from there is a quote from someone, his name is William A. Ward. He says, “Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.” There's a reason why the majority of people in this world are poor. It is because they are not taught to be rich. They don't know the principles that the rich already know and implement in their lives. If you knew the principles of the rich, you could change your life and be rich as well. It's that simple, you copy what already works. I want you to be rich and wealthy. The principles of the rich apply to everybody. They apply now, they apply tomorrow and far into the future. Principals or principles, they're timeless. They don't change. No matter when you learn these principles, they will help you to become wealthy. Join me and my guest as we talk about the eight principles to be rich, wealthy and live the dream of your life.
If you missed our last episode, be sure to listen to Straight Talk with Robert Kiyosaki (Rich Dad Poor Dad).
Enjoy the show!
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Eight Principles To Be Rich, Wealthy, And Live The Dream Life with Dustin Heiner It's my pleasure to welcome Dustin Heiner to the show. Dustin is a real estate investor who went from working the grind to living the dream. He's a husband and a father of four children who supports them with the passive income from his business and his rental properties. I only met Dustin recently, but in conversation with him,
Probably everybody is familiar with Robert Kiyosaki or his top-selling book, Rich Dad Poor Dad. Robert is a businessman, an author, and founder of Rich Global LLC and the Rich Dad Company, a company that provides personal finance and business education to people through books and videos. He has challenged and changed the way tens of millions of people around the world think about money. He is an entrepreneur, an educator, and investor who believes that each of us has the power to make changes in our lives, take control of our financial future and live the rich life we deserve. Robert joins us to talk about his inspirations, growing a company, what he thinks about our education system and more.
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I first read the book, Rich Dad Poor Dad, back in 2006 on a train ride from Rome to Florence. It was the first time I picked up any of Robert Kiyosaki's books, although I had known about his book for years. I believe that's when I first learned that my home was not an asset or at least not according to Kiyosaki. He made me realize that it was taking cash out of my pocket and not putting any cash in it, as were my rental properties. I finally met Robert and his wife, Kim, as we spent a week together on a cruise in the Caribbean where I was able to understand him a little better and share ideas about money, investing and personal development.
One thing that was clear to me is that Robert is a lifelong student and he humbles himself knowing that he is not the smartest guy in the room. He reads daily and his books have more Post-it notes and written comments in the margins than any other book I've ever seen. True to the first rule of my ten rules of successful real estate investing, Robert makes learning and knowledge a priority and he is always educating himself. One other thing we both share is the desire to educate and inspire other investors to learn and to put into practice that which they learn. It's only when you turn your knowledge into action that you find yourself truly growing and becoming a better version of yourself. I have a treat for you. I've asked Robert to come on the show and share some of his time and wisdom with you, which I appreciate given he has a crazy schedule. He travels a lot, as do I, but it's hard to pin Robert down.
Before we get to the interview with Robert, I just want to thank all of you for the great reviews you post on iTunes. I do read them and I wish I could share all of them with you. One really stuck out to me. This person said, “I've been listening to your podcast for about a couple of months now and I've learned more in that time than I have listening and reading for the past six months. It's the total package of info that enhances my motivation and appetite for more exposure to your knowledge. Thanks for all you do.” Thank you for subscribing and listening to me yap on and on about something I believe in. For those of you who haven't subscribed, it's just a finger tap or a mouse click to do so and I would appreciate it very much, so remember to subscribe to the show. Lastly, remember to download your free copy of The Ultimate Guide to Passive Real Estate Investing. Simply visit our website and click the link.
If you missed our last episode, be sure to listen to Why NOW Is The Time To Diversify With Self-Directed IRAs.
Enjoy the show!
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Learn more about Your Roadmap to Real Wealth.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Straight Talk with Robert Kiyosaki (Rich Dad Poor Dad) It is my great pleasure to welcome, Robert Kiyosaki,
Self-directed retirement accounts or self-directed IRAs is something that a lot of people are not too familiar about. A self-directed retirement account is no different than any other retirement account or IRA. Legally speaking, according to IRS regulations, you can self-direct virtually any retirement account, and what you can put into a retirement account is almost limitless. Amanda Holbrook, Vice President of Specialized IRA Services, talks a little bit about the benefits of self-directed retirement account and how to utilize them. If you want to know how you can take advantage of expanding or growing your portfolio using a self-directed retirement account and a little bit about diversification, this episode is for you.
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We're going to talk a little bit about self-directed retirement accounts and this is something that a lot of people are not too familiar about. With my guest, we're going to talk a little bit about the benefits of them, how to utilize them. How you can take advantage of expanding or growing your portfolio using a self-directed retirement account and a little bit about diversification because we want to marry those two topics. A self-directed retirement account is no different than any other retirement account or IRA. Legally speaking, according to IRS regulations, you can self-direct virtually any retirement account and what you can put into a retirement account is almost limitless. There are a few exceptions, but many IRA custodians only allow investing in certain things like stocks and bonds, mutual funds and CDs.
A self-directed IRA custodian or any custodian for a retirement account allows you to invest in other types of assets like real estate, notes, private placements and businesses, tax lien certificates and a whole lot more. When you think about the potential benefits of a self-directed IRA, it's limitless. You can tap into dollars that are pre-tax dollars depending on the type of retirement account you're talking about and allow the power of compounding. If you understand how compounding works, but allow the power of compounding to work for you because you are utilizing 100% of your contributions, which are before tax to work for you instead of putting in after-tax dollars. There are different types of retirement accounts and those work a little differently.
Some of them are pre-tax. Some of them are after-tax dollars. This is something you can discuss with whoever your tax advisor or custodian is. You want to work with a trusted advisor who understands what self-directed retirement accounts are all about because although it is a common product, well-known and an item that has been around for a long time. Believe it or not, there are a lot of advisors that don't have a lot of experience or knowledge in this area. They know what they know and they work with the tools that they have, but it's not something that they're overly familiar with. In this episode, I’m going to bring on one of my friends and acquaintances who is deep into the IRA and self-directed space. We're going to talk a little bit about diversification and dig into the whole self-directed concept.
If you missed our last episode, be sure to listen to Market Spotlight: St. Louis, Missouri.
Enjoy the show!
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Why NOW Is The Time To Diversify With Self-Directed IRAs It's my pleasure to welcome Amanda Holbrook, the Vice President of Specialized IRA Services to the show.
Real estate investors tend to overlook St. Louis, Missouri. Often known only for its gateway arch and as a Rust Belt City and part of the Flyover Country, this market does not really generate much attention. However, what most do not know is that St. Louis real estate holds significant potential. As the second largest city in the state of Missouri, St. Louis’ housing market holds almost three million people, thus making it also the twentieth largest metro area in the United States. With that, we bring the market spotlight as we take a look at even more reasons why investors should take advantage of this fact and come back to St. Louis - from the renter’s market to price range and more.
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It's been a while since we did a Market Spotlight and I'm going to start doing more of them going forward. We're going to take some time and focus on St. Louis, Missouri. St. Louis is most famous for the Gateway Arch that they built back in the 1960s. Sometimes, St. Louis is looked down on as a Rust Belt city and part of the Flyover country. It doesn't generate much attention except for when it hits the media and the news for its crime rate or its other problems. St. Louis real estate holds significant potential. The St. Louis market or at least the housing market isn't limited to the roughly 300,000 people who live in St. Louis. That would make it the second largest city in the state of Missouri. The St. Louis housing market includes almost three million people and that makes St. Louis the 20th largest Metro area in the United States. Let's take a look at the top reasons to come back to the St. Louis real estate market as an investor here in 2019.
If you missed our last episode, be sure to listen to Huge Tax Benefits As A Real Estate Professional.
Enjoy the show!
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Market Spotlight: St. Louis, Missouri It's my pleasure to welcome one of our providers on the show. His name is John and he's out of our St. Louis Missouri market. Every once in a while, we do a Market Spotlight here to feature a market. We talk about that market and the economy, why we should invest in that particular market and the types of properties and investment opportunities we have there, as well as the management side of things and just get into a little bit of the nuts and bolts. We haven't done a Market Spotlight in a while. We are certainly overdue, but we are working with a great team out in St. Louis. They provide some good quality product. They love working with us and our clients. I figured it's about time we do a spotlight on St. Louis. With that, I'm going to bring John on the show. John, welcome to the show.
It’s good to see you, Marco. I'm looking forward to visiting with you.
Thank you. It's great having you on. Your firm has sold hundreds of homes to investors and you're very well-respected. You have a great reputation. We like working with you. Your focus is on single-family homes. Tell us a little bit about you and how you got involved in this whole industry of investment real estate and why St. Louis and then we'll dig into the whole market.
I started out to corporate marketing at IBM, high tech things and nothing to do with real estate. My career flowed through executive management of IBM and then into Verizon and then my own high-tech firm. In about 2011, I started noticing single-family rental property as a new asset class on Wall Street. I'm going, “What? That's an asset class on Wall Street?
Being a real estate professional undoubtedly has its own perks. One of which, especially for those investors who are also high-income earners, is the huge tax benefit. Having the status as a real estate professional equips you with one of the most powerful tax tools which could potentially help bring someone’s tax bill from 35% down to 15% or even lower. Some of you may not even aware of this. That is why we will take a dive into this subject as we talk about huge tax benefits and how you could qualify for it with founder of 401KCheckbook.com Bernard Reisz, CPA, CPCU.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Profiting From The Profound Demographic Shift Ahead.
Enjoy the show!
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Huge Tax Benefits As A Real Estate Professional Being a real estate professional brings many wonderful tax benefits. For investors who are also high-income earners, the real estate professional status is undoubtedly one of the most powerful tax tools that could potentially help bring someone's tax bill from 35% down to 15% or lower. Of course, this is something you'll want to discuss with your tax professional. We're going to explore the subject, its huge tax benefits, and how you could qualify.
It's my pleasure to introduce Bernard Reisz to the show. Bernard is the Founder of 401KCheckbook.com, which gives investors direct control of their tax-sheltered funds for real estate equity and debt opportunities. This is done by using Checkbook-controlled IRAs, solo 401(k)s and Checkbook Life Insurance. He provides an integrated approach to tax and financial planning for real estate investors and real estate professionals, focusing on their unique profiles and opportunities. It is very important because you always have to focus on the investor and individual themselves. He's also the Founder of AgentFinancial.com which provides tax and financial services to real estate professionals, including real estate agents and mortgage brokers. Bernard, welcome to the show.
It’s great to be with you. I'm looking forward to this discussion.
We hear this term thrown around as a real estate professional and a lot of people don't understand what a real estate professional is. If I have a large portfolio of real estate, that doesn't necessarily make me a real estate professional. That's what we're going to talk about but before we do that, tell us a little bit about yourself, what you do, and how you got to where you are. You talk about a lot of different things, not just about real estate professional status but a whole broad spectrum of stuff.
I'd be glad to. The core mantra and value that I try to advocate everybody takes for their own finances is recognizing that everything is integrated. You have to be an expert or knowledgeable at least in so many different financial disciplines if you want to get the optimal results. If somebody is your tax professional, they at least have to be knowledgeable about investing. They have to be knowledgeable about the kinds of strategies that you would hear from a traditional financial advisor. They've got to be knowledgeable and have insight into every single area of finance. Likewise, if you're going to somebody for financial advice that may not be a tax preparer, they've got to know or at least be familiar, acquainted and conversant in areas of investing in taxation. If they're a traditional financial advisor, it would be great if they were educated about real estate investing.
How do you profit from the profound demographic shift that's coming ahead? If you want to predict the future with accuracy, only one crystal ball will do and that's people by the numbers. By looking at demographics, we can predict the future from commercial to social to political to cultural trends. Counting people reveals what the trend will be over the next several years. That's because it's based on what people are doing from fertility to the location, meaning where they live and to aging. For instance, women are on the rise in the workforce nowadays, shattering glass ceilings. Meanwhile, Gen Y or the Millennials, the largest generation in history, are going to be moving into their own home soon. These are two of the key changes that will be determining the fortunes and futures of many people and what is going to happen over the next several years. Do you want to get ahead in your field or in real estate? Pay attention to the trends we're about to discuss with my guest, internationally respected demographer Ken Gronbach.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
How do you profit from the profound demographic shift that's coming ahead? If you want to predict the future with accuracy, only one crystal ball will do and that's people by the numbers. By looking at demographics, we can predict the future from commercial to social to political to cultural trends, counting people reveals what the trend will be over the next several years. That's because it's based on what people are doing from fertility to the location, meaning where they live and to aging. For instance, women are on the rise in the workforce nowadays, shattering glass ceilings. Meanwhile, Gen Y or the Millennials, the largest generation in history. They're going to be moving into their own home soon. These are two of the key changes that will be determining the fortunes and futures of many people and what is going to happen over the next several years. Do you want to get ahead in your field or in real estate? Pay attention to the trends we're about to discuss with my guest.
If you missed our last episode, be sure to listen to 2019 And Beyond - A Lender's Perspective.
Enjoy the show!
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Profiting From The Profound Demographic Shift Ahead It's my pleasure to welcome Ken Gronbach to the show. Ken is the President of KGC Direct and is an internationally respected demographer who has been able to forecast societal, commercial, economic, cultural and political phenomena with uncanny accuracy. Ken's unusual blend of marketing savvy and common-sense demography based on his many years of proprietary demographic study sets him apart. Ken keynotes all over the United States and does customized demographic research. You will find at Ken's steadfast position that the United States is the best nation on Earth has given him a firm belief that the country's best days are ahead. Seasoned with his spirited presentations, he has an unmistakable pro-American enthusiasm. Ken's book, Upside: Profiting From The Profound Demographic Shifts Ahead is an outstanding book. I highly recommend it. I’m excited to have Ken on the show. Ken, welcome.
It's a pleasure. Thank you very much.
You're referred to as a demographer, a futurist and you're also referred to as a generational marketing expert. Tell us a little bit about yourself and your background. How did you get to this point?
I was in the advertising business. I had an advertising agency for 21 years here in Connecticut.
Aaron Chapman joins us for a year-end review. We're going to take a look at 2018 as well as 2019 and see where we're going. Aaron is a 21-year veteran in the mortgage lending space. He lends his smarts, experience, and insights about the mortgage market and the way the industry is working from a lender’s perspective. Learn what’s going on in the mortgage lending industry, how that's going to affect us, and what we should be doing in terms of investing.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Insurance, It's Not What You Know But What You Need To Know.
Enjoy the show!
– – – – – – – – – – – – – –
Learn more about Your Roadmap to Real Wealth.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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2019 And Beyond - A Lender's Perspective We want to look at 2019 and see where we're going. What we're going to do is take a look at 2018 and give it a recap, a year in review. In order to do that, I wanted to bring on someone who was on our show here and that's one of my favorite people, Aaron Chapman. He is a 21-year veteran in the mortgage lending space. He's a super sharp guy and smart. I rely on him almost like a mentor because he teaches me things about the mortgage market and the way the industry is working. How it's going to affect me as an investor and the people that we work with as our client’s investors. He's got a pretty big team of eleven people. He knows what he's doing and he's helpful. I wanted to bring him on to help us understand what has happened, what is going on in the mortgage lending industry, and how that's going to affect us? What we should be doing in terms of investing? Aaron, welcome to the show.
Thanks. It’s good to be on again.
It's great to have you back on. I’m reviewing my goals and I'm thinking, “What am I going to be looking at this year in terms of investments? Is it all going to be real estate? Where am I going to be investing? What are mortgage rates doing? Is it even going to impact me?” I know you have an answer to that question because we talked about that last time. Why don't we start by talking about 2018? If you were to recap what happened in 2018 at a macro level in terms of mortgage financing and how that applies to investing, how would you summarize 2018?
We got more settled into the financing real estate investor better than we had at any other time since the crash. As a matter of those people who want to invest, they want to get involved in it, they want to use the regular conforming financing, we were able to find those investors, banks and those other pools of funds that were more amiable to the real estate investment financing. It used to be they were fighting with us all the time. We have to prove that it wasn't as risky a deal. I can't say that they bought into it being lower risk than the owner-occupied. There's still a lot of that out there but it doesn't change the fact that we are able to do more. We're continuing to see high volume. What's interesting is the volume of transactions globally as far as real estate finance has dropped at 40% plus. We're seeing across the board big declines in applications taken, amount of loans that are closed, but real estate investment has continued to climb. We've seen a 116% gain. That’s what I've seen in my own personal business. That's inside a business that has shrunk nationally as far as lending in general.
The other thing that I’d like to summarize is we’ve seen rates take a direction that was completely opposite of what people have been used to for the last decade. They've been used to rates going down or rates stayin...
They say prevention is better than cure. That is why when it comes to properties, we have insurances that protect us from risks such as fire, theft, flood, and some other damages. However, not all insurances are made easy to understand and without a hitch. Almost all of the time, they have with them some nuances that, when not looked at very well, might lead you to a whole other damage. Marco, together with MC Laubscher of CashFlow Ninja Podcast and the president of Producers Wealth, explore some of the basics of property insurances as well as some of the uncommon scenarios - from the costs and policies to beneficiaries and more. They break down some of the basic types of insurance, coverage, and even things you need to know about short-term rentals like Airbnb.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Market Spotlight on the Cape Coral, Florida.
Enjoy the show!
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Insurance, It's Not What You Know But What You Need To Know Property insurance provides protection against most risks to property such as fire, theft and some other damage. These include specialized forms of insurance such as building insurance, contents insurance, fire insurance, flood insurance and even earthquake insurance. They say prevention is better than cure. The cost of property insurance often depends on what it would cost to replace the property in which additional items to be insured are attached to that policy. The insurance policy itself is a lengthy contract as you know and the names on that contract determine who the beneficiaries are. It also specifies what will and will not be covered or paid in the case of various events. Let's explore some of the basics and nuances of property insurance as well as some of the uncommon or even strange scenarios with my guest.
It's my pleasure to welcome Ed Babtkis to the show. Ed is the Founder of Ross Diversified Insurance Services and they're licensed pretty much nationwide. The last count was in 49 states. They insure thousands of properties all around the United States. They're investors themselves, which is refreshing because a lot of insurance agents out there do not buy property and invest themselves. They fully recognize the needs of customized insurance for real estate investors. Ed, welcome to the show.
Thanks. I’m enjoying the opportunity.
Let's cover some of the basics when it comes to insurance. From that, we'll talk about some of the more uncommon or strange scenarios that come up with insurance that we didn't talk about last time. You told me that it's not what you know, but it's what you don't know that you should know about insurance. It's all about what you need to know. Let's start with the most fundamental and basic thing. How much insurance should an investor have in place? It's more about what kinds of insurance should they have in place.
The type of insurance is commonly referred to as an owner and landlord-tenant policy or simply a single-family rental insurance policy where the investor who buys the property, the property is not his home. It's not a homeowner’s policy. It has different exposures in regard to liability through its tenant. It has different exposures with people who may break into the property because it may be vacant in between occupancies. Commonly this industry is called an owner landlord-tenant policy. OLT would be an acronym. The investors who are buying properties need to have something to protect their interests much more c...
Cape Coral is a master plan city. It’s pre-plotted and pre-planned with a lot of thought and design put in ahead of time before they broke ground at all. It's a fantastic place for investors to consider for a new construction development and investment in general. Marco is joined by Rob, one of his strategic partners in Southwest Florida who has worked in the real estate industry for over ten years. Rob goes into the details of the Cape Coral market and the different types of properties and opportunities that are there. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Investment Loans And The Mortgage Landscape.
Enjoy the show!
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Market Spotlight on the Cape Coral, Florida It's my pleasure to welcome Rob to the show. He is one of our strategic partners in Southwest Florida. He has worked in the real estate industry for over ten years. He's renovated houses and commercial properties and for the last three and a half years, he has been building new construction properties in Southwest Florida. These are cities that include Cape Coral, Lehigh Acres, Fort Myers, and Punta Gorda. I'm quite familiar with this market because I was an investor in this market years ago, but things cycle and repeat. Now, we're back into this market because the opportunities are plentiful. With that, Rob, welcome to the show.
Thank you very much, Marco. It's a pleasure to be on with you and it's fantastic to be able to talk about the Cape Coral area. We absolutely love this area and we think it's a fantastic place for your investors to consider for a new construction development and investment in general.
We're excited about it. I know that we've been working with you here since the beginning of the year and putting together some programs for our clients and real estate investors to be invested in this market. Why don't we start off by talking about the market and then we'll get into the different types of properties and opportunities that are there. Cape Coral is a fascinating city. It's beautiful, it's large. It's got a lot of water canals. Why don't you give us a verbal virtual tour of that city?
To me, what's unique about Cape Coral is it's a master plan city. It’s pre-plotted and pre-planned with a lot of thought and design put in ahead of time before they broke ground at all. It only started in 1957 so we've got a really new city. We've got over 400 miles of canals. Back in 1957, they used to have viewing trips and they would fly planes over the city before it was all dredged out and everything. They would drop down sacks of flour to show people who are looking to invest and purchase a lot, it was a lot that they are actually purchasing. There was a lot of momentum and a lot of energy that came early on in it.
It's still at this point right now, 50% of the city is not yet developed. We have a lot of opportunity for growth and it's an exciting place. People are coming down here for three main reasons. It's the three S's and it's sunshine, it's the scenery, and it's security. It's just a fantastic place to live. It’s actually an up and coming place for Millennials. As you look throughout the city here, they've designed it so that within a ten-minute walk from any place in the city, you can be at a park. It's loaded with lots of parks, 400 miles of canals, and over 50% of those canals go out to the Gulf of Mexico.
The American dream here for us is to live on a canal, have your pool out there,
Will 2019 by a good time to invest in real estate — or will you be better off parking your money elsewhere, whether that means sitting on the sidelines or an investment in an entirely different industry?
While no one knows exactly what will happen with home prices in 2019, if you have the right sources of information and know where to look, there is enough evidence to make a sound educated guess.
Let's explore this topic and see what we can learn.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Chewing The Financing Fat with Aaron Chapman.
Enjoy the show!
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Learn more about Your Roadmap to Real Wealth.
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Will 2019 by a good time to invest in real estate — or will you be better off parking your money elsewhere, whether that means sitting on the sidelines or an investment in an entirely different industry?
While no one knows exactly what will happen with home prices in 2019, if you have the right sources of information and know where to look, there is enough evidence to make a sound educated guess.
Let's explore this topic and see what we can learn right after a quick thanks to our sponsor.
We've seen a slowing down in the housing market this year, in most of the metro areas around the country. What’s causing this slowing growth in the housing market? Well there are dozens of factors in play, but the ones with the biggest impact over the next few months and into the new year include the following five factors: Factor #1. Affordability The real estate industry is facing a basic economic problem: lots of people want to buy homes but can’t realistically afford to do so in their current geographic area. This is because affordability has become an increasingly acute issue over the past decade.
Remember that affordability describes the percentage of one's median household income spent on the median household mortgage in a particular area. Most financial experts suggest that households spend no more than 30% of income on housing, and many metro areas exceed that amount. Home prices, mortgage rates, household income, and local property taxes are all important factors in determining how affordable a certain metro area might (or might not) be.
Graphs charting the housing market have looked like a roller-coaster over the past decade: up and down, and since around 2012 to 2013, climbing back up again. But many markets haven’t been stable or steady, and that not only contributes to uncertainty — it also makes potential first-time home buyers less courageous about taking the plunge into home-ownership. Many of these would-be first-time buyers still remember the housing crash of the last great recession back in 2008, that affected people for many years since. So not everyone is in a rush to be a first-time home buyer right now.
And buyers who are ready to take the plunge are competing for a limited supply of homes for sale, which adds volatility to the market and can keep home prices high or cause them to rise, much like what we saw back in 2004. This is especially true in areas where homes for sale are particularly scarce (Denver, Seattle, and San Francisco).
In some of those areas, the problem has become so bad that residents are spending much more than 30% of their household income on housing. Thirteen of the top 100 MSAs passed that critical barrier in 2017. In total, 30 of the top 100 are above 30% — 5 are above 50%, and there are some neighborhoods within these metros that top 70% of one's income solely for housing!
The mortgage landscape is always changing. It’s dynamic and it’s fluid; it’s not static. Where is the mortgage market headed and what has changed with investment mortgage loans? Shawn Huss has been in the mortgage business for years. He's been ranked as one of the top 200 loan officers in the country for the past years. Shawn helps people understand what's available today, where we're going, and how that's going to impact them as real estate investors. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Chewing The Financing Fat with Aaron Chapman.
Enjoy the show!
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Investment Loans And The Mortgage Landscape It's my pleasure to welcome Shawn Huss to the show. Shawn has been in the mortgage business for years. He's been ranked as one of the top 200 loan officers in the country for the past years. He's personally originated over $1.8 billion in loans. He resides in Cincinnati, Ohio and he can lend pretty much all over the country. He's one of our preferred mortgage lenders and mortgage brokers. Shawn, welcome to the show.
Thanks, Marco, for the introduction. I'm glad to be part of your show.
I'm happy you're on. I'm doing a mortgage special. I'm going to have you and one of our other preferred and highly recommended lenders/mortgage brokers that we work with because we wanted to share with our audience some insight as to where the mortgage market is headed and what has changed with investment mortgage loans because that landscape does change. I know one thing with the lending space is that it's dynamic and fluid. It's not static. This is going to be helpful for a lot of people to understand what's available today, where we're going and how that's going to impact them as real estate investors. Tell us a little bit more about yourself, what you do and the business that you're in.
I work with Chemical Bank. We're a very investor-friendly bank. We close anywhere from 50 to 60 transactions per month. How we work with investors all over the country, we follow Fannie Mae and Freddie Mac guidelines, which means you can do up to a total of ten finance properties per one person. When you recommend your clients and you’ve got two qualified borrowers with a married couple, sometimes we'll suggest and educate them why it's best to maybe split them into one by ten and the other by ten. We do this process as far as an educational process. The industry has changed a lot with investment lenders. I've been working with the investor community the last years. Some of the banks follow Fannie Mae guidelines, some of the banks follow Freddie Mac guidelines. That's where people have seen differences with different banks over the past three or four years. They've pretty much in the last twelve months lined themselves up with each other. That's why some banks will max out four, some banks will max out six.
With Chemical Bank, we don't have any overlays. We don't have any low minimums. A lot of banks will have a low minimum or they won't lend for less than $75,000. As the investor will start looking at different price points at different levels of investment properties, they might find some of the $50,000, $60,000 range that are worked within their portfolio, then they go up to $150,000, $200,000 price point. Every situation is slightly different. What separates Chemical Bank in the investment community as far as making life a little easier is our processing, our underwriting and our closing all sits right outside my office.
Aaron Chapman, 21-year veteran in the financing industry focusing on real estate investing, talks about chewing the financing fat, giving the broader macro and economic perspective on the different rates—from interest to mortgage. Aaron shares how they are going to impact you as a real estate investor as well as how you can take advantage of the lending environment. He also provides his predictions about the mortgage rates over the next six to twelve months. Diving deeper, Aaron gives his thoughts into the claim that renting is cheaper than owning, while going further into the effects of inflation to the purchasing power. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Ask Marco — Equity Acceleration, Book Recommendations, FHA Loans, Turnkey or DIY, Pay-off Loan or Not?.
Enjoy the show!
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Learn more about Your Roadmap to Real Wealth.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Chewing The Financing Fat with Aaron Chapman It's my pleasure to introduce you to Aaron Chapman. He is a 21-year veteran in the financing industry with a focus on real estate investing and investors. He has a team of eleven staff members. His focus is on financing investment loans. Aaron has become a good friend of mine over the years. He's been married for years. He has four kids and he continues to volunteer with the local sheriff's department in the rescue unit and he's been doing that for years now. Aaron, welcome to the show.
Thanks, Marco. It’s good to be with you.
It's good to have you back. Aaron, we're not going to talk specifically about loan products and interest rates here. This is a broader macro and economic perspective on what rates are doing, where they've been and where we're going. How it's going to impact you as a real estate investor, how you take advantage of the lending environment and all those good things. I'm not sure where you want to begin, but a lot of people ask us the question what are rates doing and where are we headed? It's a crystal ball question sometimes, but why don't you start off by giving us some commentary on that?
That is a very common question for myself. That question does route its way through your team quite often. That is something I've tried to spend a lot of time understanding. It's the point that I've had some people come up to me after presentations where I speak publicly is that, “What is it you do again? Are you an economist or are you a wealth management guy?” I go, “I'm a lender. I do a regular Fannie-Freddie mortgages, the 20% down stops. If you're looking to buy houses for investments, single-family, a duplex, triplex, fourplex, there are other options we've got beyond that that I've access to and even beyond the ten finance properties of Fannie Mae. We’ve got some cool 30-year loans with that. That's what breads my table, but I find it's necessary that a person in my position should understand what's driving that market. What's driving the interest rates? What would we expect as real estate investors because I'm an investor myself for the future?” The way that I answer that question is to go backwards, to understand what has created this whole process to begin with. You've seen The Big Short?
It’s a great movie. I watched it three or four times.
I've seen it ten or twelve times. I've got it on every one of my electronic devices. I've got it on my phone. I can go to my Google account. I've got it downloaded on there, so if I'm on a plane or an airport, I can go watch it again because there are tons of little good nuggets in there.
Marco picked out some questions in his inbox that are applicable to almost everybody. He goes through some of them like equity acceleration, real estate book recommendations, FHS loans for principal residence, buying properties in cash, the cost of buying turnkey versus the true cost of purchasing, rehabbing, renting and refinancing investment properties, and whether you should pay off a mortgage or not. Hopefully they'll be helpful for you and you can relate to some of them. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Where Is The Housing Market Headed? with Ivy Zelman.
Enjoy the show!
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Ask Marco — Equity Acceleration, Book Recommendations, FHA Loans, Turnkey or DIY, Pay-off Loan or Not? I got back from San Jose, California. I was there on a business trip and it was very productive. I always like to see what real estate is like when I go to different markets around the country. I found not to my surprise, but the median price of a home in San Jose, California as of late, mid-October was $1.01 million. Think about that, a price is over $1 million for a home and this was based on over 1,800 home sales. This is not a one-off. This is the mid-point. When you do the math, it breaks down based on square footage to a price per square foot of just under $700.
We've been selling properties for many, many years throughout the country in markets that make sense for $80, $90, sometimes $100 a square foot. Even our new construction in various markets like Cape Coral, Florida, in Tampa and Jacksonville, Florida, a lot of these properties are right around that $100 per square foot mark. In fact, it's hard to find properties being built for over $130 a square foot in the markets that we're in. It gets worse. If the million-dollar price tag wasn't bad enough for a median sales price, the median rent per month in San Jose is around $3,500. If you do the math, if you divide that into the million dollars and you try to calculate your rent-to-price or rent-to-value ratio, what we call an RV ratio, that's just a measly 0.35%.
Remember, we're trying to get at or above 0.8% with an ideal target of 1%. When you're down under 0.8% and you're as far down as 0.35%, it is very small. You are not utilizing your investment capital in the best and wisest way possible. Not only that, it's a very expensive market, high priced, high land values, therefore potentially high downside risk. This is why a lot of the coastal markets, particularly in California and on parts of the East Coast are just simply too expensive to invest in. Other than that, I've noticed a lot of volatility in the stock market. It's hard to believe that October is the same month that we saw record highs in the Dow, yet at the same time we saw the top 30 stocks in the index decline just short of 10%. When you have a 10% drop in the stock market, that's generally referred to as a correction.
When you look at the Dow and you look at the broader market, the S&P 500, if you were an investor at the beginning of the year, as of October 31st, you would be in negative territory. That means not only did you not make any gains, but you also haven't had an increase in value. You haven't had any cashflow either. Your capital is worth less now than it was at the beginning of the year and you had no cashflow. Your capital is worth less than it was when you first started because of inflation. You're not even keeping up with inflation.
One of the most common questions in the real estate space is where we are in the housing cycle? Ivy Zelman provides some interesting perspective on the housing market, the direction we're going, the demographics, interest rates. Ivy is the CEO and founder of Zelman & Associates, LLC, a company she founded back in 2007. Her firm leverages housing market expertise, extensive surveys of industry executives and rigorous financial analysis to deliver proprietary research and advice to global institutional investors. Her team is widely respected for its unbiased views, depth of data and knowledge, and a willingness to offer counter consensus opinions when necessary. Ivy talks about where we are in the housing market cycle and shares some important factors and metrics that we should be looking at as real estate investors.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Regardless of whether you're a full-time real estate investor, a part-time real estate investor or a real estate investor who is getting started and you haven't even acquired your first property, it's important for you to know where the real estate market is. What is going on with the housing market at the macro level and at the micro level? Meaning at the local level, the market you live in, the market you're investing in or where you're thinking of investing in. It may be where you have invested and you are potentially looking to expand in that market or sell property in that market or do a tax-deferred exchange into other markets. These are all factors that you need to think about.
I'll give you an example. If you're looking at a market and there are more buyers than there are homes for sale, you're essentially in a seller's market. What does that mean? You have to consider that prices are probably going up. It's an appreciating market. There might be competitive bidding situations. You may not be getting the best deal. You might be in a situation where if you want to invest in that market, you might be paying at or above market value. Maybe rents are being compressed. You're not going to get the same rent-to-price ratio, that rent-to-value ratio that you would ideally like to have. That forces you to look into another market. This is just one of many considerations. These are the conditions that exist both at the national level, the local level and even at the regional level.
There are people out there who I definitely want to get on the show, one of which is now. These are people who study the markets. They study data and they talk to builders. They talk to lenders and people in the industry. They look at market cycles and real estate cycles. They look at where things are at or where there is demand. They look at demographics to see who's coming up like the Millennials and maybe who is making a shift, potentially the Baby Boomers. These are all things that help you become a more informed real estate investor and a business person. If you are going to be in real estate investing, these are things that you need to consider. My guest is going to be talking about these important factors and metrics that we should be looking at as real estate investors.
If you missed our last episode, be sure to listen to How to Pay LOW or NO Taxes Using Cost Segregation.
Enjoy the show!
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Where Is The Housing Market Headed? with Ivy Zelman It's my pleasure to welcome Ivy Zelman to the show. Ivy is the CEO and Founder of Zelman & Associates, LLC, a company that she founded back in 2007.
How would you like to pay little to no taxes because you're an owner of real estate? Since 1997, the increasing number of property owners have cut their current income taxes by using something called cost segregation. Alan Goldstein, founder of Emunah Cost Segregation, explains that with cost segregation, an owner of real estate can accelerate their depreciation and thereby reduce their federal income taxes for years. Alan is an IRS-enrolled agent, a Florida real estate broker and mortgage broker, and an expert in depreciation. He says basing on a fundamental principle that a dollar now is worth more than a dollar tomorrow, this same logic can be applied to tax deductions because a tax deduction now is worth more than a tax deduction tomorrow. Learn more about how you can have an immediate increase in cashflow and the tax savings available to you through cost segregation. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
A question for you, how would you like to pay little to no taxes because you're an owner of real estate? Since 1997, the increasing number of property owners have cut their current income taxes by using something called cost segregation. With cost segregation, an owner of real estate can accelerate their depreciation and thereby reduce their federal income taxes for years. The benefits of doing a cost segregation or what's referred to as a cost segregation study can include an immediate increase in cashflow and a reduction in your current tax liability. That means the deferral of your taxes. Fourth, the ability to reclaim missed depreciation deductions from prior years. You can do this without having to amend the tax return. Cost segregation is based on a fundamental principle and that is that a dollar now is worth more than a dollar tomorrow. This is also something known as the time value of money. This same logic can be applied to tax deductions because a tax deduction now is worth more than a tax deduction tomorrow.
The major advantage of a cost segregation is not necessarily that it will produce more depreciation deductions for you. Instead due to the time value of money, the advantage of these front-loaded deductions can be quantified and is greater than had you taken those deductions spread out over longer periods of time using slower depreciation methods. By accelerating a property's depreciation, you as an investor or any property owner can lower your tax liability and thereby realize a significant increase in cashflow because it's more money in your pocket, more dollars. A larger cashflow is a great thing because that's one of the main reasons why we invest in an income-producing real estate is for the cashflow and then the equity growth over time. My guest and I are going to dive into the topic a little deeper, so you can learn more about the tax savings available to you through this.
If you missed our last episode, be sure to listen to High Performance Habits For Investors - Brendon Burchard (Part 2).
Enjoy the show!
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How to Pay LOW or NO Taxes Using Cost Segregation It's my pleasure to welcome Alan Goldstein to the show. Alan is the Founder of Emunah Cost Segregation. He is also an IRS enrolled agent, a Florida real estate broker, a Florida mortgage broker and an expert in depreciation. He is out to help taxpayers legally pay no taxes or very little on their real estate investments. Alan, welcome to the show.
Thank you. I'm glad to be on your show.
I'm excited to have you because in my conversation with you,
Brendon Burchard, author of The Motivation Manifesto and High Performance Habits, is widely considered the world's leading high-performance coach, and is one of the most watched, quoted, and followed personal development trainers in history. As one of the most followed public figures on Facebook, his videos have been viewed more than 100 million times. This is part two of the interview where he shares the six high performance habits for investors for reaching long-term success. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Welcome to the part two of High Performance Habits for Investors with Brendon Burchard. For those of you who haven't read that episode and are joining us for the first time, I do suggest reading episode 118 part one first. Brendon is widely considered the world's leading high-performance coach. He's one of the most watched, quoted and followed personal development trainers in history. He's also one of the most followed public figures on Facebook and his videos have been viewed more than 100 million times. He's got a lot of students. More than two million students have completed his online courses and his video series. He has got some great books out there, High Performance Habits. I highly recommend it. I'm honored to have Brendon on the show. Let us continue with my interview with Brendon Burchard.
If you missed our last episode, be sure to listen to High Performance Habits For Investors - Brendon Burchard.
Enjoy the show!
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High Performance Habits For Investors - Brendon Burchard (Part 2) In summarizing the first high performance habits, seek clarity. I like to think about how that applies to real estate investors and entrepreneurs who are joining us on the show. We're talking about developing skills and strengthening those skills, setting goals, creating a roadmap and executing on those goals. Be the person you want to become. One thing you were saying, and I don't know if it ties in directly to this habit but you, at one point you talked about replacing certainty with curiosity. I love that so much. You can't learn if you think you're certain or comfortable or confident about something. If you live life with a mindset of curiosity, you're always open to learning more new things.
This was a surprise, especially in the personal development industry. Lots of people are running around saying, "You want a life with certainty but the problem is if you get it, you'll be miserable." There’s never, “You're never going to get it.” It's also the wrong target. In a world that's constantly changing and relationships that are constantly evolving, you're never going to be fully certain of anything including yourself. If you are certain of yourself, you've got an ego problem. What we want are genuine confidence and intellectual curiosity. This is what the data showed as well. Confidence is I believe in my ability to figure things out. Real confidence is the ability that I know I can learn or adapt to do well here. It doesn't mean I know everything. It doesn't mean I'm certain how it's going to go. It means I trust in my ability to learn or adapt and over a period of time, I'll do fine here. I'll make it through. I'll survive.
The difference is when we ask high performers to rate the things that were most important to them, curiosity was way up there. They felt that was a differentiator. Curiosity makes you learn. It makes you seek clarity. It makes you better in relationships because you ask people questions. If you ask people questions,
Imagine at the end of your life you were standing before your Creator and he asks you, “Did you use the time I gifted you each day to be a purposeful being? Did you follow your own path and make your time count? How faithfully did you tend to the dream I sowed in your soul?” This excerpt from The Motivation Manifesto beg the question of whether you're engaged in the right habits to achieve your highest potential. When was the last time you stopped to ask yourself these or similar questions? Brendon Burchard has spent many years helping others achieve their highest potential. His lessons are researched-based and immensely practical and will make a big difference in your life. As one of the most requested motivational speakers in the world, Brendon has shared the stage with the Dalai Lama, Sir Richard Branson, Tony Robbins, and many of the leading influencers of this era. Learn about the most effective habits for reaching long-term success as Brendon outlines the six high performance habits that move the needle the most in helping you succeed. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Imagine at the end of your life you were standing before your Creator and he asks you, “Did you use the time I gifted you each day to be a purposeful being? Did you follow your own path and make your time count? How faithfully did you tend to the dream I sowed in your soul?” This excerpt from The Motivation Manifesto begs the question of whether you're engaged in the right habits to achieve your highest potential. When was the last time you stopped to ask yourself these or similar questions?
My friend, Brendon Burchard, has spent many years helping others achieve their highest potential and I know he can help you too. His lessons are researched-based, immensely practical and I know they will make a big difference in your life. As one of the most requested motivational speakers in the world, Brendon has shared the stage with the Dalai Lama, Sir Richard Branson, Tony Robbins and many of the leading influencers of this era. In this episode, you're going to learn about the most effective habits for reaching long-term success. It turns out that six habits move the needle the most in helping you succeed.
If you missed our last episode, be sure to listen to A Holistic Approach to Wealth Creation.
Enjoy the show!
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High Performance Habits For Investors - Brendon Burchard It’s my pleasure to welcome Brendon Burchard. He is widely considered the world's leading high-performance coach. He is one of the most watched, quoted, and followed personal development trainers in history. He is one of the most followed public figures on Facebook and his videos have been viewed more than 100 million times. More than two million students have completed his online courses and video series. I had the pleasure of spending over three hours with Brendon at one of our mastermind meetings and it dawned on me that his message is perfect for my audience and that's you. It is my great honor to welcome Brendon to the show.
Thank you for having me, Marco. I'm pumped.
You are an awesome public figure and your content is so amazing. I'm not sure if you have more than three books. I have all three of your books and I've gone through The Millionaire Messenger. Is that the title of the first one?
Yes.
I'm halfway through High Performance Habits and it's absolutely fantastic. I highly recommend everybody to get a copy.
We're six books in now and each one is a labor of love because it's a ...
The banking business is literally thousands of years old, but the idea of becoming your own banker originated with a guy named Nelson Nash. The concept, in its simplest form, is you create your own private banking system by saving up some money somewhere then use this pool of money to finance everything in your life. If you think about it, it makes perfect sense regardless of what you do in life. Whether you spend your money or invest it, you have to use a banking system to facilitate the transaction. All of the money in the world goes through someone's bank, and advocates of the banking concept argue that you should keep and set up a "private bank" of your own that you use. It's what is known as the infinite banking concept, a strategy that allows people to both save their money and then borrow their money or borrow against their money. MC Laubscher, creator and host of the Cashflow Ninja Podcast and president of Producers Wealth, is on a mission to help you achieve financial independence and freedom as soon as possible. MC elaborates a little more on the concept of wealth creation and the holistic approach to doing it. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
The banking business is literally thousands of years old, but the idea of becoming your own banker originated with a guy named Nelson Nash, or at least that's what a lot of the marketing literature says now. The concept in its simplest form is you create your own private banking system of sorts by saving up some money somewhere. Then use this pool of money to finance everything in your life. If you think about it, it makes perfect sense regardless of what you do in life. Whether you spend your money or you invest it, you have to use a banking system to facilitate the transaction. All of the money in the world goes through someone's bank and advocates of the banking concept argue that you should keep and set up a "private bank" of your own that you use.
