1 00:00:00,080 --> 00:00:03,440 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 2 00:00:03,560 --> 00:00:06,200 Speaker 1: and today we're talking about the harsh realities of real 3 00:00:06,280 --> 00:00:28,280 Speaker 1: estate investing. Yeah, boy, this is going to be an 4 00:00:28,280 --> 00:00:30,840 Speaker 1: episode all about investing in real estate. And you know, 5 00:00:30,880 --> 00:00:32,680 Speaker 1: we're not going to paint too rosie of the picture 6 00:00:33,080 --> 00:00:34,919 Speaker 1: when it comes to real estate, although I think we're 7 00:00:34,920 --> 00:00:37,080 Speaker 1: gonna give it a fair shake. Yeah, it's coming from 8 00:00:37,120 --> 00:00:39,520 Speaker 1: we are two guys who've done it ourselves, who own 9 00:00:39,800 --> 00:00:43,879 Speaker 1: investment properties ourselves. But we're gonna talk all about real estate. 10 00:00:43,920 --> 00:00:46,680 Speaker 1: We're going to discuss how you can know whether or 11 00:00:46,720 --> 00:00:49,839 Speaker 1: not investing in real estate is the right thing for you. Yeah, 12 00:00:50,040 --> 00:00:52,360 Speaker 1: as well as just some simple ways that you can 13 00:00:52,400 --> 00:00:55,640 Speaker 1: consider getting started with investing in real estate. And the 14 00:00:55,640 --> 00:00:57,480 Speaker 1: way you have to think about it has changed since 15 00:00:57,640 --> 00:01:00,600 Speaker 1: we started investing in real estate, what teen years ago? 16 00:01:00,840 --> 00:01:02,880 Speaker 1: So no, it hasn't been the long guy, I think 17 00:01:02,920 --> 00:01:05,400 Speaker 1: it's been close to that long or getting old mud 18 00:01:05,600 --> 00:01:09,160 Speaker 1: Holy crap, I know. Okay, before we get to real estate, 19 00:01:09,240 --> 00:01:10,720 Speaker 1: wife keeps telling me, oh, look at all the grace 20 00:01:10,760 --> 00:01:12,720 Speaker 1: in your here. I'm like it stops. Okay, you're not out, 21 00:01:12,760 --> 00:01:16,200 Speaker 1: but I wanted to ask you basically, I think I've 22 00:01:16,240 --> 00:01:19,399 Speaker 1: got a frugal or cheap here for you. So you 23 00:01:19,440 --> 00:01:22,200 Speaker 1: know that I'll like a variety of different craft beers 24 00:01:22,240 --> 00:01:24,080 Speaker 1: in my life. Yeah, I think everybody listened to the 25 00:01:24,080 --> 00:01:26,240 Speaker 1: show No No, that that's something that you and I 26 00:01:26,280 --> 00:01:29,520 Speaker 1: both enjoy. In particular, I am a fan of singles. 27 00:01:29,560 --> 00:01:32,280 Speaker 1: Anytime I go to the package shop or wherever and 28 00:01:32,319 --> 00:01:35,320 Speaker 1: they've got the shelf or the multiple shelves full of 29 00:01:35,000 --> 00:01:37,959 Speaker 1: the singles there, I like to spend some time looking 30 00:01:38,000 --> 00:01:40,039 Speaker 1: at those because it's just a great way to try 31 00:01:40,400 --> 00:01:42,360 Speaker 1: to kind of dip your toes into some of that 32 00:01:42,480 --> 00:01:45,040 Speaker 1: variety without committing to a six pen. I just say, 33 00:01:45,120 --> 00:01:47,000 Speaker 1: the worst thing in the world is when I go 34 00:01:47,040 --> 00:01:48,920 Speaker 1: into a package store and my wife's like, you got 35 00:01:48,960 --> 00:01:51,520 Speaker 1: five minutes. I'm like, no, I need like twenty and 36 00:01:51,640 --> 00:01:53,200 Speaker 1: let's just go ahead. And it's amazing. It's not like 37 00:01:53,200 --> 00:01:54,760 Speaker 1: there's that much turnover in the beer section, but I 38 00:01:54,840 --> 00:01:57,560 Speaker 1: have to look at every single item like every time. Absolutely, 39 00:01:57,560 --> 00:02:00,280 Speaker 1: it's an obsession. Yeah. Anyway, so I was had a 40 00:02:00,360 --> 00:02:03,840 Speaker 1: local package shop here in our new part of town. Uh. 41 00:02:04,080 --> 00:02:06,840 Speaker 1: This is a package store that folks have definitely recommended. 