It's what is known as the infinite banking concept, and I know many of you have heard of this concept. I've had a couple of episodes where we have explored the idea and talked about infinite banking. The idea behind infinite banking is for you to be your own banking system through dividend-paying permanent life insurance. That's a mouthful. Don't get confused, don't get lost, and don't get turned off by it because it's a very simplistic thing. It's just the way to properly describe it. Instead of an institution or an individual having control over your finances, you take back that control and control of all the banking functions you do every day. Infinite banking is a strategy that allows people to both save their money and then borrow their money or borrow against their money. You ultimately become the bank and you control what goes in and what comes out.
To elaborate a little more on that, I've invited one of my friends and past guests to join me once again to explore this holistic approach to banking and wealth creation. Since he's a new sponsor of the show, M.C. Laubscher who's the creator and host of the Cashflow Ninja Podcast and President of Producers Wealth is on a mission to help you achieve financial independence and freedom as soon as possible. He achieves this by integrating this infinite banking concept that we talk about in real estate investments to increase your money's efficiency, the returns, and recapture that cashflow and that way you're not even aware that this is going on. You can put it on autopilot but more importantly, a lot of people are not even aware that they're losing money, and this is a way to put a plug in that. M.C. shares the number one strategy of investors in this holistic wealth creation course at YourOwnBankingSystem.com. With that, we're going to invite M.C. on the show and we are going to explore this holistic approach to wealth creation.
If you missed our last episode, be sure to listen to Multi-Family Real Estate Inve...
Full-time entrepreneur, investor, and coach, Michael Blank shares great insights and information about his main focus, multi-family real estate investing. Taking us from the beginning of his journey to settling with multi-family investing, he provides the pros and cons he has learned along the way. He provides some contract to investing in residential real estate, the one to four-unit properties. He shares his thoughts on the market value of properties and what determines it; why most people don’t involve in large real estate business; and how to find deals. Pushing forth the value of appearing experienced, he urges to get yourself educated and to build a team around you that will help you forward. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
On this episode, I wanted to do something a little different. I want to bring on a friend of mine named Michael who started off with single-family home investing and moved up into larger multi-unit properties. Generally speaking, we refer to that as a multi-family real estate, but for all intents and purposes, we're talking about apartments. I wanted to bring him on to give some contrast to investing in the residential real estate, the one to four-unit properties. When we talk about multi-unit properties, we're talking about two categories. There are the small multi-family properties, which are properties that contain two, three, or four units. Then we're talking about large multi-family properties and those are properties that have five or more units.
When we get into five or more units, we're referring to commercial properties. These are properties that don't qualify for residential or conventional financing. You’re talking about commercial properties fall under different guidelines when it comes to financing. The appraisals are more complicated and they're certainly far more expensive. Inspections are different. They're more expensive. Everything with multi-family, meaning apartment or commercial-based properties are more expensive and more complicated. There are more moving parts. They’re typically a slower transaction. They're taking longer escrows. They have pros and cons.
When you ask yourself the question, “Where should I start or which is better?” The answer almost always is, “It depends.” There are many factors that go into that decision. Most people, especially most people that we deal with as clients, are interested in and build portfolios of single-family homes, duplexes, triplexes, and fourplexes. Often, it's because they're more affordable, they’re easier to understand, and financing options are better because you have 30-year loans instead of your 25-year commercial loans. Thirty-year fixed loans are exactly that. They are fixed at a particular rate. Whereas the commercial loans that are amortized over the shorter 25-year period have five-year terms.
At the end of that term, you have to refinance that loan or extend or change the terms by renegotiating with the lender. Essentially, you're getting a new loan every five years with a shorter amortization period. The calculations are still based over 25 years, but you're having to go back and reestablish the terms every five years. In general terms, the pros of multi-family investing are more possibility for cashflow. This is a scalability thing. It's dependent upon the size of the property. Second is you have one loan or mortgage that covers multiple units. Keep in mind this is also true for two, three and four-unit properties as it is for 50-unit and 100-unit properties. You also have one insurance policy.
These pros and cons are not necessarily big things or big deals. They are just factors to consider. It's the difference between having one insurance policy on a twenty-unit building versus having twenty insurance policies for twenty single-family homes or duplexes or five fourplexes. The thing is it's not that big of a deal. You get the policy,
Brett Swarts, president of Capital Gains Solutions LLC, helps break down real estate taxes and offers some tips on what you can do to minimize them in a legal way. He talks about capital gains tax and how through deferred sales trust, the investors achieve freedom, liquidity, and diversification with their funds. Covering also 1031 exchange, he discusses its advantages and disadvantages in commercial real estate. Learn how both are different and when it is the best situation for both. Know your role in the process and the perspective to take while keeping in mind the solutions to some of the issues or problems that may arise. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
We’re going to talk about taxes. This is something you want to hear about because nobody likes to pay taxes especially more than you have to. When it comes to the sale of real estate or businesses, if you’re a real estate investor or business owner, at some point in time you’re going to want to sell or trade your business or your real estate. At that point, it becomes a struggle because you’re going to be forced to pay capital gains tax on those assets that you sell. Most of us are familiar with the 1031 exchange and that's not what this episode is about, but whether you're familiar with it or not, this is something that you should learn more about. There are other options out there as you're going to learn.
The problem with a 1031 exchange is, first and foremost, you're tied to a timeline. You have 45 days to identify the properties that you want to trade or purchase. The second thing is you have only 180 days to close on them. It's sometimes a bit of a struggle for investors, feeling pressured, rushed or trapped and forced to make quick decisions because of those rules and regulations around that tax-deferred exchange. It's only one option that has limited flexibility. What if you can do a tax-deferred sale and have complete control over those funds to do almost anything you want and stretch out the payment cycle for those funds?
If you missed our last episode, be sure to listen to Heads I Win, Tails You Lose with Patrick Donohoe.
Enjoy the show!
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Another Way to Defer Your Capital Gains Taxes It's my pleasure to welcome Brett Swarts to the show. Brett is the president of Capital Gains Tax Solutions LLC located in Sacramento, California. Brett provides trustee services to help real estate and business owners win over their capital gains tax and achieve liquidity and diversification with their funds so they can create and preserve more wealth. Brett, welcome to the show.
Thank you, Marco, for having me. It's my pleasure.
It's great having you on. Brett, you have an interesting past and you have an interesting fit in this space which most people don't know about. Can you tell us a little bit more about yourself, what you do, and what the company does?
I’m the President of Capital Gains Tax Solutions. I’m one of thirteen exclusive trustees across the US who provide capital gains tax deferral education, in particular, on the deferred sales trust. The larger parent company I'm underneath is called the Estate Planning Team. That’s a team of about 1,100 plus professionals. It’s a mix of CPAs, tax attorneys, trustees, real estate brokers, financial advisors, escrow officers and QI companies. The sole focus is working as a team to help each individual client or business professional grow their business to help their clients defer capital gains tax and have options versus just may...
Americans are losing the money game. Freedom is our innate human tendency, yet that beacon of Americanism has dimmed over the last decade. It's an abstraction to some and a fantasy to others. Our society has replaced the foundational principles of self-reliance and entrepreneurship with security and dependency. The price we've paid for this transfer responsibility continues to compound. However, the opportunity to create financial freedom is far more available than it has been for your parents and their parents' parents. Patrick Donohoe, founder and CEO of Paradigm Life and PL Wealth Advisors, says it all starts with your financial education and your mindset. You may need to question everything you know about money and wealth investing in retirement, but it's available to you. Patrick talks about his new book, Heads I Win, Tails You Lose. His work centers on educating clients to reach their financial freedom by building wealth, creating cash flow, and establishing a legacy. Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Americans are losing the money game. Freedom is our innate human tendency, yet that beacon of Americanism has dimmed over the last decade. It's an abstraction to some and a fantasy to others. Our society has replaced the foundational principles of self-reliance and entrepreneurship with security and dependency. The price we've paid for this transfer responsibility continues to compound. It's evidenced by these incredible statistics. The US national debt is at an all-time high and has been for a very long time. It's currently over $20 trillion. Half of our earned income goes to taxes when you start to factor in sales tax, property taxes, utilities and inflation. Both Medicare and Social Security now comprise over 200% of our GDP, the gross domestic product. The retirement savings gap is at a staggering $14 trillion. Consumer debt is also at an all-time high at $20 trillion or over $20 trillion.
45% of the workforce has $3,000 saved for retirement, almost half of our workforce has only saved $3,000. Our outstanding student loan debt is over $1.5 trillion and to make that worse, student loan default rates are over 50%. This is a big problem that the government is going to have to step in and deal with. Employment satisfaction and engagement, which are critical because you need to love what you do and have a passion for it, are staggeringly low. If you don't believe me, just ask ten of your friends, but there is hope. The opportunity to achieve financial freedom and a life of fulfillment is available to more people now than ever before. We have the speed of communication, technology and the internet. Things have been democratized.
We have a great opportunity. The opportunity to create financial freedom is far more available than it has been for your parents and their parents' parents. It all starts with your financial education and your mindset. You may need to question everything about money, wealth, investing and retirement. I love the blockbuster movie, The Matrix. I use this movie as a metaphor all the time. Picture yourself in a similar seat as Neo with Morpheus extending his hand to you, offering you the following choice. He says, “You take the blue pill, the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes.” It all starts with your mindset and financial education. You may need to question everything you know about money and wealth investing in retirement, but it's available to you.
If you missed our last episode, be sure to listen to 7 Steps for Picking a Strong Real Estate Market.
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The US housing market continues to grow with rising prices and new construction supported by a strengthening domestic economy. According to new data released by the NAR, the National Association of Realtors, home prices are still rising. However, a rental property is only valuable to you if there is a person willing and able to use the property and pay you rent. If you buy a house standing by itself in the middle of a desert, the prospects of you finding a tenant are very poor. What you want is a hassle-free cash flowing property near lots of well-paid people. Those people want to live near their jobs and the amenities they enjoy. Learn the seven steps for picking a suitable and strong rental market.
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If you missed our last episode, be sure to listen to Loopholes Of Real Estate Investing with Garrett Sutton.
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7 Steps for Picking a Strong Real Estate Market The US housing market continues to grow with rising prices and new construction supported by a strengthening domestic economy. President Trump, love him or hate him, has plenty of options to boost the economic forecast and the housing markets from California to Texas to Florida. It's a seller's market across the country with persistent buyer demand. Despite gloomy housing forecasts, the last four years have completely missed the mark. It has been strong and there's a lot of growth, strong demand, and low inventory.
According to new data released by the NAR, the National Association of Realtors, home prices are still rising, although a lack of listings is suppressing sales. That means low inventory. It's been 35 plus straight months of declines in home sales. That means that the market is tight and continues to be tight, which makes it challenging if you're looking to buy a home. It’s great if you're a seller and if you're a real estate investor, we can feel the pain. If you're looking for rental properties, it's tight. How do you pick a market and properties that make sense for investment purposes? A rental property is only as valuable to you if there is a person willing and able to use the property and pay you rent. If you buy a house standing by itself in the middle of a desert, the prospects of you finding a tenant are very poor. You want a hassle-free cashflowing property near lots of well-paying people. Those people want to live near their jobs and the amenities they enjoy.
Loop Holes of Real Estate
For property to be suitable, it must be located in a market that passes the litmus test that I'm going to go over with you. It's the seven steps for picking a strong rental market. Regardless of the market that you're in, wherever your properties are located, you need asset protection. It is necessary and it is affordable. No one wants litigation, but it happens. It's part of life. Corporate Direct has protected thousands of clients for over 30 years. Corporate Direct is owned and operated by attorney and author, Garrett Sutton who has written the bestsellers, Loop Holes of Real Estate and Start Your Own Corporation. It's important that you have the formalities of your entities in place and properly set up. They need to be current. If you haven't done your annual minutes or followed the other formalities, Corporate Direct has a corporate cleanup service. Give them a call or visit them at CorporateDirect.com. Their phone number is (800) 600-1760. Get a free fifteen-minute consultation with an incorporating specialist.
Real estate becomes an asset when it brings you cash flow. As a real estate investor, you'll be putting other people's money to work for you. When we talk about loopholes of real estate, we're talking about the financial tax and legal advantages of investing in real estate as a passive income earner. It has been successfully utilized by many investors to protect and maximize their real estate investments. Loopholes provide for the defense of your valuable real estate. From a tax perspective, there are real estate loopholes to be opened. Smart investors know how to open those loopholes to their maximum advantage. From the legal side, there are real estate loopholes that need to be closed. When you learn when to open and when to close loopholes, you become a successful and even a sophisticated real estate investor. Bestselling author and Rich Dad advisor Garrett Sutton discusses the loopholes of real estate investing. Garrett has been practicing corporate law for more than 35 years, assisting real estate investors and entrepreneurs in protecting their assets and maximizing their financial goals.
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Real estate becomes an asset when it brings you cashflow. As a real estate investor, you'll be putting other people's money to work for you, like your lenders and tenants. When we talk about loopholes of real estate, we're talking about the financial, tax and legal advantages of investing in real estate as a passive income earner. It has been successfully utilized by many investors to protect and maximize their real estate investments. When you learn about the ins and outs of real estate investing, you're going to quickly learn that as long as your property is cashflow positive, you can write out any downturn that may occur in the real estate market. Recessions don't matter when your property is in a good market, a good location and is cashflow positive.
The great news is that you don't need a lot of cash reserves to get started. Risks can be efficiently managed and eliminated. It can certainly be managed through insurance, legal structures and other common strategies that are not difficult nor expensive. This is something that you should not overlook. Loopholes provide for the defense of your valuable real estate. From a tax perspective, there are real estate loopholes to be opened. Smart investors know how to open those loopholes to their maximum advantage. From the legal side, there are real estate loopholes that need to be closed. When you learn when to open and when to close loopholes, you become a successful and even a sophisticated real estate investor.
If you missed our last episode, be sure to listen to A Property Manager’s Perspective On Real Estate Investing.
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Loopholes Of Real Estate Investing with Garrett Sutton It's my pleasure to welcome Garrett Sutton to the show. Garrett isa bestselling author and one of Robert Kiyosaki's Rich Dad Advisors. Garrett has been practicing corporate law for more than 35 years. He has assisted real estate investors and entrepreneurs in protecting their assets and maximizing their financial goals through his two companies, Corporate Direct and Sutton Law Center. He received hisBusiness degree from the University of California, Berkeley, and earned his law degree at Hastings College of Law in San Francisco. Garrett, welcome to the show.
Thanks, Marco. It’s a pleasure to be with you.
It's great having you on.
Your property managers are your asset managers. They take care of your property, fill vacancies, maintain the property, take care of the tenants who are your customers, and deal with the law and liability. They need to be understanding of the environment, speaking of the law and liability. Dave is the co-founder of Great Jones, a venture-backed business on a mission to make property management efficient, effective, and delightful for owners regardless of their portfolio size. He has a lot of industry exposure and experience. He was the director of construction for FirstKey Homes, a massive company that has purchased an untold number of homes. He oversaw operations across ten markets. Before that, he was the regional director of another massive company called Waypoint Homes. Dave talks about building his own company and gives his perspective on real estate investing.
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I wanted to get inside the head of a property manager and find out his perspective on real estate investing. During this interview, we bounced around talking about different things. We started off talking about him in this great venture that he has started. He built a company called Great Jones, which they planned to take nationwide as a property management company with some very unique services that come from the corporate world actually from Wall Street because he used to be with Waypoint Homes which is part of Starwood. You might know the hotel chain Starwood and they used to be with FirstKey.
He comes from a background of publicly-traded companies and companies that are backed by tens of millions of dollars. These companies were literally buying thousands and thousands of properties. In fact, he was part of that whole acquisition, which is still going on but he decided to branch off and start creating a nationwide property management company. It's small but this guy has got the smarts and his team got the smarts to make this a very big deal. You think about property management, I talk about this often and they're not just your property manager. They're your asset managers. They have to take care of your property, fill vacancies, maintain the property, take care of the tenants who are your customers and deal with the law and liability. They need to be understanding of the environment speaking of the law and liability.
If you missed our last episode, be sure to listen to Mindset Matters! Leveling Up Your Life Through Real Estate Investing.
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A Property Manager's Perspective On Real Estate Investing Dave Diaz is the Co-founder of Great Jones, a venture-backed business on a mission to make property management efficient, effective and believe it or not, delightful for owners regardless of their portfolio size. He was the Director of Construction for FirstKey Homes. For those of you that don't know FirstKey, they are a massive company that has purchased an untold number of homes. He oversaw operations across ten markets and before that he was the regional director of another massive company called Waypoint Homes. He has a lot of industry exposure and experience. Dave, welcome to the show.
Thank you so much for having me.
It’s my pleasure. You have a tremendous amount of experience. I'm completely intrigued with all the things you've done and where you've been. Tell us a little bit more about your background and experience, so our readers have an idea of where you're coming from and what you're going to be trying to do...
Warren Buffett once said, “Until you can manage your mind, do not expect to manage money.” Warren Buffett is correct. Without the right mindset, it would be difficult to become a successful investor. Getting into the field of property investing, your mindset matters and it plays a very important role in leveling up your life. Paul Thompson used to have a corporate day job but now he's a full-time real estate investor who lives to help others find their way. When Paul realized that the perfect time to start investing was never going to come, he simply switched his mindset and jumped in. Now, he's doing three deals a month and is able to help himself as well as others build wealth and passive income with cashflow. Paul tells his personal story of securing twenty plus deals in his first eighteen months of investing to serve as an inspiration for everybody else.
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Warren Buffett once said, “Until you can manage your mind, do not expect to manage money.” Getting into the field of property investing, your mindset plays a very important role. You need to think like a successful person in order to gain access. People are largely driven by their subconscious and typically, they’re consciously unaware of why they think the way they think or feel the way they feel, such as being angry or being happy. I'm guilty of this from time-to-time. This is influenced by many factors such as our environment, past events, education, memories, values and attitudes, past decisions, and beliefs, but mindset matters. This is the most important concept.
Warren Buffet is correct. Without the right mindset, it would be difficult to become a successful investor. Whether you listen to financial gurus or trainers or entrepreneurs, they all say the same thing, that your mindset contributes 60% to 90% of your success. Only the actual number varies here depending on who you ask, but the rest is mechanics and knowledge. Do you think that great investors such as Warren Buffet or even Donald Trump think differently than most other people? I’ll bet money that they do and I would think you agree with me here. A study was once concluded that if all the wealth in the world was taken away from everybody and distributed equally to all the people in the world, it would probably take less than ten years until exactly the same people who had no or little money before would be poor again and the same people who were rich before would all have their wealth back.
One of my goals is to learn from some of the people that are very successful out there. I want to talk to a wide variety of people, from the most high profile people such as one of my most recent guests, Rich Dad Advisor, Ken McElroy, to some of the youngest ambitious entrepreneurs in the early years of their real estate investing journey. My next guest may not be all that young, but he’s certainly doing well with his real estate investing. He’s got a great mindset for success after making the decision to leave corporate America for something bigger and more rewarding. Let's hear what he has to say about mindset and real estate investing success.
If you missed our last episode, be sure to listen to Ask Marco! – Negative Cash Flow, Multi-Family Housing
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Mindset Matters! Leveling Up Your Life Through Real Estate Investing He used to have a corporate day job, now he's a full-time real estate investor who lives to help others find their way.
Sometimes, it can be unfortunate to find how so much focus is given on academic and professional education without having to recognize the importance of financial education. In our lives, not only do we live everyday pursuing our goals, but we also have to live a life full of financial matters. That is why as we have often seen, most still find themselves financially insecure and experiencing negative cash flow. And as we put it here, “Ignorance is expensive.” The good thing is we can always change that. Marco answers some of your real estate and other financial-related questions, touching on topics like investments, portfolios, financing, multifamily housing, funds, appraisals, and more! You’ll find yourself learning so much more and getting some insider tips on navigating your way to financial freedom.
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If you missed our last episode, be sure to listen to Unlocking Home Equity Without Monthly Payments To Grow Your Portfolio with Jim Benavidez.
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Negative Cash Flow, Multi-Family Housing and More I’m back from Sandestin, Florida. I was there presenting to a group of professionals, mostly dentists and some doctors. We talked about investing and everything related to that. My main presentation there was about how to achieve extraordinary returns with real estate investing, which is exactly what we talk about all the time and what we do here. It was interesting to see. I was in a room of well-educated people who are fun, bright and great at what they do in their profession. It reminded me of the fact that our education system, our school system, the things that we're exposed to focus on academic education and professional education.
There's still such a lack of financial education, which is why these masterminds form all around the country. They come together in an effort to help one another, help each other and learn everything they can about investing. Whether it's real estate, the stock market or alternative investments and asset protection, financing and the economy and where interest rates are going. These are things that I enjoy learning about. Maybe you don't, maybe you have a partial interest and you learn what you can from books, from podcasts and whatnot. The more you learn, the more you earn, that's the general saying. During that presentation that I did to this group, I asked the question early on in my presentation I said, "Finish the following sentence, ignorance is blank." I paused for a moment and everybody said, “Bliss,” almost at the same time. No one answered the question properly, at least no one answered that question the way I wanted it answered, and the answer that I gave them was, ignorance is expensive.
You don't know what you don't know and what you don't know is costing you money. It's costing you the opportunity. It's costing you time. When you understand an investment or an investment strategy, then you understand what to look for. You know the difference between a good investment and a bad investment or a great investment. Good is the enemy of great. You don't want a good investment, you want a great investment. I like to say that ignorance is expensive, it's not bliss. Bliss is sticking your head in the sand. Understanding that ignorance is expensive motivates me to learn more, to expand my knowledge, to read more books, to listen to more podcasts and audiobooks, to explore and experiment with new things.
Negative Cash Flow: You don’t know what you don’...
What if you could convert a portion of your home equity into immediate cash that you can use for any purpose, and what if there were no monthly payment requirements on that immediate cash? Jim Benavidez invests alongside with you in your home. It’s what’s called a home ownership investment, and because it's an investment and not a loan, there are no monthly payments at any given time on the money they provide you. In fact, there are no payments at all until you sell or refinance the home, and that can be up to 30 years later. Learn more how you can unlock home equity without monthly payments to grow your portfolio.
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What if you could convert a portion of your home equity into immediate cash that you can use for any purpose? What if there were no monthly payment requirements on that immediate cash? The program we're going to be talking about is unlike anything you've seen before. Our guest invests alongside with you in your home. It's called a home ownership investment and because it's an investment and not a loan, there are no monthly payments and there are no monthly payments at any given time on the money they provide you. In fact, there are no payments at all until you sell or refinance the home and that can be up to 30 years later. You are allowed to pay it off any time after the third year but think about that. No monthly payments for up to 30 years. I will tell you that I am a client and I have found the experience to be very smooth, professional, and pleasant. I like to think that this is one of the best kept secrets because it allows you to borrow cash today using tomorrow's dollars and that is where inflation becomes a friend of yours, by paying something off in the future with cheaper, inflated dollars. Let’s talk about it with my guest.
If you missed our last episode, be sure to listen to Investing As A Working Professional with Lane Kawaoka
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Unlocking Home Equity Without Monthly Payments To Grow Your Portfolio with Jim Benavidez It's my pleasure to welcome Jim Benavidez to the show. Jim is a Regional Manager for Unison, a home ownership investment firm founded back in 2004. Jim has worked with retail mortgage companies and wholesale companies and been in that space for nineteen years. He's worked with companies such as Merrill Lynch and Bank of America. He is responsible for the training, onboarding, and the overall support for new lenders as Unison expands into this residential real estate market. This is going to be a very exciting episode for you because it's going to unlock a lot of potential for you as an investor to grow and expand your portfolio. Jim, welcome to the show.
Thank you very much, Marco. I appreciate it.
Thanks for coming on. I was thinking about bringing you on months ago when I first became a customer of yours because I wanted to try out your program and I have to say that I didn't quite understand it at first. It took me a little while to fully understand it. Once I understood it, it was great. It was an a-ha moment because if you're a smart investor, you can figure out a way to take advantage of equity that you could borrow with no monthly payments. For our audience, just expand a little bit on your background and what led you to Unison please.
I've been in the mortgage business. I started off in the wholesale business as account executive and was basically responsible for building out a team of lenders to work with on that side and promotin...
Go to school, study hard, get a good job. That’s the linear path that a lot of people start on. After getting an engineering degree, Lane Kawaoka started working in the day job as a construction supervisor and bought a house pretty quickly. But he was never home because he was traveling all the time for work, so he started renting his home out. Realizing how much passive cash flow he was able to pull from that got him started into real estate investing as a working professional. He currently has a portfolio of eleven single-family homes in places like Seattle, Birmingham, Atlanta, Indianapolis, and Pennsylvania. He's also a partner in a syndication that controls currently over 1,300 apartment and RV units. Lane has made it a mission to help people get off the corrupt Wall Street roller coaster and focus on main street investments with safer, higher returns that benefit the American middle class.
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I want to stop and thank each and every one of you for an amazing ride. We've been doing this podcast for over three years now and you've helped us make this show one of the top twenty podcasts on iTunes. Yes, the top twenty business podcasts available on iTunes, which makes up about 96% of the podcast market. We are ahead of guys like Tony Robbins, Suze Orman, Grant Cardone and the one and only, Robert Kiyosaki. Thank you all for your support and your time and being an audience to this show.
As a busy professional, it's unlikely that you have hours to spend sifting through markets and properties and looking for that so-called “best deal” or even your next deal. Being time poor, which probably describes most of us, shouldn't prevent you from growing and multiplying your hard-earned money. You don't have to do it yourself. If you're a busy professional or you're just thinking about investing but don't have the time, then you need the right team and you need the right mindset and you need the right guidance. Let's talk about that with my next guest.
If you missed our last episode, be sure to listen to Massive Growth And Profit In Residential Assisted Living with Gene Guarino
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Investing As A Working Professional with Lane Kawaoka It's my pleasure to bring on Lane Kawaoka to the show. Lane is a full-time civil engineer and a real estate investor from Honolulu, Hawaii. He has a portfolio of eleven single-family homes in places like Seattle, Birmingham, Atlanta, Indianapolis and Pennsylvania. He's also a partner in a syndication that controls currently over 1,300 apartment and RV units. After Lane’s parents got duped with their 401(k) in the stock market, he's made it a mission to help people get off the corrupt Wall Street roller coaster and focus on main street investments with safer higher returns that benefit the American middleclass. Lane, welcome to the show.
Thanks for having me.
It's great having you on. You and I seemed to have very similar investment philosophies and I love the work that you're doing and the articles that you write. I thought it was a good time to get you on the show and pick your brain a little bit about what you've done and how you've progressed as a real estate investor, especially from the state of Hawaii. You're investing literally thousands of miles away. Let's start the show off by learning about you. Tell us about your background and how you’ve got started investing in real estate.
I started on this linear path that a lot of people start on.
10,000 people a day are turning 65. Much more importantly, 4,000 a day are turning 85. Gene Guarino of Residential Assisted Living Academy is focused on investing in the mega trend of senior assisted housing. They find the right location, the best demographics, and they buy or rent a home and convert that into a senior-friendly, senior-safe home with grab bars, smooth floors, wide doors, and the like. Gene explains it's a residential home in the neighborhood which may have six to twelve seniors living in it with no sign in front being used as a group home for the elderly with caregivers 24/7. Gene exposes this exciting opportunity in a growing trend and talks about the real estate angle and the business angle of residential assisted living.
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This episode is interesting because we're talking about something that relates to massive growth. We're talking about a major demographic and population shift. Demographic changes in the United States have major implications for investment returns. You have to pay attention. This is something you need to start paying attention to. Of all the facets of economic life, a few are as predictable as the impact of population growth and age structure. Demographics are often ignored. I hear very few investors talking about it. Despite the influence they have or they can have, they have a major impact on the markets and on real estate, so you do need to pay attention. There are over 77 million Baby Boomers and every day, 10,000 of them turns 65 years old. I've heard this statistic a number of times and I'm sure many of you have as well, but that's a big number and their number one dilemma is housing.
That dilemma can be our opportunity, could be your opportunity. My guest and I discussed this opportunity that almost anyone can benefit from. I have to be honest, it's not for everyone, but it's good for you to know and to learn about it as this is a demographic shift in trend that will touch and affect everyone, including you. It's not a matter of if, it's a matter of when. We're all aging. We're all getting older and at some point in time, we're going to turn 65 and we're going to have a need for housing or different kinds of housing or housing assistance. This is something to certainly be aware of and pay attention to whether you're involved or not. Once you know how to capitalize on the tremendous need for senior housing, you'll have the tools and the knowledge to protect your family's future while you build a legacy for yourself, if you choose to do so. You don't have to, but you need to be aware of this. Keep in mind that this is not for everyone but I'd like you to read this because it's not only interesting, but it's a major demographic shift that needs to be on your radar, and you need to be aware of it.
If you missed our last episode, be sure to listen to Passive Income From Tax Lien Certificates
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Massive Growth And Profit In Residential Assisted Living with Gene Guarino It's my pleasure to welcome Gene Guarino to the show. Gene is the President and Founder of the Residential Assisted Living Academy. He has over 30 years' experience in real estate investing and in business. Now, Gene is focused on just one thing, investing in the mega trend of senior assisted housing. Having trained tens of thousands of investors and entrepreneurs over the past 25 years, Gene now specializes in helping others take advantage of this mega trend opportunity. Gene,
Investing in tax lien certificates is an alternative way to include real estate in your portfolio, at least another source of income. When a homeowner falls behind on their property taxes, the county or municipality where the property is located can place a tax lien against the property. A tax lien certificate is issued usually by the tax assessor's office, verifying that there is a lien in place and the amount of taxes owed on that property by the current owner. According to the National Tax Lean Association, an amazing estimated $14 billion in property taxes goes unpaid each year. This is a pretty broad market for investors that most people don't understand. Ted Thomas explains how you can diversify a little and generate some extra cash using these tax lien certificates. Ted is a Florida-based educator, publisher and author of more than 30 books. His home study materials are international best sellers and draw clients from as far as Europe and South America. Find out how you can earn and make more money through an alternative form of passive real estate investing.
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Investing in tax lien certificates is an alternative way to include real estate in your portfolio, at least another source of income. When a homeowner falls behind on their property taxes, the county or municipality where the property is located can place a tax lien against the property. A tax lien certificate is issued usually by the tax assessor's office, verifying that there is a lien in place and the amount of taxes owed on that property by the current owner. According to the National Tax Lien Association, an amazing estimated $14 billion in property taxes goes unpaid each year. This is a pretty broad market for investors that most people don't understand and this is something I personally have not looked into all that much. I understand it, I've looked at it, I've never pursued it, and then maybe I'll change my mind. When a property has a tax lien, it can't be sold or refinanced until the past due taxes are paid.
The lien certificate itself, however, can be purchased by you, the investor. This typically occurs through a public auction and it's organized and held by the county or sometimes the municipal tax collector’s office, but auctions can be held in person or online, which is what makes this an easier thing to do. I'm not saying it's easy, I'm just saying it's relatively easy. You wouldn't necessarily go to Zillow all the time to buy a property, but you could. If you know what you're doing, it becomes a lot easier. With certificates, they go to the highest bidder, so it's essentially an auction. My guest explains how you can diversify a little and generate some extra cash using these tax lien certificates.
If you missed our last episode, be sure to listen to Bitcoin, Blockchain And Real Estate. Oh My!
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Passive Income From Tax Lien Certificates It's my pleasure to welcome Ted Thomas to the show. Ted is a Florida-based educator, a publisher and author of more than 30 books. Over 75,000 clients have evaluated Ted's Quickstart Introduction in Secure Tax Lien Certificates. His home study materials are international bestsellers and draw clients from as far as Europe and South America. I've invited Ted onto the show to discuss about this lesser known form of passive real estate investing and that's what we all love because that's what I titled the show, Passive Real Estate Investing.
Everybody has heard of bitcoin, but some people really don't know what cryptocurrency is. Cryptocurrency is essentially a decentralized form of currency, and bitcoin is the market leader. The blockchain technology is the technology behind bitcoin. Blockchain and cryptocurrency expert Mike Freemen says the crypto revolution can bring money into the pockets of people who have never had a bank account and just skip that entire system. It's very liberating and powerful and the reach is virtually unlimited. Mike talks about bitcoin, blockchain and real estate, and says it's just a matter of understanding the uniqueness of what blockchain is and how that's going to apply to investing and real estate and contracts. Mike shares how his knowledge of blockchain technologies coupled with his investing experience allowed him to retire to Chile where he now spends his time advocating for freedom and seeking the next best way to cause more freedom in the world.
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Investing in cryptocurrency could be a good investment or it could not. With cryptocurrency being so young and the market being historically volatile, there is no real yes or no answer about the wisdom of investing in cryptos. It is with this in mind that we cover some pros and cons and some friendly but not professional advice here. Cryptocurrency, despite all its risks, is perhaps the most exciting asset of the 21st century, a decentralized digital currency that works on the very interesting and likely here to stay Blockchain technology. If you don't understand what all these gobbly goop words mean, we're going to define all of these things and what they mean. Trying to figure out what the Blockchain is or how it works is like the olden days of the internet when college students were asking,“What's a modem?What's this internet browser thing?Why do I need it to do my homework?” Trying to explain the future possibilities of the internet in the early 1990s is like explaining the future possibilities of Blockchain today. Blockchain, with all of its possibilities and what it will become, is not a fad.
If you missed our last episode, be sure to listen to Market Spotlight on the Quad Cities.
Enjoy the show!
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Bitcoin, Blockchain And Real Estate. Oh My! It's my pleasure to welcome Mike Freemen to the show. Mike is a student practitioner and a teacher of what it means to be free. After 25 years in the software industry and twelve plus years in investing, he knit together a life that includes everything he's passionate about. Mike had his head deep in cryptocurrency and Blockchain related technologies for a long time now. He's been interviewed on AM radio, spoken corporate settings, and in investment conference. He writes a newsletter about the block chain revolution. In 2017, his knowledge of Blockchain technologies coupled with his investing experience allowed him to retire to Chile where he now spends his time advocating for freedom and seeking the next best way to cause more freedom in the world. As of late, he's been educating people on the basics of cryptocurrencies and Blockchain technologies. In his spare time, he loves enjoying incredible Peruvian food and aims to be an extraordinary dancerof Argentine tango. That's an extremely great goal. Mike, welcome to the show.
Thank you very much, Marco. Great to be on.
It's great having you on, Mike. I want to start off by throwing a disclaimer or a cautionary comment out there.
Where’s the hotbed for real estate investing? Answer: the Quad Cities. Chris delves into buying and renovating luxury properties for the working-class folks. The Quad Cities, where Chris started, boasts very solid fundamentals. There's very consistent, strong returns on these properties. Single family up to four unit properties and the tenant base are pretty stable. It's not a more volatile market, like you're looking at major markets, like New York or Los Angeles.
There's just a really high demand for a good rental product in the Quad Cities right now, considering that a lot of smaller operators don't take good care of the properties they handle. There's not too big of a supply of the more, as Chris would call it, like a luxury product for these working-class folks - and Chris’s team provides just that. Want in on the game before it's too late? Learn how to hold your properties to a high standard so you can lease them up in two weeks!
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On this episode we are doing a market spotlight on the Quad Cities. The Quad Cities is a new market that we are introducing. I'm pretty excited about it actually because it's been tough getting inventory in many of the markets that we're in so we've had to actually research and find new markets to bring on in order to provide the rates of returns that we'd like to get as real estate investors. I just finished doing an interview with our provider out there. It's a great interview that I had with Chris. The thing with Quad Cities is a lot of people don't know much about it or where it's located, but it's an interesting market because it crosses over two states.It’s made up of four cities, has an interesting foundation, and has a lot of leading edge innovation that comes out of that market.
It's highly productive. The people are technically minded, it has an affordable workforce, so it's great for businesses that want to expand or grow there. It's an ideal place for a manufacturing. John Deere is one example of companies that are based out of the Quad Cities market. It is logistical hub. There's a lot of food processing and packaging that goes on there. It is one of the top five defense communities in the country. There's a lot of professional technical services. It actually is a growth region for high tech jobs, which was something that I've found to be interesting, not necessarily surprising. They have a 37 million people in a 300-mile radius, so it is definitely a large market. I refer to it as a tertiary market because that's what it is but given the access to people, places, population and jobs in that area, it's definitely not a small market. That's what we're going to be talking about. I think you might be interested in and excited about this new market. We're going to be getting some inventory here, but we're just in the process of onboarding them right now. Let's get to that interview with Chris.
If you missed our last episode, be sure to listen to Investing in Real Estate from Over 6,000 Miles Away
Enjoy the show!
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Market Spotlight on the Quad Cities I'd like to welcome Chris to the show. Chris is one of our newest providers in one of an interesting market that we have. It's what we refer to as the Quad Cities and I'm not going to steal any of his thunder. I'm going to let Chris talk about the Quad Cities. Chris, welcome to the show.
Thanks a lot for having me on. I'm excited to be here.
It's great to have you on.
How do you invest in real estate essentially as a solopreneur from over 6,000 miles away? Billy Keels is an international real estate entrepreneur, author, coach, and mentor. He sees opportunities where others often don’t in real estate. One thing that makes Billy interesting is that he works full-time for a Fortune 500 company in Barcelona, Spain, yet invests in US real estate from over 6,000 miles away. Billy talks about how he got started in long distance real estate investing, why he's doing what he's doing, how he's doing it, what's important to him, and what his challenges had been.
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Just when you thought you had the record for the longest distance in purchasing real estate property from California to Florida, investing over 2,600 miles away, someone comes along and beats that record and not buy a little but buy a lot, in fact more than double. In fact, my guest has been purchasing investment real estate here in the United States from over 6,000 miles away because he's in Spain and he's an interesting character; a younger guy with a family but he's got a full-time career with a Fortune 500 company. Yet he is a real estate entrepreneur and an investor. He came onto my radar and I thought, "This is an interesting story." How do you invest in real estate as essentially a solopreneur from over 6,000 miles away? I wanted to ask him some questions to get into his head as to how he got started, why he's doing what he's doing, how he's doing it, what's important to him and what his challenges had been? Some of that plays into what we all experienced and what we all do. An interesting guy, his name is Billy and we're going to talk to him here.
If you missed our last episode, be sure to listen to Top 10 Things Real Estate Investors Need To Know To Protect Their Assets with Scott Smith.
Enjoy the show!
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Investing in Real Estate from Over 6,000 Miles Away It's my pleasure to welcome, Billy Keels. Billy is an international real estate entrepreneur, an author, coach and a mentor. He sees opportunities where others don't in real estate. The one thing that makes Billy interesting is that he works full-time for a Fortune 500 company in Barcelona, Spain, yet he invests in US real estate from over 6,000 miles away. Billy, welcome to the show.
Marco, thanks so much. I'm looking forward to the conversation.
I'm looking forward to it too because you're an interesting investor. I want to call you a character because you do so many things, you speak so many languages. I want to start by learning a little bit about you and have our audience learn a little bit about you because we're going to talk about some interesting stuff. Tell us how you ended up in Spain of all places. Let's start there.
The short answer is love. I'm a guy from Columbus, Ohio. I moved around the US most of my younger life. I went to college in the Southwest of Ohio and after that I had a chance to work for a pretty amazing company that allowed me to work and travel throughout some 58 different countries in five years. After that, I didn't see myself going back to a normal 9 to 5. I was very fortunate enough to be accepted at a university in Paris. I moved to Paris. I went and learned how to speak French, danced Salsa and also learned more about wines. That was supposed to be a one-year sabbatical. I enjoyed it so much that I was fortunate enough to begin working at a different Fortune 500 but I left Paris,
Ownership of real estate has many benefits from an investment and tax perspective, yet there is downside risk. The value of real estate holdings can be used to cover damages awarded in lawsuits. It is important to consider asset protection strategies relating to real estate holdings in order to minimize that risk. Asset protection planning is a preemptive measures to reduce your exposure to future lawsuit risk. Scott Smith, owner of Royal Legal Solutions, says using the right tools to mitigate your exposure risk and liability is critically important. Learn more about the right tools and properly protecting ourselves.
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Ownership of real estate has many benefits from an investment and tax perspective yet there is downside risk. However, since the value of real estate holdings can be used to cover damages awarded in lawsuits, you don't want that exposure, so it is important to consider asset protection strategies relating to real estate holdings in order to minimize that risk. Asset protection planning is a way to reduce your exposure to future lawsuit risk. It encompasses insurance and how real estate is titled to make It and other assets less valuable, less vulnerable to the claims of individuals who may be able to sue you for something in the future whether it's frivolous or not. It is about preemptive planning, so the first place to start is with the property itself.
Since real estate investors are easy to identify, easy to sue, and appear to have deep pockets, being adequately insured is an absolute necessity. The second step involves the proper structure in which to hold the real estate. For investment properties, it is highly unusual to hold them in an owner's personal name. That is the wrong thing to do. I'm not an attorney, but any attorney will tell you holding title to real estate or any asset worth anything in your personal name is a big mistake. It's putting a target on your back. Holding property in one's personal name or jointly with a spouse places those personal assets and other investment properties at risk if a lawsuit results in damages being awarded. Using the right tools to mitigate your exposure risk and liability is critically important. You need the right tools. Let's learn more about properly protecting ourselves.
If you missed our last episode, be sure to listen to Limiting Beliefs About Money and Wealth with Buck Joffrey.
Enjoy the show!
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Top 10 Things Real Estate Investors Need To Know To Protect Their Assets with Scott Smith It's my pleasure to introduce to you, Attorney Scott Smith. Scott is the owner of Royal Legal Solutions in Austin, Texas. They are one of the top asset protection companies for real estate investors in the country and they provide niche advice for over 29,000 real estate investors representing most of the US states, withholdings of over $4.5 billion. He personally holds real estate in over ten of those states. Scott, welcome to the show.
Great to be here, Marco. Thanks for having me on.
It's great having you on. I haven't done an episode on asset protection for awhile and we are long overdue because there are a lot of things we can talk about as it relates to asset protection. It's such a critically important topic and one that a lot of investors don't like to talk about because of the fact that they could potentially get sued scares them, but you can't stick your head in the sand and avoid the topic.
Thousands of people, despite all their best efforts to succeed, grow, and thrive, end up failing financially. Our subconscious beliefs often work against us, setting up hidden obstacles in the way of achieving what we consciously think we want and blocking the path to our highest potential. It’s those money and wealth limiting beliefs that hurt us the most. These negative beliefs are the money phrases that we have all heard before and that many of us say consciously or even subconsciously all the time. You need to be careful because of these seemingly harmless phrases about money can interfere with the wealth building process, exactly what you're trying to work towards. Buck Joffrey, an accomplished surgeon, entrepreneur, asset manager, and bestselling author of 7 Secrets of Eternal Wealth, shares the most common limiting beliefs and created a roadmap in his course to help people towards their journey of investing on their own and ultimately financial independence.
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After working with thousands of investors over the past fourteen years when I'm creating more income, wealth, and freedom, I've seen firsthand that it is our subconscious beliefs that often work against us, setting up hidden obstacles in the way of achieving what we consciously think we want and blocking the path to our highest potential. Thousands of people, despite all their best efforts to succeed and grow and thrive, end up failing financially, feeling hopeless and clueless about what they do differently to bring about a better income.
It's the negative beliefs that are the subconscious beliefs that hurt us the most. These negative beliefs are the money phrases that we have all heard before and that many of us say consciously or even subconsciously all the time. You need to be careful. Some of these seemingly harmless phrases about money can interfere with the wealth building process, exactly what you're trying to work towards. Here're some of the most popular phrases about money that you hear other people say, maybe you say these yourself. The first one is “It takes money to make money.” This phrase is limiting at best and destructive at worst. How about this one? “Money doesn't grow on trees.” This belief sets people up to believe that money is scarce and difficult to earn instead of seeing money as being abundant, which it is. Here's another one, “Another day, another dollar.” How often have you heard that one? “The masses trade time for money.” This creates the belief that making money is a linear process directly connected to time.
How about, “Money is the root of all evil?” The real thing is the love of money is the root of all evil, but it has been misquoted so often for centuries that most people believe money itself is the root of all evil. It is not. “A penny saved is a penny earned.” There's a classic. This is a very dangerous belief as it puts a major emphasis on saving, and saving in itself is not bad, but the masses are so focused on clipping coupons and living frugally that they missed the major opportunities around them. “Money can't buy you happiness.” I've heard family members say this in the past. You don't get rich to get happier. You get rich for the financial freedom and time freedom that it brings you. If you're unhappy without money, guess what? You're not going to be happy when you have lots of it. Selfishness is a virtue. The masses are programmed from an early age to put the needs of others before their own.
That sounds like a spiritual thing, a spirit-driven philosophy, it's the worst advice you can get when it comes to money because once you acquire wealth, then you can volunteer your time and give back to charity. It's all about being, doing, having, and then giving. What about more money and more problems? Another myth. Another myth among the masses is the idea that millionaires are...
As a twenty-year veteran in the finance industry, Aaron has developed this concept of the evolution of the real estate investor. You can imagine it as an hierarchical structure or similar to what you might find in an organizational chart with a company. Aaron explains that it is an evolution where you start out working with real estate investors who spend money by investing in real estate, who then evolve to a position as a business owner in possession of several properties, to being a chief operations officer and having within their organization people that are going to work with new investors to market the properties and find more. He shares that understanding each level of this evolutionary structure will help make the team become more efficient in doing their particular tasks and also enable them to work in harmony with the other levels.
I wanted to do something a little different. I'm bringing on a good friend and one of our preferred mortgage bankers, mortgage brokers and mortgage lenders, Aaron Chapman. Aaron was on years ago, and we talked about non-owner occupied real estate investing and getting loans in the mortgage environment. If you haven't seen it, go back and read that episode because there's a lot of foundational information about mortgage lending there. He has this very interesting concept that he refers to as the evolution of the real estate investor. He explained this a couple of times and I found it very interesting because it's representing a hierarchical structure of what you might find in an org chart with a company, you, being the CEO of that company.
Aaron is a 20-year veteran in the finance industry and he focuses specifically and only on real estate investors. He does investment loans and he has a great team of a total of ten staff members that help him do these loans. He's been married for 22 years and has four kids. He's a very active guy and a lot of fun and he does a lot of stuff outside the investment and loan industry. He helps out with his local sheriff's department in the rescue unit. He has been doing this for nine years as a technical off-road and helicopter rappel rescue technician.
If you missed our last episode, be sure to listen to The Memphis Market and Our Next Investment Tour.
Enjoy the show!
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Evolution Of The Real Estate Investor Aaron, welcome to the show.
How are you doing?
I'm doing great. It's good to have you back on.
A lot has happened. So many things that have occurred and compressed and I talk about that as Aaron’s Theory of Time Relativity. When you are a kid, a day seems like a long period of time because you didn't have a whole lot of experiences to go from. We get later in life and three years seems like six months because we have so much going on all the time that you're compressing it all into that window of perception.
That’s why everybody says time flies. They seem to fly through the days and the weeks and then the month so quick. Your kids grow up so fast. I’ve noticed my daughter's approaching eleven years old and I'm still wondering, “What happened to five and six and seven?” It's a perceptual thing, because time doesn't change, but it keeps going faster and faster. The main topic of the show is this concept that you refer to as the evolution of the real estate investor. Start off telling us how that all came to be, because it's an interesting twist on how you view yourself as a business owner and as an investor.
It is in evolution. When you start out working with real estate investors, you start seeing that it's being reviewed like a consumer.
Memphis is a consistent and stable market. Mark brings back James, one of their team members out in the local market, to talk about the Memphis market and amazing things on the two-day Memphis investment property tour. He also talks about investing in Memphis and why it's such a great cash flow market. James and his team has renovated, purchased, and sold over 235 single-family homes in Memphis, Tennessee that cash flow well and rent for very high-dollar amounts, making the cash on cash returns very attractive. Learn more about how you can invest in Memphis on the next investment tour.
I want to talk about Memphis and our next upcoming Memphis Investment Tour. For many of you, you know that we did a property/investment tour. I believe it was around the September, October timeframe. If you go back to an earlier episode, you will know that we talked about the Memphis Market and why invest in Memphis and why it's such a great cashflow market. We can actually look back and talk about what we did on this two-day Memphis Investment and Property Tour because it was quite amazing. There was a lot of great content and education. We had some great speakers from all over the country and it was all packed into one and a half days. It's happening again. We're having another event in May and it's an opportune time because they happen to have this world-famous barbecue festival or event that goes on. The timing is purposely done to coincide with that event.
I brought James back on the show here. For those of you that don't remember, James leads the team that we work with in Memphis. They are a great company and a great provider in terms of putting out fantastic income producing rental properties. In 2017, James and his team purchased, renovated and sold over 235 single-family homes in Memphis, Tennessee. The average prices of those properties were a $101,000. We're not talking super expensive properties. They're affordable. They cashflow well. They rent for a very high dollar amount making the cash-on-cash returns very attractive. These are great income-producing properties. James and his team in conjunction with our team here work with investors around the world to help you guys create passive income. As one of our top turnkey providers and partners in the Memphis market, they've now ventured out into building some new construction homes. They've built 23, 24 and they are ramping that up. That's going to be a new thing that we're introducing to you as well as on this Investment Tour. I don't want to take all of James’ thunder. With that I want to welcome, James.
If you missed our last episode, be sure to listen to From Zero to 35 Rentals in 4 Years – A Client Success Story.
Enjoy the show!
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The Memphis Market and Our Next Investment Tour Welcome back to the show.
Marco, thank you so much for having me.
I appreciate you being on. I'm glad to have you back on and I'm excited to do this Memphis Investment Tour again with you. This time, let's flip the show around. Last time, we talked about Memphis first but let's talk about what we did last year and what we're doing this year on this on this Investment Seminar and Property Tour because it was really exciting to have all that content. Give us an overview of what's going on.
The Memphis Market: One of the best benefits of coming to an event like this is getting to speak with other investors who are already doing this.
Last October was a huge success. We had nearly a full bus. A bus only holds 50 people, so we're limited to 50 attendees and the tickets are going pretty fast.
On today's show, I have one of my senior investment counselors, Steve, and we will talk about what to expect when buying a turnkey rental property. We answer a lot of frequently asked questions and all of our clients, whether they're new or newbies or they are fully seasoned investors, have certain questions and certain expectations. They all want to know what the next step is and what to do at a certain point and what to do in certain situations and how to move the purchase along. We have certain answers for all these situations.
If you missed our last episode, be sure to listen to How Trump’s Presidency Could Affect Real Estate Investing.
Enjoy the show!
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What To Expect When Buying A Turnkey Rental Property
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. On today's show, I have one of my senior investment counselors, Steve, who's going to help me cohost this particular episode. What this episode is about is what to expect when you're buying a turnkey rental property. Let me explain what that means. We answer a lot of frequently asked questions and all of our clients, whether they're new or newbies or they are fully seasoned investors, have certain questions and certain expectations. They all want to know what the next step is and what to do at a certain point and what to do in certain situations and how to move the purchase along. We have certain answers for all these situations. They're pretty common across the board. We have this purchase process, if you will. On today's show, we're going to talk about some of the most common scenarios and what to expect with appraisals and inspections and a whole list of stuff. I have Steve on the line here. Steve, welcome to the show.
Hey, how you doing today?
I'm doing great. It's good having you back on. It's been a while.
It's been a while. I'm here, still alive and kicking.
I'm happy about that. That's good. As you heard me say, we're going to talk about some of the frequently asked questions or more about the expectations. They're not so much questions but what to expect in certain scenarios. I've scripted a bunch of items on a sheet of paper here. We're just going to go through those. They're more or less in a chronological order. What I'll do is I'll just throw out the topic, maybe you can comment or answer the question and then I'll provide my commentary and then we can just banter if need be and then we'll move on to the next one.
I'll answer it and we'd move on.
Let's start with the most general item. It's something we talk about a lot. In basic terms, what is a turnkey property?
That's a good question. It does cause some challenges if somebody comes to the table with certain expectations about what that is. The problem is that there is no correct definition. You go online, you research turnkey properties. There's a lot of different opinions about it. I think in general what it means is that everything is going to be done for you. That's probably something that everybody would accept as what a turnkey property is. You're going to buy a property that will be rehabbed and in rent ready condition. That usually means that the mechanicals and the major systems of the property should have I would say a minimum of seven years useful life left in them. You're not going to have to worry about any major expenditures like that for at least seven years. Your roof's going to be good, your furnace is going to be good.
Also, the property has had a cosmetic overhaul inside. These are rental properties, they're not going to get courts counters and a...
Having a plan of action is one thing, but sticking to that plan is another. Most investors lose motivation when they see a task that is too big for them to do. But Anton Ivanov had a clear vision of his goals. When his tasks where bigger than he can handle, he broke it down to smaller pieces. Anton inherited a condo and became an accidental landlord but then saw that turnkey investments is great for starting investors who want to go out of state. Now he owns 35 rental units across four states that generates passive cash flow. Anton shares his stories of beginnings and how he got his confidence in the real estate investment world.
I have an interesting episode because I have a special guest, but he’s more than a guest. He’s actually a past client. This guy has really impressed me. The reason is because he set out to acquire real estate and build a portfolio. He set some goals and he made a plan. Not only did he execute on his plan but he stuck to it. He stuck to it in a way that he actually surprised me. I got an email with the subject line, “Just wanted to say a HUGE thanks.” I was a little taken aback. At first I thought, “It’s a spam email,” and I was about to delete it but then I recognized his name. I opened it up and he basically said, “I want to reach out to you just to say thank you for all your help, guidance and advice you’ve given me in the few years back. It’s been absolutely invaluable.” That’s literally “right from his email.” One thing led to another and I wanted to get him on the show here to share his experience and a little bit about him and how he got started and why he chose the path he chose and how he built his portfolio. Everybody’s got advice and some wisdom and knowledge and I figured it would be invaluable for a lot of people to learn from him.
His name is Anton Ivanov. He is a real estate investor and an entrepreneur. He has built a 35-unit rental portfolio that’s spread out across four states. He lives in California, so these are not in California. He’s also the founder of an incredible app called DealCheck. It is dubbed the leading real estate analysis software and it is used by over 28,000 investors and agents to quickly analyze and compare investment properties. I actually was part of that beta test when he was developing it and it is excellent. I really enjoy using it and it’s outstanding. If you live off of an iPhone or a smart device, I really suggest putting that on your device because it’s useful. With that, I want to welcome Anton to the show.
If you missed our last episode, be sure to listen to Ken McElroy on The Economy, Finding Deals, Real Estate Myths, Property Management, and Achieving Goals Part 2.
Enjoy the show!
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From Zero to 35 Rentals in 4 Years – A Client Success Story Anton, welcome.
Marco, it’s great to be here. Thanks again for having me.
It’s my pleasure because you really, really impressed me how you built up a 35-unit rental portfolio when you had essentially zero when we first started. You inherited one property from your family and that was the starting point. With that interesting story, why don’t we start off by you telling us a little bit about you and how you got started with real estate investing?
Turnkey Investments: I basically became a landlord when I least expected it.
I’m actually originally from Russia and I immigrated with my family to Southern California, to San Diego in 2000, so I was in high school. I graduated high school and actually right after that, I joined the US Navy, active duty. I served for six years for the American Navy.
Cash flow can be generated in real estate with no tax, making it the best kind of investment. By looking at the potential of the property in ten years, improvements can be made to increase cash flow, cap rate, income and rate of return for investors. Ken McElroy, author of The ABCs Of Real Estate Investment, has always had a soft spot for home ownership. When people build homes, this equates to mortgage interest because the owners build equity on that home. Ken McElroy shares tips on getting your financial settings in real estate on track and staying on that course by simply starting small and in a neighborhood that you know.
This is Part 2 of my interview with Ken McElroy, Rich Dad Advisor. He’s a great guy, smart, full of wisdom, extremely successful. If you haven’t listened to the first episode with me and Ken, just listen to that episode. It’s number 95. We’re going to continue with Part 2 of my interview with Ken McElroy.
If you missed our last episode, be sure to listen to Ken McElroy on The Economy, Finding Deals, Real Estate Myths, Property Management, and Achieving Goals Part 1.
Enjoy the show!
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Ken McElroy on The Economy, Finding Deals, Real Estate Myths, Property Management, and Achieving Goals Part 2 You and I both look at job growth and population growth at a macro level when it comes to analyzing markets. Obviously, you probably do the same thing I do. I look at neighborhoods after that. That’s my next step. Regarding neighborhoods, do you have a neighborhood preference? Did you have to modify the types of neighborhoods that you’re looking at in order to find deals because of the cap rate compression and lowered inventories?
I take a little bit of a different view on this. What happens a lot of times with real estate investors is that they tend to go look for really good deals with low down payments. That’s not a bad thing. Usually, that’s on the outside of town. They’re trying to minimize their down payment. I completely understand that, but I do the opposite. I’m trying to find rental demand in affluent areas, so I’m going to be paying more.
For the most part, we like to stick to B, B+ type neighborhoods, maybe A- at least the way we categorize them. I see so many investors making the mistake, in my opinion, of investing in C and D type neighborhoods where we’re looking at $40,000, $50,000, maybe $60,000 properties. Call it per door, per unit, however you want to look at it. If it’s an apartment building, you’d still say it’s a $40,000 apartment. The challenge there, in my opinion, is you’re dealing with a tenant class and a demographic that is far more challenging. By putting less down in order to “save money” on your down payment is actually a huge mistake because you’re buying yourself headaches down the road. Is that how you feel about this?
Home Ownership: You can never manage your way out of a bad neighborhood. It just is never going to happen.
What I found is that while you might pay less, you’re going to have a lot more management problems. Honestly, not always. I’m a big fan of low-income housing. I think it’s needed and it’s necessary and it could be managed really, really well. I always try to say to people, “You can never manage your way out of a bad neighborhood. It just is never going to happen.” I met with the mayor of Phoenix and they had ten properties that they had targeted as bad landlords. I went and looked at them because I said, “Let me go take a look at them. Maybe we can buy them all and turn them all around and do some cash.” They have what’s called a private-public partnership op...
Americans can now retain both low income housing tax credit and private activity bonds with the new tax reform in act. This is a need that the government recognized so they created this tax break. Author of The ABCs Of Real Estate Investment, Ken McElroy deals with rental business but is a big fan of home ownership. While he understands why most investors look for good deals with low down payment, he does the complete opposite by finding rental demands in affluent areas because it will lead to less property management problems. Learn more on how you can start getting on track with you financial setting and how to stay on the course.
This episode is very exciting because I have a very special guest. A lot of you may know him. If you don’t, you’re going to get to know him. Ken McElroy is an extremely successful individual and one of Robert Kiyosaki’s Rich Dad Advisors. We had a great interview, chock-full of nuggets and wisdom. I just want to take a moment to thank everybody for the success the show has had over the last two and a half years. We have over 500 five-star reviews on iTunes US. Every country has its own iTunes store, so it has its own review and rating system. This is just the US. In speaking of other countries, we are also heard in over 125 countries. Thank you to everybody from as far as Israel, Australia, the UK, Portugal, France, you name it. It’s because of you that the show is a success. The reason I do it is to help share information, wisdom and knowledge with you.
Once again, I just want to say that we had an incredible 2017. It was our busiest year ever. We’re on track to make 2018 the same. We love helping real estate investors, people who are real estate investors or want to be real estate investors. If you’re one of those people that have been listening for a while, sitting on the fence, you’ve got some investable capital and you know you need to make a decision on your financial future, let us help you take it to the next level or let us help you get started. That’s what we’re here to do. Just schedule a free strategy session with one of our investment counselors. Have that initial 30 or 60-minute conversation to figure out where you are today, where you want to go, what is the plan and the path to get you there. We can take that roadmap and help you take it one step at a time to achieve those financial goals. It really just comes down to having a plan, executing that plan, and having a criteria that’s attached to it. It’s not that hard to do and we want to help you do it. In fact, I’m probably going to record a podcast episode about that topic. I will try to do that here in the very near future.
Last but not least, I’ve been very busy looking at underwriting some syndication deals as well. I’ve looked at a number of them last year. Unfortunately, they just didn’t meet my criteria and my underwriting basically just punted it out the door. One of them took over three months to underwrite. What we have on the table right now for people who are either accredited or are not accredited but have a smaller amount of investment capital, I’m looking to put together syndicated or group investments of ten-pack or twenty-pack single-family homes. That’s something that I have started working on. However, I’m probably not going to release or announce that for a month or two. Two opportunities I’m working on actively right now and that actually is open to accredited investors are cannabis-related investments. Believe it or not, real estate does play into some of those opportunities. You would have to just reach out to me directly for that information and I would need to connect with you via email and/or phone before I can send you that information.
If you missed our last episode, be sure to listen to Exploring New Markets.
Enjoy the show!
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Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
I'm going to do something a little bit different today. Recently, I was invited to be a guest on The Real Estate CPA show, which is hosted by Brandon Hall. If you recall, Brandon was a guest of mine on episode 90. That episode was titled Sheltering Your Rental Income from Taxes (and Other Tax Tips). Brandon is a sharp guy, a great investor, and CPA. He focuses on creative tax strategies but he’s really dialed into the whole tax scene and how to reduce your taxes as an investor. He invited me on his show and we had a great conversation about a lot of different things. Some of it is great review for investors and other questions that he had was great for virtually any investor listening in. I wanted to share that episode with you. I did get Brandon’s permission to re-air if you will that episode on my show. We talked about things like the biggest real estate investing myth, what drives different markets, and the market differences, how to choose a market. We talked about investing locally versus long distance, the macroeconomic factors in selecting a market and there are four of them. Those are good to know. The three kinds of markets at a spectrum, there are three categorizations for that. Different types of neighborhoods, what is an A, B, and C classification for a neighborhood. This is really what I tell people when I'm doing a live presentation. It’s some good material and a few other things. It’s a great interview and I wanted to share that with you. Without any further delay, I'm going to let that roll. Hopefully, you enjoy it and we will see you again next week.
If you missed our last episode, be sure to listen to Investing in Houston, Texas (and Hurricane Harvey).
Enjoy the show!
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Exploring New Markets - My Interview on The Real Estate CPA Podcast
Today, we’re going to do something a little bit different. I’ve got a guest that’s going to be joining me on the show today. His name is Marco Santarelli. He is the owner of Norada Real Estate Investments. It’s a turnkey real estate investment provider. He’s got some really cool things to say. We’re going to be exploring how do you pick investment markets, what investment markets he is currently in, and how do you go about picking the actual neighborhood that you want to invest in. Before we touch on that, a couple quick things: One, pay attention to the newsletter especially as these tax plans start coming out in the house in the senate. We’re going to be keeping everybody up to date with our newsletter. We’re analyzing the tax changes and how they might be affecting real estate investors, so just pay attention to that. The second quick announcement is that we’ve got two webinars coming up in November, one for clients and one for non-clients. It’s just going to be a walkthrough of the tax plans that have been proposed by Congress and how they're actually going to be affecting real estate investors as a whole. If you like the show, please leave us a rating on iTunes. We would love to hear from you. I'm super appreciative of everybody that has already left us ratings to date.
Today, our guest is Marco Santarelli. Marco is an investor, author and the founder of Norada Real Estate Investments and nationwide provider of turnkey cashflow rental properties. Since 2004, they’ve helped over 1,000 real estate investors create wealth in passive income through real estate. He’s also the host of the Passive Real Estate Investing podcast. Marco, how are you doing?
I'm doing good, Brandon. I'm glad to be here.
Thanks for joining us. Tell us a little bit about yourself.
Welcome back to another episode where we’re going to talk about the Houston, Texas market. One thing that we’ve been getting asked a little bit about recently is the effects of Hurricane Harvey. As you know, Hurricane Harvey ripped through the Caribbean and beat up some of the islands down there and hit the coast pretty hard. However, the good news is that there was no bad news. We haven’t heard from any one of our clients that had invested in the Houston market reporting any kind of flooding or damage. That’s a good thing. There’s really one key reason why that was, and we’re going to talk about that today with my guest, Bryan.
Houston is an interesting city. We’ve been there for many, many years. We’ve had a lot of happy clients and success there because it’s such an incredibly diverse and progressive city. It’s the nation’s fourth largest city, growing fast. It’s known as the city of infinite possibilities. It’s quickly approaching six million residents, that’s more than 32 states and it just continues to grow. Strong jobs, strong population growth, a friendly business climate, lots of cheap land to build on, it’s just a great market. Coupled with all that, we have a lot of what we refer to as STEM jobs. STEM meaning science, technology, engineering and math. When you have jobs in the STEM field, what you have are high paying jobs. Roughly 6% of employment in Houston is held by STEM job holders. That adds to equality rental pool, that just means more stable tenants. Houston is drawing businesses in from everywhere as well as new residents. These are not only people who are looking to buy and live there, but also people who are tenants. That’s good for you and I as landlords. That’s what we’re going to talk about today.
If you missed our last episode, be sure to listen to Passive Income with Syndications – Mauricio Rauld.
Enjoy the show!
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Investing in Houston, Texas (and Hurricane Harvey) It’s my pleasure to welcome Bryan to the show. Bryan is one of our team members and boots on the ground in the Houston, Texas market. We’ve been working with them for many, many years and have had tremendous success. Bryan, welcome to the show.
Thanks, Marco. It’s a great pleasure to be here.
The reason I wanted to bring you on, Bryan, is because of the recent hurricane in the Houston market. Actually, it hit a major coast line but that was Hurricane Harvey. I know we were talking off air about this briefly, but you had some really interesting things to say about it. I call it the elephant in the room, and to me, it’s just a big question. We’ve had a number of clients ask us this question. I will say that as far as I know, none of our clients who have invested in the Houston market have had any problems or reported problems of after effects from Hurricane Harvey, which is fantastic news. Let me throw it over to you and ask this question. How are things in Houston after Hurricane Harvey?
Investing in Houston: One of the things you will learn about Houston is how resilient this whole market is.
Marco, I think we’re doing very well. I think one of the things you will learn about, and people should know about Houston, is how resilient this whole market is. We manage a large number of rental properties. We manage 750 rental properties. Out of those properties, we only had fifteen that sustained any flood damage, so that’s 2%. Perhaps we were lucky but I think we really go out of our way not to acquire properties or build properties on land that is subject to flooding. There are some great tools that are available that we utilize all the time...
Robert Kiyosaki once said, “Finding good partners is the key to success in anything: in business, in marriage and especially in investing.” On this show, we talk a lot about passive income and passive investments and how to create wealth through those vehicles, especially real estate. What about partnerships or syndications?
Today, I want to explore the world of investment partnerships, they're also known as syndications, and how you can potentially participate and profit from them as well. What is a syndication? In its simplest form, a syndication is just a pooling of investor money where the investor is typically a passive limited partner. The other partner to the deal is really a general partner or an active partner. That’s the person that puts the deal together. They manage the business plan. They provide the return and the benefits to all investors. You'll hear general partner or GP often. They're also referred to as the syndicate or the sponsor. These terms are used interchangeably. At the end of the day, a syndication is nothing but a group investment. It’s a pooling of investment capital to put into an investment opportunity that is managed by a syndicator.
We have an amazing guest on today’s show, someone who I'm getting know quite well. In fact I'm meeting him for lunch here in a couple of weeks. We had a great opportunity to get to know each other recently. His name is Mauricio Rauld.
If you missed our last episode, be sure to listen to Deferring Taxes for Decades (and the Dangers of 1031 Exchanges).
Enjoy the show!
– – – – – – – – – – – – – –
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Passive Income with Syndications – Mauricio Rauld It’s my pleasure to welcome Mauricio Rauld to the show. Mauricio is the Founder and CEO of Premier Law Group, a boutique securities law firm. He’s a licensed attorney with over seventeen years of experience. His expertise is in private placements. He has helped clients raise well over $100 million in capital. He frequently shares the stage at conferences with world-renowned authorities such as Robert Kiyosaki, Ken McElroy, Tom Hopkins, Simon Black and economist, Peter Schiff. Mauricio, welcome to the show.
Thanks for having me, Marco. I appreciate it.
It’s great to have you on. I had the privilege of finally meeting you at a video recording studio in Phoenix where you and I are part of a curriculum for an upcoming Wealth Training Program along with some big names like Ken McElroy and Tom Wheelwright among several other high-profile names. Honestly, I felt like a small fish in a big pond there. It was my opportunity to just actually get to know you and invite you on the show because I know you're a wealth of information.
I appreciate that. That makes the two of us being a small fish in a big pond. Our good friends have some pretty impressive names and it was just a pleasure to be among those. It was great just to share some time at the backstage and we had a chance to chit-chat and get to know each other. That was really good. It was really great.
I'm actually looking forward to get to know you better and actually doing some work with you. Let’s start off with a little bit about you. Why don’t you tell us how you got into the world of real estate syndication?
I've been doing this for a while. After I graduated from law school, I did basically what every lawyer dreams of doing, which is I went to work for a fairly large law firm down in Southern California. I did a lot of securities work back then, but it was really litigation. I was doing all the court cases, depositions, trials, motions, all that fun stuff. Anytime somebody got into trouble,
I just got back from Memphis, Tennessee where I had a great three days there. We had a two-day event. The first day was all about education, getting to know new things about things related to real estate and real estate investing and taxes and whatnot. Then we had a great networking event that evening where I got the opportunity to meet a lot of investors from all around. In fact, we had one person there from Australia, we had a couple there from Hawaii, and it was fun. These people are there to learn and they're people who listen to this podcast and it was just a lot of fun to meet people who listen to and from their drive to work. It's great to put faces and names to people who are out there listening and educating themselves, learning to better their financial future and create financial freedom for themselves. That first day was all about education, the evening was all networking. We got to sit around and have something to eat and have a few drinks and just overlook the Mississippi River. It was just a great time.
The second day was all about a property tour. We got to go around the Memphis market, learn about various neighborhoods, get to see properties at different stages of the game; some being pre-renovation, some of them being in the middle of renovation, some of them having completed renovation. It was an exciting event. Then we had some more networking after that. It was great two and a half days of mingling and meeting other real estate investors.
One of the things we got talking about there was taxes and taxation and whatnot. The question comes up, “Why do people hate paying taxes?” One reason is because they just simply don’t understand them. Albert Einstein said, "The hardest thing in the world to understand is the income tax." Aside from that, we just simply don’t like to pay any more than we have to. Some people feel that there is an obligation to pay, but at the same time I think you have an obligation to learn how to reduce, minimize or even eliminate the taxes that you pay when the opportunity is there. The thing is you may not know what opportunities exist because it's just a simple matter of honest ignorance. I always say that ignorance is expensive, but knowledge leads to increased wealth and the ability to lower your taxes. If you don't, you would think that your tax adviser would be well-educated on this stuff, but that's just simply not the case as you're going to learn today with my guest Bruce Jones.
I had a great interview with Bruce. Something that he's going to share a few things actually are things that I've looked at in the past but never quite completely grasped because it's just what most financial planners and advisers don't really know or understand. This is a great episode and there’s some stuff that we're going to talk about today that might go over your head. Don't let that get you lost just because we're getting deep in the weeds. You could always go back and listen to this episode over again, or better yet, you can just contact Bruce and his team and learn more about it. It's just free education.
If you missed our last episode, be sure to listen to Sheltering Your Rental Income from Taxes.
Enjoy the show!
– – – – – – – – – – – – – –
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Deferring Taxes for Decades (and the Dangers of 1031 Exchanges) It's my pleasure to bring Bruce Jones onto the show. Bruce is the President of Tax Wealth, a tax analysis and solutions research company which for 23 years has served owners of real estate and privately-held businesses. Bruce himself entered the financial services industry in 1970 and has taught the subjects of Tax Manageme...
Before we get on our show here, I want to remind you about our upcoming Memphis Investment and Property Tour that will be on October 6th and October 7th. It’s a Friday, Saturday. This is a great event. If you can make it, get in touch with our investment counselors here. We are offering free tickets, the tickets are normally $450, and we would love to see you and maybe your spouse down there or your business partner. What we are doing is hosting a unique event in Memphis, Tennessee. It will be a weekend of property tours, speakers and networking mixed with a little Memphis culture. Not only will you see great investment properties but the first full day is where we’re bringing together speakers from all over to address various aspects of today’s real estate investing. That’s going to be a breadth of information and topics. We would love to have you down there and see what we have going on in that great market. Again, this is October 6th and 7th. You can come in as early as Thursday, October 5th. I'm not sure if we have an event on Thursday but we definitely have an event going on on Friday evening. It’s a dinner and a networking mixer. Saturday is open-ended on Saturday evening so we can do whatever we want to do unless you want to fly out that night, but I think a lot of people are going to fly out on Sunday. Contact our office or send us an email through our website at NoradaRealEstate.com and we’ll tell you more about it.
Today’s episode is about sheltering your rental income from taxes and maybe some other tax tips. When it comes to taxes, I pay my taxes, it’s not my favorite thing to do, but it’s something we just all have to come to grips with. Paying taxes just seems to be part of the American life now and ever since the Income Tax Act of 1913, there’s really no way around it. There’s a lot of code in the tax code. Unfortunately, you have to pay your taxes for any types of income you make. Fortunately, the US Tax Code has many, many rules that allow rental property owners to reduce their taxes and save money. If you own property, it’s a huge part of your tax strategy because it is the most tax-favored investment that you can get your hands on, that you can put your investment capital into, and the IRS rewards this type of behavior. If you don’t have property, you really should have some because the tax benefits are fantastic.
I'm not a tax professional or a CPA but I do know many people who are tax advisors and specialists in that area and the fact that they are in the niche, that they deal with real estate investors, that really helps in helping educate you through this podcast, through articles as well as clients because we can put you in touch with them to minimize your tax impact or defer that taxable impact or in some cases, even eliminate completely and forever the tax impact of your income. Our show today is about sheltering and reducing your rental income from taxes. I have a great guest on who is a very, very sharp individual, so just stay tuned.
If you missed our last episode, be sure to listen to Investing in Memphis and Our Upcoming Property Tour
Enjoy the show!
– – – – – – – – – – – – – –
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Sheltering Your Rental Income from Taxes (and Other Tax Tips) It’s my pleasure to welcome Brandon Hall to the show. Brandon is the owner of The Real Estate CPA. He’s a real estate investor and CPA specializing and providing business advice and creative tax strategies for real estate investors. Brandon’s experience in the Big Four accounting firm and his personal investing experience allow him to provide unique advice to each of his clients.
I want to just say thanks for your patience. I've been away for about eight weeks. I haven’t done an episode in almost two months. The reason for that is because I've been traveling extensively here for actually the whole year but mostly throughout the summer. I spent about two and a half weeks traveling through Italy and up to Paris. That was a family vacation. The rest has been all business related. I've been traveling everywhere from Kansas City to Dallas to China. I actually just got back from Shanghai, which was just an amazing trip. I might talk a little bit more about that in my next episode because it’s quite fascinating what is going on in terms of investment capital and foreign investment in the US. Aside from that, I plan to get back on a weekly recording schedule here as best as I can. I still have a lot of travel coming up here over the course of this month and the rest of the year. I'll do my best to continue to deliver content and bring on some great guests.
In the meantime, I want to announce something that we haven’t done for a long, long time and we rarely do, and that is a combination of an educational seminar/property tour where you can actually just kick the dirt and walk around and see various properties in a market at different stages of development; from acquisition to demolition to renovation through to completion, so you can see everything that gets done, who’s doing it and how it gets done. That’s combined with some amazing speakers, everything from finance to 1031s and whatnot. That’s all packed in about a day and a half. It won't be a long drawn out four-day event. It will be short, sweet, you come in on one day, you have a day and a half of networking and education and property visiting. Then you could leave in the second half of that day or the following day. That’s what this episode is about. It’s investing in Memphis, Tennessee and some information about our upcoming property tour.
I have a great guest. He’s one of our team members out in the local market. He knows the market very well. Memphis has been a great market for us. It always has been. It’s a perennial market. It’s very strong. The real estate market there in Memphis continues to grow. It has been what I call a perennial cashflow market. You don’t see wild fluctuations and appreciation. They're strong, steady, stable rates of return in cashflow. If that’s what you're looking for, it’s a perfect market because it’s got everything you could possibly want aside from hypergrowth in terms of price appreciation. We don’t have an inflated market but we do have what a lot of investors want, and that is solid, steady, consistent income and rates of return.
We're going to dive into that and bring on James, our partner here. Stay tuned.
If you missed our last episode, be sure to listen to Daniel Amerman – Inflation, Deflation, Debt and the Coming Housing Crash?
Enjoy the show!
– – – – – – – – – – – – – –
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
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Investing in Memphis and Our Upcoming Property Tour It’s my pleasure to welcome James to the show. James is one of our team members in Memphis, one of our perennial markets. We've been there for a long time. We do a lot of business with James and his team. I wanted to bring him on the show today to talk about the Memphis market, why it’s such a great market and has been for a long time in terms of investing. On top of that, we have an upcoming investment and property tour coming up. James, welcome to the show.
Marco, thank you so much for having me.
It’s great to have you on. I know we do a lot of stuff with you. All our investment counselors love working with you and...
Vladimir Lenin once said the way to crush the middle class is to grind them between the millstones of taxation and inflation. It's true, and it's happening. Inflation and Real Estate Investors Financial industry insiders talk about monetary policy issued by central banks, exchange rate policies, and inflation rates, most of which are not fully understood - and are completely ignored - by the general public. What you need to know is that the odds are stacked against real estate investors in a more comprehensive and complicated way than most people are aware.
The Advantages of Understanding Inflation Theory
The good news is that, when you're armed with this knowledge, you gain the ability to not only protect yourself from cost-push inflation and demand-pull inflation, but to also find new sources of wealth in unexpected places. The real return associated with these sometimes counterintuitive sources of wealth can be substantial because they work with the underlying flow of wealth rather than against it, notwithstanding the current monetary policy in place. How Inflation Rates Affect Real Estate Investors
If you don’t understand inflation theory, stay tuned, because our guest today is going to dive into this with me. It’s something that will be an eye-opener for you and possibly even a paradigm shift. I strongly believe that understanding the three forces of asset deflation, monetary inflation, and taxes for inflation will be the single, most important thing you can do to protect and improve your standard of living over the long-term, whether there is price stability or not. I believe these forces will be the primary determinants of real financial success for investors in the decades ahead and that those who fail to understand these forces of economy will be a great risk in the future.
Join me on this amazing interview with one of the smartest guys I know on the subject. It’s an episode you'll want to listen more than once, so don’t go away.
If you missed our last episode, be sure to listen to Millionaire Success Habits: The Gateway to Wealth & Prosperity – Dean Graziosi.
Enjoy the show!
– – – – – – – – – – – – – –
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
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Daniel Amerman – Inflation, Deflation, Debt and the Coming Housing Crash? It’s my pleasure to welcome Dan Amerman to the show. DDan is a chartered financial analyst and a former investment banker with an MBA and a BS and BA degree in Finance. Dan has over twenty years of financial experience. As a former real estate investment analyst, he is more than well-qualified to talk about the relationship between the economy and real estate. Dan, welcome to the show.
Thank you, Marco. I appreciate you having me.
It’s an honor to have you here because I invested in some of your courses and material years ago and it was just absolutely fascinating. One of your programs, which I have on my bookshelf here next to me, is Turning Inflation Into Wealth. It’s quite a package. Let’s start off by you telling us a little bit about yourself and what you like to study.
I'm a numbers guy. I guess I take maybe some non-traditional approaches to things. I was pretty conventional as a professional, financial analyst for institutions and major developers and so forth for many years. But I was really getting into studying what I felt was on the way in terms of retirement of the Baby Boom, in terms of global economic changes and so forth. I was very dissatisfied, number one, with most people’s understanding of these issues. Number two, and even more importantly, what people can do about it. I suppose I reached a point where it could have been pretty easy f...
The success habits of millionaires set them apart from everyone else. This is not to say that they are born with these habits, but they have perfected them. Learning them can also give you the success they worked hard for. Want to find out what millionaires do differently, and how their success habits have made them who they are today? Listen to the podcast, or read our outline below, and follow along with Dean Graziosi for valuable tips for building your wealth. Success Habits You Must Develop Inspiration for Success
Success does not come from nowhere and neither does the inspiration for it. If you are lucky, you may have already found the reason why you keep doing what you do. For some, this inspiration is yet to come. Inspiration is important because it's the thing you hold onto during the long road to success. It comes in many forms: life experiences, encounters, books, certain events, and, for most people, a successful person.
We have a very special show today and an incredible guest, someone who I've been looking to get on the show for a while now. About three months ago at one of my Mastermind meetings, I had the opportunity to sit down and meet with him. We got talking about his new book and habits and whatnot. I asked him to come on the show. It took me a while to get him on the show because he's always traveling and he's got a busy schedule. We're going to talk about his new book and habits and some amazing content here today. Habits of Success and the Success of Habits
One thing about habits I want to say is that habits are the basis of your success, and they could also be the basis of your downfall. Despite the importance of habits, few people know much about them or even how they work.
Habits are thought about negatively — usually they relate to gambling habits or drug habits — but there are a lot of good habits and things that we should incorporate into our lives, such as exercising regularly or how we think or meditate or what we do and what we eat and how we treat our friends and our family.
The magic of habit lies in its repeatability. By consciously and continuously exercising such habits, we form the core and foundation of the success we dream of having.
To be aware of our habits and how powerful they are and what subtle changes we can do to affect the trajectory and the path of where we're doing is just an amazing thing. I have an amazing guest today. Please stay tuned, right to the very end. He's got a great offer for you.
If you missed our last episode, be sure to listen to How to Properly Interview and Hire Your Property Manager.
Enjoy the show!
Do you have success habits you want to share? Let us know in the comments section below!
Up Next: 11 Qualities Real Estate Investors Must Possess to Be Effective
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Millionaire Success Habits: The Gateway to Wealth and Prosperity – Dean Graziosi It's my pleasure to introduce Dean Graziosi to the show. If his name sounds familiar, it's because you've probably seen Dean and his real estate books on television for the last 20 years. I've had the privilege of having Dean come and speak at one of my Mastermind events a few months ago and then we got talking a little bit afterward, which is when I invited him to come and join us on the podcast here today. Dean is perhaps best known for his long-running interview style TV shows, but he is also well known for being a real estate expert, an author, speaker, entrepreneur. Based in Scottsdale, Arizona, he has written multiple New York Times bestselling books and has touched the lives of millions of ...
Hiring a real estate property manager is an essential component of maintaining a property and its value in the market (not to mention attracting good tenants). If you're a property owner who is busy, owns several properties, or owns out-of-state real estate investments, you will certainly benefit from hiring a professional property manager. Why Should You Hire a Property Manager? Finding a reliable property manager who can efficiently handle the day-to-day management, maintenance, and repairs of your investment property, conduct tenant screening and rent collection, and stay on top of landlord-tenant law changes is absolutely essential. It's not only for peace of mind but also to ensure the maximum market value of the rental property. What Does a Property Manager Do?
A property manager's job description includes taking care of all the details and busy work so you can focus on growing your real estate investments. Having a good property management company on your side goes a long way to ensuring easy, profitable, and stress-free investing. It can bring you hassle-free rentals and property maintenance while optimizing your cash flow and your return on investment. What Should You Look for in a Property Manager? It's important that the property manager, the company, and the overall business ethics inspire confidence and trust in you so you're completely comfortable in assigning the property over to them. I often refer to residential property managers as asset managers because if you stop and think about it, it's not just the property that they're managing, it's really your assets. My guest and I will talk about some of the things that you should look for when you're interviewing or hiring your property manager.
If you missed our last episode, be sure to listen to Why Should You Invest in Alabama? (Huntsville, Montgomery and Birmingham).
Enjoy the show!
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Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Please give us a RATING & REVIEW (Thank you!)
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How to Properly Interview and Hire Your Property Manager It's my pleasure to introduce Linda Liberatore. Linda is the Founder and President of My Landlord Helper and Secure Pay One, a unique virtual assistant solution for do-it-yourself real estate investors. Linda is a motivational speaker and author of two books, Daily Inspirations to Achieve Your Real Estate Investment Goals and My Landlord Helper, a new book. Linda, welcome to the show.
Thank you, Marco. I'm so pleased to be here.
I'm glad to have you on. I remember first meeting you when you were a host to a panel discussion that I was on back in February. I got talking to you and learning a little bit about your business and your book and then you came out with another book called My Landlord Helper, which is self-titled to the website you have, which I took a look at and it was great. You have me intrigued with what you do. I have come to learn that you are very knowledgeable about property management and how to interview and hire and screen your property manager. I thought that is a great topic for our audience. Before we get into a discussion about property management, tell us a little bit about yourself and how you got into this space and about My Landlord Helper at a high level.