42 00:02:07,080 --> 00:02:09,400 Speaker 1: In fact, I'm not going to name them, but you 43 00:02:09,400 --> 00:02:12,400 Speaker 1: yourself have also been to this package shop. Okay, So 44 00:02:12,440 --> 00:02:14,400 Speaker 1: I went in there and I saw a couple that 45 00:02:14,480 --> 00:02:16,440 Speaker 1: look pretty solid, and I thought, I'm gonna try those out, 46 00:02:16,639 --> 00:02:20,080 Speaker 1: took them home, cracked it open, and one of them, dude, 47 00:02:20,520 --> 00:02:23,880 Speaker 1: was awful, like terrible. And it wasn't just the beer. 48 00:02:23,919 --> 00:02:25,680 Speaker 1: It was old. And it wasn't because I did not 49 00:02:25,800 --> 00:02:28,040 Speaker 1: like the style of that particular beer. And it wasn't 50 00:02:28,080 --> 00:02:31,200 Speaker 1: because it wasn't from a brewery that wasn't solid in 51 00:02:31,360 --> 00:02:34,520 Speaker 1: and of themselves, like this was a fantastic brewery. And 52 00:02:34,639 --> 00:02:37,440 Speaker 1: I thought, man, that's so weird. And I checked the 53 00:02:37,520 --> 00:02:43,360 Speaker 1: label and this beer was from twenty seventeen. Oh my gosh. Yeah, 54 00:02:43,440 --> 00:02:47,280 Speaker 1: and so base. I mean, some beers can be bottle conditioned, 55 00:02:47,360 --> 00:02:49,880 Speaker 1: like the spontaneously fermented beers are, like, you know, you 56 00:02:49,880 --> 00:02:51,840 Speaker 1: can let it age for one to three years. I've 57 00:02:51,840 --> 00:02:53,640 Speaker 1: still got a cantone. It's like a decade old that 58 00:02:53,639 --> 00:02:56,320 Speaker 1: I brought back from my from answer. You might have 59 00:02:56,400 --> 00:02:58,920 Speaker 1: a bottle of vinegar. No, no, it says on the bottle, 60 00:02:58,960 --> 00:03:00,239 Speaker 1: but you can you can hang on some of the 61 00:03:00,360 --> 00:03:04,040 Speaker 1: twenty super higher quality of ones evolve. So all that 62 00:03:04,080 --> 00:03:07,840 Speaker 1: to say, would you go back to that package store 63 00:03:08,160 --> 00:03:10,480 Speaker 1: and ask for your money back. Okay, I would go 64 00:03:10,639 --> 00:03:13,040 Speaker 1: back if I was in the vicinity and it wasn't 65 00:03:13,080 --> 00:03:15,160 Speaker 1: a big deal, but I wouldn't drive back there just 66 00:03:15,240 --> 00:03:17,880 Speaker 1: to return my four dollar beer. I will definitely go back. Well, 67 00:03:17,919 --> 00:03:19,560 Speaker 1: and it's it was a drain pour. I mean, I like, 68 00:03:19,600 --> 00:03:22,239 Speaker 1: we literally did, but I had experience. I want it 69 00:03:22,280 --> 00:03:24,160 Speaker 1: out because I couldn't. I mean, I couldn't drink the 70 00:03:24,240 --> 00:03:26,639 Speaker 1: dang thing. So I've only literally ever been there once. 71 00:03:26,680 --> 00:03:28,720 Speaker 1: But the next time I go back there, I've decided 72 00:03:28,800 --> 00:03:30,800 Speaker 1: I'm not going to return it, but I am going 73 00:03:30,840 --> 00:03:33,239 Speaker 1: to let them know and say, hey, you know, I 74 00:03:33,280 --> 00:03:34,880 Speaker 1: just want to let you know the last last time 75 00:03:34,920 --> 00:03:37,240 Speaker 1: I was here, I bought a beer and it was 76 00:03:37,600 --> 00:03:39,880 Speaker 1: what is that six years old? It was not it 77 00:03:39,920 --> 00:03:42,960 Speaker 1: was not drinkable. It was very bad. Yeah. Yeah, No, 78 00:03:43,320 --> 00:03:46,520 Speaker 1: I would definitely mention it to them, and I'm curious 79 00:03:46,520 --> 00:03:47,800 Speaker 1: if it's the whole place. I want them to be 80 00:03:47,840 --> 00:03:49,640 Speaker 1: able to do better because I had the same experience. 