My Landlord Helper: Keys to Managing Your Real Estate Investments, Achieving Explosive Growth and Saving Money
I've been working with technology solutions and real estate investors for years. My Landlord Helper, Secure Pay One, we’re the combination, the marriage of the two. I've always worked with productivity tools and training and worked for a development team. I've always worked for people that were buying real estate investment properti...
We have a special show today because we're going to do another market spotlight. Today, we're going to talk about why you should invest in Alabama. In fact, there are actually three great markets to consider in Alabama.
To discuss why you should invest in Alabama and these markets, I wanted to bring on one of my local market providers. He is a great guy, very knowledgeable. His name is Jared. Him and I were down at the IMN event in Florida a couple of months ago. He was on one of the panels, as was I on a separate panel.
I really enjoyed listening to him talk because he is such a knowledgeable person. He's very detailed, analytical; he really digs into the markets and market timing and trends and the economics and fundamentals. He understands why a market makes sense from many levels.
I could literally listen to him all day long. Then I thought, “We work together, and we have a property in Huntsville, Montgomery and Birmingham in Alabama. Why don't we just do a podcast episode and talk about these markets and why they make sense? Then you can take it from there.”
If you missed our last episode, be sure to listen to Home Inspections: What You Need to Know.
Enjoy the show!
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Why Should You Invest in Alabama? (Huntsville, Montgomery and Birmingham) Jared, welcome to the show.
Thanks, Marco. Thanks for having me. I'm glad to be here. I want to thank your listeners for taking some time to learn a little bit about demographics and what makes markets tick, why some markets are so much better to invest in than others. We're glad that they can take some time to listen. Thanks for having me on your show today.
It's great having you on because you're a smart, and you know a lot of information. You're very knowledgeable about these markets and others too. When it comes to these tri-cities in the State of Alabama I thought we could just lift up the hood and look down and see what's there. A lot of people don't know about these markets or don't hear much about them. They're not sexy markets. Let's talk about those today. Before we get into that, share some of your background because you have a very interesting background. If you don't mind, include your story about when you were training other consultants and coaching clients such as Rich Dad coaches and others, because I thought that was a fascinating story.
What was so funny, about ten years ago, I was looking for Robert Kiyosaki; many of you have probably read Rich Dad Poor Dad. I love his concepts, I love his books, I love the things that he teaches. When people paid $12,000 to $20,000 to talk to a coach for half an hour a week, you really expect that that coach is going to be 100% on top of the latest trends on exactly where market cycles are and be able to help protect you from investing at the top of the market and stop you from doing that, making sure that you're getting out at maybe 80% of the watermark so that when the market starts to go down, you're already at cash and you could buy when the market's down because that's when you really make money. Warren Buffett talks a lot about that and that's why Warren Buffet spent so much money getting into the single-family housing space six or seven years ago. All the hedge funds that you and I go to at the IMN conferences, they looked at that and went into the markets at the right time.
Invest in Alabama: If you want to know whether a market's going to go down, look at whether income is keeping pace with the housing prices.
One time, I was sitting on the coaching floor and all these coaches that I used to train for Robert,
On today's show, we're going to talk about properly inspecting your rental properties before you buy them or even after you've purchased them. All of our clients at Norada Real Estate, we insist that they order a professional home inspection as part of their due diligence after they put a property under contract. That's true for every single property they buy. Why? Because it's important that you know the condition of the property and if there are any issues or red flags. There are still some amount of education that goes around this topic of home inspections.
I wanted to bring on a professional, someone who really knows not only the industry, but the nuts and bolts of doing the actual inspections. My guest today is a gentleman named Tim Tucker. He's with US Inspect. Tim is the Director of Business Development for US Inspect. They are the nation's leading employee-based inspection services firm. They're headquartered in Northern Virginia, but they have a very large network of inspection teams nationwide.
If you missed our last episode, be sure to listen to What Clients Want to Know... Marco Santarelli on the Other Side of the Mic.
Enjoy the show!
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Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.
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Home Inspections: What You Need to Know
Tim, welcome to the show.
Thanks for having me, Marco. I really appreciate being here.
I bumped into you down at the IMN event in Miami, Florida about a month and a half ago and gotten into a conversation with you there. I found it very interesting how knowledgeable you are with inspections. I was impressed to see that you actually have a nationwide company, which I don't come across very often, so I was a little surprised that I never came across you before then. I asked you if you would come on the show and you graciously said yes. Let's start off by you telling our listeners a little bit about yourself and something about US Inspect.
US Inspect, as you mentioned, is the nation's largest employee-based inspection company. We're not a franchise, so our employees are W2 employees. We started back in 1987 doing corporate relocation inspections across the country. Later, that expanded into us performing home inspections for just regular home buyers. At the time, we didn't have that large employee base. We actually were working with a network of inspectors across the country. Back in the late 1980s into early 1990s, we were vetting home inspectors across the country. Now, that database has just exploded. We have a network of inspectors ranging from Alaska, into Canada, all the way down to the southern tip of Florida. Outside of that, we have those W2 employees, so we truly are the nation's leading employee-based inspection services firm.
About myself, I started back in the early 1990s, 1993 to be exact. I have performed to date over 10,000 inspections ranging from residential homes, all the way up to industrial buildings including a lot of skyscrapers and big industrial parks. Currently, I have about 33 certifications starting off as an ASHI Home Inspector, which is the American Society of Home Inspections. Then, going on to the Building Performance Institute as a Certified Building Analyst Professional and an Envelope Professional, that's covering the energy side. I also have a license with the Indiana State Chemist Office for pest. I'm certified to do Radon. Outside of that, I have almost every single International Code Council certification that you can get. Currently, I'm a Certified Building Official and I'm one test away from getting my Certified Fire Marshal.
Home Inspections: It's important to be a student and understand every...
On today's episode we are doing something a little different. We are having one of Norada's newer active clients interview Marco Santarelli with some common, and not-so-common questions. Be sure to listen for some history, thought provoking questions, and motivation to pull the trigger or keep the momentum going for yourself.
If you missed our last episode, be sure to listen to The Effect of World Events on Your U.S. Real Estate – Lior Gantz.
Enjoy the show!
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Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.
See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
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What Clients Want to Know... Marco Santarelli on the Other Side of the Mic On today's episode, we have something completely different, something I've never done before. We're actually going to turn the tables around where I have one of our current clients at Norada Real Estate Investments interviewing me. What he has done is he's come up with some questions that he wanted to have answered, and many have been answered, but he's got questions that he wants to ask because these are the questions that he thinks about, some of the stuff that keeps him up at night. We got talking one day down in Florida and even before then. We got thinking that, "If he's got these questions, I'm sure that many other investors have these same questions." We thought it would be neat for us to just have an interview, but he's the one asking me the questions and I'm just going to answer them as he fires them off at me. His name is Chris. He's a native of Florida. Chris, welcome to the show.
Thank you very much.
It's good having you on here. I'm feeling a little awkward about this because I've never been interviewed on my own podcast. It'll be a lot of fun. Before we get started, why don't you just give our listeners just a high level introduction to who you are and what you're doing in terms of real estate investing?
I live in Florida, as you mentioned, in the West Palm Beach area. Middle aged, I work for a corporation in the typical E Quadrant, according to Robert Kiyosaki. My wife and I have three children and we're at the stage in our lives where we realize that our current investment plan is not really going to get us where we want to be, that being our 401(k). We have owned one or two different rental properties over the years. We've gotten our feet wet, but at this point we've made a decision to go deep and long and make this our main push and our primary vehicle for financial independence.
Wise decision. I don't want to reveal too much about your financials or your personal facts, but just so people know where you're coming from, you do have retirement accounts, so you are vested in the stock market. But you also are investing in real estate and your goal was to ramp up your portfolio size on the real estate side and maybe divest to some degree out of the stock market. Is that a fair assessment?
Correct. We are looking in terms of passive streams of income. I've first read Rich Dad Poor Dad in the early 2000s. I kept going at the corporate job, my wife kept going at her career. We pretty much just continued on that path in spite of believing in the entrepreneurial spirit and dabbling in rental real estate. Now, I'm going to turn 50 soon, I'm looking forward 10, 15, 20 years and I just don't see saving money in a 401(k) as a real retirement plan. Even if you are able to assemble a pretty good chunk of money there, it's just not going to carry you. It's not going to give you the income that you need. Over the past year, now I've been planning and preparing and studying. We've reached that point now where it's time to accumulate those properties and redirect our investments,
I just got back from IMN's 5th Annual Single Family Rental Investment Forum in Miami, Florida. I was on a panel there speaking. What I enjoy about these events is that I get to network with people from all around the country and even out of the country and talk about the future of real estate investing, what is happening in the markets, the tightening of inventory, the growing rental pool, the effects of policy, monetary and fiscal, as well as geopolitical events. There's just a mixed bag of topics. It's all fascinating. This is a good segue into today's show. Sometimes I talk to you about tactical items, whether it be asset protection or evaluating a neighborhood or finding a good deal. But you need to counter that with understanding some strategic related topics. It's good to understand the tactical side of things, but it's also good to understand the bigger picture, the strategic items, things that can or will affect your real estate investing, the strategy you have, where you invest, when you invest, that kind of stuff.
Today's show is more about macroeconomic stuff. We're bouncing all over the place talking about different subjects but they all tie in. It's good to have that big picture, 50,000 foot level view, of your real estate investing. It doesn't matter whether you don't have property yet or you only have one property or maybe you have a large portfolio of a hundred units. It doesn't matter. You just need to understand this even if it's at a high level.
Thomas Friedman, he is a US journalist but he's really an author and three-time Pulitzer Prize winner. He's a very smart guy. He's written many books on the subject of world events, economics, geopolitics, and how that all plays into the US economy. I like one of his quotes. He said, “In Globalization 1.0, which began in 1492, the world went from the size large to size medium. In Globalization 2.0, the era that introduced us to multinational companies, it went from size medium to size small. Then somewhere around the year 2000 came Globalization 3.0. At that point, the world went from being small to tiny.” You can see that the smaller the world gets, the more we are affected and impacted by events that happen outside of our borders.
All real estate may be local but that doesn't necessarily shield one market from major events occurring thousands of miles away. In today's global economy, important geopolitical events have consequences that can easily ripple across the planet. It can and will affect you. Election results, economic policies and international relations all have spillover effects on global real estate, whether directly or indirectly. These create incentives for buyers to be drawn toward or even repelled from various geographic markets. You’ve got to watch these bigger picture items because it can give you clues as to when or why to move into a market or when or why to move out of particular markets.
Some factors are purely financial in nature, like changes in currency values or tax treatments. For example, the provincial government of British Columbia in Canada imposed a 15% tax on foreign investment last August. That's a law that would have added $300,000 to the price of a $2 million home in the Vancouver market. We all know that Vancouver is very, very expensive. It's much like the San Francisco market here in the US. There are many parallels to that. There's a lot of investment capital coming in from other countries, foreign capital. As a result of this tax, house prices in the area fell 5.3% in November and that’s the largest monthly decline since 2012. From January 2016 to January 2017, house prices in Vancouver fell a whopping 18.9%, that’s almost 19% in one year. It reduced the foreign investment rate from 13% prior to August of last year to a low of about 4% right now. The foreign investment capital has dried up considerably and that lack of demand, that lack of capital has let prices slide in the Vancouver market.
When it comes to real estate investing, most financial advisors shake their heads. But the financial services industry has turned itself into such a complex machine. It has caused confusion, encouraged mistakes, and justified hefty fees. And all for the benefit of its own bottom line. That reminds me of a quote from Donald Trump. He said, “Sometimes, your best investments are actually the ones you don’t make.” What Most Financial Advisors Don't Want Investors to Know About Real Estate In this article:
What Investors Need to Know about the Financial Services Industry What a Financial Advisor and a Real Estate Investor Says How Brent Sutherland Began His Career as an Investor What's So Good about Having Real Estate Investment Property Why Investors Need Better Financial Education Why Financial Advisors Don't Include Real Estate in Your Investment Strategy Income Diversification vs. Portfolio Diversification Why Investors Need to Diversify Their Income More than Their Portfolio Investors and Planning for Retirement Risks You Have to Look Out for as a Real Estate Investor Where Can Real Estate Investors Find a Financial Advisor They Can Trust?
What Investors Need to Know about the Financial Services Industry Many financial advisors will discourage you from trying your hand at real estate investing. They’d say that the real estate market is volatile. It’s hard to find a real estate agent you can trust. And how do you plan to manage the day-to-day operations of your investment property? But the thing is they have little education in real estate. They don’t know how to find, buy, and manage investment properties. If you’re interested in residential or commercial real estate, speak with someone who knows his way around the industry.
What a Financial Advisor and a Real Estate Investor Says
Today’s show is about financial advice, financial planners, Wall Street and—really—who do you believe? My guest today is Brent Sutherland from Ntellivest. Brent has worked in financial services for over 11 years, both in the corporate accounting and investment world. He has a boutique financial planning business today. His goal is to help you turn off the noise and challenge the traditional approach to financial planning and thinking.
If you missed our last episode, be sure to listen to Think and Grow Rich for Real Estate Investors.
Enjoy the show!
Will having a financial advisor deter you from your goal of making passive income through real estate investing? Let us know in the comments below!
Up Next: 100 Investment Property Loans: FAQs in Buying a Home Without Deposit
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One Financial Advisor’s View on Real Estate Investing Welcome to the show, Brent.
Marco, thank you for having me. As you know, I’m a follower of your podcast, so it’s an honor for me to be on it.
I appreciate that. I’m glad to have you on because you’re really the first financial advisor I’ve had on the show. Sometimes, we poke fun at financial advisors and really at their expense, which is because of what they do, what they say, and what they sell. I think there’s a certain place in the world for financial advisors. At the same time, I don’t necessarily agree with everything they sell and the advice they’d give. Let’s begin with you. Tell us who you are and exactly what you do, please.
How Brent Sutherland Began His Career as an Investor
I am a financial advisor. I know that can be more of a dirty word, so to speak, in the real estate investment community. That’s specifically because most financial advisors you talk to do no...
Think and Grow Rich is one of those books you see most often on the recommended reading list of people who have achieved really great things. The book was written by the commission of Andrew Carnegie. Based on interviews of over 500 people in history who now we know as great men in the early 20th century, he’s commissioned this book. He interviewed people, such as Henry Ford, J.P. Morgan, John D. Rockefeller, Alexander Graham Bell, Thomas Edison, Theodore Roosevelt, Wilbur Wright, Howard Taft. This book is amazing. I read it so long ago. It was first published in 1937. It has sold more than 70 million copies. It gives it the distinction of being the all-time best-seller in the personal success category.
Today’s episode is about Think and Grow Rich for real estate investors. The perfect person to bring on for this is a person who I know and respect, a friend of mine. His name is Mani Vaya. Mani is the founder of 2000Books.com where he interviews some of today’s top authors. Over the last five years, Mani has read over 1,000 books in the field of business and personal development. Get this, over the last few years, he has been reading seven books a week, which basically averages out to one book per day.
The first book that revolutionized his thinking was Napoleon Hill’s Think and Grow Rich. As a real estate investor, it made sense to bring him on to talk about the book and how it ties in with real estate investing.
If you missed our last episode, be sure to listen to Proper Estate Planning for Real Estate Investors.
Enjoy the show!
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Think and Grow Rich for Real Estate Investors Mani, welcome to the show.
Hey, Marco. Thank you very much for having me. I’m so delighted to be here.
It’s great having you on. I enjoy your podcast. I wish I had the amount of time to read books as you do. It’s awesome.
Books are my love. I spend a lot of time reading and learning. That’s why this business is here.
How did you get started with 2000Books.com?
Let me go a little bit back in time. I didn’t always start off as being the book reader. I am from India originally. I’m a physics guy. I studied physics, then I moved on to study electrical and computer engineering. I had my career in engineering for a long time. I was managing billion-dollar plus cell phone design projects, cell phone launches. Until at some point, I decided that I had to move on and create my own success, create my own definition of success, create my own entrepreneurial venture. It was brewing inside of me. But at some point, I had to let go.
2000 Books came as a result of me wanting to continue down this path of learning that had been brewing in my mind for a while.
2000 Books came as a result of me wanting to continue down this path of learning that had been brewing in my mind for a while. Think and Grow Rich was one of the seminal books that got me started in the whole field of personal development. Before that, I did not really understand it. Or maybe I had used the principles in my life, but I didn’t even know that I was using principles that had been written about 50, 60, 70, 100 years ago, 200 years ago at some point. These were just some things I had picked up or somehow I had known, and again and again, they would show up as truths in my life. Think and Grow Rich, when I read the book, I was like, “I have been using this for so long.” 2000 Books came about a year and a half ago when I said, “I want to dedicate my life at this point to learning from these books, to teaching entrepreneurs about all the great books that are out there and publishing all that info...
There's a quote by Ambrose Bierce, "Death is not the end. There remains the litigation over the estate." With this quote from this journalist and writer, today's show is about proper estate planning for real estate investors. This is something I've been wanting to do for a while because I've realized it's a little bit of a gap in the content that I've been putting out.
Today, I brought on a guest who I found out about through a friend of mine. His name is Jules Martin Haas. He is a New York City based lawyer who provides clients with legal representation in various areas of law including real estate, trusts and estates, probate estate planning, and business law. With that amount of over regulation that we have out today, it's very important to have a good attorney.
If you missed our last episode, be sure to listen to Rental Income Protection – Sky Mikesell.
Enjoy the show!
– – – – – – – – – – – – – –
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.
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Please give us a RATING & REVIEW (Thank you!)
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Proper Estate Planning for Real Estate Investors
Jules, welcome to the show.
Thank you, Marco. It's a pleasure to be here. Thank you very much for inviting me on your show today.
Let's just start off with taking a minute and having you tell us about yourself.
As you said, I'm a New York attorney. My office is in Midtown Manhattan. I'm at 845 3rd Avenue, New York, New York, which is between 51st and 52nd, right in Midtown Manhattan. I have a website. I have a blog, New York Probate Lawyer blog. I practice pretty much throughout the New York metropolitan area, which is New York City and all; there’s Queens, Brooklyn, Manhattan, Bronx, Staten Island, and some of the surrounding counties, which include Nassau, Suffolk and Westchester Counties as well.
Tell us about your background as an attorney and your focus on estate planning and whatnot, just so we have a better idea of your practice.
I've been representing clients and practicing here in New York since 1979. The folks that I represent really are a wide array of interest. The areas that I primarily work in, as you mentioned, include estate planning, which includes wills and trust and various items like that. I do a lot of what we call Surrogate’s Court work here in New York, which people outside of New York may know it as probate court, which is probate of wills, administration of estates, various forms of litigation that go along with that, which there are a lot, such as will contest and various other trust and accounting proceedings, kinship proceedings.
I handle guardianship matters where people become incapacitated and they need a guardian. I also do a lot and have done a lot of representation in connection with real estate matters. Real estate matters really, as your audience knows, can really run a whole array of different things. There are matters such as the run-of-the-mill closings, which can be single, multifamily homes. Here in New York City, we have cooperatives, co-op apartments, we have condominium apartments. There are leases. There are landlord-tenant issues. There are all kinds of stuff. New York being as it is, there are many rules and regulations and various things that you have to overcome even in the simplest type of transaction. I've been doing all of that for well over 30 years as well.
It's interesting because a lot of the representation that I have in the estate area and the real estate area go hand in hand. The reason being that many times, the main asset, the most valuable asset that a person owns is usually going to be real estate, whether it's a house or an investment property or some other type of interest. As your audience probably knows,
On today’s show, we have an interesting topic. It’s about how to protect your rental income. I have worked with this person for quite a while and I wanted to bring him on the show because he has actually been part of a new company that is offering a rental income product. It might be something of great interest to you, especially depending on the size of your portfolio and where it’s located.
If you missed our last episode, be sure to listen to Wealth, Wall Street and Real Assets with Buck Joffrey.
Enjoy the show!
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Rental Income Protection – Sky Mikesell
It’s my pleasure to introduce Sky Mikesell. Sky is the CEO of RentSure Membership, which is the only rental income protection product to the United States. He has been investing in real estate since 1997 and has been involved in other 1,000 real estate transactions in seven different states. Sky, welcome to the show.
Thanks, Marco. Thanks for having me.
Thanks for coming on. You called me up probably a few months ago to tell me about this new product and this new company called RentSure Membership. I found it fascinating, especially considering that I was involved in, I don’t want to say a similar product, but it is a similar type of product several years ago. I’d like to talk about that, but before we go there, tell us a little bit about your journey into real estate and how that transitioned over into RentSure.
To share with you I will just give you a quick backdrop on my background and experience, what lead us to this moment. I grew up in Portland, Oregon on the West Coast there and I started buying real estate when I was actually nineteen. I was a plumber’s helper saving my money and looking to buy my first house and, eventually, I bought my second house, and slowly started growing my portfolio. About six or seven years into it, I transitioned my portfolio out to the East Coast and moved to Charlotte, North Carolina where I still remain today.
I started turnkey operation when I got out here. We bought. We renovated. We leased houses and we sold them. That’s how I met you originally, and a few of your clients, in fact. That’s how we started. I guess that was ten to twelve years ago all in all. We did quite a few transactions in the Charlotte area. Then about three years ago, we started buying in other areas around the country that we felt like made sense, in addition to Charlotte.
Default vacancy and unexpected maintenance - the two things that have been the cashflow killers.
I would say, Marco, about a year, a year and a half ago, two years ago, I can’t tell you the exact moment, and this sounds silly, but I bought a vacation rental for myself and my family. I was putting a new tile in and it was 2 AM. I’m on my hands and knees laying tile in my vacation rental because I was so excited about my new vacation rental. It hit me, I said, “Sky, the thing that has cost you, all your investor friends, colleagues, and clients, the most money in the last twenty years you’ve been doing this has been two things: the default vacancy and the unexpected maintenance.” Those are the two things that have been the cashflow killers.
We’ve been able to find good properties. We’re happy when we found good properties. We renovated them properly. We even found good tenants for some of them. But when the tenants defaulted, that killed everything. I said, “That’s the business I am going to go in.” I woke my wife up that night at 2 AM. I said, “Great news. We are starting a new business. We are going to go in to the rental income protection business.” She said,
Today’s show is about wealth, Wall Street and real assets. I’ve brought Dr. Buck Joffrey on to the show to talk about this. Buck knows the old mantra of, “Investing in a diversified portfolio of stocks, bonds and mutual funds,” is simply outdated and dangerous, especially, for high paid professionals given the instability and the volatility in the markets today. He advocates entrepreneurship and investing, especially in hard assets and those that provide cashflow because that’s really the reliable way and the approach to building solid personal finance. I’m in line with his thinking and what he advocates. I want to get him on the show to talk about his perspective on these things. It was an interesting conversation, so I think you’ll thoroughly enjoy it.
If you missed our last episode, be sure to listen to The Real Estate Investor Ladder of Success – Trevor McGregor.
Enjoy the show!
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Wealth, Wall Street and Real Assets with Buck Joffrey It’s my pleasure to welcome Dr. Buck Joffrey to the show. Buck is an accomplished surgeon, entrepreneur, asset manager and podcaster. He is also the number one best-selling author of Seven Secrets of Eternal Wealth. With a negative net worth upon finishing his surgical training back in 2008, Buck quickly became a serial entrepreneur and real asset investor amassing an eight figure net worth. Buck, welcome to the show.
Thanks for having me.
It’s a pleasure having you on. I listen to your podcast. I love the content you put out because I consider myself an arm chair economist. I like to learn about the global economy, macroeconomics, how things play into real estate and other asset classes here in the US and where I should invest and where I should maybe not invest. Before we get into all that stuff, which I find really interesting, let’s start off with you. Tell us about your journey, how you got started from becoming a doctor and then getting into real estate and an asset manager.
It’s started out, as you said, I was your typical A-student, as Tom Wheelwright would say, the recovering A student. I went through medical school, graduated top of my class, I went to start out a neurosurgery residency, became a brain surgeon. I decided the lifestyle wasn’t for me, but I finished another type of surgical training. I was a little bit easier on my life but it was still surgery. I enjoyed doing that. I spent about 33 years preparing myself and getting trained, etc. and then practiced for about four or five years and then effectively retired. That was about 2008, 2009 when I finished my training. I was a pretty academic guy. I was very interested in all the research stuff and so on and so forth.
Right around 2008-2009, obviously, there was a mortgage meltdown, all these people losing their money. Fortunately, for me I didn’t have any money already. It gave me a chance to look at what other people did wrong. One of the thoughts that I had when I was coming out was, “I’ve gone several years making minimum wages as a surgical resident. Now, I’m going to go up six figures plus, how am I going to this differently than all these people who lost a bunch of money?” Instead of going the route of just being another guy who hands my money over to a financial planner, I took it upon myself to become more self-educated, got inspired by, of course, Mr. Kiyosaki. The man who’s probably created more millionaires than anybody else on earth. I got inspired from him. I started my own practice, turned that into a business, phasing myself out. Did it again with another business, phasing myself out.
Today, we have a very special show. It is not specifically about real estate per se, but it is tied to real estate investing, the psychology of it, and how you can be more successful in your real estate investing. I brought on someone who I truly admire, who I met back in Denver about three or four weeks ago. We were both speaking at an event, Joe Fairless’ Best Ever Real Estate Investing Conference. I was really impressed by Trevor McGregor, who is a Master Coach. Trevor has completed well over 10,000 coaching hours. He’s worked with hundreds of clients from around the world to achieve success and fulfillment, including Fortune 500 executives, entrepreneurs, real estate investors and world class professionals.
His mission is to assist others to achieve better health and more wealth and freedom and contribution than they ever thought possible. This really resonated with me.
If you missed our last episode, be sure to listen to Understanding Neighborhood Trends and Forecasting Property Values.
Enjoy the show!
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The Real Estate Investor Ladder of Success – Trevor McGregor Trevor, welcome to the show.
Thanks very much, Marco. It’s great to be on the show.
It’s great having you here because I know what you are capable of delivering. I sat through your presentation back in Denver with ears wide open and taking notes. I thought this material and this content and your professionalism would be perfect to have on our show for our audience because they’re going to eat all this stuff up.
Having said that, let’s begin with you. I always like to start off with our guest. Tell us about your journey and how you got into coaching and to real estate investing, because I know you’re a real estate investor as well.
Correct. I’d love to share that. I’m from Canada. I live in Vancouver Canada. I grew up, typical guy, loves sports and really wanted to get into a career or a profession that I love and went to university, studied Business. When I got out of college, I worked for a real estate and hospitality company. What I thought would be an interesting beginning to my career there, it ended up being many, many years of climbing the ranks and working in areas of operations and marketing and finance and HR. I really enjoyed that because I was learning, I was growing. I got married, started a little family.
While I was going through that journey, I also had an opportunity to invest in the company. What I did is I borrowed a whole bunch of money off from family and friends, and cashed in a little bit of our 401K, and popped some money into an investment and things went great for a while. Then when 2001 hit, I took a little bit of a hit. The business couldn’t hang on to our growth plans. It ended up losing a significant sum of the money I had invested.
At that time, I thought to myself, how was I going to get back on my feet and really move things to the next level? I started to work with my own coach. He said, “Trevor, have you ever thought of doing something in real estate?” I said, “Tell me more about it.” Really, Marco, that was the start of the journey. I started to go to seminars, read books, listen to audios. I found that there was a new way of thinking and behaving. In a relatively short amount of time, with a little bit of money that I had scraped together, I bought one little townhouse. That was a great experience. I bought a condo. I pulled the equity out of that to buy my first duplex. I really started to understand cashflow then and I started to buy fourplexes.
In a relatively short amount of time,
On today’s show, we have a special guest. He actually has been on our show before back in show number 35. I am bringing him back on today because he’s got some updates to share with us. This show is about things like forecasting property values, looking at appreciation trends and forecasts. My guest today is Dr. Andrew Schiller. Dr. Schiller is the founder, CEO and Chief Scientist of Location Inc. He is responsible for inventing the search and neighborhood matching algorithms that powers Neighborhood Scout, which has been covered by CNN, Bloomberg Business and The Wall Street Journal among others.
If you missed our last episode, be sure to listen to How to Stay Inspired and Driven – John Lee Dumas.
Enjoy the show!
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Understanding Neighborhood Trends and Forecasting Property Values
Andrew, welcome back to the show.
Thank you, Marco. It’s great to be here.
It’s great having you back on. I really enjoyed doing the show with you in the past talking about analyzing neighborhoods and the power of your product with Neighborhood Scout. I use it daily. I am a walking testimonial for it. I know you have been keeping yourself really busy. Why don’t you give us, first of all, a quick update or an overview actually of what Neighborhood Scout is and then we can get into some of the changes you’ve made later.
Neighborhood Scout has served about 65 million people since it was first launched in 2002. Neighborhood Scout is a platform where people can learn about locations with data on crime, schools, appreciation rates, housing market, vacancies, demographics and all that are built together into one simple to use platform and reporting mechanism. Much of the data and analytics in Neighborhood Scout are built in-house by our PhD scientists. Unlike many other types of services or sites where they simply aggregate existing data, we are primarily a source of and builder of high-end analytics, predictive analytics, trends and information that can help people make really informed decisions. That was our specialty. We baked it into Neighborhood Scout.
I am a geographer. I have always loved places. The whole idea about Neighborhood Scout is to reveal the truth about locations. We have no vested interest in people moving to or buying property in any particular place or even moving or buying at all. We want people to be as empowered as possible. To tell you a personal story, when I bought my first house in 2001, it was a year before launching Neighborhood Scout. My first daughter, Wendy, was not quite one year old at the time. I was just finished with my Geography PhD program. I was well-trained. I was able to find information and aware of the importance of location. We selected a lot on a quiet, dead-end street in Worcester, Massachusetts near hiking trails and within walking distance to local shops.
Trends and Forecasting: The answers were right there at my fingertips. I could make educated decisions.
One year later, I launched Neighborhood Scout. I quickly entered what was important for us in a neighborhood. At that time, for us personally, we wanted good public schools, affordability, educated neighbors, and low crime for example. Neighborhood Scout delivered a map and my eyes were permanently opened to a new level of understanding. We should have bought two miles away. I didn't even know. The answers were right there at my fingertips. I could make educated decisions. It was a great enlightenment.
Now, as of about a week ago, fifteen years later, that great enlightenment is happening again for me personally with Neighborhood Scout’s n...
Welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. On today’s show, I was able to get John Lee Dumas on for about fifteen minutes. Now, it was a relatively quick and somewhat rushed interview but I was fortunate to get him on. He’s a very busy guy. He does a daily podcast with some of the most successful business entrepreneurs. If you’re in business, you can learn a lot from his show, although I have a lot of trouble keeping up with seven episodes a week.
One thing that came out of this interview with John is his passion and that’s one thing that came through. We talked about it for a little bit. It seems that as he failed in his journey, it was because of a lack of passion. As I look around at other people, I see that people who are just getting by or coasting in life seem to have lack of desire, lack of passion, lack of drive and their just not inspired. It blows me away. I used to think that it’s because people don’t actually write meaningful, smart, specific goals. But I think there’s more to it than that. I think it all starts with a desire and a passion to get something done or achieve or accomplish something greater.
It’s an interesting interview, as short as it is. But a few things about passion in itself, I had to look up the definition of passion and figure out what exactly does that mean. But really, passion is the energy that keeps us going. It fills us with meaning and happiness and excitement and anticipation. Passion is a powerful force, like energy. It motivates us and moves us in accomplishing anything that you set your mind to. This can be in work, in life. It helps you to enjoy life to the fullest extent possible. Ultimately, passion is the driving force behind success and happiness that allows us all to live better lives.
I love quotes. I should start more reading quotes actually. There are some really good quotes out there related to passion. From Benjamin Franklin, for example: “If passion drives you, let reason hold the reins.” Jean-Paul Sartre: “We must act out of passion before we can feel it.” That’s very interesting. Barbara Corcoran from Shark Tank: “You can’t fake passion.” T.S. Elliot: “It is obvious that we can no more explain our passion to a person who has never experienced it than we can explain light to the blind.” The famous singer Jon Bon Jovi said: “Nothing is as important as passion. No matter what you want to do with your life, be passionate.” Mia Hamm said: “If you don’t love what you do, you won’t do it with much conviction or passion.” One of my personal favorites here is a quote on passion from a man who clearly had way more talent than he claims in his quote. He says: “I have no special talents. I am only passionately curious.” That was Albert Einstein.
The passion you have for something really determines not only how successful you will be at it but also how far you’re willing to go to get to where you want to be. Think about that.
If you missed our last episode, be sure to listen to New Construction Fourplexes in US Growth Markets.
Enjoy the show!
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How to Stay Inspired and Driven – John Lee Dumas It’s my pleasure to welcome John Lee Dumas to the show. John is the founder and host of Entrepreneur On Fire, a top ten business podcast that interviews today’s most inspiring and successful entrepreneurs, including Tony Robins, Barbara Corcoran, Tim Farris, Seth Godin, Gary Vaynerchuk and hundreds more. John, welcome to the show.
Marco, my neighbor to the north, it is a pleasure to be here.
It’s great having you on. I follow your stuff. You have great podcast.
On today’s show, I talk to Steven, one of our providers at Norada Real Estate. They focus on brand new construction fourplexes in growth markets in the United States. He discusses this niche in detail, as well as the three main growth markets that they are working in. If you missed our last episode, be sure to listen to 10 Lessons Learned From 100 Successful Real Estate Investors.
Enjoy the show!
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New Construction Fourplexes in US Growth Markets Welcome to Passive Real Estate Investing. I’m you’re host, Marco Santarelli. On today’s show, I want to bring you one of our great providers that we work with in several different markets around the United States. They have a particular niche. They focus on brand new construction fourplexes in growth markets in the United States. This is a great product for certain types of investors. I would let Steven explain that. I don’t want to steal any of his thunder. First, let me welcome you on the show, Steven.
Thank you, Marco. It’s such a pleasure to meet with you. Thank you so much for taking the time to have me on your show.
It’s my pleasure. I think this is great because the information that you’re going to share today about the three different markets that you’re in and the product that we’ve been selling to clients is going to be very beneficial because we can reach a wider audience and do it very effectively on the podcast. First and foremost, let’s start off with you for a few minutes here. Why don’t you share a little bit about yourself, where you came from and how you got involved with real estate and real estate investing?
One of the mentors that I met with gave me some really insightful advice.
I started out as a full time student. I was going to university. I knew that I wanted to get into real estate. I got my real estate license back in 2007. One of the mentors that I met with gave me some really insightful advice. I live in a mountainous region. He said, “If you go to the top of the mountain and look down on your market, you now have a license to do something that impacts that place for good. You get to choose what’s the highest and best use of your time to do that.” That was my mindset the entire time I was in real estate. What can I do to make a difference? Not just get commissions. What can I do to make a difference in this industry?
At the time when I was working with a builder, there’s plenty to compete with: a first time buyer, home builders, etc. you sit model homes. I didn’t have a flavor for that. I had no desire to sit in a model home and hear about people who wanted to change a room color or a flooring option or move a light fixture over three inches. That just didn’t do well with my brain type. At the time, there was a scarcity of a multi-family. I had investors that wanted to buy fourplexes, duplexes or eightplexes, etc. because of the ability to leverage decently and have one rooftop for more renters, rental sharing. There was very little available.
I talked to this builder I was working with and said, “Why don’t we build them?” The very first product type we put out, I sent out an email just to my database saying, “We’re going to build this fourplexes. We had nine of them. They’ll be new construction. You’ve got to get your own construction loan because we’re not going to finance it for you. It’s a really good return. If you’re interested, let me know.” Within 30 days all nine had sold out. Nothing sold at that speed. It was when the market was down. We found that there was really a lot of demand for stable new construction fourplexes specifically.
On today's show, I talk to Dan Lane, host of the Rental Income Podcast where he has interviewed to over 100 successful real estate investors. He has compiled 10 of his most important lessons learned from all of these interviews, and we go through each of them today.
If you missed our last episode, be sure to listen to Rich Dad Poor Dad Book Summary.
Enjoy the show!
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10 Lessons Learned From 100 Successful Real Estate Investors – Dan Lane Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. It is said that mistakes are made but lessons are learned. One of my friends, Dan Lane, is a guy who has interviewed over 100 successful real estate investors. He always asks the questions that he should've asked when he got started investing in real estate. He's learned a lot of good things and has walked away with a lot of great takeaways. I asked him to come on the show today to share with us some of those, the top 10 lessons that he's learned. It's great to have him on the show to share that wisdom that has been accumulated by many people over many years and that can help you shortcut your path to success and avoid stepping on the same landmines that other people have had or to maybe just curtail and accelerate the speed at which you accomplish your goals.
It's my pleasure to welcome Dan Lane to the show. Dan is an accidental landlord. He's also the host of the Rental Income Podcast, happens to be one of the podcasts I listen to on a regular basis. Dan wants to share his experiences and knowledge with you, our listening audience today. I'm excited about that because he has learned a lot from virtually 100 successful real estate investors that he's interviewed here over the last, I'm not sure how many years. With that, Dan, welcome to the show.
Hey Marco, it's an honor to be here. Thank you so much for having me. I love your show too. It's a real thrill to be on with you.
I'm happy to have you on. You sent me a list of lessons learn and I thought, "Wow, these are pretty good." They apply to different people in different ways, but there's something here for virtually everybody. I want to jump into those here in a couple of minutes. Let's start off with you, because it's always good to know who you are and where you came from. In your case, how you got involved in real estate accidentally. It's a great story. Please share that with us.
When I graduated from college, I got a job in Corporate America. After a couple of years, I was making some money and I decided I was going to buy a property. I bought a house and I wasn't planning on having roommates. When word got out among my group of friends that I bought a place, I started having a lot of friends reach out to me to ask if they could rent a room and move in with me. I said, "Sure. Let's do it. This will be fun."
When I started doing the math, I was realizing that I was going to be living there for free, that their rent was covering the mortgage. I was just in disbelief. Today, we have a term for that. We call it house hacking. At the time, I wasn't familiar with that concept. I just figured I had stumbled upon something that was really cool. Just as luck would have it, the market was also appreciating around that time. About two years later, I sold the house and I made about $100,000. It really worked out awesome that I lived there free and had this big pile of money. I was hooked. From that point, I wanted to do it again.
I ended up getting my real estate license to learn more about real estate. When I became a realtor,
On today's show, I will be giving you a summary of Robert Robert Kiyosaki’s Rich Dad Poor Dad book. This is a famous book that has been mentioned in past episodes several times, but just in passing. This book changed and influenced the lives of a lot of people, myself included.
If you missed our last episode, be sure to listen to Ask Marco – Is It a Peak Market? | When Should I Buy? | Avoiding Failures.
Enjoy the show!
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Rich Dad Poor Dad Book Summary Welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. On this episode, I want to talk about a very famous book, Rich Dad Poor Dad. I want to make a book summary here. If you’ve read the book, even if you’ve read the book more than once or you’re familiar with the book, I still suggest listening to this episode because we learn through repetition. You might catch a lot of things in your first run-through with the book but it’s not until you listen to something or read something a second or third time that you catch things you missed the first time, and you catch some new ideas that connect and gelled with new knowledge that you have in your head. It's always good to hear things a second or third time, because often you’ll catch new ideas and see things in a new perspective.
Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
Rich Dad Poor Dad was a book that really affected me and opened my eyes because when I was reading that book, I literally cannot put it down. I was just so drawn into it. I was on a train ride from Rome to Florence, Italy at the time. With this beautiful countryside whizzing by on both sides of the train, it was more important to me to read the Rich Dad Poor Dad book than it was to look out the window of the train and admire and take in the beautiful scenery. I was focused.
The nice thing about Rich Dad Poor Dad is that the book summarizes Robert Kiyosaki’s lessons learned from two different perspectives, that of a poor man and that of a rich man. Drawing on his own experiences, Robert Kiyosaki discusses how he creates financial independence through investing and property ownership and building businesses. In his book, he says, “Look around, the richest people didn’t get rich because of their education. You look at Michael Jordan or Madonna, even Bill Gates who dropped out of Harvard and founded Microsoft, he’s now the richest man in America and he’s still in his 30’s.” That was back then, keep in mind this was twenty years ago. The point he’s trying to make is that, getting a good education and making good grades no longer ensures you success. Nobody seems to have noticed this.
He talks about two perspectives, and they’re very subtle but they’re two different perspectives. He says one is, “The love of money is the root of all evil,” but then he also says, “The lack of money is the root of all evil.” I tend to believe the latter. I come from the camp that a lack of money is the root of all evil because if you have enough money, cash, then you can resolve your issues and you can be charitable and help other people with their issues. I think if you have that lack mentality, it’s really more of a poor and middle class type of perspective. It’s not a perspective of abundance.
One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school. Most of us learn about money from our parents. What can a poor parent tell their child about money? Money is not taught in schools, unfortunately.
On today's episode I take some listener questions related to market timing and a "peak" market. I also discuss the best time to buy rental properties, and how to avoid making mistakes leading to investment failures.
If you missed our last episode, be sure to listen to What To Expect When Buying A Turnkey Rental Property.
Enjoy the show!
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On today's show, I have one of my senior investment counselors, Steve. And we will talk about what to expect when buying a turnkey rental property. We answer a lot of frequently asked questions here. All of our clients, whether they're new or fully seasoned investors, have certain questions and expectations. They all want to know what the next step is, what to do at a certain point, what to do in certain situations, and how to move the deal along. We have certain answers for all these situations. Turnkey Rental Property Investments | What You Need to Know In this article:
Turnkey Real Estate Investing Basics What Real Estate Investors Need to Do What is a Turnkey Property? Appraisals in Turnkey Real Estate Investing Inspections and What to Expect with Them Three Types of Repairs Turnkey Investment Properties and Repairs Turnkey Property Investment Closing Timeline How to Communicate with Service Providers What to Expect with the Lease Status of a Turnkey Investment Property How to Select a Turnkey Property Investment Your Responsibilities as a Turnkey Property Investor What Does a Real Estate Investment Counselor Do? How Norada Real Estate Gets Compensated
Turnkey Real Estate Investing Basics Turnkey investment properties aren’t a set-and-forget kind of deal. Some people think they can “flip” a rental property and have it move-in ready after a week of repairs. That’s not always true. Turn-key real estate is a long-term investment. It’s for those looking to build their passive income over time. If you want to keep things smooth, you’ll have to learn how to build a long-term relationship with appraisers, inspectors, turn-key property management firms, and other providers.
What Real Estate Investors Need to Do
New real estate investors think they don’t have to do anything to make passive income. That couldn’t be any less true. When you’re looking at turn-key property, you need to understand that you have responsibilities as an investor. This is the key to generating real wealth in real estate.
In this episode, we’ll talk about your expectations as a turnkey property investor. We'll also discuss your roles and responsibilities. And we’ll talk about the best ways for you to engage with a turnkey company to help you make the most out of your investments.
If you missed our last episode, be sure to listen to How Trump’s Presidency Could Affect Real Estate Investing.
Enjoy the show!
Do you have turnkey rental property investment tips you'd like to share? Let us know in the comments section below!
Up Next: From Zero to 35 Rentals in 4 Years – A Client Success Story | PREI 097
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What To Expect When Buying A Turnkey Rental Property
Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. On today's show, I have one of my senior investment counselors, Steve, who's going to help me co-host this particular episode. What this episode is about is what to expect when you're buying a turnkey rental property. Let me explain what that means. We answer a lot of frequently asked questions and all of our clients, whether they're new or newbies or they are fully seasoned investors, have certain questions and certain expectations. They all want to know what the next step is and what to do at a certain point and what to do in certain situations and how to move the purchase along. We have certain answers for all these situations. They're pretty common across the board. We have this purchase process if you will. On today's show, we're going to talk about some of the most common scenario...
In less than two weeks, we have president-elect Donald Trump taking over the Oval Office. What will that mean to us? How is that going to change the environment? How will Trump's presidency affect real estate investing?
On today's episode we talk with Greg Rand about how Trump's presidency might affect the real estate investing industry.
If you missed our last episode, be sure to listen to 5 Mindset Myths That Are Killing Your Wealth Potential.
Enjoy the show!
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Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.
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How Trump's Presidency Could Affect Real Estate Investing Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. I want to give a shout out to all of you listeners out there in 152 countries. Thank you for being a listener. It's going to be an exciting year this year, 2017. Granted, there is a lot of change going on around the world, especially here in the US. What will 2017 bring, especially for us real estate investors and people who just follow the real estate environment?
Today, I want to bring on a guest who I've known for a while and I keep bumping into him here and there. He's an author and a real estate guru of sorts. His name is Greg Rand. He's written a great book. He likes to look at real estate through the policy, political and economic and environmental lens. He has an interesting perspective on things. I think you're really going to enjoy today's episode.
In less than two weeks, we have president-elect Donald Trump taking over the Oval Office. What will that mean to us? How is that going to change the environment? I really don't know. I don't think anybody really knows because I've always said that Donald Trump, although he has a lot of great business and marketing qualities, he's also a wildcard. There's a lot of uncertainty about this new political regime that's coming into Washington.
At the same time, he's a guy who really understands a lot of things about business. I don't know. You got to look at the tax structure that we have in place and what that could potentially change into. There are predictions out there that home prices will go up. There are comments and suggestions that he will make industry friendly policy changes that will improve, not only the economy in general, but real estate more specifically.
One of those big things that are just floating out there and have been for a long time is the whole Dodd-Frank Act. It's a bill that is just jam-full of regulation. If Trump gets in and he is true to his word and minimizes the amount of regulation centered around this Dodd-Frank Bill, that will probably ease up on the capital flow. There will be more capital available for real estate projects, specifically for commercial. That will flow into many areas of the economy.
If Trump is successful in creating domestic jobs and bringing jobs that have been moved offshore back into the US, then theoretically that should be good for our economy and good for commercial real estate and good for residential real estate and good all around.
I am politically agnostic and I do not believe that governments create jobs. They sure know how to raise capital through taxation, through inflation and guess what, then they redistribute that into areas that they want to put it into, social programs, infrastructure, whatever else, military. Time will tell. This will be a very interesting year. It'll be a very interesting four years with Trump in office.
Trump's Presidency: At the end of the day, we can't control the global economy but what you can control is your own local economy.
I am going to keep a close eye on the economic landscape and...
Successful real estate investing relies on several factors, but as the old adage goes, “location, location, location” is top of the list. But “location” is a broad term, and evaluating the right place to invest your dollars in real estate means identifying the right market in both the macro and micro senses.
On today's episode we talk about the factors that make up a good market for your investment dollars.
Successful real estate investing relies on several factors, but as the old adage goes, “location, location, location” is top of the list. But “location” is a broad term, and evaluating the right place to invest your dollars in real estate means identifying the right market in both the macro and micro senses.
On today's episode we talk about the factors that make up a good market for your investment dollars.
On today's episode we speak with M.C. Laubscher about a not-so-new concept of how to be your own bank. M.C. Laubscher is a wealth strategist, educator, and financial freedom fighter. He is the founder and president of Valhalla Wealth Financial.
On today's episode we talk about some of the hidden assets you may not be aware of, and how you might be able to put them to better use and get a higher yield. It's a quick episode but a topic an important topic to consider.
If you want to succeed in real estate, your tax strategy will play a HUGE role in how fast you grow.
A great tax strategy can save you thousands of dollars a year — and a bad strategy could land you in legal trouble.
On today's episode we discuss some ways to maximize your tax deductions, Little known secrets to take control of your retirement money, clever ways to write off your kids, and so much more.
If you missed our last episode, be sure to listen to the Maverick Mistakes in Real Estate Investing.
Enjoy the show!
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How to Pay Less in Taxes – Amanda Han and Matthew MacFarland Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. Today we've got what might be perceived as a boring topic, and that is about taxes. But remember that taxes are your biggest expense throughout your lifetime. Not only do you need to choose your income wisely because your income, depending on how you generate it, will be taxed at different rates. But if you invest wisely, like with real estate for example, you can have some of the best tax breaks available through the IRS code in the United State.
See, the more you earn through your job or through your business, the more you're going to get taxed. But the system is actually set up in a way that actually punishes people who earn employment income. This is your W9 and, to some degree, your 1099 income. It is designed to reward business owners and investors. Real estate, rental real estate, income producing real estate, falls in that I quadrant. That's all about investing.
Wage income not only requires hard work but it gets taxed at a very high rate and on top of that, you have to pay what are known as FICA taxes, which have to do with your Medicare. It's just not the best way to protect yourself from the taxes that will erode and eat away at every paycheck.
Rental real estate has many tax advantages, especially over wage income.
How do you protect yourself? The best way is through rental real estate, income producing real estate. Why is that? Because it has many tax advantages, especially over wage income. You got this capital gains rates that, on real estate, caps out at 15%.
Now, that's assuming you've held a property for a minimum of twelve months, but you compare that 15% federal tax rate on the capital gains to the 35% or so that you would be charged on wage income. There's a huge difference right then and there. On top of that, you have state taxes, and then on top of that, some states even have further discounts on those capital gains income. It really adds up.
Remember that capital gains requires that you hold the property for a minimum of twelve months. This does not apply to flippers. Unfortunately, if you're wholesaling and flipping property, you lose out on this capital gain benefit.
Now, there's also that 1031 exchange, which is basically a way for you to roll your profits over from one rental property into another and defer those taxes. You could potentially defer indefinitely. Your tax basis in doing so actually just rolls from one property to another to another. This is the great thing about the 1031 exchange, it's a tax deferred exchange.
Now, there are some rules you have to follow. You have to close within 180 days and you have to identify those properties within 25 days. We've actually talked about this in a previous episode not too long ago. You can go back and listen to that to figure out how this all works.
Rental real estate, income real estate, also provides you an interest deduction. You see, you get to actually deduct the interest you pay on your debt.
Born with an entrepreneurial spirit Damion started his first business at age 11, has started 30 since then, and is the published author of 5 books.
Damian paid for his first rental house with a VISA, then over next 5 years bought 150 houses across 7 states, and went through a $20,000,000 meltdown in 2008.
Damian’s personal philosophy combined with a love of financial markets and money psychology drove him to start the Austin-based financial-tech company, Total Control Financial in 2016. His aim was to disrupt wall street and empower main street.
On today’s episode we discuss some of the messes and misfortunes Damion made as a real estate investor. What can we learn from his experience? Let’s find out, and enjoy our other interesting tangents of discussion.
If you missed our last episode, be sure to listen to the Ask Marco: Asset Protection, Holding Title, Closing Dates.
Maverick Mistakes in Real Estate Investing – Damion Lupo Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. As you know, this is the show where busy people like you learn how to build substantial passive income and create wealth for the long term.
On today's show, I wanted to bring on a guest who I find rather interesting because he has been very, very successful in real estate in years past. But then, has also learned from a lot of messes and misfortunes. I'm hoping that he can share some of those lessons in maverick mistakes in real estate investing with us today.
I guess, us, as investors, if we can learn from other people's successes and other people's mistakes, it will just spring board our success and it will shorten or compress the length of time that it takes for us to get to where we want to achieve those investment goals.
My guest today is Damion Lupo. He is born with an entrepreneurial spirit. Damion started his first business at the age of eleven. He's started 30 since then. He is the published author of five books. Damion paid for his first rental house on a Visa, of all things. Then, over the next five years, bought 150 houses across seven states.
Then he went through a $20 million meltdown in 2008. Damion's personal philosophy combined with a love of the financial markets and money psychology drove him to start his Austin based financial tech company, Total Control Financial in 2016. His aim was to disrupt Wall Street and empower the Main Street, which I just love.
Damion, welcome to the show.
Hey, Marco. It's awesome to be here. Thanks for having me.
It's my pleasure. Before we get into meat and potatoes here, I have a curiosity thing. I took martial arts for many, many years. In my earlier years, I spent many years studying Judo and then I spent years in Aikido and Hapkido, which is a Korean version of the martial art. Apparently, you have three black belts and you created your own martial art, called Yokido. I was wondering if you could maybe tell me a little bit about that, because I'm very curious.
Definitely. I started Aikido about the same time I started my real estate investing. Actually, it was the same year. Over the next decade and a half, I ended up with three different black belts in Aikido or versions of Aikido.
At some point, about five or six years ago, I started studying yoga and realized there was such powerful component of yoga, with breath work and core, strength that could really be brought into the Dojo, the martial arts space. And empower people to use their breath, which is so important that gets left out often times, and infusing things like the meditative aspects of yoga and bring that in so that people could be more powerful simply by breathing correctly.
This was a good bridge for women that loved yoga and really wanted to feel comfortable walking around. Especially with Aikido, if they saw there was a gentle way to take yoga and bridge into self defense, they could have a different experience showing up in the world and living without fear of ...
On today's episode we respond to some listen questions about asset protection and how I like to structure my asset protection plan. As well as how to hold title and use a client as an example scenario. And a quick look at closing dates and what to expect in practice.
If you missed last week's episode, be sure to listen to the Listener Questions / Jacksonville Update.
Enjoy the show!
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Ask Marco: Asset Protection, Holding Title, Closing Dates I want to apologize for missing last week. I was very, very busy. In fact, we've all been very busy around here lately. This has just been an unbelievable year in terms of investor interest and sales. We recently hired a new transaction coordinator. I think she's been with us for three or four months. Lately, we've been in the process of finding a new investment counselor and we are now in the process of onboarding her and doing some training. It just never ceases to end, how busy things are around this country in terms of real estate and how busy we've been. A lot of that is thanks to you guys. For all you, past, current and future clients, we want to thank you very much. We appreciate your business. We love working with you and we love helping you and we love educating you. Keep up the good work. Don't lose the momentum. There are still lots of great deals to be found and we have a lot of those on our website. Even though inventory is tight and it moves quickly, we see a very big velocity in the number of properties being turned over, but they are there.
A question for you, in your opinion, do you think the stock market is hugely overvalued? Obviously, there's a little bias in that question. I do. I think the stock market is irrationally high. I think that's the reason why we are so busy. I think there's a lot of investors who are coming to the realization that the stock market is overvalued and has had a long, long bull run. Some people I think are smart enough to start pulling some of those chips off the table and taking that cash and redeploying it into other areas, other assets. Some people might be sitting on the sidelines in cash, other people are investing those funds into hard assets. One of the best hard assets out there you can invest in is obviously income producing rental properties. What do you think? I'd like to know. I personally think the stock market is heavily overvalued.
One of the metrics or indicators that people look at is the PE ratio, the price to earnings ratio. This is a valuation indicator that is probably the most quoted in the financial media. Nevertheless, according to that data, which by the way, I believe is compiled by Yale-Shiller. It is the index that was put together by Robert Shiller of the famous Case-Shiller index. Based on the standard estimates for the second quarter of this year, that ratio currently stands at 25.2 to 1. If that doesn't mean anything to you, let's look at it this way. A “normal” range is often in the 12-15 to 1 ratio. At least historically, that's what we've seen is being "normal." Realize this, that number is higher than 89% of the past bull market peaks. Where we stand today in the stock market, we are above where we have been at our peak in 89% of the past bull market peaks.
Asset Protection: Value always will trump everything else. You could be irrational for only so long. Think about that.
You decide. I always tell people to not be heavily vested in the market. That's not financial advice, that's just me and my opinion and how I feel about it. At the end of the day, these valuation indicators are only so helpful.
On today's episode we briefly revisit Jacksonville, Florida to look at some new pre-construction investment opportunities.
I also answer several listener questions about getting started, property tax rates as an out-of-state investor, and whether a cash-out refinance on a principal residence makes sense.
If you missed last week's episode, be sure to listen to the Market Spotlight: Little Rock, Arkansas.
Enjoy the show!
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Listener Questions / Jacksonville Update On today's show, we're going to cover two things. One, we're going to have Brian back on the show here to give us a quick Jacksonville update. He’s got some new construction opportunities in the Jacksonville market, which I think you might be excited about. Then I have three great questions that have come in recently from our listeners. I'm going to cover that here right after we talk to Brian.
It's my pleasure to welcome back one of our Jacksonville providers. I have Brian on the line here who wants to give us an update on the Jacksonville market. More importantly, he wants to give us an update on an exciting new construction project that he has going on. Brian, welcome back.
Thanks so much for having me Marco. It's good to hear your voice.
Thanks for coming back on the show for a quick update on the Jacksonville market. That's a good place to start, Brian. Let's talk about what has transpired since episode number 21, where we did an entire episode with you on the Jacksonville market and we talked about not only what's going on there, but the product type that you are producing as far as turnkey rental properties. What has changed since then? If you want, just highlight some of the things you talked about in the past that would make good highlights for new listeners.
To revisit just very briefly for the listeners, we started investing in single-family homes and foreclosed property in particular back in '98 in Bakersfield. That, at the time, had a third of the foreclosure activity in the state of California. We saw it as a huge opportunity. We went in there pretty green and made some mistakes in the beginning and very quickly built a really good team. From '98 to '04, we built up a portfolio of a couple hundred homes. Most of the listeners know what happened in California between '04 and '06. We were fortunate enough to start liquidating in '04 and we sold every home that we owned in California between '04 and '06. We made a really good play there and made millions of dollars fairly quickly and then moved a lot of the resources and the capital into Jacksonville. Timing wasn't the best to do that in '06 and '07 and Florida was not the best place to be placing capital. We realized that very quickly and then backed off 2008 to 2011 when Jacksonville bottomed out. Then 2011, fast forward to today, we came back into the market slowly in '11 and since have built up a good sized portfolio. We're right around 170 homes and providing a lot of turnkey investments for investors like yourself.
We definitely have felt the pinch of inventory in our bread and butter solid working class neighborhoods in Jacksonville.
An update on Jacksonville, since we spoke last, Marco, which was only about a year ago, honestly, nothing has radically changed. Obviously, the fundamentals are what they are. Really just to focus and give you an update on the timing in the market and where we're at this cycle, we are still moving through recovery in a buyer's market, in my opinion, in our niche in Jacksonville. Obviously a year ago, there was more inventory.
On today's episode we take a look at the great "under the radar" market of Little Rock, Arkansas.
Little Rock has a great economy, and terrific number in terms of purchasing and rates of return. It's also one of the most landlord friendly states in the country with average eviction times of only 21 days!
Why invest in Little Rock, AK? What is the local economy like? What is the local housing market like? What is the local rental market like? What are the typical turnkey rental properties like in Little Rock?
If you missed last week's episode, be sure to listen to the Investing in Turnkey Properties — My Journey, Setbacks and Advice.
Enjoy the show!
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Market Spotlight: Little Rock, Arkansas Today, we have an exciting show for you because it's another market spotlight. The market I'm talking about was ranked the fourth strongest economy in the US by Business Week in 2013. This market that I'm talking about has been under the radar. It is a gem that most investors don't know about or even talk about. Those that know about this market are doing extremely well there. The market I'm talking about is Little Rock, Arkansas. On today's show, I have two of the principals of the company that we have a relationship with and do work with down in Little Rock. They are our provider of course. They're going to be here with us today to talk about the market and why it makes such a great market to invest in, why invest there, what the economy and the housing is like, the types of investment properties that are available there. Although they are in somewhat short supply, we have a revolving inventory. It is fairly consistent and we will have something for everybody if this is a market that is of interest to you.
It's my pleasure to welcome Jeremy and Brian to the show. Jeremy and Brian are two of the principals and partners of our Little Rock, Arkansas provider. Jeremy has a background as an Electronics Engineer and is a full-time real estate entrepreneur. He owns and manages a portfolio of his own properties. Brian, his partner, is a lifetime native of Little Rock and owns 27 properties out there. Guys, welcome to the show.
Thanks, Marco.
This is a little overdue because we have been keeping our eye on the Little Rock, Arkansas market. It really is under the radar. I wanted to get you on today to talk about it. This is going to be our market spotlight. We're going to start pushing some inventory. Let's begin by you telling us a little bit about yourselves and how you got involved in real estate. Maybe Jeremy, we could start with you.
I got started in real estate about ten years ago. Again, I come from the corporate world, nine years of experience in the semiconductor industry. I started buying rentals in Memphis, managing them, going through the process of learning how to be an investor, got involved through a local area and met my current partner in Memphis. We started building a company there. Through a mutual connection on his end, we met, we hooked up with Brian in Little Rock and started business there about three years ago. That's how things got started. Brian, of course, has been investing in Little Rock for about twenty years. He's a lifetime native. In the last two or three years, we've just seen extraordinary growth in the Little Rock market.
Brian, what about you?
I've been investing here since 1997. I became an accidental landlord. It worked out. I bought another property and networked out and bought another property. I'm self-taught from the school of hard knocks for the last twenty years in real estate ...
On today's episode I share my journey investing in rental real estate from my early start at the age of 18, through my trials and tribulations, to where I am today. We should all learn from our past experiences, good and bad, because they provide us knowledge and the wisdom to improve and do better as we go.
Regardless of where you are in your investing journey, I encourage you to listen in, and feel free to share your story with us.
If you missed last week's episode, be sure to listen to the Indianapolis Update and Listener Questions.
Enjoy the show!
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See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
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Investing in Turnkey Properties -- My Journey, Setbacks and Advice Today, I wanted to talk about the concept of investing in turnkey properties. Investors sometimes ask me, “If I had to go back and do it all over again, what would I do different? What did I learn?” Really, it's just about the journey of where I started and how I got to where I am. People just want to know where I started and how I got to where I'm at. If I was to just rewind the clock and tell you where I started, I was only eighteen years old when I bought my first investment property. I have to tell you, at that time, it was an exciting time and a scary time. In fact, I had never read a book or taken a course on real estate up to that point. I only really had experience in rental properties through helping my parents, aunts and uncles renovate a single property they bought as a group when I was in my early teens. It really was a family project, and it really was the only rental property that they ever bought and fixed up. It was more daunting and more work than they anticipated, so it ended up taking weeks to get done. It was a job that was done in evenings and on weekends because everybody had a full-time job, we were in school so it was really a side project, if you will.
My first investment property was a rundown, two-story townhome that needed a decent amount of work and upgrading. I was able to purchase it with financing because the lender considered the property to be livable and I qualified for the financing because I was employed for over two years with a good paying job and it was a part time job. I then hired my uncle who was a general contractor. With the help of my immediate family for some of the demolition, we jumped in to get the property cleaned, upgraded and prepared to lease. That project probably took a couple of weeks.
Turnkey Properties: My biggest regret with that first property was selling it. I can't imagine what the cashflow would be like today if I had kept it.
I recall running an ad in the local paper. Remember back then, there were no iPhones and there was no internet so it was the newspaper or you stuck a sign in the yard. I would have people come by the property to fill out applications while we continue working on the property inside. I had absolutely no experience in screening tenants. I'm sure I relied on my gut feeling at least as much what they wrote on their applications. I kept that property and managed it for probably a few years before I decided to sell it. I made a nice profit on it. All in all, it was a very good experience and one that I can look back and reflect on. The property was local to me. The price was right and I was ambitious enough to literally jump in and just do it. My biggest regret though with that first property was selling it. Over time, the market value exceeded ten times the price I originally paid for it. I can't imagine what the cashflow would be like today if I had kept it. It probably would be free and clear. I would be raking in, who knows?
On today's show we speak with one of our local Indianapolis market experts and property provider about the growth and opportunities in the Indianapolis market. We have some news and updates from our Indianapolis market spotlight early this year.
I also answer several listener questions, and talk about leveraging your existing equity to build a larger portfolio with more cash flow.
If you missed last week's episode, be sure to listen to Pros and Cons of Rehabbing and Flipping – Matty Aitchison.
Enjoy the show!
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Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.
See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)
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Indianapolis Update and Listener Questions On today’s show, I wanted to focus on Indianapolis again, but this is not a market spotlight per se. It’s really just another update on the market and what has been going on because we have had some changes there. Although Indianapolis is a perennial market for us, we've been there for probably ten years, if not longer. We have had some changes there. We've brought in a couple of new providers that we've been working with for about a year or more, and things have been going very, very well, clients are very happy, we've had many people fly out there to visit with our team; kick the dirt, see properties, see neighborhoods. They're always very impressed. I thought, “Let’s just take another look at the Indy market and bring one of our providers on. Today, I’m going to bring on a gentleman by the name of Josh. He is one of the team members that we work with out there, who manages a large team of people. Josh, welcome to the show.
Thanks, Marco. I appreciate you having me today.
I’m happy to have you on because I think it’s a good time to take a quick look at Indy again. Like I had said, it’s a perennial market. The numbers always seem to make sense there. There’s a constant flow of inventory, which I think is very important. Before we jump in to asking that all-important question of why invest in Indianapolis, why don’t you tell our listeners a little bit about yourself and your partner, Scott, and how you guys got involved in real estate?
Scott and I worked together at a firm in the late ‘90s. It was our first experience together. We managed a high volume of investment property, generally distressed sale managements. We were acquiring properties all over the state, more of a C class or inner city-type property situation rather than what we focus on today. We did it at pretty high volume. We had probably at one point in time, over 500 properties under management. We were acquiring somewhere in the neighborhood of 20 to 40 properties a month. It was just a different time, different market than it is today. We found that it wasn’t as reliable and as certain as what we’re hoping for. That was when we first got together. We had been working together in various different operations over several years. We all know what happened in 2008. Everything went sideways in most markets. Indianapolis, it had an issue, but we didn’t really have it as it affects nationwide. We definitely had increased amount of foreclosures. That’s what I spent my time focusing on. We managed properties for Fannie Mae, Freddie Mac, HUD, Chase, all the big firms. We really focused on the management and sales side of that for probably about eight years.
My partner, Scott, was building this company where there was a defined need in around 2010 for turnkey investment property providers. There was just a lot of interest in people, in our market, looking to purchase quality investment properties. There were very little providers out there that actually knew the market, had the systems in place and were able to produce it o...
Matty Aitchison is a millennial entrepreneur, real estate investor, and wealth building evangelist who has had great success following his turbulent start. Ranked in the Wall Street Journal’s Top 1000 for real estate teams nationwide, Matt has personally flipped over 100 houses in 5 years, and now passionately mentor others on their journey of unlocking a rich and fulfilling life.
Listen in as Matty and I discuss the pros and cons of rehabbing and flipping properties.
If you missed last week's episode, be sure to listen to The Four Real Estate Market Cycles.
Enjoy the show!
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Pros and Cons of Rehabbing and Flipping - Matty Aitchison Matty Aitchison is a millennial entrepreneur, real estate investor and wealth-building evangelist.
It's my pleasure to welcome Matty Aitchison to the show. Matty is a millennial entrepreneur, real estate investor and wealth-building evangelist who has had great success following his turbulent start. Ranked in the Wall Street Journal's Top 1000 for real estate teams nationwide, Matty has personally flipped over 100 houses in five years and now passionately mentors others on their journey of unlocking a rich and fulfilling life.
Matty, welcome to the show.
It's a pleasure to be here, Marco. Thanks for having me, man.
My pleasure to have you on the show. You have an interesting background. You're a relatively young guy. If I'm not mistaken, I think you're in your late 20s, is that true?
That's correct.
Again, another millennial. I think you're the second or third millennial I've had on the show here in the recent past. You guys not only intrigue me, but you guys inspire me. You have an interesting background, Matty. Why don't we start off by you telling us about yourself and your background?
I'm from Sacramento, California and born and raised here. I was heavily into sports. It's funny, a lot of people ask me, "How did you get into real estate investing?" I go back to when I was twelve, thirteen, fourteen. My mom, who was always worked in corporate America her whole life, was going to those guru flipper seminars and she would take me with her. At a young age I was exposed to this idea of real estate investing being this vehicle for wealth building and had the ability to put no cap on your income. You had the freedom to be your own boss. You could add value to communities and people in that space. It had always been in the back of my head.
I actually got into trouble a little bit in school, as most teens often do, and I was expelled from high school. I went on to go to UC Santa Barbara for college. In my first year in college, I actually got arrested for the exact same thing that got me expelled from high school. That was my fork in the road, my “oh shiz” moment, I like to call it of thinking, “Man, what am I doing with my life?” The direction that I said I wanted to go in was not being backed up by my actions. My video and the things that I was doing was not matching my audio and the things that I was saying and telling people that I wanted to accomplish. I had a big reflection time at that point in my life.
I remember my dad actually spoke some great wisdom to me at that point in my life where I could have gone in a really wrong direction. He said, “Your rear view mirror is there for a reason and I want you to look at this as an opportunity to say your past doesn't have to equal your future." I decided to keep my focus on the windshield and the vision but also kept in mind the rear view mirror, keeping me aware of what was behind me but what led me to where I was currently at.
In order to make profitable investments, it’s vital for investors to understand the four real estate market cycles because they directly affect the price of the properties you may want to consider, or the properties you currently own.
If you missed last week's episode, be sure to listen to The Wealth Creation Formula.
Enjoy the show!
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The Four Real Estate Market Cycles Today, we're going to talk a little bit about market cycles. In order to make a profitable investment, it's vital that you understand the cycles of the real estate market because they actually affect the value of the properties that you want to consider or the properties that you own. Let's be clear right from the beginning, I am not suggesting or implying that you focus on appreciation or potential appreciation in lieu of cashflow. For me, cashflow is still the number one priority, it's at the top of the list. It is the most important factor that I look at. I look at cashflow in terms of dollars, but I also look at cashflow in terms of what's my cash-on-cash return? That's how I judge a good performing asset.
In terms of market cycles, the first thing to understand is just as the weather has four seasons, so does the real estate market. It has four general cycles. An upmarket, a peak market, a down market and a bottom market. In other words, just as temperatures fluctuate during spring, summer, fall and winter, so do property prices in residential real estate. They go up and down in their cycles. However, unlike weather seasons, market cycles tend to last longer at approximately seven to ten years. That's an entire cycle from beginning to end. Keep in mind that these cycles are normal functions of dynamic markets. They're affected by factors within those markets. For now, let's take a closer look at these four general markets and what goes on in each of them. We're going to consider a little bit more of a technical definition later, but let's just talk about this in general terms.
Market Cycles: When you're in a rising market, it's exciting because the tide floats all ships.
First and foremost is our favorite, an upmarket. This occurs when home prices are rising. It's also called a "sellers' market." I'm sure you've heard that term before. It's called the sellers' market because sellers can pretty much get the price that they want when they want it and there are so many people who are buying properties at these higher prices that it continues to push the price up. In essence, demand exceeds the supply. What are the signs of an upmarket? Prices are appreciating, that's obvious. But inventory levels are low or that trend is dropping. You'll see inventory start to dry up. Tied in with that is you'll see a shorter number of days on market. This is referred to as the DOM, days on market. You will see that properties don't sit on the MLS or on a street for very long before it goes into a pending and sold status. There are multiple offers on properties. Often, you will see people bidding against the same property. That just further drives prices up. There is optimism and excitement or a buzz among people and within that market. You can tell that there's some sort of euphoria going on. This is what sometimes leads to that irrational exuberance as the book talks about. Investors feel good about investing. There's that general feeling of, "This is the right thing to do and the right place to be." When you're in a rising market, it's exciting because the tide floats all ships.
After a few years of an upmarket, what we find is we reach a peak market. As the name indicates,
Have you ever wondered how the rich keep getting richer while broke people stay broke and the middle class continues to shrink? This isn't as mysterious as it may appear when you examine the specific differences in how broke people, the middle class, and the rich spend their money.
Today we talk about The Wealth Creation Formula.
If you missed last week's episode, be sure to listen to Finding The Drive To Be A Huge Success In Real Estate with Rod Khleif.
Enjoy the show!
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The Wealth Creation Formula Our show is about creating substantial passive income and creating wealth for the long term. That's the subject of today's episode. It's wealth creation, or more specifically, the wealth creation formula. Have you ever wondered how the rich keep getting richer, while broke people stay broke and the middle class continue to shrink? This isn't a mystery as it may appear when you examine the specific differences on how broke people, the middle class and the rich spend their money. This is such a simple concept, yet it's so profound. I believe I finally understood this concept on a train ride with my wife from Rome to Florence, Italy. I had picked up a new book called Rich Dad, Poor Dad by Robert Kiyosaki. Once I started reading it, there was no putting it down. What was made clearer to me at the time is how the rich spend their money. What I'm going to explain to you today is why the rich keep getting richer, the broke keep getting broker and why the middle class remain stressed out.
Wealth Creation:Cashflow, the money that you bring in. Expenses is money that you spend. Asset is something you own or have equity in.
Before we start, it's important to understand some common financial terms. The reason is many people misunderstand their real meaning. The terms that you need to be familiar with are the following: Cashflow, which is the money that you bring in. Expenses is the money that you spend. Asset is somewhat of a confusing term because most people are familiar with the traditional definition of an asset, which is something you own or have equity in. However, Robert Kiyosaki introduced us to a new definition of an asset in his Rich Dad series of books. Robert defined an asset as something that pays you, and that's the definition I've adopted and the one that we'll use here. Liabilities, is defined as those things that cost you money. A typical example is one's house, which is often viewed as an asset, but it can actually be a liability. Anything that costs you money is a liability, not an asset. If you have a mortgage on your house, it's an asset to your bank because it pays them every month. However, a house or other property can also be considered an asset under the right circumstances. If that property generates income, like a rental property, and it pays you a positive cashflow every month after all expenses, then it would be considered an asset. Just remember that an asset has to put money in your bank account. Cashflow is the money you make, while expenses is the money you spend.
Let's take a look at how broke people spend their money. Keep in mind that my definition of a "broke person" are not those that are destitute. I'm referring to that large portion of our society that live paycheck to paycheck and never seem to have any money. In fact, they often have to borrow from Peter to pay Paul, run up credit cards and they find themselves with more month leftover at the end of their money. Broke people purchase what I'm going to call stuff. Those things that people buy that they really don't need to survive.
Our guest today is Rod Khleif. Rod has personally owned more than 2,000 single family homes, and multiple apartment communities. Rod has also built several multi-million dollar businesses, and has dedicated himself as a community philanthropist. A compelling rags-to-riches-to-rags-to riches story, Rod soared from humble beginnings as a young impoverished Dutch immigrant to incredible success.
Why is psychology more important than technical knowledge in real estate?
How does one find the drive to be a huge success in real estate? What’s the difference between Achievement and fulfillment in your real estate business? And so much more.
If you missed last week's episode, be sure to listen to Inflation, Debt and the Investment Landscape with David Stein.
Enjoy the show!
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Finding The Drive To Be A Huge Success In Real Estate – Rod Khleif It's my pleasure to welcome Rod Khleif to the show. Rod has personally owned over 2,000 single-family homes and multiple apartment communities. Rod has also built several multimillion dollar businesses and has dedicated himself as a community philanthropist. He has a compelling rags to riches to rags to riches story. Rod has soared from humble beginnings in Holland, I believe it is, to incredible success here in the US. Having said that, Rod, welcome to the show.
Thanks, Marco. It's awesome to be here.
It's my pleasure to have you on the show. I didn't know much about you until recently. In doing my due diligence on you and learning more about you and listening to your podcast, I was very impressed with a lot of the things that you had accomplished in years past. Then I was even more impressed with your Tiny Hands Foundation. I'm going to do a little thing that's out of the ordinary for me here. I usually start with tell us about yourself and whatnot. If you don't mind, before we get into you and real estate investing, can you just take two minutes or so and tell us about that Tiny Hands Foundation? Because I'm very intrigued with it.
I was a narcissist back in the day, probably seventeen, eighteen years ago. I came across Tony Robbins, I went to a Tony Robbins' event. I saw what he does for needy families. He has something called a Basket Brigade. I decided to model it the year I went to my first event with him. I decided to feed five families and called the church, found out who needed help. My brother and I went and delivered big boxes of food to five families. One of the families, the lady came out of the house, she was in the shack and she came out of the shack, and she started crying when she saw the food. Then her five children all came out and they all started crying. I was hooked. The next year, I fed 50 families. This is for the holidays, a big holiday meal with gifts and things like that. In fact, I used to do turkeys. Literally, I deliver a turkey for Thanksgiving. I did 50 the next year, I did 100 the year after that. I doubled it every year, 200, 400, 800, 1,600. I paid for it all up to 1,600. That was '07. Then '08 hit. I was in real estate in '08, need I say more. I formed a foundation called The Tiny Hands Foundation. We have now fed, in the last sixteen years, 40,000 kids for the holidays. We've also done thousands of backpacks filled with school supplies. In fact, we're doing 1,500 backpacks to local kids here in Sarasota and Bradenton. It's just astounding to me that children in the United States
Drive: If you don't incorporate giving back somehow in your life, you need to. It's cliché, people tell you,
Our guest today is David Stein. David was the Chief Investment Strategist and Chief Portfolio Strategist at Fund Evaluation Group, LLC, a $33 billion investment advisory firm. Today he likes to teach people about money, how it works, how to invest it and how to live without worrying about it.
What is inflation, and what causes it? Why you shouldn't pay off your mortgage. What does the current investment landscape look like? Plus other topics we discussed on tangents.
If you missed last week's episode, be sure to listen to How to be Mortgage Free in Five to Seven Years.
Enjoy the show!
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Inflation, Debt and the Investment Landscape – David Stein Welcome to Passive Real Estate Investing. I am your host, Marco Santarelli. If this is your first time here, welcome. If this is not your first time here, I am glad you made it back. Today, I wanted to do a show that was a little different than what we typically do, which is hyper focused on real estate specifically. So much of what ties into real estate and investing in general has to do with what is going on in the economy and around the world, whether it be oil prices or interest rates or countries devaluing their currency versus our currency. Changing the cost of goods that goes into transportation and changing the cost of the materials that go into housing, etc.
It is really a very wide complex interconnected web. What I am going to start doing in future episodes, I am going to sprinkle in a show here and there about the economy and about economics, and about some topic related to real estate but not directly. Hopefully, that's going to help enlighten you and broaden your knowledge about what is going on around the country and the world. I don't get into politics, of course, but maybe something that is happening in Washington is going to affect financing or what you can and can't do with your properties. Who knows?
David Stein is the host of the personal finance podcast, Money for The Rest of Us.
Today, I am bringing a guest on by the name of J. David Stein, a really smart guy. He used to manage billions of dollars in a fund, not a hedge fund but an investment fund and he is a strategist. He has an interesting way to look at things and he explains things in a fairly clear way. In fact, he's got a great podcast that I listen to and I enjoy. It's just one of many sources of information that I get. Anyway, I was a little pressed on time on my interview with him, so I had to rush it a little bit and I apologize about that in advance.
It's my pleasure to welcome, David Stein to the show. David was the Chief Investment Strategist and Chief Portfolio Strategist at Fund Evaluation Group LLC, a $33-billion investment advisory firm. Today, David likes to teach people about money, how it works, how to invest it and how to live without worrying about it. He is also the host of the personal finance podcast, Money for The Rest of Us, which by the way is a great podcast. David, welcome to the show.
Thanks, Marco for having me. It’s good to be here.
It's great having you on the show. I actually am a listener of your podcast. I enjoy it very much because it's an interesting, easy listening format to learn about money and the economy and everything else surrounding that, which is not exactly what our show is about. I wanted to bring you on because I think a lot of our listeners are either sophisticated and or interested in different aspects and asset classes and how maybe all this stuff in the economy ties back to real estate and the landscape that may or may not affect us.
How would you like to be completely mortgage free in less than a decade?
There's a new way to manage your mortgage and monthly cash flow so that you, and not some banker, get to squeeze the most use out of every dollar that comes in, and every dollar that goes out. The strategy is called Equity Acceleration. It's not such a big secret in Australia and the United Kingdom, where as many as 1-in-4 homeowners are accelerating the mortgages.
Join me on this exciting episode to discover how you can be mortgage free in 5 to 7 years on your principal residence or investment properties.
And, if you missed last week's episode, be sure to listen to From Broke to $10,000 per Month at Age 24 – Sean Gray.
Enjoy the show!
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How to be Mortgage Free in Five to Seven Years - Jordan Goodman Today, we have a very exciting episode because we're going to tell you how you can cut your mortgage down and have it paid off in about one third of the time. Typically, that's going to be five to seven years but it could be seven to nine. In either case, it's going to be about one-third of the time. Our goal here is to share the knowledge and methods of actually owning your properties and your home mortgage-free much sooner than you imagined.
Think about this interesting statistic, in 1929, only 2% of Americans had a mortgage on their home. In 1962, 98% of Americans had a mortgage on their home. That's a huge difference. Take a look at the history of mortgages in America and you'll start to understand why this has changed so radically. Do you know where the idea of the amortization concept came from? It was actually developed after the great depression as a way to stimulate home ownership and of course banks' profitability. That is still true today. Until that time, most loans were five years in interest only and they had a balloon payment at the end of the five-year term. Bankers didn't determine that payments were a problem. They thought that those monthly payments were actually the biggest hindrance to someone owning a home. What they did is they dragged out the mortgage for as long as they possibly could to generate these low monthly payments. That made home ownership and affordability much, much easier.
Initially, they stretched it out to ten-year loans. That's what was common and then twenty and then 30-year loans. That seems to be the norm nowadays. For some of you, if you remember back in the mid-2000s, we saw 40 and even 50-year loan amortizations, which is just absolutely crazy. If you think about it, the longer that term, the more interest you're paying to the bank over the course of the life of that loan. Really, at the end of the day, who's winning there? Is it you or is it the bank? Your lower monthly payment is given up in lieu of much, much larger interest payments. Today, would you buy a $250,000 home and pay $500,000 for it? Of course, you'd say no but that's exactly what you're doing when you finance a property.
Mortgage Free: Leverage is a wonderful thing if it's used properly and real estate is a great vehicle to allow you to do that.
Don't get me wrong, 30-year fixed rate mortgages are great because it's good debt. It allows you to acquire a larger portfolio of rental properties than you could if you were buying all cash. Leverage is a wonderful thing if it’s used properly. Real estate is a great vehicle to allow you to do that. You have to understand that there's a cost involved and of course, your tenant is actually paying the mortgage off for you, not you. Your tenant is buying the property for you and that's okay.
How does a 22-year old go from being broke, clueless, and sleeping on the floor of a small home with ten other broke college buddies to making over $10K per month, traveling the world, meeting his business heroes, all within six months?
Well meet Sean Gray. He started by asking himself better questions, and as he likes to say, “being the person who he is becoming.” Today, at age 24, he’s an author, speaker, real estate investor, business owner, and Rich Dad Education rep.
Join me for a great interview with many nuggets of great information.
If you missed last week's episode, be sure to listen to What You Need to Know About Cash-Flow – Frank Gallinelli.
Enjoy the show!
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From Broke to $10,000 per Month at Age 24 – Sean Gray Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. If you're a millennial, I really want you to pay attention to this show. But if you're not a millennial, I still want you to pay attention to the show because I have a question for you. How does a 22 year old go from being broke, clueless and sleeping on the floor of a small home with ten other broke college buddies, to making over $10,000 per month, traveling the world, meeting his business heroes all within six months? Meet Sean Gray. He started by asking himself better questions and, as he likes to say, "Being the person who he is becoming." Today at age 24, he's an author, speaker, real estate investor, business owner, a Rich Dad education rep. With that, welcome to the show, Sean.
Thank you, Marco. That was quite the introduction.
It's all true. You have an amazing story. What impressed me a lot about you is you were 22 at the time, you're 24 now, if I'm not mistaken.
Correct.
That puts you in the millennial category. It depends on whose numbers you read, but there's over 82 million of you guys out there. I think a lot of millennials really are lost. A lot of them still live at home because they just don't have the income, because they don't have the jobs. A lot of them are in school or they were in school and dropped out. They're trying to find their way. This is the reason I wanted to bring you on the show, is because I think you can be a massive inspiration for a lot of these people. It's not just those people that are listening to the show. We have everybody, from 18 to 70 year old people listening to this show. You can be an inspiration for everybody. I'm very happy to have you on the show.
I'm happy to be here.
Let's begin with a very basic question. What do you do?
That is a great question. It seems like a basic question but it's like peeling back layers of the onion. I get asked that question a lot. I'm not sure how to answer it. Sometimes I answer it with just basic, "I do sales, marketing," because I can't tell if they're really wanting to know or if they're just making small talk. For the conversations like this, when you really want to know what I do, at the 30,000 foot level, what I do is I travel around and I build my brand, I build my network through building relationships and keeping my eyes open for opportunities. When opportunities present themselves that align with my values, where I want to go, the things that I want to accomplish, I put myself in those environments to take advantage of them. I know that's a 30,000 foot view level and not very specific but I'm sure we'll get into more specifics as we go on.
Like you said in my introduction, I work with Rich Dad Education, do some real estate investing. I have a couple different businesses. One that teaches financial education and entreprene...
The only way to win the real estate investing game is by mastering the numbers.
If you’re truly interested in real estate investing then you must first realize that investing in income properties is all about the numbers. It’s about discounted cash flow and rates of return and net operating income and cap rates. If you understand how these and other key concepts work, then you’re on your way to success – and that’s exciting.
Our guest, Frank Gallinelli is the author of the best-selling book, "What Every Real Estate Investor Needs to Know About Cash Flow... " now in its third edition, as well as other books and numerous articles on real estate investing and finance. A graduate of Yale University, he serves as Adjunct Assistant Professor of Real Estate Development at Columbia University. Frank has been involved in real estate for more than 40 years and is the founder & president of RealData, a real estate software firm that has provided analysis and presentation tools for investors and developers since 1982.
What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures can be purchased on Amazon.com.
If you missed last week's episode, be sure to listen to Increasing Cash-Flow, Deferring Taxes and Reducing Risk using a 1031 Exchange.
Enjoy the show!
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What You Need to Know About Cash-Flow – Frank Gallinelli Welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. Today’s episode is about what you need to know about cash flow. I have the most appropriate guest for that subject. His name is Frank Gallinelli. He’s the author of about two or three books, which can be found at Barnes & Noble, Amazon.com and few other places. Real estate investing is a number’s game. The only way to win at this game is to understand the numbers. It’s important to know how to evaluate property, how to understand the cash flow, the rates of return, etc. but you don’t need to be a rocket scientist.
On today’s episode, we do get into some deep conversation, things that are maybe initially hard to understand or conceptualize. This podcast is on demand. You could listen to it two or three times. You can also educate yourself through books and various other resources that are available out there. This is something that you need to understand, at least, at a high level, if not be an expert at it. At least understand it at a conceptual level so you know what cash flow, cash-on-cash return is, your net operating income. These are all acronyms and part of the vocabulary. The only way to elevate yourself from being a novice or a newbie investor to a more sophisticated investor is to really grasp the vocabulary so you know what these terms mean and how you can use them and calculate them. Let’s jump in here in one moment and talk to Frank Gallinelli.
Frank is the author of the best-selling book, What Every Real Estate Investor Needs to Know About Cash Flow.
It’s my pleasure to welcome Frank Gallinelli to this show. Frank is the author of the best-selling book, What Every Real Estate Investor Needs to Know About Cash Flow, now on its third edition. He’s written other books and numerous articles on real estate investing and finance. He’s a graduate of Yale University and he serves as Adjunct Assistant Professor of Real Estate Development at Columbia University. Frank has been involved in real estate for more than 40 years. He’s the founder and president of RealData, a real estate software firm that has provided analysis and presentation tools for investors and developers since 1982. Frank,
Would you like to defer (or eliminate) your capital gains taxes? How about increasing the cash-flow of your real estate portfolio?
The taxable gain in real estate is due to a combination of the appreciation in value and the amount of depreciation taken over the period of time that it was owned by the investor. The tax savings using a 1031 exchange can be enormous. And using a 1031 exchange can help you re-position your real estate holdings into more, and better income real estate to increase your cash-flow and lower your risk.
This is a content-rich episode, so get ready to expand your knowledge.
If you missed last week's episode, be sure to listen to The Difference Between Rich and Wealthy (and Which is Better).
Enjoy the show!
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
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Please give us a RATING & REVIEW (Thank you!)
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Increasing Cash-Flow, Deferring Taxes and Reducing Risk using a 1031 Exchange Today’s show is pretty special. There’s a reason why real estate is one of the most tax favored assets in the entire country. There are a lot of great benefits to owning income producing real estate. We’ve talked about depreciation in past episodes, how you can amortize or depreciate the improvements of your property over 27 and a half years. You don’t need to spend a single penny to get that depreciation. It is absolutely incredible.
After 27 and a half years, that clock will run out. Now, you don’t have that ability. But there is a way too reset the clock.
At some point, that will run out. After 27 and a half years, that clock will run out. Now, you don’t have that ability. There is a way around it. There is a way too reset the clock. There’s also a way to take equity that you have in your existing properties and move that equity into other better, larger properties. That doesn’t necessarily mean that you're going from single family homes to fourplexes or apartments. What it does mean is that you can take the existing equity you have across one or more of your properties and leverage that into more property, better property that increases your cash flow.
In the process of doing that, because there are sales involved, you can defer your capital gains taxes. In fact, done right, you can defer them forever, indefinitely or at least until you pass away. Then there are some nifty things that happened like a step-up in the basis of that property so those that you will or heir the property to can start the clock over for themselves without any tax impact. It’s really a powerful thing. That’s what you're going to learn about today.
I have a really special guest who’s going to go into a lot of detail. I went through a lot of information before bringing him on the show. I structured my questions in a logical format where we can just start with the most basics and go through some complicated scenarios. First, I want to take one of my listener questions here, which I don’t think I've covered in the past, but it ties in somewhat nicely to what our topic is today.
This person writes and says, “Hi, Marco and Michael, a quick question about depreciation on tax returns. I know you guys are not CPAs but I’m sure you must have done it so many times. If a property is older than 27 and a half years when I bought it and if I bought it rehabbed, can I still claim the depreciation on the building, not the land? Does the counter get reset somewhere during the process or is this something that is applicable to properties newer than 27 years old or just one string of life of the building? Thanks, guys.”
I know what you're asking but you're asking the wrong question. It’s really not a matter of the age of the property.
Many people think that being rich and being wealthy are the same thing. They’re related but not the same. You see, the rich have lots of money but the wealthy don’t worry about money.
What’s the difference?
Join me as we take a look and compare the two.
And if you missed last week's episode, be sure to listen to Financing for Foreigners and the Self-Employed.
Enjoy the show!
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The Difference Between Rich and Wealthy (and Which is Better) Today's show is about the difference between rich and wealth, and which is better. Yes, there is a difference between the two. You see many people think that being rich and being wealthy are the same thing. They're related, but they're not the same. The rich have lots of money, but the wealthy don't worry about money. That's the key distinction. While the rich might have lots of money, they may also have lots of expenses that keep them up at night or they might have a high paying job, but they have to get up every day to go to work and possibly have the fear of getting laid off or getting injured and not being able to work for a long term. Either way, this situation can be stressful because you depend and rely on your regular income.
The wealthy on the other hand don't have these worries. Why? What's the difference? First, let's look at the definition of wealth. The definition of wealth can be defined as the number of days that you can survive without having to physically work and still maintain your standard of living. For example, if your monthly expenses are let's say, $5,000 and you have $20,000 in savings, your wealth is approximately four months or 120 days. Therefore your wealth is actually measured in time, not dollars.
Rich and Wealthy: True financial freedom is being out of that rat race.
What you want to do is build a business and invest in assets like income producing real estate to increase your cashflow. You want to add assets to your personal balance sheet that generate monthly income. Once that income from your assets exceed your monthly expenses and it does this on a predictable basis, then you're no longer rich, you're wealthy. You're out of that so-called rat race. This is what I refer to as true financial freedom. It's being out of that rat race. Now, you've actually created streams on income. This income can cover all your expenses and support your lifestyle, support your cost of living, support your monthly and annual needs.
Ultimately, it's not how much money you make that matters, but how much you keep and how long that money works for you. There are a lot of people out there who make a great income and I know many of these people, yet they're not wealthy. If they lost their business or they got injured, there's a high probability that they wouldn't last for more than six months to a year. There are people out there who come into these chunks of cash, who simply blow it on consumer items like bigger homes and cars and boats and vacations or whatnot. Many go into deeper debt, as in bad debt in the process of doing this. This behavior is actually what separates the rich from the wealthy.
The smarter thing to do is to use those funds to build your assets to increase your cashflow and then let that cashflow pay for those consumer items and those luxuries. What some people do to afford new things is to budget or live below their means. I'm sure you've heard this statement before. I don't want to necessarily point fingers, but I believe people like Suze Orman and Dave Ramsey talk about eliminating debt and living below your means and setting yourself a budget. To me,
How do you get financing for investment real estate if you're a self-employed or a foreigner (non-resident or non-U.S. citizen)? It's not hard as there may be many options available to you.
We talk to a lot of investors who are self-employed or live abroad who want to purchase investment property with financing. Well, the good news is there are a number of financing options and we work with a number of lenders who can provide you financing on virtually any of our turnkey investment properties.
On today's episode we speak with just one of portfolio lenders who has helped a number of our clients purchase properties here in the United States. Listen up as we discuss the commonly asked questions and terms available today.
If you missed last week's episode, be sure to listen to The Importance of Reputation.
Enjoy the show!
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Financing for Foreigners and the Self-Employed Today, I wanted to talk about the subject of financing, but financing specifically for foreigners and the self-employed. These are two types of people that we find to be a little bit on the challenging side to get financed because they don't fit into the conventional box or the box of financing that comes down through the government sponsored entities of Fannie Mae and Freddie Mac. Obviously, that's where you get your best rate. I wanted to bring on Matt Lineberger, one of the individuals that we work closely with. They are one of our preferred lenders. Matt is the Vice President of Business Development for Lima One Capital. What they are is a specially private lender for financing investment properties. They are especially useful to foreign investors, basically our clients around the world, and to those who are self-employed. With that, Matt, welcome to the show.
Thank you, Marco. I appreciate you having me on.
It's great having you on. I think this is a very important topic and one that will be of great interest to people around the United States who are self-employed, especially to our past, current and future clients around the world that are living in other countries; they're not residents of the United States, they don't necessarily have US based credit. Then they ask the question, "I want to invest in the United States. The opportunities are great, the affordability is great, but I can't get financing." They don't have any options. They're either all cash or they have to find their own private money or they have to work with a lender like yourself.
That's correct. As a matter of fact, I'd say 20% to 25% of our clientele are actually foreign investors. We identified that there is a niche and a need there and trying to fill that gap where the conventional lenders have left off.
Let's start off by you telling us a little bit about yourself and a little bit about Lima One.
I have been in real estate in some form or fashion about thirteen years now. I absolutely love it. I've been an investor, a lender, a contractor, you name it. I like to think I've been involved in just about everything. I'm sure there's a whole lot more to come. I can somewhat identify with some of the borrowers and some of the challenges of the real estate industry. From a standpoint of Lima One Capital, it has just been a great past couple of years for the company. As you were saying, we are private money lenders, we are not a traditional bank. We don't go to the conventional route. We can offer investment loans only. There is no owner occupied program that we offer. We can finance foreign investors, we can finance you as citizens and we can finance rehabbed properties all the way to long-term rental pr...
I just came back from a real estate forum in Florida where I was speaking on a panel answering questions about real estate and turnkey operators in the industry. As it turns out, I was asked a very important question about building your reputation in an industry with shady operators. Unfortunately, they only gave me two minutes to answer a question that required at lease 15 minutes.
So, I felt the question was important enough to cover as a podcast episode. Especially in our industry where there truly are shady operators.
And if you missed last week's episode, be sure to listen to Common Investor Questions (Part 1).
Enjoy the show!
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The Importance of Reputation Today's show is about the importance of reputation. I'll tell you why I have chosen this topic for today's episode. I just came back from Miami, Florida for the 4th Annual Single-Family Rental Investment Forum. It was great. I had a lot of fun. I got to network with a lot of people that I know in the industry. I was actually speaking on a panel there on turnkey operators. We all got asked questions of various sorts about the industry and turnkey providers specifically and how we operate and just what is going on. It was interesting. I got asked one question that was, "How do you build your reputation in an environment with some shady operators?" There's just no way that I could've answered this question in the 30 seconds or a minute or two minutes that they gave me to answer this particular question. I thought it would be a good idea to actually have a podcast episode on the importance of reputation, especially in an industry like ours where let's say, nine out of ten operators are actually worthy and ethical and have a decent or good reputation and one or maybe two out of ten, don't.
You as a consumer, you as an investor, need to know, you should want to know who has a good reputation and who doesn't because obviously, you don't want to work with somebody who's going to sell you a lemon or a money pit for a property or tell you one thing and it's something else like you're in a good neighborhood, but then you end up finding out there are a bunch of crack dealers down the street. This is not a good thing. I have seen this happen. Having been in this industry for 12.5 years, again, being one of the first turnkey providers in the country on a nationwide basis, I've seen a lot of people come and go. I've seen a lot of operators die on the vine.
The reputation of a business is essential to its survival. You have to have trust and confidence.
The reputation of a business is essential to its survival. You have to have trust and confidence. The trust and confidence of the consumer does have a direct and profound effect on a company's bottom line. While reputation is an intangible concept, having a good reputation can benefit a business in many, many ways. It expands from consumer preference to support foreign organization when it's in times of crisis or controversy. It also affects the future value of an organization in a marketplace. Having a good reputation just adds to a company's brand strength and goodwill.
I was doing a little research and I came across a reference to a study that indicated there were ten main components to an organization's reputation. The first of those ten is ethics. An organization that behaves ethically is admirable, is worthy of respect and is trustworthy. I think this is a very important thing, especially as the first item on this particular list because a company needs to be ethical before it can be a leader in the industry or have any kind of social responsibility or fiduciar...
We get asked a lot of great questions from real estate investors and our clients. On this episode I invited one of our Investment Counselors where we both provide answers to some of our most common investor questions.
And if you missed last week's episode, be sure to listen in to better understand how to predict real estate prices.
Enjoy the show!
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Common Investor Questions (Part 1) On today's show, we're going to do something a little bit different. I've never had one of our investment counselors on the show before. This is the first time we're going to do that. I'm going to bring on one of my investment counselors. His name is Steve. A very sharp, smart individual. He's helped a lot of our clients to date. We thought we'd do something a little different. I think what I'm going to do going forward is have the occasional frequently asked question podcast episode. What we'll do is we'll cover three or four questions on each one of those episodes that we get asked by our clients on a regular basis.
Steve, welcome to the show.
Good to be here. Thanks for having me, Marco.
It's my pleasure. Steve, tell us a little bit about yourself and just share a little bit of your background with our listeners.
Investor Questions: I used to own a franchise that all we did was wholesale and flip properties. I learned a lot doing that business.
I'm Steve. I love real estate. It's probably the first thing I think about every morning when I wake up. That might be a bit of a problem. I like it that much. I've been in real estate my whole career and involved in a lot of different capacities. A lot of buy and hold on single-family. I've even done some assignment deals on raw land. I've done a ton of wholesaling. Back then, I used to own a franchise that all we did was wholesale and flip properties. I learned a lot doing that business. It brings a lot of value when I work with Norada clients on what to look for and what to watch out for in a property because I'm good at reading inspections and pointing out what matters, what doesn't matter and sorting through all the things that happen in a real estate deal. It's pretty amazing. On a typical turnkey deal, you've got ten, eleven, twelve people that all have their hands on that deal. It's a miracle it turns out as well as it does, as often as it does considering all the moving parts. That's what we do. I enjoy that, I enjoy making deals and helping people acquire properties. I've been in this business literally my whole career in one capacity or another.
You have a lot of experience. I think you're being a little bit humble because I know you have done a lot more than what you're talking about and you've done a lot of rehabs from a remote distance. You've been an active real estate investor in a market that's not local to you. You've been very successful with that. You've seen all those moving parts and you've seen the good, the bad, the ugly, dealt with bad contractors. I don't know if you ever lost money on a particular flip, but I think we've all experienced that at some point if you're in the game.
Losing some right now.
I'm sorry to hear that.
It's not a lot, but sometimes they just don't go the way you planned. It's a particular property in Memphis, Tennessee. Probably you’ll lose a little bit of money, a couple thousand dollars, but that's part of the risk that you take. I've heard a lot of people say this and I totally agree with it: Flipping properties and wholesaling properties really is a job. You have a job. I don't know that you're necessarily investing when you do that because the outcome depends o...
Is it possible to learn how to predict real estate prices?
Learn why property values and price trends are so important. If you can see where a market has been, and where it may be headed, you can lower your risk and improve your results.
We welcome back my good friend and successful real estate investor, David Campbell, to discuss market drivers, inflation, currency and other factors that investors should be aware of.
Enjoy the show!
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How to Predict Real Estate Prices - David Campbell Welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. On today’s show, I have my good friend, David Campbell back. David is a good friend of mine and the founder of Hassle-Free Cashflow Investing. David started investing in real estate part-time while he was working as a full-time high school band director with zero net worth. Within six years and before the age of 30, David became a financially independent millionaire through part-time real estate investing. David has been involved with new home construction. In fact, he was one of our new home builders in the state of Texas for a number of years. He’s been involved in land development, commercial real estate and he has been focused as a professional mortgage known investor for over a decade now.
David, welcome back to the show.
Hey, Marco. Thank you so much for having me back. I love talking with you and your listeners. I’m excited to see what we learn today.
I’m excited too. I think we have a great topic. I’ve titled it, How to Predict Real Estate Prices, which is of interest to most, if not all, real estate investors. What do you think?
I think your title is very specific about real estate prices rather than real estate values, because values and prices are two different things. As an investor, when were focused on profits, it’s the increase in prices that makes us money, not necessarily the increase in value.
You’re jumping in, that’s great. Break that down, define value, define price, because for a lot of people, they think they’re one and the same. I know what you’re talking about but a lot of people are saying, “What’s the difference?”
Value is the usefulness of a particular item. For example, the usefulness of a gallon of gasoline is pretty much constant. It gets you from point A to point B by creating a certain amount of energy when it’s burned. The price of gasoline fluctuates every single day because of different variables. It could be the supply of the gasoline. It could be the demand for that gasoline. It could be the supply of the currency, which is used to purchase that gasoline, or it could be the demand or the velocity of that currency that’s used to purchase gasoline as well.
Everything you’re talking about comes down to two or three fundamental things. One is supply, and supply could be measured on many, many different things. Second is demand. The third, we’ll get to hear in a moment because we really haven’t jumped into talking about real estate specifically. Before we go down that road, I always want to start off my episodes with people talking about them. I’d like to just ask you the question, how did you get involved in real estate? Maybe you could just take a minute to talk about that, if you don’t mind?
I started looking for financial vehicles that were more powerful than trading my time for money.
Sure, Marco. When I was a high school band director, I started in the mid to late ‘90s. I was getting my first paycheck and I still qualified for food stamps. I realized that even though I was an educated, smart, college graduate,
Is it truly possible to purchase turnkey rental properties for about $6,000 total out-of-pocket?
On today's episode we show you that it is, and we explain how it works and how you too can benefit if you choose.
Join us as we speak to one of our Memphis property specialists about the market and the opportunity.
If you missed last week’s episode, be sure to listen to Ask Marco – Pre-Construction Risks, Evaluating Cash-Flow and Rates of Return. Enjoy the show!
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$6,000 Total Out-of-Pocket Turnkey Properties in Memphis Today's show is a little bit special. I wanted to bring on one of our local specialists, a guy by the name of Nick that we've worked with here for a few years. He's an awesome provider for us as far as building quality turnkey investments. It's not just that these investments are your typical turnkey property. What we have and what we've been selling in the Memphis market now for about a year are investment properties that you can acquire for approximately $6,000 total out-of-pocket. You may be wondering, “How is that possible?” If there's no down payment, it's only $6,000 out-of-pocket. That's what we're going to explain today. To some degree, this is going to be a market spotlight on the Memphis market, but we're going to save half the show to talk about how this investment opportunity works and whether it's right for you or not, because it may not be right for you. With that, I want to bring on Nick, who is, like I said, one of our specialists in the market. He has been a valuable asset. Him and his team have put together some great opportunities for us. Nick has been a real joy to work with. I am happy to have him on the show.
Nick, welcome to the show.
Thanks, Marco. I appreciate it. Thanks for having me.
It's my pleasure. Nick, we were talking here a little bit about how you got started in real estate. I always like to start with that question of how you got involved in real estate because everybody has a unique story. Some people fall into it accidentally, other people planned it that way. Why don't you tell us about how you got started and transitioned into real estate?
I never had intentions of being in real estate. It just worked out that way. I moved out to Memphis from Michigan fifteen, sixteen years ago and took a job in the service industry. As I was working, I got married and started a family and had a son and just realized that I was working from seven in the morning until seven at night. I didn't really get a chance to hang out with my family, so I figured I needed to try something new. I got into real estate, looked into becoming an agent, got my license and just morphed into the whole investment side of things.
Were you investing for yourself personally or you're actually buying and flipping properties at the time?
At the time, as I was working in the service industry, at my other job, I was buying houses and selling them. I'm basically on the side just onesies and twosies just to try to make a little extra money.
We've been in Memphis for a long, long time. It seems that Memphis is one of those perennial markets where you open it up as a market, you invest in it as a market, you build up a portfolio there and there are still opportunities to be found. I never really put my finger on exactly why that is. If there's just a lot of foreclosures in that market or if it's just a market that is so large and there's such a volume of inventory coming through the pipeline that you always have access to distressed properties and maybe even distressed sellers to pick up these deals. Regardless,
After returning from a two-week vacation in Thailand, I'm back to work answering listener questions. On today's episode I talk about some miscellaneous stats and cover some listener questions including:
What do the successful 2% do that the other 98% don't? Do you deal with "active" real estate investments? How should I evaluate a property's cash-flow and rates of return? Are there more risks with pre-construction properties?
Enjoy the show!
If you missed last week’s episode, be sure to listen to Leveraging Your Cash, Equity and Time – Keith Weinhold.
Enjoy the show!
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Ask Marco - Pre-Construction Risks, Evaluating Cash-Flow and Rates of Return Today, I'm actually going to be your guest too. You have me on both ends. Today I want to talk about some listener questions that we've been getting. I appreciate you sending in your questions from week to week. We do try and cover them live with you on the phone or via email, but once in a while, I'll post some of those out and cover them here on the podcast episodes.
First, I just want to let you know that I just got back from Thailand. In fact, I'm running on coffee at this point. I don't think I've slept in the last 48 hours because it's about 22 hours of travel. Yesterday, I couldn't sleep at all because of the time change. I'm effectively running on about 48 hours here of sleep deprivation. But the trip to Thailand was absolutely amazing. It's a beautiful country. The hospitality is amazing. We were able to eat some great food, ride and feed elephants, go kayaking in the caves, snorkel, go on some river raft rides. The people there are just unbelievably friendly and patient and courteous. It's a different culture, but it is something that is worth experiencing if you haven't been there.
Pre-Construction Risks: I look at different cities and markets from an economic perspective.
What was amazing, and I'm always looking at these different cities and markets in a different light. I always look at it from an economic perspective. I look at the businesses and I try to think about what the opportunities are there and what the restrictions are. This is true for any economy, not just Thailand. We had several tours and I asked our tour guide what the average annual income is of a person in Thailand. The range is pretty diverse. His comments were that the average Thai person makes 120,000 Thai Baht. To translate that into US dollars, 120,000 actually works out to be $3500 per year, not per month, $3500 US per year. That's according to our tour guide. I did a Google search on the same thing and I wanted to find out how much they make according to some analysis or reports online. What I was able to find was about half of that.
It's amazing that these people really just live day-to-day, hand to mouth. They make just enough to survive to pay for their accommodation and food. They really don't have disposable money to spend on things like nice cars or jewelry or trips. They are just hand to mouth, but they're very happy. I won't say they're all happy, but they are satisfied.
I talked to and met a lot of Thai people, many of which didn't speak much if any English. Everybody was just very courteous. We had a great time. We were there for two weeks. I apologize that I never had a podcast episode out last week. Obviously, that's the reason why. In fact, I purposely chose not to bring my laptop with me. I did bring my iPhone just to keep up on some email, which I checked late at night or first thing in the morning. For the most part, I was disconnected and unplugged from the world for most of the day.
On today's episode our guest is Keith Weinhold. Keith is the founder of Get Rich Education and is a popular podcaster, active real estate investor, business owner, and good friend.
Keith shares his story of how he started in real estate and became an "accidental millionaire". Many of you may want to copy that same formula.
We discuss the differences between compounding and leverage. Which one is better?
We explore the concept of return on time - one of my personal favorites.
And Keith shares some tips and advice for new investors looking to build a portfolio, and for seasoned investors wanting to get to the next level.
Keith's website can be found at www.GetRichEducation.com.
Enjoy the show!
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Leveraging Your Cash, Equity and Time – Keith Weinhold It’s my pleasure to welcome Keith Weinhold to the show. Keith is the founder of Get Rich Education and is a popular podcaster. He’s an active real estate investor, a business owner and a good friend. Keith, welcome to the show.
Thank you so much for having me today, Marco.
It’s great having you on. How’s the weather up there in Anchorage, Alaska?
It is a gray, rainy, windy day here, but it didn’t stop me. I just got back from going on a run about an hour ago anyway. I’m feeling invigorated.
You like to mountain climb, if I remember right?
Yes, that is right. I wasn’t born and raised in Anchorage but I moved here because this place just fits me. I do a lot of mountaineering and skiing here in this city of 300,000, Anchorage Alaska.
Only 300,000. It’s a beautiful place. I’ve seen many pictures of Alaska and Anchorage and it’s gorgeous. The lakes are just beautiful. One of these days, maybe I’ll have to fly up and go out for dinner with you.
Yes, you sure will at some point. Only 300,000. This is the big city here. Almost half the population lives in this one city. A lot of old time sourdough Alaskans, they frown on urban Alaska and urban Anchorage. They make jokes. They say, “From Anchorage, you can see Alaska.”
That’s a good one. All real estate is local. I have that saying, live where you want, invest where it makes sense. This segues into your story. Let’s get into your story here. You remind me of the “accidental” millionaire because of how you got started in real estate. Tell our listeners your story of how you discovered real estate investing.
It was a little bit accidental. I was born and raised in Pennsylvania. I did not come from an entrepreneurial or a real estate family at all. In 1999, I moved to a place I dreamed of living, Anchorage, Alaska because I had vacationed here four times previously. I was really young when I moved here, I was coming of age. When it’s about time for me to buy my first home, I was hanging out with some friends that were, I guess productive-minded friends, aspirational. Like they say, you are the average of the five people that you spend most time with.
Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
Two of my friends, what they had done is they had bought their first home not as a single family home but what they did is they bought a fourplex building. They lived in one unit and rented out the other three. Now, one of my friends really had his act together, and the other was kind of a screw off. I knew if the screw off could do it, I could do it. In 2002, I started my real estate investing career, I didn’t know it was going to turn in to any sort of career, by buying an Anchorage, Alaska fourplex building for $295,000. Between having some friends that were doing it and reading the influent...
There are times when you may need a Broker's Price Opinion. Are you even aware of what exactly a BPO is and is not? Many investors aren't, and many don't even realize the many uses of getting a BPO done on your properties, or one's you're looking to purchase.
On today's episode we talk to the owner of Lakeside BPO to better understand the differences between appraisals, Broker's Price Opinions, CMAs and regular sold comparables.
If you missed last week’s episode, be sure to listen to How the Economic Machine Works – Ray Dalio.
Enjoy the show!
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Why You Need a Broker's Price Opinion On today's show, we're going to talk a little bit about Broker’s Price Opinions or what are known as BPOs. Most of you probably know what a BPO is. For those that don't, it's really a half-step between getting market comparables on a property and a full-blown appraisal. You might be asking, "Why do I need one? Why do I care?" This is what we're going to talk about with our guest today. You can see that there are times where it does make sense to get a BPO done. It could be just a check-up on your own property to do some due diligence on a property that you're looking at or in some situations where you have an appraisal that goes a little wonky comes in low and you need to justify the actual value of a property. This could be true if you're a buyer or a seller. In today's show, we're going to really explore what the BPOs are and what they're not and when they apply. Believe it or not, there are services out there that will provide this to you on a nationwide basis.
It's my pleasure to introduce Cameron Gagnon to the show. Cameron is the Founder and Director of Operations at Lakeside BPO. They specialize in Broker Price Opinions and use their advanced proprietary software to efficiently service their client's requests quickly and accurately. Cameron, welcome to the show.
Thank you very much, Marco. I really appreciate it.
I didn't want to get too deep into your bio because I want you to explain what you do and how this all came to be. You're down in Arizona. Is that correct?
That's right. We're in Lake Havasu City, Arizona. It's beautiful and sunny out, great weather.
Cameron, tell us about your business, maybe a little bit of background on you and how you got into this business and why you started this business. Just educate ourselves and then we'll get into the weeds of what BPOs are and who uses them and why investors would need one and when they would need one. There’s some good stuff we're going to cover here today.
Broker's Price: There are a lot of directions to make this a better experience for clients, vendors and real estate agents.
I've been around real estate my whole life. Between family and companies that I've been around, I’ve done a lot of real estate stuff. I've been in the Broker Price Opinion world for several years now. I was working for a larger company that did the Broker Price Opinion and I was servicing them. At that time, I became really familiar with them and I quality controlled process of them and fulfilling them. It was almost a couple years ago, I started this business, Lakeside BPO, a Broker Price Opinion service, because I saw a need in the industry. The company I was working for before, I really became familiar with it and I was excited about it. I saw that there were a lot of directions that I could go personally to make this a better experience for both clients and vendors and real estate agents helping me out to make it a better deal. There are a lot of integrity issues with these companies, especially since they're such low dollar amount...
I think you are going to love this episode!
What I’m excited to share with you today is the audio portion of one of the greatest videos ever produced that explains how the economy works. More specifically, it’s titled “How the Economic Machine Works”. The 30-minute video was produced and narrated by Ray Dalio.
Who is Ray Dalio?
Ray Dalio is an American businessman and the founder of the investment firm Bridgewater Associates. He is one of the wealthiest people on the planet, with an estimated net worth of $15.4 billion (Forbes, 2015). And Time magazine considered him one of the Top 100 most influential people in the world.
I reached out to Ray last week and asked him if I could share his great explanation with my listeners, and he graciously agreed.
Ray says that an economy is simply the sum of the transactions that make it up. A transaction is a simple thing. Because there are a lot of them, the economy looks more complex than it really is. Instead of looking at it from the top down, it’s much easier to understand if we look at it from the transaction up.
Regardless of how important the economy may be to you, I think having a basic understanding of it will make you a smarter investor. And having a better understanding of it will help make you far more successful in all your financial and investment decisions.
I’m sure many of you will want to listen to this episode more than once because of the amount of content packed into this audio-only reply. My suggestion is to listen to it at least once, then click the link in the show notes to watch the animated video. The animations give it another dimension that helps you visualize and better understand the concepts. So don’t feel overwhelmed if this is your first time hearing this.
Plus, Ray shares his three rules-of-thumb that you can take away and apply to your own personal economy.
Now, just sit back and enjoy this audio-only portion of “How the Economic Machine Works”.
If you missed our last episode, be sure to listen to Viewing Properties Just Got Easier – WeGoLook.
Enjoy the show!
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How the Economic Machine Works – Ray Dalio What I'm excited to share with you today is the audio portion of one of the greatest videos ever produced that explains how the economy works. More specifically, it’s titled, How the Economic Machine Works. The 30-minute video was produced and narrated by Ray Dalio. Ray Dalio is an American businessman, but he's also the founder and more well-known for his investment firm or hedge fund, Bridgewater Associates. He's actually one of the wealthiest people on the people with an estimated net worth of $15.4 billion according to Forbes, that was a recent number. Time Magazine actually considered him one of the Top 100 Most Influential People in the World. I reached out to Ray last week and asked him if I could share his great explanation with my listeners. He graciously agreed.
Ray says that the economy is simply the sum of all the transactions that make it up. A transaction is a simple thing. Because there are a lot of them, the economy looks more complex than it really is. Instead of looking at it from the top-down, it's much easier to understand if we look at it from the transaction up. Regardless of how important the economy may be to you, I think having a basic understanding of it will make you a smarter investor and having a better understanding of it will help make you a far more successful investor in all of your decisions, whether financial or otherwise.
I'm sure many of you will want to listen to this episode more than once because of the amount of content that's ...
Wouldn't it be great to have a set of eyes, hands and feet in another market to help you check or verify almost anything you want?
On this episode our guest is Robin Smith, the CEO of WeGoLook.com. WeGoLook is an inspection company leveraging a sharing economy of over 20,000 agents. They can inspect and verify properties, autos, boats, antiques, electronics, furniture, and almost any other asset.
Learn how they can help you with your real estate investing by taking care of inspection and verification tasks that you can't easily or quickly do yourself.
If you missed last week’s episode, be sure to listen to An Aussie’s Journey into U.S. Real Estate. Enjoy the show!
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Viewing Properties Just Got Easier – WeGoLook We have a great show here for you today because what happens when you’re a long distance or out-of-state or maybe out-of-country investor. You're looking to purchase a property and of course you have a home inspection done and you have other team members helping you and moving you along on purchasing that first or second or fifth or tenth property. What if you need some extra services in terms of verifying information, verifying something about the property or maybe checking up on a work that has been done and you need a second opinion or just a simple confirmation of the work being done.
There’s a solution out there and I came across a company last year some time and I looked into them and I thought this is a fascinating business. It’s a company where they will actually go out and inspect and verify virtually anything. I could be cars, boats, antiques, not just properties. I thought I need to get them on the show because this is a service that I myself will probably use with some of the projects that I'm doing right now out of state. A lot of investors, especially those that are still a little bit uncomfortable with the long distance investing and even foreign investors in other countries. We have clients in Canada, Australia, and UK. They may want to have this just as a supplement to the existing due diligence that they're doing. I brought the CEO of the company on and they are growing rapidly and they have expanded into multiple countries. This show is all about that. It’s really just how to supplement what you're already doing if you want it, and how to view your properties from afar.
It’s my pleasure to welcome Robin Smith to the show. Robin is the CEO of WeGoLook. WeGoLook is an inspection company leveraging a shared economy of over 20,000 agents. They can inspect and verify properties, autos, boats, antiques, electronics, furniture, and virtually almost any other asset. Robin, welcome to the show.
Thank you, Marco. I really appreciate the opportunity to be here. Thank you.
It’s certainly my pleasure. I actually found out about your service early last year. When I first heard about it, I thought that’s a neat concept, a neat idea. I wasn’t sure at the time how I would use it or how it would plug into our business model. The more I thought about it, especially as of late, the more I realize that’s a great idea. I wish I thought of that. It’s amazing. I’m excited to have you here and share this service with our listeners because many people will actually look into it further, maybe utilize your services. I certainly can see a fit for some of the projects that I’m working on. Tell our listeners what is WeGoLook.
WeGoLook captures on-site data in the form of current photos, video while working demonstration, answering custom questions.
WeGoLook is basically a crowdsourcing platform. We feature, like you said, over 20,
On this episode our guest is Reed Goossens, the owner of RSN Property Group. He lives in Los Angeles and is originally from Australia down under. His background is as a structural engineer and currently owns properties in New York, Pennsylvania, and Texas.
Reed moved to the U.S. in 2012 to pursue a career in structural engineering, however he discovered a passion for real estate investing. With limited funds and no credit, Reed went from purchasing a small duplex to growing his own real estate investing firm, RSN Property Group. Reed now syndicates large multi-million dollar deals across the U.S.
Listen in as Reed shares his journey into U.S. real estate from his first property to commercial syndications.
If you missed last week’s episode, be sure to listen to Make Better Decisions Using Neighborhood Info.
Enjoy the show!
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An Aussie’s Journey into U.S. Real Estate Today’s show is a little different than most of the shows we’ve been doing. It’s more of a story with some golden nuggets throughout the episode. I met a person a few months back named Reed, who was a person from Australia, who came to the US. He was working a cubicle job, something that he was trained in, but didn’t really want to do for the rest of his life. At least, he didn’t himself wanting to do that for the rest of his life. He made the decision to jump into real estate investing here in the United States and started off with a property in New York and built it up to the point where he is now doing multi-hundred unit property syndications. This is his journey to the US and how he got started and what’s he’s looking for and where he’s investing. Really, what I want you to takeaway are some of the key concepts and nuggets that he shares with us today.
If have any questions about real estate or real estate investing or what turnkey properties are, or how to get involved in them, just shoot us a question. You can go to PassiveRealEstateInvesting.com and just click the Ask Marco button. Send in your question. I’ll cover that on one of the future episodes. Also, you can just do that by voicemail. There’s a voicemail button right on the website there. If you are thinking about real estate and you want to have a free consultation with one of our investment counselors, by all means, get in touch with us, just head over to our website at NoradaRealEstate.com. We’ll be happy to spend time with you and put you on the right track, whether we can or can’t help you, that’s okay. We just want to see if there’s something out there where we can get you to the next level. Remember to subscribe. We have listeners in 110 countries now, or maybe more, we appreciate you being on the show. We love having you as a listener.
It’s my pleasure to introduce Reed Goossens to the show. Reid is the owner of RSN Property Group, focusing on multifamily acquisitions. He lives in Los Angeles and is originally from Down Under. His home country is Australia. He has properties in New York, Pennsylvania and Texas. His background is as a Structural Engineer. Reed, welcome to the show.
Good day, Marco.
I wanted to bring you on the show, Reed, because I've got introduced to you several months ago. I’ve been doing a little digging on you and learning about what you’re doing. I’ve heard you on several other podcasts. You have an interesting story. I wanted to bring you on to be on a show about an Aussie’s journey to the US, and what brought you here and what you’re doing in the US. I know you’re a big fan of passive real estate investing and passive income, and that really resonates with me.
It's not enough to analyze a property, or even the overall market. The neighborhood surrounding your property is permanently attached and important to consider when investing in rental properties. You want to make sure that you understand where you're investing and that it fits your goals and investment criteria.
On this episode we talk to Dr. Andrew Schiller. Dr. Schiller is the Founder, CEO and Chief Scientist of Location, Inc. He is responsible for inventing the search and neighborhood matching algorithms that powers www.NeighborhoodScout.com.
This is an episode you'll want to listen to twice.
If you missed last week’s episode, be sure to listen to Market Spotlight: Investing in Indianapolis. Enjoy the show!
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Make Better Decisions Using Neighborhood Info We have a very special show for you today. I have Dr. Andrew Schiller on the show from NeighborhoodScout. That product is something we use a lot in addition to many other tools. I've been wanting to get Dr. Schiller on for three or four months now because he's a very, very smart guy who aggregates a lot of data and has a tool called NeighborhoodScout.com that's been around for many, many years. It's just chockfull of information.
When we talk to investors, a lot of times, we go from talking about the market to talking about the property. Although there's consideration and thought about the neighborhood, it seems that many investors skip over the neighborhood as if it's just something that is attached to the hip of the property. Really, a lot plays into the decision of what you're investing in because of the neighborhood: the demographics, maybe crime, schools, the percent of owner occupied homes, the number of people with college degrees, whether they're white-collar, blue-collar workers, income levels and all that kind of stuff. Where do you get that data? It's peppered all over the internet. You can go to many different websites and pull some of it from here and some of it from there, Bureau of Labor Statistics, the different government websites. But there's no one website or one place where you can get all that data. One of the websites that we like to use is NeighborhoodScout.com. There's a lot of that information, not everything but a lot. It's just one of the tools in the toolbox.
On today's show, we have Dr. Schiller talking about his company, the product, how they're aggregating data and how you could use this tool to help you make better decisions in your investing, whether you're purchasing a turnkey property or whether you're purchasing a distressed property, you're going to be fixing it up to keep it or fixing it up to flip it. At least you have a better understanding of what you have and what you're dealing with.
It's my pleasure to welcome Dr. Andrew Schiller to the show. Dr. Schiller is the founder, CEO and Chief Scientist of Location, Inc. He's responsible for inventing the search and neighborhood matching algorithms that powers NeighborhoodScout.com. Andrew, welcome to the show.
Thank you, Marco. It's a pleasure to be here.
I'm happy to have you here. I've been thinking about getting you on the show for the last three or four months. I've been dealing with a lot of other issues and I've been very, very busy so I haven't had the time to bring you on. The reason I wanted to bring you onto the show is because you have an impressive tool that I've been using for a number of years. I've been a subscriber of yours for a number of years. I actually use it for my own investing and our company uses it internally here to look at different properties for our clients to help match those...
Why invest in Indianapolis?
On this episode we take a close look at the Indianapolis, Indiana market and why it has been a perennial market for real estate investors. The affordability, price points and quality of properties makes it one of the favorite markets among real estate investors.
The Indianapolis market is landlord friendly, and ranks as one of the cleanest and safest cities in the country.
If you're looking for cash-flow in a solid stable market then Indianapolis turnkey rental properties may be the right addition for your portfolio. Find out more by contacting one of our Investment Counselors at Norada Real Estate Investments.
If you missed our last episode, be sure to listen to My Father’s Passing, Best Way to Get Started, Due on Sale, IRA Exit Strategy.
Enjoy the show!
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Market Spotlight: Investing in Indianapolis It’s my pleasure to introduce one of our local market specialists in the Indianapolis market. Michael is one of our partners. We’ve been working with him for many, many years. In fact, it goes back to about 2008. He has been buying, rehabbing and selling turnkey investment properties in the Indy market since 2008. He has bought and sold 600 or maybe even more than 600 homes in that time frame. I’m glad to have met him a long time ago. We’ve had a great working relationship. I’m going to welcome Michael to the show.
Thank you, Marco, my friend. I’m glad to be here. Obviously, you and I are both are passionate about what we do and we like to help our investors out. I think your numbers are probably about the same as mine. We’re close to about 65%-75% of our businesses repeat and referral business. Glad to be a part of the team.
I’ve been wanting to do a market spotlight on the Indy market for a while now. This is our third one and we’ll probably do one for every single market. Indy is a popular market. It’s what I call a perennial market. We always get interest in it because it’s one of those linear markets. It doesn’t go up and down, like the Coastal markets of the US. Michael, tell us how you got involved in real estate. I always like to start off with a little bit about you and your background so people get a perspective and a context of where you’re coming from.
Investing in Indianapolis: My stock market investments would go up and down. But my Indianapolis real estate was just pretty consistent.
My background is in the stock market. I enjoy trading stocks and options. I love it. I just really enjoy either developing passive income or structuring passive income for myself. As fate would have it, my story is hopefully new and not familiar to you. When I was 31 years old, my dad passed away. My mom needed a steady source of income that didn’t rely on the stock market or any other investments. At that time, I think I had five or six homes at the time. My stock market investments would go up and down. A few of my other things were spotty at best. My Indianapolis real estate was just pretty consistent. It didn’t double in value in a year or two, but all it did is send me checks every single month. That's really what my mom needed and wanted. I have done deals in about five different states, but my holdings and my consistent cashflow came from the Indianapolis market. With that positive experience underneath my arm, I decided to build a company that was built by investors for investors, as I like to say, in that area. It has gone gangbusters ever since.
You do put up a great product. I think that was a very smart decision to make that shift away from paper assets like stocks, bonds, mutual funds,
After having been forced to take a little time away from recording new episodes, I am back to pick up where I left off.
On this episode I take a moment to reflect on how real estate has provided me with the TIME freedom to spend with my father who has been saddled to a hospital bed for over seven (7) months up until his unfortunate passing early this month.
I also address three listener questions on the best way to get started in real estate investing. Another question about a lender's ability to accelerate a loan using the "Due on Sale" clause -- and how to avoid it. And finally an interesting question about an IRA exit strategy when turning 70 1/2 and you are required to make the minimum required disbursements (MRD).
If you missed our last episode, be sure to listen to Rich Dad Advisor, Tom Wheelwright on Tax-Free Wealth.
Enjoy the show!
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My Father's Passing, Best Way to Get Started, Due on Sale, IRA Exit Strategy My father passed away on February 2nd. He’s been suffering for quite a long time. He had lung cancer and the last six, seven months have been rather difficult on him. The last two months have been exceptionally hard. I just tried to spend as much time as I could with him. My father was a great man. He was very compassionate and respectful and unselfish. He always put family first. I've had people tell me that my father gave me a beautiful gift, and that’s his temperament. You learn a lot from your parents and you get your values from your parents, whether it would be trust, honesty and just having integrity. These are the things I learn from my parents. My father was an amazing person who really touched a lot of people unknowingly. These values that I got from my parents and my father, I implement those in my own life and I pass those on through my business and just being open and honest and transparent and trustful with people.
The reason I was able to spend all that time visiting my father is because of real estate.
The reason I'm sharing this with you, aside from the fact that I just haven’t been available or in frame of line to put any episodes out for the last three or four weeks is because in looking back, I went to visit my father who lives out of town. A three-hour flight from where I live here in Southern California. Every month I would go and visit him for seven, eight days at a time and spend the majority of my time with him in the hospital. I would do that every month. I've been doing that for the last seven months consistently. When I look back, the reason I was able to do that, the reason I was able to spend all that time visiting my father is because of real estate.
The business and the investment of real estate has given me the freedom to travel and visit with him and spend the time. It’s all about that freedom. It’s not just about the cash but it’s about the time. Fortunately, I had the time to go and visit with him. I'm glad I did because I was there right to the very end.
The message I have for you is that a lot of us love what we do, but there are a lot of people out there that have a job that they don’t necessarily care for all that much. Even if they do love it, you’re married to the occupation or your career, it’s a 9 to 5 type of thing, and that’s all fine. I love what I do and a lot of people love what they do. What happens if you have accidents or a sick family member and you need to go and spend time with them? Are you going to be able to do that? Do you have the time freedom to do that? That’s my goal for you, really to help bring you, our audience, to a point where you have financial freedom and time freedom.
On this episode we learn how to keep more of what we make and legally pay less tax (or not tax) on our income and real estate!
Our guest is Tom Wheelwright -- a leading tax and wealth expert, speaker, and a Rich Dad Advisor to Robert Kiyosaki (author of Rich Dad Poor Dad). Tom is best known for making taxes fun, easy and understandable and is the bestselling author of Tax-Free Wealth.
You can buy his book at most retailers or on Amazon:
Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes
Visits Tom's company website (ProVision Wealth Strategists) at www.taxfreewealthadvisor.com
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Rich Dad Advisor, Tom Wheelwright on Tax-Free Wealth It’s my pleasure to welcome Tom Wheelwright to the show. Tom is a leading tax and wealth expert, a speaker, and a Rich Dad Advisor to Robert Kiyosaki, author of Rich Dad Poor Dad. Tom is best known for making taxes fun, easy and understandable, and is the best-selling author of Tax-Free Wealth. He specializes in helping investors permanently reduce taxes, and that’s the reason I wanted to bring him on the show today. Tom, welcome to the show.
Hey, thanks so much for having me. It’s great to be on your show.
It’s my pleasure to have you. I’ve been actually looking forward to this episode because taxes are one of those things that nobody likes to think about, nor do they like to pay it. It’s been said that taxes are the largest single expense, in fact, that’s a quote from Robert Kiyosaki. I think it’s timely to have you here on the show in January, and I’m pretty excited to talk to you.
Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes (Rich Dad Advisors)
I’m always excited to talk about tax. As we were talking beforehand, I am, first and foremost, a tax nerd. I absolutely love tax, I love the tax law. I was actually doing a little research the other day, and I think the Bible has 800,000 words to it, and the tax code, just the law, no ruling, regulation, anything else, has over two and a half million. There’s this famous quote from Albert Einstein saying, “The most difficult thing in the world to understand is income tax.” I just like that quote because it makes me feel good about myself, but I do recognize that it is something that people, like you say, taxes are bad word, it’s a bad thing. But there are so many opportunities to reduce your taxes, that if we can turn it into a good word, then we now have just a lot more money to use to invest and build our wealth.
We’re both very big on education, and I’ve read your book in 2012 when it came out, your book Tax-Free Wealth. One of the things you say in there is that, taxes can make you rich or make you poor, it’s your choice. Let’s start off by talking about what tax-free wealth is. How do you describe that to people?
Tax-free wealth is really a function of understanding how the tax law works and what it really is. Most people look at the tax laws, and in fact, most tax advisors look at the tax law as, this is the government out to get us, and it is completely the opposite. I’ve been a student of taxes for over 35 years. What’s really clear to me is that, there’s only one line in the tax law that actually raises revenue. There’s a line that says, basically, all income is taxable unless we say it isn’t. Then there’s about 29 pages of charts and tables that tell us how much to pay on that income. The rest of the tax law, the rest of the two and a half million words is an instruction guide on how to reduce your taxes. Once we get that in our minds, then all of a sudden … if we’re looking at this as,
Welcome to 2016... We hope you had an awesome start to your New Year!
I want to take a moment to wish all of you and your families a very Happy New Year! We hope that 2016 is full of joy and prosperity.
The beginning of a new year lets us revisit and refine our investing goals. And, as you know, our focus here is to educate, motivate and empower you to become better real estate investors.
We have big plans and goals for 2016, and we can't wait to share them with you.
What goals have you set for yourself in the coming year? What do you want to accomplish? What habits do you want to change?
It should be no surprise that successful people had to do things differently to get to where they got. They worked hard, made good decisions, stayed motivated and focused on what was important to them. That will be you if you believe in yourself.
Here are some things successful people did that you can do as well to achieve your goals.
If you missed our last episode, be sure to listen to Pros and Cons of “Active” Real Estate Investing with Mike Hambright.
Enjoy the show!
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13 Things Successful People Do Differently Welcome to 2016. We hope you had an awesome start to your New Year. I want to take a moment to wish all of you and your families a very happy new year. We hope that 2016 is full of joy and prosperity. At the beginning of a new year, let us revisit and refine our investment goals. As you know, our focus here is to educate, motivate and empower you to become better real estate investors. We have big plans and goals for 2016. We can’t wait to share them with you as the weeks go by. What goals have you guys set for yourselves in this coming year? What do you want to accomplish? What habits do you want to change?
It should be no surprise that successful people had to do things differently to get where they got to. They work hard. They make good decisions. They stayed motivated and they focused on what was important to them. That can be you. The will and the belief in yourself is very important. Here are some things that I’ve listed out that successful people did. It should be no surprise that successful people had to do things differently to get to where they got to. They worked hard. They made good decisions. They stayed motivated and focused on what was important to them. That can be you too, if you believe in yourself.
Here are some things that successful people do that can help you achieve your goals as well. I’m going to list thirteen things that successful people do differently. Hopefully, you can adopt this into your own routine and make this year your best year ever.
Create and pursue SMART goals.
The first thing they do is they create and pursue SMART goals. I know you hear this time and time again at the beginning of every year about goal-setting and achieving goals. Let’s break this down and look at what smart goals are. Successful people are objective. They have realistic targets in their mind. They know what they are looking for and why they are fighting for it. Successful people create and pursue SMART goals. SMART is an acronym. What that means is goals are specific, measurable, attainable, relevant and timely. Let’s break these down and see what each of these mean.
A general goal would be something like getting shape. But a related specific goal would be to join a health club and work out three days a week for the next 52 weeks. A specific goal has a far greater chance of being accomplished because it has defined parameters and constraints. That’s a specific goal. The M in SMART refers to measurable.
In this episode we discuss some of the pros and cons of "active" real estate investing -- the opposite end of "passive" real estate investing. That means you're actively involved in the deal -- whether that is wholesaling, rehabbing, or flipping properties. It's certainly not for everyone, but it can be a good business for those with the desire and time to do so.
Our guest is Mike Hambright. Mike is real estate investor, mentor and entrepreneur who has purchased and renovated hundreds of houses from when he started in 2008. Mike recruits and mentors new franchisees into the "We Buy Ugly Houses" system. And he's also the founder of FlipNerd.com.
If you missed last week’s episode, be sure to listen to Nationwide Rental Property Insurance.
Enjoy the show!
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Pros and Cons of Active Real Estate Investing with Mike Hambright Today's show is a little different. It's about the active real estate investing side of the equation. I am bringing on one of my friend's here today who is heavily in that space on rehabbing and finding properties to fix and flip or keep for himself, what we call distressed properties. Sometimes these are also distressed sellers. It's not always that the property is ugly. It could be that there's a situation where you have a distressed seller. There's some life event or situation going on and they just can't afford to keep their house and they have to sell it. You may be able to find a good deal like that where you pick it up and get a really good price. All you have to do is some cosmetic work and you can keep that house or you can flip that house or you can flip the contract, something known as wholesaling. I just wanted to expose you to the other side of the real estate investing spectrum. I focus on the passive side because I just like to have those streams of cash coming in and being able to do other things. I know there are people who are on the fence and thinking about rehabbing or thinking about flipping properties or doing something along those lines. I thought I'd bring Mike in today to talk about that.
It's my pleasure to welcome Mike Hambright to the show. Mike is a real estate investor, a mentor, an entrepreneur who has purchased and renovated hundreds of houses from when he started back in 2008. Mike recruits and mentors new franchisees into the We Buy Ugly Houses system, which he'll talk about. He's also the founder of FlipNerd.com and the related podcast show, Flip Nerd. Mike, welcome to the show.
Hey, Marco. Thanks for having me.
It's great having you on. Let's start off by telling our listeners where you're located.
I'm based in Dallas, Texas. Things we do are more and more becoming virtual but that's where home is.
Active real estate investing would be things like wholesaling, rehabbing, and flipping.
Mike, the reason I wanted to bring you on the show, it seems like a little bit of an antithesis to what the show is about. The theme of my show is passive real estate investing. There are a lot of people out there who think about the active side of it or maybe want to dabble in it. Passive real estate investing to me is having streams of cash versus having chunks of cash. Active real estate investing would be things like wholesaling, rehabbing, and flipping. This is really what you've done a lot of and you're really good at. That's the whole reason I wanted to have you on the show. Let's start off by introducing our listeners to who you are and where you came from. Maybe talk about your story, how you went from corporate America, you and your wife, into the real estate space.
In this episode we continue our discussion about rental property insurance. This is a supplement to the last episode on insurance.
Our guest is Ed Babtkis -- the founder of Ross Diversified Insurance Services. They are licensed in 49 states and insure thousands of properties around the United States. They’re property owners themselves, so they fully recognize the need for customized insurance for real estate investors.
One of the unique things about Ross Diversified is their ability to cover rental property insurance on a nationwide basis.
Ed Babtkis can be reached at www.RossDiv.com or call them at (800) 210-7677.
If you missed our last episode, be sure to listen to Rental Crisis in the US.
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Nationwide Rental Property Insurance Today's show is about property insurance. It's not like the last episode we had about property insurance. I wanted to bring on a new provider that I have found just recently that provides nationwide property insurance. They're one of the few, in fact I only know of two, that provide property insurance for investors on a nationwide basis. I thought I'd bring him on, not to rehash what we covered in a previous episode with someone else about property insurance, but to supplement that episode because this is another option. I wanted to get Ed's perspective on a few things related to coverages, replacement costs versus actual cash value, some gotchas, how the policy actually works. It's a short episode. I think you'll enjoy it and hopefully it'll just add to your knowledge about property insurance and what you should have, what you shouldn't have, and how much to cover.
It's my pleasure to welcome Ed Babtkis to the show. Ed is the founder of Ross Diversified Insurance Services. They are licensed in 49 states. They insure thousands of properties around the United States. They're property owners themselves so they fully recognize the need for customized insurance. Ed, welcome to the show.
Good afternoon and thank you. It's good to be here.
It's my pleasure having you on. You're located here in my backyard in Orange County, California. Correct?
We are. Our programs are nationwide but the office is homebased in Orange.
The reason I wanted to get you on the show is because you have a rather unique approach to insurance. You are one of only two nationwide insurance companies that I know of. The first one, there’s a little bit of some sketchiness that I'm watching right now in terms of how they perform and whether they pay on their policies or not. I've heard good things about your company and I'm surprised that I didn't know about you sooner because I've been doing this for over twelve years. I'm glad to have you on the show. I want to, in a good way, expose you and your services to our listeners and our clients. I figure I'd ask you some basic questions and get into your program.
There's lots of reasons why perhaps you haven't heard of us before. With the recent entrance of places like Blackstone and Colony taking the single-family dwelling business into a national spotlight, if you will, more insurance carriers have become a little bit more interested in getting involved in serving this community.
That's an interesting comment because this space, what a lot of people refer to as the "mom and pop" investment space where it's mostly just individual and smalltime investors that invest in real estate, it really is a fragmented industry. There really is very few, if any, true nationwide companies whether it be property management or insurance or construction or you name it.
Is there a Rental Crisis in the US? It depends on how you look at it!
In this episode I look at the U.S. rental "crisis" and what it means for tenants and landlords. What are the trends? Are opportunities getting better or worse? Where do we go from here?
Whether you're starting out, or a seasoned real estate investor, this is a question worth investigating.
If you missed our last episode, be sure to listen to How to Self-Manage Your Properties.
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Rental Crisis in the US? I want to begin by thanking all of you for making the show the success it is. We're now heard in 110 countries around the world. That is just mindboggling that we can actually have that much of a reach. I want to mix up the topics a little bit. Sometimes, we're going to talk about housing. Sometimes, we're going to talk about economics. Sometimes, we're going to talk about tactics such as asset protection or maybe tax strategies or market spotlights. Today, I want to talk about the so-called rental crisis. Do we have a rental crisis here in the United States? It depends on how you look at it. What side of the equation are you on? For most of us, at least the people listening to this show, it might be a huge benefit because we are effectively real estate investors and landlords. Our service is to provide tenants who need housing with clean, safe, and affordable housing that they can live in and be happy and pay their monthly rent. That rent pays off our mortgage and our expenses and hopefully there's some left over at the end of the month, which becomes positive cashflow for us. That pool of tenants has been increasing quite rapidly over the years.
Rental Crisis: Today, we're at a situation where home ownership in the US is at a 48-year low.
Today, we're at a situation where home ownership in the US is at a 48-year low. It's the lowest since 1967. That trend is continuing. Even though the government has tried to step in and interject with introducing more lenient qualification criteria in terms of mortgage financing, I don't think that's going to stand the tide. This is a trend that's going to continue for years to come. The other issue too is that we're seeing real incomes declining. In other words, for a long time now, real income has declined in terms of real numbers. In other words, when you adjust for inflation, people's income year-over-year has actually declined or stayed flat. It hasn't increased like the media has led us to believe.
In regards to home ownership, the problem is that fewer and fewer households can afford to buy a house. Even with these low interest rates, there are more and more people renting than buying today and that's by choice or by necessity. This increased rental pool has caused increased demand and that increased demand has pushed rents through the roof. That's one of the effects that we're seeing. The nation's home ownership rate does continue to decline and I foresee that to continue for years to come. It peaked at 69 .2% to be specific, back in 2004. Today, we see it 63.4%, that's a huge drop. For every percentage decrease in that home ownership rate, we're seeing somewhere in the neighborhood of probably a million new people coming into the rental pool. That's a huge number. They need to live somewhere. That's where we hopefully step in as real estate investors, to provide them clean and affordable housing.
What happened? This started off with tighter mortgage standards. Now we're seeing multiple credit checks, owner’s income and assets verification, these are headaches, higher credit score requirements and lower debt-to-income rati...
In this episode we discuss the considerations and process for self-managing your rental properties. Can it be done? Many people self-manage - even from thousands of miles away.
Our guest is Lucas Hall, the Chief Landlordologist at Cozy, and the founder of Landlordology.com. He has been a successful landlord for over 10 years, self-managing dozens of happy tenants.
Some of the topics we discuss include:
Why did you choose to self-manage over hiring a professional manager? How should an investor decide whether to self-manage or hire a property manager? What are the pros and cons? What is your management process? How can the free tool at Cozy.co help a landlord? What tips can you share for self-managing landlords?
If you missed our last episode, be sure to listen to Property Management Secrets with Brenton Hayden.
Enjoy the show!
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How to Self-Manage Your Properties Today’s show is about self-managing your properties and how do you go about doing that. Most of our clients manage their properties through a professional property management company that we have in every market that we have properties in. Often, we’ll have two to three professional management companies that work with us through our referral network. However, there are some investors that prefer to manage their own properties. Last week, I had an episode about managing properties through professional management. I had Brenton Hayden from Renters Warehouse on. That was a great episode. There was a lot of good information covered in that one. That was centered around using a professional manager.
This week, I wanted to bring on a guest who is the Chief Landlordologist at a company called Cozy. He’s also the founder of a website known as Landlordology.com. That website is a community of real estate investors who self-manage. It’s chock-full of great information that covers everything from qualifying and screening tenants to finding tenants, to evictions and whatnot. I brought on Lucas who is the founder of Landlordology to talk about how he goes about self-managing and going through the process. I asked him various questions to try and get into some tactical items and the how-to’s, not just what to look for but how to actually do it.
Hopefully, you’ll appreciate this episode and get a lot out of it. If you have any questions about what we cover, don’t hesitate to reach out to Lucas. He’s a very, very nice guy. This is what he does all day long. He answers questions about self-managing property and how to do it, what tools are out there and he blogs about it.
It’s my pleasure to welcome Lucas Hall to the show. Lucas is the Chief Landlordologist at Cozy and the founder of Landlordology.com. He has been a successful landlord for over ten years, self-managing dozens of happy tenants. Lucas, welcome to the show.
Thanks for having me.
To give people a sense of geography, why don’t you tell them where you’re located?
I’m located at the DC Metro region in Northern Virginia.
That’s a pretty pricey real estate market there, isn’t it?
It is. As a real estate investor, it does make it somewhat difficult just to pick up properties on a weekend. I have to put in a little more planning.
I know you self-manage all your properties which is what the topic of the show is about. Are all your properties located locally or are they out of state?
Both, I should say. They’re located in Northern Virginia, DC. I have one in Colorado.
Just briefly tell us how you got started in real estate investing because a lot of people who invest,
In this episode we discuss the importance of property management and what things to consider when selecting and working with a property management company.
Our guest is Brenton Hayden -- the founder and chairman emeritus of Renters Warehouse USA, a six time honoree of the Inc. 500|5000 list. Brenton attended Harvard Business School and MIT’s Sloan School of Management and was named the youngest franchisor in America by Inc. Magazine in 2011 at the age of 25.
Breton can be reached on LinkedIn at https://www.linkedin.com/in/brentonhayden.
His company's website is www.RentersWarehouse.com.
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Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. This is the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. Today's show is a very important show about property management. As you know, my eighth rule of successful real estate investing is to use professional property management. You never should manage your properties on your own. There's a few exceptions to that, but generally speaking, it's not a good idea.
Property management is a thankless job and it requires a solid understanding of tenant landlord laws, a solid understanding of marketing skills, strong people skills. These are all things that allow you to deal with your tenants and your tenant complaints and excuses when they come up. You see, your time is your most valuable resource, it is precious. You should spend your time with your family, on your career, and looking for more investment property. Property management is not the thing you should be doing.
What do you look for in a property manager? There's different reasons to have property management. For example, your property manager or at least the professional property manager will know how to market your property to keep it rented. Vacant rental properties are a drain on you and a drain on your cash-flow, and it doesn't make a productive asset. An experienced property management company will know how to aggressively market that property and keep it leased.
The second, you get better tenant screening, an experienced property management company is more likely to have an effective system for screening and qualifying tenants that will ensure that your property has quality tenants that will meet their financial obligations. That means that they'll take better care of your property too.
Thirdly, having a professional property management company will protect your investment. An experienced property management company will take better care of your property. Now, what do I mean by that? A property management company that has been in business for a number of years, they'll have seen and heard everything. They would have come across virtually every possible problem and scenario and be able to confidently handle those problems, as they arise, quickly and efficiently.
Last but not the least, having professional property management makes owning your rental properties a more simple and convenient investment. You see, a company with years of experience in property management, they have systems in place. They'll be able to have a streamline process setup so owning rental properties becomes a simple passive, not disconnected, but a passive investment for you. That gives you the time to do other things while you still enjoy the financial benefits of owning that investment property.
Property Management Secrets with Brenton Hayden
On today's show, we have a very special guest, someone I’ve known for a great number of years.
In this episode we talk to Chris Picciurro, the co-founder of Integrated Financial Group, about the many important tax-related topics related to investing in the United States as a foreign national. There's a lot to consider from withholding taxes, tax reduction strategies and asset protection. This episode is full of great content and a must listen if you're an investor from any country outside the U.S.
His contact information is:
Chris Picciurro 1 (888) 434-7791 x106 www.integratedfg.com http://www.linkedin.com/in/picciurro Twitter: @PiccCPA
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What Foreigners Need to Know When Purchasing Property in the US with Chris Picciurro Welcome to Passive Real Estate Investing. I’m your host Marco Santarelli. I just finished recording an interview with a very knowledgeable CPA who’s the co-founder of Integrated Financial Group, and what we discussed is taxes. But don’t let that turn you off. Taxes as it relates to foreign national investors. If you are looking to invest in the United States or you have been investing in the United States, you’ll definitely want to listen to this episode.
Chris specializes in taxes for non-resident and non-US citizens that are looking to buy or are already purchasing investment property in the United States. He has some great advice. We stopped to look at estate taxes, withholding taxes, how to structure your entities. Now this is not case specific. We had to be somewhat general, but there’s so much great content.
I hope you get a lot out of this episode as we talk to him about purchasing property here in the US. I hope you find this episode informative because tax laws can be complicated but it really comes down to a case by case basis. Stay tuned.
It’s my pleasure to welcome Chris Picciurro. He is the Executive Officer and Co-founder of Integrated Financial Group. This guy has a list of credentials longer than my arm. I’m just going to highlight some of the stuff here. He has over 15 years’ experience as a CPA, including an adjunct instructor at Davenport University. He’s an Accounting Instructor with an MBA program, I think I got that right. He’s a graduate of Michigan State University. Has an MBA from the University of Detroit. He is extremely knowledgeable when it comes to taxes, especially as it relates to foreign investors. His list goes on and on. I’m not sure what this means but Chris maybe could tell us a little about it, Rich Dad Educational Events. Anyway, Chris, welcome to the show.
Hi, Marco, it’s good to talk to you again. How are you?
I’m doing fantastic. I’m excited to have you on the show here because we work with investors not only around the United States but around the world. A lot of them come from Canada, Australia, England, we have some people from Japan, so it varies. I know you can talk a lot about taxes as they relate to citizens within and outside the United States. But for today, at least, I want to put more of a focus on taxes as they relate to foreigners investing within the country. That’s framing this episode. Let’s start off by talking about where you’re located. Maybe you can explain this Rich Dad Educational Event.
Our headquarters is in the Detroit Area, outside of Detroit, Michigan. Although the scope of our practice is not only throughout the United States but it’s throughout the world. We specialize in assisting non-US residents that buy investment property here in the United States. We have been very fortunate to work with clients in over 40 different countries at this point and our client base spans over 30 US States as far as where these investments are taking place in t...
In this episode of "Ask Marco" we answer more listener questions including:
Do you have any newspapers or real estate journals you read frequently? Any books you can recommend to someone with little capital? What benchmarks do you use when evaluating a property as it relates to the property's age? Do old houses appreciate as well as newer houses? Does a remodel catch an old house up to new house profitability? What is the process like for a Canadian to invest in real estate? And more...
Here is my list of the Top 10 Real Estate Investing Books
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Ask Marco - Top 10 Real Estate Books, How Important is a Property’s Age, Investing as a Foreigner On today's show, we're doing another Ask Marco episode. We have three questions here that were sent in just not too long ago from our website at PassiveRealEstateInvesting.com.
Our first email is from a guy named Josh. He says, "Hi, Marco. I recently started listening to your Passive Real Estate Investing podcast and love it. I just graduated from school. Despite not having the money to invest now, I am looking to educate myself in anticipation of the opportunity. Do you have any newspapers or real estate journals you read frequently or any books you can recommend to someone with little capital? I appreciate your willingness to answer questions and guide newcomers to the field. Keep putting out a great podcast."
First of all, I don't know why newspapers are still around. It's just amazing that there are still around after all these years, especially with the explosion of the internet. Newspaper started dying off in the 1950s after the introduction of the television, at least when it went mainstream. Ever since the internet exploded, information at your fingertips, you can pull up almost anything instantly. There's so much free information out there. I don't know if you really need a newspaper. However, magazines are still around. I like magazines actually, I like holding them even though I have an iPad where I read everything from.
Real Estate Books: The other publication is called Realty411. You can actually see a copy of it on our website at NoradaRealEstate.com.
There are two magazines in the US where you can get good information on real estate investing. One is called Personal Real Estate Investor Magazine. It has a limited circulation, but you can find it or you can subscribe to it. I do have it. I rarely find the time to read it so it just sits on my credenza. But there are good articles in there. The other publication is called Realty411. You can actually see a copy of it on our website at NoradaRealEstate.com. In fact, it's the issue that I'm on the cover. You can click on that and it'll take you to their website. From there, you could probably figure out how to subscribe to it.
However, I'm not necessarily suggesting that you use newspapers and magazines to educate yourself. There is so much free content on the internet, on real estate forums, with podcasts and with all the books that are out there that you could find yourself swimming in information to the point where you may not even end up doing anything. It might be analysis paralysis.
I do agree that knowledge is the key. It is fundamental. It's my first rule of successful real estate investing. You do need to educate yourself. I consider knowledge to be the new currency. If you don't educate yourself and you don't have that knowledge, then you're really going to be stuck or doomed following other people's advice. You don't know if that advice is good or bad. Knowledge will help make you a good investor and actually it'll t...
In this episode we talk to one of our youngest investor clients who is on track to purchase seven (7) turnkey investment properties this year. He started at the age of 22, and plans to acquire a lot more next year in 2016.
He shares with you some tips and suggestions on how he got started, what he looks for in his investments and how you can do the same. There is no magic, just following a system and doing your due diligence. All this and more on today's episode.
If you missed last week’s episode, be sure to listen to The “Buy & Hold” Strategy with Linda McKissack.
Enjoy the show!
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Client Case Study on Turnkey Real Estate Investing In today's show, we have a current client of ours. His name is Lance. I wanted to bring him on as a bit of a case study because this guy is only 26 years old. He started investing at the age of 22. He's on track to close on his seventh property this year. He'll potentially have eight by the end of the year. He plans to buy a whole lot more next year. He's really following our philosophy and our advice of buying prudent income-producing properties in market's that make sense, that cashflow from day one. He's diversifying according to the strategy that we've laid out for all of our investors, all our clients. He's really jumped in and made it work. He's had great success. He's also an analytical person who likes to do his research and due diligence. As Ronal Reagan used to say, "Trust but verify." That's exactly what Lance does.
It's my pleasure to welcome one of our clients. His name is Lance. He's one of our youngest clients. I believe he's 26 years old. He's got some very clear and aggressive real estate investing goals, which is just fantastic. I wanted to bring him on the show today as a bit of a case study to share his experience with investing, not only on his own but even through our network at Norada Real Estate Investments. I'm sure he'll be able to share some tips and some ideas for you today. His name is Lance. Lance, welcome to the show.
Thanks for having me on, Marco.
It's my pleasure. You are one of our youngest real estate investors at the age of 26. We have had clients from the ages of 19 all the way up to their 60’s. It's quite a wide range. You started off quite young as I recall. I remember you contacted us. It was actually my birthday. January of 2015 is when you had first called our office. I like you to share with our listeners how you got started in real estate investing, where it all began and how it progressed, because I know you started off at a very young age.
Turnkey Real Estate: I always knew when I was younger that I was going to get into real estate investing at some point.
I always knew when I was younger that I was going to get into real estate investing at some point whether it was residential or commercial. I wasn't exactly sure where. My family owns some real estate so I thought it was a good investment. When I was 22, I actually made my first purchase. I purchased a townhouse. At the time, it was a place that I would live in. I also was looking for, "If I move out of this place, I want to make sure that it would be cashflow positive." That was my only criteria. At the time I was thinking, "Here's an investment I'm going to make and 30 years from now it's probably going to pay off. That's where I'm really going to make the money.” I purchased it and shortly after, I ended up getting moved for work. I rented it out. I did pretty well and at the end of it all, I ended up netting probably $150 to $200 a month throughout the course of owning it. What really paid off was earlier this year whe...
Linda McKissack is an investor, entrepreneur, best-selling author, business coach, and a highly regarded speaker. In 2013, Linda was co-author of the national best-seller “HOLD - How to find, buy and rent homes to build wealth”. Her authenticity makes you believe – If she can do it then so can I.
In this episode we talk to Linda about the "Buy & Hold" strategy and her huge success investing in single-family homes. She has accumulated 108 units in real estate, and is working on other passive income projects right now. Her basic strategy and formula is: Find, Analyze, Buy, Manage, Grow.
Here is the Amazon link for her book:
HOLD: How to Find, Buy, and Rent Houses for Wealth
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The "Buy & Hold" Strategy with Linda McKissack Why is the Buy and Hold strategy the best? The Buy and Hold methodology, as it applies to property, is and always has been the cause for making more millionaires than any other method. The main reason for this is really because it lets you develop equity through appreciation and amortization over a period of time. There are numerous short-term techniques like lease options, wholesaling and flipping properties that can create some cash or what I call, chunks of cash. But in no way will it improve your long-term net worth. I found in my many years of investing experience that purchasing real estate is the most significant part of the ownership cycle. It's very important that you buy right; buying the right market, the right location, the right property, the right cashflow. These are all things that we help our investors do in Norada Real Estate. If you're interested in that, talk to one of our investment counselors.
Buy and Hold: As long as you're in the right market, liquidating property is very simple.
The selling side of it is pretty straightforward. As long as you're in the right market and you have the right market cycle, liquidating property is very simple. That is one of my biggest regrets. I purchased a property for $40,000 many, many years ago. In fact, it was the first property I ever purchased at the age of 18. That $40,000 property would have been long paid off today and that property today is worth close to $400,000. It has appreciated considerably, certainly kept up with the rate of inflation. When it comes to Buy and Hold, your goal in property investing must be to develop as much equity as you can in the property while still having enough passive income to get you there. As long as you own the property, you'll have the advantage of tax sheltering some or all of your income. You cannot get that from other short-term investment methods. The Buy and Hold strategy is the basic reason that explains why people have become wealthy over time.
Today's guest is someone who I like and admire. I like the way she thinks. She's a famous author, a New York Times Best Seller. The book is HOLD. It's one of the Gary Keller Trilogy books, which are all fantastic books. I highly recommend them. Her name is Linda McKissack.
I'd like to introduce Linda McKissack to the show. Linda McKissack is an investor, an entrepreneur, a bestselling author, a business coach and a highly-regarded speaker. In 2013, Linda was co-author of the national best seller, HOLD: How to Find, Buy and Rent Homes to Build Wealth. Her authenticity makes you believe if she can do it, then so can I. Welcome to the show, Linda.
Thank you, Marco. I appreciate it.
It's great to have you here. Just to give our audience a sense of geography, can you tell them where you're located?
I'm actually just north of Dallas, in a town called Denton, Texas.
You've written this incredible book called HOLD. Although I know your story to some degree,
Jacksonville is a very large coastal city located in the state of Florida. Unlike some cities where white-collar or blue-collar occupations dominate the local economy, Jacksonville is neither predominantly one nor the other.
With a population expected to more than DOUBLE over the next 10 years, Jacksonville offers exceptional investment opportunities hard to find in most markets around the country today.
In this episode we explore the five key fundamentals that create the "perfect storm" for real estate investors in Jacksonville. Listen in as we dive in and uncover a golden investment opportunity.
If you missed our last episode, be sure to listen to The Truth about Property Insurance.
Enjoy the show!
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Hot Investment Opportunities in Jacksonville, Florida We’re going to talk about the Jacksonville, Florida market. This is a relaunch for us in that market because we have just had a hard time getting good inventory, but that all changes today. We are bringing on our local market partner here to talk about the market, the opportunities there. Why it’s such a great market and why so many investors just don’t know about that market is beyond me. Anyway, it’s a good opportunity for us if you know what’s going on. Timing and the market cycle really play into your decisions as to where to invest when you’re investing in real estate. What you’ll find is that Jacksonville is almost a perfect storm. We’ve got everything going on there that is in our favor as a real estate investor.
Brian is our new local market partner in Jacksonville, Florida. When I say new, what I mean is this show is effectively marking the relaunch of Jacksonville, Florida. We’ve been in the Jacksonville market for a number of years. However, the greatest challenge we have found is getting the right inventory and enough of it. That sounds like a problem with some good fundamentals, but it is a problem. We needed to bring on a new team that has excellent product that are in the right areas. Brian and his team are well-vetted. They are fantastic. Their knowledge of the market is exceptional. I wanted to bring Brian onto the show today to talk about the Jacksonville market, the opportunity there for you as an investor, and share with you what we potentially could bring to the table, if you’re interested in opportunities down there. Brian, welcome to the show.
Thank you so much for having me, Marco, and the audience as well.
It’s my pleasure. I’m glad to have you on. I’m very impressed with your team. I’m also very impressed with your success story. As I understand it, you started off in California. You weren’t born here, but you were an investor here in California. Then you took that success and you repeated that model in Jacksonville. I have a trademark saying, “Live where you want. Invest where it makes sense.” Let’s start off by you telling our audience about your background and how you got started.
Hot Investment: One of the things we did upfront was surround ourselves with some good mentors and some smarter investors that had been around the block a lot longer than us.
Actually, our first portfolio in California dates back when we started our first deal in 1998 in a place called Bakersfield, California. We were actually living in Santa Barbara, so live where you want and invest where it makes sense and the fundamentals. Living in Santa Barbara, the numbers made absolutely zero sense even in 1998. The median price in the coast there was $750,000. You could not cashflow property. My business partner and I have always, from day one, been focused on cashflow affordable property. We’ve made lots of mistakes along the way. One of the things we did upfront was surround ourselv...
In today's episode I talk to one of my insurance agents (Joshua Dupree) to answer many common (and not so common) questions that real estate investors ask. Insurance is a necessity but there is so much confusion surrounding what coverage to get, how much coverage, what deductible, and replacement cost versus actual cash-value. All that and so much more.
Don't miss this episode - it is full of great information that might have you review and questioning your current insurance policy.
For those interested, here is Joshua's contact information:
Joshua Dupree Missouri Farm Bureau Insurance Services (816) 833-4440 www.mofb.com
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Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. On today's show, we're going to talk about the truth about property insurance. We get a lot of questions from investors about where to get insurance, how much insurance, how high their deductible should be, what's covered and then there's the always confusing question about replacement cost versus actual cash value, which seems to be debated in perpetuity online in real estate forums. I wanted to bring my insurance agent on, a guy named Joshua in Missouri where I'm buying properties right now. I asked him a bunch of questions about property insurance, what's the proper coverage, how to compare different policies, how much deductible is enough, etc, etc. It's really not as confusing as you might think, but it's important to understand what you're looking at and how to compare one policy to another policy.
Without further delay, we're going to get him on here in just a moment. But before I do, I wanted to talk about a listener question that came in recently. The question was, "Can I put my property in an LLC after I close with conventional financing?" The short answer is, yes, you can. After you close escrow on your property and you take title, you can do whatever you want with your title. In other words, if you want to take it out of your name and put it into your LLC, for example a holding LLC, a limited liability company, you're more than welcome to do that.
Now, keep in mind that lots of mortgage documents, most mortgage documents have what's called a due-on-sale clause. Technically speaking, if you do transfer title out of your name, when you have a mortgage on that property and you put it into another entity, you technically breached or triggered that due-on-sale clause. What that means is that if the lender wanted to, they could accelerate the loan and demand that the loan is due in full and payable immediately.
Now, I've never seen that happen. I've heard of it happening. But I think to be quite honest with you, it is extremely rare because at the end of the day, if the lender is getting a payment every month like clockwork from you, they're not going to care anything about whether you're holding title in your name or in an LLC. They may not like it but they're not likely going to accelerate the loan because it's just too costly and too much of a risk for them to try and do that knowing that they’re going to get monthly payments as opposed to try and collecting the whole amount of that mortgage balance from you.
If you close escrow on a property, you could put it into a trust, you could put it into an LLC. You're free to do what you choose to do with it. Just keep in mind that there is this due-on-sale clause in the document, but you can hold title in any entity or trust that you choose. Many investors do this. It's not really a prudent thing to hold title to your rental portfolio in your name. It's a bit of an exposure. It's like having a target on your back saying, "Look, I own all these assets." If you ever get into a lawsuit,
In this episode of "Ask Marco" we answer some listener questions. Here is the actual email text: Hello Marco,
I'm looking to purchase my first investment property sooner rather than later. I've been reading tons of books, blogs, and and listening to podcasts incessantly for the past couple of months, including the Passive Real Estate Investing Podcast (which is a great podcast. Thank you!)
I live in NYC which has way too high an entrance cost into the market. Having lived in Portland Or for 9 years, I know the areas and market. It has a much lower entrance cost than NYC. But, I feel it's kind of at the top end of a boom and I would still need to save for about a year for down payment money.
Being a fan of your podcast I decided to look into Norada and was kind of blown away at how accessible rental properties are in other markets. I got excited at the prospect of being able to acquire multiple properties within a year. So, I guess my first question is addressing my lack of knowledge about these cities. I know NYC and Portland. I'm not too familiar with, say, Kansas City or Dallas and I'm uncertain of exactly what I'd be buying. This is my biggest source of uncertainty.
Second, I love that Norada has a lot of the due diligence right there for each property. But, in the spirit of "trust but verify," what research would you recommend I put forward beyond the wonderful data provided?
And lastly, say I saw a property you have on Norada and decided it was what I wanted to purchase. What would the first steps be?
Thank you for your time and help,
Robert F.
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Ask Marco – Making the Leap, Due Diligence, The First Step In today's episode, I want to do an Ask Marco episode because we get questions from investors throughout the week, every week, via email and voice mail and through our online voice mail recorder on our websites. Sometimes, we get some really great questions that I know other investors are thinking about, other investors are probably asking but maybe not coming right out and asking us about it.
On this episode, I wanted to go over a recent email that I got from an investor yesterday. His name is Robert. He has three questions in his email that I think are excellent to cover in a dedicated podcast episode. Robert from New York, his subject is: Question about making the leap into real estate investing.
I got excited at the prospect of being able to acquire multiple properties within a year.
His message is, "Hello Marco, I'm looking to purchase my first investment property sooner rather than later. I've been reading tons of books, blogs, and I've listened to podcasts incessantly for the past couple of months including the Passive Real Estate Investing podcast, which is a great podcast. I live in New York City, which has way too high in entrance cost into the market. Having lived in Portland, Oregon for nine years, I know the areas and market. It has a much lower entrance cost than New York City, but I feel it's at the top end of a boom and would need to still save for about a year for down payment money. Being a fan of your podcast, I decided to look into Norada and was blown away at how accessible rental properties are in other markets. I got excited at the prospect of being able to acquire multiple properties within a year. My first question is addressing my lack of knowledge about these cities. I know New York City and Portland. I'm not too familiar with say, Kansas City or Dallas and I'm uncertain exactly of what I'd be buying. This is my biggest source of uncertainty.”
First and foremost, if you're working with a good, competent, reputable real estate agent or broker in that market,
In this episode we explore to importance of mindset and how some people achieve their goals faster and easier than others.
Our guest is J. Massey -- a full-time real estate investor, entrepreneur, popular podcast host, author, speaker, coach and all-around problem solver. He invests his time looking for investment opportunities (i.e. problems to solve through real estate transactions), and teaching others how to find and manage similar opportunities.
In 2014 he released his highly acclaimed book, Cashflow Diary: 10 Steps to Creating Wealth in ANY Economy!
You can get a free copy of J. Massey's book at www.CashFlowDiary.com/freebook
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The Success Mindset with J. Massey Tied in with that passive income and wealth creation is something that you need to have. It’s a critical ingredient that is called, mindset. What happens between your ears will help determine your level of success and whether you even get to where you want to get to. You’re in for a real treat today because my guess is J. Massey. If you want to talk about a real rags-to-riches story, he’s got it and he is very inspiring.
I wanted to bring him on the show because I thought this is the guy that I think you, our audiences, need to hear. If you’re stuck in a rut, just getting started or want to break out and take your success today to the next level. That’s what today’s show is about. It’s about having a successful mindset and how to get there.
It’s my pleasure to bring on J. Massey to this show. J Massey is a full-time real estate investor. He’s an entrepreneur, a popular podcaster, an author, speaker, coach, and an all-around problem solver. He invests his time looking for investment opportunities, which means that he solves problems to real estate and teaches others how to find and manage some more opportunities. J, welcome to the show.
Thanks for having me. I’m glad to be here.
It’s my pleasure to have you. Just to give our audiences a sense of geography. Can you tell them where you’re located?
I'm out here in sunny Southern California, Mission Valley to be specific.
The reason I wanted to bring you on the show is you have one of the most inspiring stories. I’ve learned at a young age that mindset and attitude is absolutely key in order to be successful in anything you do. Not just real estate investing but anything. I was fortunate enough or maybe just lucky to come across Anthony Robbins when I was a teenager. This goes many, many years ago. I had ordered his Personal Power Program on audio cassette. I listen to those audio tapes over and over and over again, and I really drilled it in as to the importance of mindset and attitude. What I’d like you to do, if you don’t mind, is start off with your story. I’d like to call it a rags-to-riches-story. Tell us where you came from and how you got started because it’s the most inspiring story I’ve heard in a long time.
Thank you for saying those kind things. I wouldn’t have chosen this to be my story, so let’s be very clear on that. Secondly, I know that someone out there, I don’t know who you are, but that’s part of the reason I’m here today is because I’m hoping that whatever I say, something that I say inspires you to realize that there’s still something left. You still have something in the tank and it can happen, it is possible and you are the one that have been uniquely designated to go make that happen. A few years ago, my wife and I, she by trade is a recruiter, I was a financial planner. We were doing “okay” or at least what we considered to be okay at the time. We have bought our first primary residents. It was a condo and for those of you familiar with California Real Estate Pre-crash, it’s a 1,
Atlanta is a large city located in the state of Georgia. Atlanta is a decidedly white-collar city, with fully 89% of the workforce employed in white-collar jobs, well above the national average. In addition, Atlanta is a major college town. As is often the case in college towns, the many students that live in Atlanta have a strong influence on the local culture and music scene.
The citizens of Atlanta are among the most well-educated in the nation: 46.8% of adults in Atlanta have a bachelor's degree or even advanced degree, whereas the average US city has 21.8% holding at least a bachelor's degree. The per capita income in Atlanta in 2010 was $35,890, which is wealthy relative to Georgia and the nation.
In this episode we explore the greater Atlanta market and the reason why it might make sense for you to invest there. We talk to one of our local market specialists, host of The Deal Farm podcast and long-time team member to learn more about the benefits that Atlanta has to offer.
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Market Spotlight: Stability in Atlanta, GA Stability in Atlanta, GA: Atlanta is a business-friendly city. It is a large transportation hub.
Today's show is about Atlanta and the stability and investment opportunities located in that market. Atlanta is a business-friendly city. It is a large transportation hub. We've been in the Atlanta market for about eight years. For us, it's a perennial market. A lot of major companies and corporations have their headquarters there, from Coca-Cola to Home Depot. It is a very broad and diverse economy. It's not made up of just one sector. It's very white-collar. There is a large workforce employed in the white-collared job community.
Although Atlanta itself is about 450,000 people, the entire metropolitan area is closer to 6.5 million people. There are many cities all clustered together making it one of the largest cities in the US. Therefore, there are a lot of opportunities because all real estate is local and you can get down to the neighborhood level if you have to in order to find the right deals in the right markets.
I'd like to welcome Ken to the show. Ken is our local market specialist based in Atlanta, Georgia. He is a full time real estate investor. He's host of The Deal Farm podcast. Ken has a business degree from University of Georgia, a master’s degree from Georgia Tech. He has bought and sold over 600 properties in the Metro Atlanta area over the last several years.
He's a national speaker and author and he has written multiple articles educating investors on all aspects of real estate investing. He's married with three kids and currently lives in Woodstock, Georgia. Ken has a vast understanding of how and where to invest profitably in the Atlanta metro area, which is the reason why I wanted him on the show today to talk about Atlanta. Welcome to the show, Ken.
Hey, Marco. How are you doing? Thanks for having me.
It's great to have you here. I've known you for many, many years. Our listeners know we've actually worked together for many years. We've actually carried and sold a lot of your product to investors around the world. It's great to have you on our new podcast.
Again, thanks for having me.
Let's start off by talking a little bit about you. Give us a quick idea of your background, if you don't mind.
As you mentioned, I graduated from the University of Georgia in 1999. I came out and worked for a large insurance brokerage for five years. Actually, it was a great first job out of school. I loved what I did but just knew I wanted to get into real estate.
In 2005, I quit my day job and jumped into real estate here in Atlanta full time. Here over the last ten years now,
Have you ever asked how do you purchase property in other markets or out-of-state? Well there is a clearly defined method that works every time. It has been refined over the years and in this episode we break down that process into phases and talk about each one.
Some of the topics we discuss include:
Selecting a market. Selecting a neighborhood and property. Doing your due diligence. Financing your purchase. The closing process. What to do post-closing.
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How to Purchase Property in Other Markets Welcome to Passive Real Estate Investing episode sixteen. I'm your host, Marco Santarelli. Welcome. Thanks for joining us again. Today's show is about how to purchase property out of state or out of your area or in another market. It's what I've developed over the years and I call it the purchase process checklist. Essentially, I started investing out of state from California in three different states back in 2004. I was buying up a lot of property in a very short period of time.
That process was not something that I knew exactly how to do from day one. It was a process that I learned very quickly. Through that process, I made a lot of mistakes, I did lose some money. But I also learned how to properly, quickly and efficiently identify investment opportunities, put them under contract, do my due diligence pre contract, post contract and get to a close.
Although there's no rocket science in this process, it is important to understand. Because a lot of investors find this process to be somewhat foreign, especially if you haven't done it once or twice. Knowing what to look for and how to purchase property out of state or out of your local area is very important if you want to be successful. Because the truth is, a lot of people live in markets that are inflated and overpriced. The numbers just don't make sense there. For example, coastal markets like in California, New York, New Jersey. The rent to value ratios there are so low, they might be .5%, .4%, .3%. The numbers just don't make sense.
On top of that, those property values are so high that your investment capital, which is limited, will only go so far. When you look outside of your local market, you will find markets that are probably better off economically, have better opportunities, more choice for good quality income property. You'll find that your cash on cash returns are higher and your overall down payment will be lower, which means that you can take your fixed amount of down payment capital and leverage that into a larger real estate portfolio, meaning that you can purchase more properties than you could locally.
Purchase Property in Other Markets: Select your market. You can narrow down the markets that meet your strategy and criteria.
Let's start with basically phase number one, that is select your market. Once you know what your investment strategy is and you've detailed out your investment criteria, then you can narrow down the markets that meet your strategy and criteria. In other words, there's over 400 markets in the US. You can't be in all those markets. It's also very difficult to know where to start. If you define your investment criteria, then you can eliminate majority of those markets and focus on certain ones. Obviously, we have our favorites. Within our company, we focus on about eight or nine different markets for various reasons, but they're all really good markets.
If you focus on maximizing your cash flow, then the markets you want to focus on are the ones that'll provide you higher rent to value ratios. These are typically what I call linear markets. Those are usually found in the midwest and parts of the southeast.
In this episode we talk to Joel Grasmeyer, a real estate investor, engineer, and entrepreneur who started PropertyTracker.com in 2004 to create user-friendly, yet powerful tools for real estate analysis.
Some of the topics we discuss include:
The importance of tracking your rental properties. What metrics do most investors like to track? What tools do real estate investors use? What is PropertyTracker.com? Mobile phone Apps that can also help investors.
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How to Track Your Real Estate Portfolio Today’s show is about tracking your real estate portfolio. It’s one thing to look at and analyze properties before you purchase them. What happens after you’ve purchased them and you’ve added them to our portfolio? As your portfolio grows, you’ll want to keep track of the income and the expenses, and more importantly, the performance of those properties. It might make sense to sell some of them or do a tax deferred 1031 exchange into other markets or maybe refinance them to increase your rate of return or pull equity out and move that over into other markets.
There are many things that you can do, but it’s important that you keep track of your real estate portfolio. This actually all came about, when I had a client of ours, a guy name Kevin contact me about two weeks ago. He asked me how to keep track of his new portfolio. He’s just starting out, he’s just building that portfolio but he’s already creating these elaborate Excel spreadsheets and I thought, “There are online tools that can help you and there’s even mobile apps.”
I wanted to bring on my guest here today, a guy named Joel, and talk about what he looks at as far as metrics for analyzing his properties, as well as what tools he uses. Obviously, he likes his own tools, but we can learn a little bit more about that. This is just one option. It’s not something that is absolute necessity. However, it does make your life a lot easier. Especially, at tax time, when you can just click a button and produce a report and give it to your CPA or your accountant and have your taxes put together for you very quickly and easily.
Track Your Real Estate Portfolio: Joel Grasmeyer started PropertyTracker.com to create a tool for real estate analysis.
I’d like to welcome, Joel Grasmeyer to the show. Joel is a real estate investor. He’s an engineer and it seems he’s a serial entrepreneur. He started PropertyTracker.com back in 2004 to create a user-friendly but powerful tool for real estate analysis. Then, in 2008 he created Property Evaluator for the iPhone. Later in 2010, he launched RealEstateTools.com, which is a variety of real estate investment tools, so it’s a market place for that. Lastly, in 2012, he launched the Construction Cost Estimator out to help contractors quickly estimate construction cost using the iPhone, iPad and a Mac. Welcome to the show, Joel.
Thanks for having me on.
It’s great to have you here. Let’s give our listeners a sense of geography, where are you located?
I’m in Ogden, Utah which is about an hour north of Salt Lake City and right next to world class skiing.
I love Salt Lake City, the views there are amazing. You were a native Californian, if I remember correctly?
Yeah, I lived in Southern California from about 1998 to 2006. Then we decided to escape the rat race to Utah and get out of California while the getting was good.
Tell us a little bit about your background. I know you are heavily involved in application development and website tools and you’re an engineer. Tell us about your background.
I spent eight years while I was in Southern California designin...
In this episode we talk to Aaron Chapman, an 18 year veteran in the mortgage industry with a focus on real estate investors, about financing real estate investments.
Some of the topics we discuss include:
The investor's mindset and why that's important. The landscape of mortgage loans for investors. What is loan sequencing. Mortgage loan products available today. Qualification requirements. How to finance more than 10 properties.
You can visit Aaron's website at www.BighausChapman.com.
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Financing Real Estate Investments | PREI 014 Welcome to Passive Real Estate Investing episode 14. I'm your host, Marco Santarelli. Today's show is about financing your real estate investments. This is a very important subject matter because real estate is an investment class that allows you to finance up to 80% of the purchase price using other people's money at historically low rates and control that property over the course of 30 years under a mortgage that is paid off by your tenant. This is incredible. Nowhere else in the world can you do this like you can in the United States.
Financing Real Estate Investments: Financing is a confusing subject because regulations are thick, they continually change, mortgage terms and interest rates fluctuate.
Financing is a confusing subject because regulations are thick, they continually change, mortgage terms and interest rates fluctuate. It's hard to keep up on everything that's going on and the changes in the industry. There are people out there who really know their stuff and can help you in understanding and navigating this space in terms of strategizing your mortgage financing to getting the best product to help you finance those purchases. It's critical that you work with the right people.
Today on the show, we have one of the mortgage brokers and portfolio lenders actually that we work with to help our investor clients finance their purchases, not only just get a loan but strategize on how to best finance all their properties and build their portfolio. The focus is beyond one property. You really should have a focus that encompasses your goals and where you want to go with your financing, where you want to go with your portfolio. It's not enough to say, "I'll just pick a property today and I'll think about buying another one next year and we'll deal with the financing situation then." It's better to look at the big picture and just see where you have to go.
For example, we have some clients that want to purchase fourplexes and we have some clients that want to purchase single family homes. I advise that they start off by purchasing the fourplex first because the down payment amount on his first four mortgages would be five percent lower than the down payment on it as if he had purchased it later after purchasing the single family homes first. The net result to him was a down payment that was five percent lower by starting off with the more expensive property. Many investors know this but it's surprising how many investors really don't know what is referred to as mortgage sequencing. This is just an example.
Today, I wanted to bring on one of the companies and one the people that we work with. Very smart guy, understands this space of mortgage financing for investors very, very well. He's an eighteen year veteran and his name is Aaron.
It's my pleasure to welcome Aaron Chapman to the show. He's an eighteen year veteran in the financing industry with a focus on real estate investors. He has a team of eleven total staff members who help him finance investment loans. He's been married for nineteen years, has four children. Here's an interesting fact, he's with the local sheriff's department and h...
In this episode we take a look at Kansas City, MO and why it's such a great market for real estate investors. Most investors are not even aware of the incredible opportunities available to them there. So we'll dive in and take a look at why it's a great market and what you can expect to find for your real estate investment portfolio.
Kansas City is a largest city in Missouri made up of 147 constituent neighborhoods. With a population of over 463,000 people in the actual city, the greater metropolitan population is expected to grow to 2,200,000 by 2020.
The overall education level of Kansas City citizens is substantially higher than the typical US community, as 29.6% of adults in Kansas City have at least a bachelor's degree.
Jobs are plenty with many large employers spread across a diverse range of industry sectors, and the cost of living is 15.3% below U.S. average.
Click here to view the latest Kansas City investment properties.
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Market Spotlight: Cash Flow in Kansas City, MO Welcome to Passive Real Estate Investing episode 13. I'm your host, Marco Santarelli. Today's show is a market spotlight. Today we're going to look at Kansas City. We've been in Kansas City for about eight years with tremendous success. There is so much opportunity there and you could pick up properties in a wide range of price ranges, from $50,000 on the low end to $150,000, $160,000 on the high end. That's really not even the high end, you could get $200,000, $300,000 properties there, although I don't recommend those as investment grade properties. The numbers don't work out as well on those types of properties.
Kansas City has been growing year after year. It has a large growing population that is expected to increase to about 2.2 million by the year 2020. That's only about six years away. Kansas City is a large city in the state of Missouri. It has a population of about 470,000 people. It's made up of over 147 constituent neighborhoods. Kansas City has a very diverse economy. It's neither blue collar nor white collar. It's got a mixed workforce and it expands every sector, from healthcare to professionals, office workers, service providers, industrial, sales jobs, management type positions, administrative support, technology is a new big one.
Kansas City has more people living there that work with computers and math than 95% of places around the US. That's an interesting statistic. Of the large cities around America, Kansas City is one of the most car oriented. 83% of the people in Kansas City drive to work in their own car every day, most often alone. Also, the overall education level of Kansas City people or citizens is substantially higher than the typical US community. About 29.5% of adults in Kansas City have at least a bachelor's degree. The average American community has only 21.4%.
Cash Flow in Kansas City, Mo: We love Kansas City. We've been there for many years.
Also the per capita income in Kansas City back in 2010 was over $25,000 per person, which is actually wealthy relative to Missouri. It's considered upper middle income relative to the rest of the United States. What this means is it equates to an annual income of about $103,000 for a family of four. Kansas City contains every type of person. Its demographic ranges from the very wealth to poor people as well. It's not much different than any other metropolitan area.
We love Kansas City. We've been there for many years. We've had properties there from as little as $45,000 in B- neighborhoods all the way up to, like I said, $150,000 properties. Cap rates are very high so they're attractive to investors. Population is growing, median home price has been going up year over year for a number of year...
In this episode we talk to David Campbell, the founder and Hassle Free Cash Flow Investing. He started investing in real estate part-time while he was working as a full time high school band director with zero net worth. Within six years and before the age of 30, David had become a financially independent millionaire through the vehicle of part-time real estate investing. David has been involved with new home construction, land development, commercial real estate and has been focused as a professional mortgage note investor for over a decade.
You will learn:
How to make money as the bank by acquiring an income-producing mortgage note secured by quality real estate. Why now is the best time in the market cycle to acquire a mortgage note. How to buy a mortgage note to create a portfolio of tax-free and tax-deferred passive income for life. Why the most savvy investors are buying real estate outside of their IRA and buying mortgage notes inside their IRA but usually not the other way around.
Get your FREE copy of David's white paper on Mortgage Note Investing by emailing him at lending@hasslefreecashflowinvesting.com
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Passive Income Investing in Mortgage Notes Today’s show is all about passive income and specifically, it's about mortgage notes. I have a long interview here with a good friend, who is involved with mortgage note investing and he has been for over a decade. He's very successful at it. He has a very large portfolio of notes, and he really understands the ins and outs of mortgage note investing and how to profit from it.
David Campbell is a founder of Hassle-Free Cash Flow Investing.
It's my pleasure to welcome David Campbell to the show. David is a founder of Hassle-Free Cash Flow Investing. He started investing in real estate part-time while he was working as a full-time high school band director with zero net worth. Within six years and before the age of 30, David became financially independent. In fact, he became a millionaire through the vehicle of part-time real estate investing. David has been involved with new home construction, land development, commercial real estate and he has been focused as a professional mortgage note investor for over a decade. Welcome to the show, David.
Marco, it’s a pleasure to be here with you and your audience.
Thanks. It’s great having you here. Just give our audience a sense of geography. Where are you located?
I am in a suburb of San Francisco.
Today’s subject is about Mortgage Note Investing. I need to be honest with our audience. I am not a big fan of “paper assets.” However, I do make an exception with mortgage notes. The reason is because it’s actually an IOU that is backed by a real tangible asset, which in this or my case, would be real estate. That's the only thing I would invest in. I like mortgage notes for that reason. The other thing is, our show’s theme is passive real estate investing, so this fits right in with that model of passive real estate investing.
I think the best place to start for people who are not that familiar with what notes are or mortgage notes specifically is maybe you can explain what mortgage notes are and what they look like.
A mortgage note is shorthand. It’s a way of saying promissory note secured by a piece of property. That security instrument can be either a mortgage or a Deed of Trust. It depends on what state you're doing business in or which security instrument you're using. It's a two-part instrument and they move together. The promise to pay which is called a promissory note, which states how big the loan is, and what the interest rate and the terms of the loan are. That security instrument which is the mortgage note or the Deed of Trust...
Since the early 2000′s, the number of self-directed IRAs has more than doubled! These plans give individuals the ability to invest into assets that they understand and can control such as real estate. Investors who have knowledge and expertise in a particular investment can purchase them in a tax-free or tax-deferred environment
The and Checkbook IRA and Solo 401k are viable solutions that allow you to investment in virtually any asset including real estate, provide you with “Checkbook Control” over your retirement account, and minimize or eliminate custodian fees.
In this episode we talk to Dmitriy Fomichenko the founder and president of Sense Financial Services LLC, a boutique financial firm specializing in self-directed retirement accounts with checkbook control.
We also take a look at another available turnkey investment property in our Deal of the Day segment.
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Investing Using Your Retirement Accounts Today’s show is about self-directed IRAs and Solo 401Ks. What is that? These are retirement accounts. A lot of people don’t realize what they can and can't do with retirement accounts. Most people use these accounts to sock away some savings and then invest in mutual funds or the stock market, which I don’t personally think is a great investment. A lot of people don’t realize that you can turn those retirement accounts into self-directed retirement accounts where you can actually invest in whatever asset class you want.
There are very few restrictions but the great thing about it is you can invest in passive income investments like notes and income producing real estate. You can do this quite easily and you can have complete control over it. You know I’m big on control. It’s my ninth rule of successful real estate investing. When you have the control to invest and direct the funds within your retirement account into assets that you have complete control over as well because they’re hard assets, then you have an amazing and a powerful combination.
The contribution limits on some of these retirement accounts are actually quite impressive. A lot of people don’t even realize that they can do a lot more with their retirement account than what they are told they can do by their financial planners or stock advisers or custodians, because they really don’t know about it or they don’t want you investing in other assets. Today, we have a great guest who is someone I've known for many years. He specializes in working with investors who want to use their retirement accounts to invest in real estate related assets.
Dmitriy Fomichenko, founder and president of Sense Financial Services.
I’d like to introduce and welcome Dmitriy Fomichenko to the show. Dmitriy is the founder and president of Sense Financial Services, a boutique financial firm that specializes in self-directed retirement accounts with checkbook control. He began his career in financial planning and real estate investing fifteen years ago. He now owns multiple investment properties in various states and is a licensed California real estate broker. Dmitriy, welcome to the show.
Thank you, Marco. It’s great to be here with you.
I love your subject matter. I think it’s going to be invaluable to our listeners. Let’s begin by just asking the question: Where are you located?
Here in Southern California, in Orange County.
I met you back in the mid-2000s. Back then I know you were involved in selling investment properties, so you had your feet wet with investment property. My question is, at least to get things started, how did you go from real estate investing to starting Sense Financial?
That’s a really good question, Marco. It actually ties in close together.
The number one problem most real estate investors face today is knowing "how to protect" not "what to protect." Caught between attorneys, tax professionals, and self-proclaimed gurus, the average real estate investor finds himself awash in the quagmire of information and ideas with little coherency or consistency.
Unfortunately, the reality is that most professionals do not understand the complex nature of real estate asset protection from the legal and tax perspective. As a result you are left with a piece-meal plan based upon a fragmented stream of advice that seldom allows you to feel secure in your planning.
In this episode we talk to asset protection attorney Clint Coons to examine some of the entities and strategies used by real estate investors to protect their wealth.
Clint is a successful real estate investor and the manager of Anderson Business Advisors and Law Group.
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Passive investing in syndicated deals gives beginning real estate investors opportunities they used to only dream about. We all have to start somewhere, but some of us start with far less capital than others. Syndicated deals can give beginning investors the chance to break into the crowded real estate market. Passive Investing in Syndicated Deals: Getting the Best Deals for Your Money In this article:
The Basics of Syndicated Deals What a Successful Real Estate Executive Says Getting to Know Joe Fairless How Joe Fairless Started His Career in Real Estate Jumping into Syndicated Deals Syndicated Deals: What are They? Why Comparative Real Estate Market Analysis is Important How to Find and Close Syndicated Deals Syndicated Deals: What to Watch Out For Pros and Cons of Syndicated Deals Other Ways of Finding Syndicated Deals Residential Investment Properties vs. Syndicated Deals Reading Up on Real Estate
The Basics of Syndicated Deals In this episode, we explore syndicated deals and how they compare to smaller 1-4 unit residential properties. Passive investing in syndicated deals involves cooperating with other partners.
Syndication occurs when investors combine their money to purchase properties they would not be able to afford by themselves. Together, they cover the costs of the property and share its profits. Read on to learn more about passive investment in syndicated deals and other real estate topics in today's interview with Joe Fairless!
What a Successful Real Estate Executive Says From being the youngest vice president of a New York City ad agency to creating a company that in six months controlled over $7,000,000 of property, Joe Fairless lives up to his Fearless Fairless nickname. He’s the host of the popular podcast, Best Real Estate Investing Advice Ever show, and is closing on a 250-unit apartment this summer worth over $14,000,000.
We also take a look at another available turnkey investment property in our Deal of the Day segment.
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Passive Investing in Syndicated Deals – Joe Fairless We have a great show today. We're going to be talking about syndications. I have an excellent guest who's had an amazing success story. Today's guest is Joe Fairless. From being the youngest vice president of a New York City ad agency to creating a company that in six months controlled over $7 million of property, Joe Fairless lives up to his Fearless Fairless nickname. He's the host of the popular podcast, Best Real Estate Investing Advice Ever Show, and is closing on a 250-unit apartment this summer worth over $14 million. He's on the Alumni Advisory Board for Texas Tech University and the Board of Directors for Junior Achievements. Joe, welcome to the show.
Thank you so much, Marco. I am glad to be here.
It's great to have you. I have to be honest with you, I'm really excited to have you as a guest because not only do you guys have a great podcast, and I really don't know how you put out one episode every day, I don't know where you find the time, but you have a great success story. I'm really excited to have you on.
I'm glad to be on the show. Really quick on how I have the time, I just prioritize it because I've seen that the daily podcast is incredibly valuable from a friendship and from a business standpoint. Really, it makes room for itself.
Getting to Know Joe Fairless Those relationships you could really leverage and there’s probably a small percentage of those people that you could bring into your projects and your syndication. I think that is time well spent. Give our listeners a sense of geography. Where are you located?
I am in Cincinnati now. I recently moved to Cincinnati from New York City about a month or two ago.
Inflation normally results from government policies which create inflationary pressures. The result of inflation can be best described as more money chasing fewer resources. The sad reality is that for most people inflation truly is detrimental and a silent theft.
Real estate investors are in a unique situation whereby they actually benefit from inflation. The only ‘hedge’ against inflation that we are aware of that works consistently over time, in any market, and any economy is real estate. But how?
When you understand what inflation is, and how it benefits you as a real estate investor, you will want to build your real estate portfolio to take advantage of these powerful wealth building concepts.
In this episode we explore inflation and why it's your friend. We also give you five (5) simple strategies to benefit from inflation in any market.
We also take a look at another turnkey investment property available in our Deal of the Day segment.
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5 Strategies to Benefit from Inflation Today, we are going to be talking about the exciting subject of inflation. Now, before you turn this off or shake your head and wonder how inflation can be exciting, keep listening because you will find out that inflation is actually your friend. You will see how it can be profitable for you in real estate. Let’s just lay a little bit of background here. The American economy has been bumping along pretty much since 2008. We haven’t really had a real economic recovery. Real estate markets have seen some activity here, especially in the last three to five years. We’ve seen considerable appreciation in many markets. But outside of the real estate sector, the economy has been relatively sluggish. This has forced the government to step in with various monetary policies that have done nothing more than create pent-up inflation. Some people are seeing it. We do have a bit of a deflationary environment, so you do see prices in some things like oil, recently, gasoline, technology coming down. But for the most part, if you look at your daily expenses, energy, housing, food, various consumer goods, those prices have been going up, so we do have an inflationary environment. At the same time, we have government policies that are creating pent-up inflation that we haven’t seen fully bloom at this point in time. The fear is that in the years to come, that could bring on rampant inflation.
If you are on the right side of the equation, you can benefit from inflation.
I am not a big fan of these government policies, the quantitative easing, the money printing that the Federal Reserve has been on, let’s call it a massive binge, since 2008. Inflation is just one of those things that are a reality. Now, when investors hear the word inflation, in fact, when the general population hears the word inflation, for many, it just sends shivers down their spine. They just hear inflation and they just think that everything is going to be more expensive. That it’s eroding their savings. It’s going to make saving for retirement even more difficult. Those things are generally true, but that doom and gloom is not all that inflation is about. Inflation is much more than that. If you are on the right side of the equation, you can benefit from inflation. At the end of the day, inflation’s effects are pervasive and they’re very subtle. Most people don’t realize that inflation is eating away at their purchasing power every year, but it is there. What you do is see a shrinking pay check. You see your purchasing power of your income get eroded, and that just translates to increasing costs for gas, energy, housing, food and other essentials. Let's dive in and take a closer at inflation. Let’s define it and look at the cause and effect and how you could benefit from inflation as a real e...
Classifying a neighborhood by “type”, or what many investors refer to as a “grade”, is typically nothing more than a subjective description. Although most people will have a general idea of what is being referred to, in my experience it is usually nothing more than a qualitative rather than quantitative description.
Because of that ambiguity, we’ve developed a proprietary, simple grading system that we use with all our investment-grade properties. In this episode we help you to better understand neighborhood types.
We also take a look at another turnkey investment property available in our Deal of the Day segment.
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Choosing the Right Neighborhood Hello. Welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. This is the show where busy people like you learn how to build substantial passive income and create wealth for the long term. Thanks for joining us again. Today's show is very important. It's about choosing the right neighborhood and how do you go about doing that. This is an important topic.
A lot of people talk about neighborhoods and how they qualify them or grade them, but classifying a neighborhood by type varies from investor to investor. In fact, what many investors refer to as a grade is typically nothing more than a subjective description. Although most people will have a pretty general idea of what is being referred to, in my experience, it is usually nothing more than a qualitative rather than a quantitative description. The fact is, is there's no formal definition out there of what a neighborhood type or neighborhood grade is.
In fact, if you go back to episode number four where I talk about turnkey real estate investing and turnkey real estate investments, even there I have talked about there not being a formal definition of what turnkey real estate and real estate investments are. Everybody has a different idea or definition of what that might be. In an effort to level the playing field and define what that is, I've gone into some detail about that in episode four. If you haven't listened to that, be sure to take a listen.
With this ambiguity, we've, over the years, developed a somewhat proprietary but simple grading system that we use to grade all of our investment grade properties. To help you better understand this, I'm going to go over a basic overview and describe each of the neighborhood types and the grading system and what it means so you have an idea of what it should mean in case you don't know. If you have your own idea, I'm sure this is going to be fairly similar to your existing model or paradigm of neighborhood grading.
Choosing the Right Neighborhood: If you've defined what your criteria is, finding the properties that fit that criteria becomes infinitely easier.
Hopefully, this will help you to better understand how to look at a neighborhood and grade it or put it into some sort of spectrum in order to compare one neighborhood from another and what may be a good choice versus what may be a bad choice. Ultimately, this comes down to what is your investment criteria. If you know what your goals are, you have a strategy, you've defined what your criteria is, finding the properties that fit that criteria to meet your goals becomes infinitely easier.
Let's begin by describing the low income neighborhoods. These are typically what we call C and D grade neighborhoods. These low income neighborhoods generally have a large portion of their residence on government assistance. For example, the section eight housing program. The ratio of renters to owner occupied homes in these areas are often greater than 50% and more often they're as high as 80%. A C grade neighborhood would probably be 50 to 60, 70% tenant occupied.
What’s the difference between a linear real estate market and a cyclical market? Is one better than the other? Today we explore the different market types and what they mean to you as a real estate investor.
We also take a quick look at a turnkey property available in one of our linear markets with great cash-flow and high rates of return.
We also take a look at a real world example available today from www.NoradaRealEstate.com.
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Understanding Linear and Cyclical Markets Welcome back to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. This is the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. Thanks for joining us. If this is your first time here, welcome. If not, we're glad to have you back.
Today's show is about something that I talk about on a very regular basis. Something that most people understand conceptually but a lot of people still don't completely understand. This is really important if you're a real estate investor, especially when you're in the early stages of selecting what markets to invest in. This is the concept of linear and cyclical real estate markets.
Cyclical markets are real estate markets that tend to have larger price moves up and down over the years.
Cyclical markets are real estate markets that tend to have larger price moves up and down over the years. Property values will move up and down like a roller coaster and they have noticeable peaks and troughs. They are essentially the shooting stars of the housing market. These are the markets that have the booms and busts. The length of the cycle can vary from market to market because, as you know, all real estate is local. That's the saying in real estate. These cycles can last from seven to ten years from end to end. Many of these cyclical markets are found along the east and west coast of the United States where the household incomes are higher and land for new construction is in short supply.
Good examples would be coastal markets along the coast of California, New York, New Jersey, as well as many parts of Florida, from Miami on up north. When conditions are ripe and the annual housing price gains in these areas go up, you can see 20 to as much as 30% or more in property values in a single year. These are crazy rates of appreciation and they are absolutely not sustainable.
You may remember back in 2005, 2006, we've seen appreciation rates in southwest Florida, in the areas like Lee County go up 32 to 40% in a single year. There were two years back to back where they had large double digit returns. We all know what happened. Years later, that market became one of the ground zeros of the foreclosure crisis. Las Vegas, Phoenix, Riverside, California, southwest Florida, these were areas that had some of the largest number of foreclosures.
We saw property values increase dramatically and then come crashing down. These local booms burn themselves out by pushing prices to unaffordable levels. When those prices get to those unaffordable levels, very few, if any, people can afford to buy the median priced home. At that point, what happens is buyers dry up, there's an excess amount of supply and that equilibrium no longer exists. The pendulum swings from one end to the other and property values come crashing down since there's no one to buy these properties because of the lack of demand. You get a galette of inventory.
I often refer to these markets as bubble markets because they appreciate in value so dramatically in a relatively short period of time but they come crashing down as the economy changes and brings property values back down as quickly as it went up. Often,
In today’s episode we discuss the importance of understanding and calculating a properties cash-flow and rates of return. Specifically we look at capitalization rates, cash-on-cash returns, and the total return on investment (ROI).
A good understanding of these numbers are required to make smart investment decisions and to be able to properly compare one investment to another.
We also take a look at a real world example available today from www.NoradaRealEstate.com.
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Cash-Flow and Rates of Return Welcome back to Passive Real Estate Investing. I'm your host, Marco Santarelli. This is the show where busy people learn how to build substantial passive income and create wealth for the long term. If this is your first time here, welcome. We're glad to have you. If you're returning, welcome back.
Today's show is about cash flow and rates of return. This is something that every investor needs to know. It's important to know how your properties performing for you. Or if you're analyzing a property because you're looking to purchase, then it's important that you know how to analyze that property to know what the rates of return are and to be able to compare property to other investment options that you have. This is a very important topic today. I'm going to break this down into two main sections, cash flow and then rates of return. Both are equally important because the rates of return come from the cash flow of that property.
Income is the gross rental income that comes from a property.
Let's begin by talking about cash flow. Cash flow is loosely defined as the income from a property that's left over after all expenses and bills are paid. That's a simplistic definition and it's not exactly correct. Let's break it down. Income is obvious, it's the gross rental income that comes from a property. If you have a property and it rents for $1,000 a month, that is your gross rental income. Now, assuming that comes in every month, that will be what is collected by you or your property manager and from there, you would deduct expenses.
Sometimes you'll have other income coming in from a property. It's not that common but it is possible to have late fees from tenants who miss a payment or are late on their payment because rents are generally due on the first and late on the fifth. There may be a $50 or more late payment fee that will be charged and that's added income for you. Not all that common, but on larger properties and sometimes on fourplexes, you'll have income from a washer and dryer. For the most part, the income is made up of the gross rental income from that property.
When it comes to expenses, there's a long list of potential expenses but there are few that you can't get around. The largest expense you typically have will be property taxes. Property taxes will vary from state to state, county to county. They're usually the highest expense and you can't get around them. Property taxes will vary from about one percent to as high as five percent. Texas, for example, will average somewhere around 2.2%.
At the end of the day, property taxes are a mandatory expense that you will have.
At the end of the day, property taxes are a mandatory expense that you will have. Some people are under the false belief that if you invest in a state or a market where property taxes are high, that may not be a good deal or it should be avoided because it cuts into your cash flow. That's not true because taxes are relative to the income.
In most cases, again I use Texas as an example, you will find that even though you have higher property taxes relatively speaking, you also have higher income or rent. That income that your tenant is paying is going to make up for those highe...
Today’s episode discussed what “Turnkey Real Estate Investing” is and further defines what a turnkey real estate investment is. A good understanding of this is important to make smart investment decisions and help avoid common pitfalls and traps investors make when buying these types of properties.
We also discuss our 5-Point Success System to help you compare turnkey providers. Picking the right turnkey provider is not just about the property.
We’ll also provide some tips, advice and comments on due diligence, rent guarantees, unnecessary fees, and the “2% Rule”.
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Turnkey Real Estate Investing Explained Welcome to Passive Real Estate Investing. If this is your first time here, we're glad to have you. If this is not, then we're glad to have you back. Today's show is about turnkey real estate investing. This is a topic that's near and dear to my heart because I've been involved with turnkey investments for about eleven and a half years now.
I started investing out of state in late 2003 and I've seen the good, the bad and the ugly. Back then, turnkey real estate investing wasn't really a subject matter or term that was kicked around too much by real estate investors. People would talk about passive real estate investments, rent ready real estate investments, turnkey real estate investments. It was loosely defined and it was a general understanding of what turnkey meant. It wasn't a topic that had that much attention.
It does today. In fact, it's a hot topic. It's gained great popularity over the last ten years, especially over the last three or four. Today, it sees a lot of interest and controversy in real estate forums as well as other venues like real estate clubs.
Make smart decisions when it comes to passive real estate investments or turnkey real estate investments.
Why is this important? First of all, I want you to understand what turnkey real estate investing is as well as what a turnkey real estate property is. These are two different things as far as the way I look at it. I'm going to break that down for you today. You need to understand what it is and what it isn't in order for you to make better decisions. That's my second objective today, is to help you make smart decisions when it comes to passive real estate investments or turnkey real estate investments.
Let's break it down into different definitions and get a good lay of the land and then we can connect all the dots. This will hopefully educate you to better understand this particular area of real estate investing. From there, I'll give you five point system that we use to compare turnkey providers and turnkey companies. You can use the same system in order for you to look around and decide on who you want to work with and who's the better choice for you to help you achieve your goals and your criteria.
Regardless of where you choose to invest, there are two opposite ends of the investing spectrum when it comes to your involvement and required resources. On the one end, you have the do it yourself model or the do it yourself investment style, what I call active real estate investing. This is essentially a business where you're active involved, rolling up your sleeves, maybe getting your hands dirty.
Do it yourself real estate investing puts all the risk and responsibility squarely on your shoulders. Typically, that involves everything from sourcing the property, acquiring it, funding it, renovating it, maybe managing it, selling it and coordinating literally every step in the process. Of course, it's not likely you'll be involved in every single piece of that process by yourself, but you will be involved to some degree every step of the way.
In this episode Marco discusses why real estate is the IDEAL investment.
Real estate is the most historically proven wealth creator.
In the episode we discuss what makes real estate the IDEAL investment. We break down the five major elements of real estate and discuss when the best time to be investing is.
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Why Real Estate is the IDEAL Investment Welcome to Passive Real Estate Investing. I'm your host Marco Santarelli. This is the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. If you're new to the show, I encourage you to go back and listen to the first two episodes. I cover some foundational and introductory information there. If you're joining us again, welcome back.
Real estate has been the most historically proven wealth creator.
Why is real estate the ideal investment? Real estate has been the most historically proven wealth creator. More people, especially people in the middle class, have become millionaires and billionaires through real estate than any other investment in history. Back in 2012, Warren Buffett was interviewed on CNBC's Squawk Box and he said, and I quote, "If I had a way of buying a couple hundred thousand single family homes, I would load up on them."
This really got a lot of people's attention, not just on Main Street but on Wall Street. In fact, since then, there have been a number of hedge funds that have come up with billions of dollars and invaded many markets across the country, starting with places like Phoenix moving east to Dallas, Houston, Atlanta. They just came in and they started buying up all they could possibly buy. They really didn't care about the rates of return as much as the fact that they wanted buy at a "low price" and just build up a portfolio.
The problem with buying real estate at the institutional level and on such a grand scale is that it's very difficult to do. This market, the real estate market, is a very fragmented market. It's a fragmented industry. Every real estate market is local and every market has its own real estate agents and brokers. It has its own set of property managers and inspectors and whatnot.
It's very difficult to manage this as an investment on a grand scale. But that's really an advantage for us as a real estate investor. We can take advantage of these inefficiencies of scale, this fragmentation. It helps us as real estate investors because it allows us what used to be called mom and pop investing. It allows us to really build a large business out of it or a really large real estate portfolio for ourselves so we have that passive income through the cash flow.
Real estate is made up of many elements. It is not a simple one sided type of investment. Because of that, it makes real estate an ideal investment. Let me break that down. Why is it an ideal investment? Ideal is not just an adjective for real estate, it's also an acronym. Each letter in the word ideal represents a major benefit or factor of real estate.
Because if you don't have cash flow from an investment, it really isn't much of an investment.
The I in ideal represents income. Income is probably the most important ingredient when it comes to real estate or any investment for that matter. Because if you don't have cash flow from an investment, it really isn't much of an investment in my book.
Not all investments provide income. If you were to go out and buy, let's say, $100,000 or $10,000 worth of stock from the stock market, unless you bought a blue chip company stock that pays an annual or quarterly dividend, there really isn't any cash flow, there is no income. That's what differentiates real estate from stocks and many other investments,
In this episode Marco discussed his 10 Rules for Successful Real Estate Investing.
After many years of successes and failures, Marco came up with the following rules of successful real estate investing. These are the same rules he follows today and shares with investor clients at Norada Real Estate Investments.
This is an important and foundational subject so be sure to listen. You can also read the original article here: 10 Rules of Successful Real Estate Investing
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10 Rules for Successful Real Estate Investing Welcome the Passive Real Estate Investing. I'm your host, Marco Santarelli. This is our second episode of our exciting new show. This is the show where busy people like you learn how to build substantial passive income while creating wealth for the long term. If you're new and you missed the first show, I encourage you to go back and listen to that introduction. We cover passive real estate investing, what it is, how that compares to active real estate investing. It lays a good foundation of what the show is about and where we're going as well as an introduction about myself.
Today we're going to talk about the ten rules for successful real estate investing. I find this to be very foundational and very important. After many years of successes and failures through acquisitions, dealing with tenants, managing myself, working with property managers, market ups, market downs, seeing speculation in the market, speculating myself, getting caught up in that whole frenzy back in the early 2000s and then riding down a deflating bubble, I've learned many, many things.
Over the course of those years, I've come up with these rules for successful real estate investing. These are the same rules I follow today and they're the same rules that we share with clients at Norada Real Estate Investments, a company that I own and manage that sells turnkey investment properties nationwide here in the US.
Knowledge is the new currency.
The first is educate yourself. This is critically important and probably the most important rule. Knowledge is the new currency. If you don't educate yourself, then you are doomed to follow other people's advice. That applies to almost everything, whether you're talking about equities and the stock market or real estate or anything else for that matter.
I like what Robert Kiyosaki talks about. He breaks education down into three categories. There's academic education, and this is what we all go to school to learn, the important stuff, the basics, what teachers teach us. This foundation is the reading, writing, learning and learning about the functions in the world.
Beyond that, there's professional education. This is what we learn to help become successful within our careers. This is usually the stuff we learn in college or trade schools or maybe even on the job. It's information that we use for our profession. A good example would be attorneys or CPAs or dentists or trades people, like a machinist. This is information and skills that we need to be successful at work, at our job.
The third kind of education is what we call financial education. This is the type of education that teaches us what we should be doing with our money to be successful. In today's world, financial education is crucial, especially with the world, economy and recession or depression. However, our school systems don't teach us about financial education and so most people have never really been taught what they need to know in order to take control of their financial lives.
It surprises me that some people get out of high school and they don't even know how to balance a checkbook. Financial education is crucial. This all comes down to educating yourself,
Welcome to our first episode of Passive Real Estate Investing. We are excited to have you and look forward to many content-rich episodes.
In this inaugural episode we take a minute to introduce our host, Marco Santarelli, as he shares his real estate investing journey which started at the age of 18. We also lay out the goals for this podcast so you know where we will be taking you in future episodes.
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What Is Passive Real Estate Investing? Hello. Welcome to Passive Real Estate Investing. I'm your host, Marco Santarelli. This is a new show, a show where busy people like you learn how to build substantial passive income while creating wealth for the long term. If you desire to better yourself and desire to better your financial future, then this is the show for you.
What's my goal with this podcast? It's to inspire you to start or continue building your real estate portfolio. It's to teach you proven strategies for making money with real estate in any market. It's to help you avoid the common and costly mistakes, many of which I've had and made myself over the years. It's to give you actionable tips and advice. It's to help put you on the road to financial freedom. Because without passive income, it's difficult or nearly impossible in today's environment to actually achieve true financial independence and retirement, however you define retirement.
Active real estate investing is a do-it-yourself investment strategy.
What is passive real estate investing? That's what this show is all about. In order to understand passive real estate investing, let's start by understanding what active real estate investing is. Active real estate investing is a do-it-yourself investment strategy. It involves your time, your capital, your risk. You are engaged and involved in the process, either entirely from beginning to end, or heavily in parts of the process as you go through it.
It takes up a significant portion of your time and involvement. It's really you and your time working for cash. It's you that makes it happen. It's you that's involved. It's, in many ways, like a job, JOB. If you look at job as an acronym, for many people it means Just Over Broke. It still a job, whether you're self-employed or not.
The primary objective is to generate chunks of cash. You do this through either assignments of contract or from the equity you build in a property, if you're rehabbing a property. I'll get to that in a minute here. The primary objective is to generate chunks of cash, piles of cash. It's really just a one or two time payment and that's it, there is no cash flow.
Let me give you a few examples here. Wholesaling, although I don't really consider wholesaling by definition to be investing, because what wholesaling is, it's the assignment of a contract. It's not really selling a property, you're selling a contract that you have in tying up a property to another investor. You're getting an assignment fee. You're just controlling property, you don't technically own the property.
There's many ways to wholesale. Some people drive various neighborhoods looking for distressed properties, other people are marketing through post cards and whatnot. But that whole process of wholesaling takes time, it takes some capital, it involves some risk, although not risk in the property but risk in lost time. That's wholesaling. Once you sign that contract, you get a chunk of cash.
Another example of an active real estate investing strategy would be a quick flip. Some people like to look for properties that they could flip quickly. That could be because it's a distressed property and needs work or maybe it's a distressed homeowner and they can pick up that property up a...