81 00:03:49,680 --> 00:03:51,800 Speaker 1: I brought about a Bissell Brothers beer, which I know 82 00:03:51,880 --> 00:03:53,880 Speaker 1: I love, and it was old and it was trash 83 00:03:54,200 --> 00:03:57,040 Speaker 1: and I was just super disappointed. I just haven't been 84 00:03:57,080 --> 00:03:59,560 Speaker 1: back to that place, so but yeah, again, if it's 85 00:03:59,600 --> 00:04:01,840 Speaker 1: not just going back, like wasting a half hour of 86 00:04:01,840 --> 00:04:03,840 Speaker 1: your time to return a four dollars like trekking across 87 00:04:03,920 --> 00:04:05,640 Speaker 1: to the other side of the city. Yeah, this is 88 00:04:05,680 --> 00:04:09,960 Speaker 1: close by, but that's pretty crappy. Yeah, I want them 89 00:04:10,040 --> 00:04:12,000 Speaker 1: to do better because tosher old beers. I'm thinking about 90 00:04:12,040 --> 00:04:13,960 Speaker 1: the other guys out there, the other ladies who are 91 00:04:13,960 --> 00:04:16,479 Speaker 1: also interested in craft beer, and what if this is 92 00:04:16,480 --> 00:04:18,440 Speaker 1: a style or maybe they're just getting into it and 93 00:04:18,440 --> 00:04:20,120 Speaker 1: they're thinking the same thing that I'm thinking. Oh, I'm 94 00:04:20,120 --> 00:04:21,520 Speaker 1: just gonna go with one of these singles to try 95 00:04:21,520 --> 00:04:23,960 Speaker 1: out this new style, and they're thinking, oh, this is terrible. 96 00:04:24,000 --> 00:04:27,840 Speaker 1: I can't believe. Yeah, exactly. I want them to be 97 00:04:27,880 --> 00:04:29,880 Speaker 1: able to deliver a quality products. So I think I'm 98 00:04:29,920 --> 00:04:31,440 Speaker 1: going to say something next time I go in there. Cool. 99 00:04:31,440 --> 00:04:33,080 Speaker 1: I'm not sure if it's going to change anything. Yeah, 100 00:04:33,200 --> 00:04:34,680 Speaker 1: I think it's worth pointing out, and I think you 101 00:04:34,680 --> 00:04:37,640 Speaker 1: can do it nicely and hopefully they'll give your money back, 102 00:04:37,760 --> 00:04:39,920 Speaker 1: because that's ridiculous to be selling a little bonus a 103 00:04:39,960 --> 00:04:42,760 Speaker 1: six year old IPA. Sorry to hear about your krummy experience. 104 00:04:42,839 --> 00:04:45,120 Speaker 1: I'll be all right. Yeah. One other thing to do 105 00:04:45,200 --> 00:04:48,600 Speaker 1: is you could literally just like TP their their establishment 106 00:04:48,680 --> 00:04:51,720 Speaker 1: one night in the middle of the night, just fire bottom. Yeah, 107 00:04:51,960 --> 00:04:54,920 Speaker 1: just yeah. In case you're you don't want to test fate. 108 00:04:55,000 --> 00:04:57,080 Speaker 1: Maybe maybe I'll end up in prison. Maybe I'll just 109 00:04:57,080 --> 00:05:00,279 Speaker 1: get away with going to choose violence. Has mentioned beer 110 00:05:00,279 --> 00:05:03,719 Speaker 1: that we're having on today's episode. Hopefully this one isn't 111 00:05:03,800 --> 00:05:06,160 Speaker 1: a piece of crap. I don't think it is. This one. 112 00:05:06,640 --> 00:05:09,159 Speaker 1: It's called US Alive or US Alive, I don't know 113 00:05:09,440 --> 00:05:12,040 Speaker 1: by McKellar brewing. We'll give our thoughts on this one 114 00:05:12,040 --> 00:05:13,720 Speaker 1: at the end. Since this is a wild ale. Even 115 00:05:13,720 --> 00:05:16,000 Speaker 1: if it's old, I'm sure it's gonna taste great. But Matt, 116 00:05:16,080 --> 00:05:17,560 Speaker 1: let's move on. Let's get to the subject that hand. 117 00:05:17,560 --> 00:05:20,039 Speaker 1: We're talking about the harsh realities of real estate investing, 118 00:05:20,400 --> 00:05:22,440 Speaker 1: and for some reason, I don't know, maybe think of 119 00:05:22,480 --> 00:05:26,479 Speaker 1: homeschooling because there's this like massive change, this massive shift. 120 00:05:26,760 --> 00:05:30,479 Speaker 1: More people are homeschooling than ever before. And when you 121 00:05:30,520 --> 00:05:32,360 Speaker 1: decide whether or not you want to homeschool your kids, 122 00:05:32,400 --> 00:05:35,000 Speaker 1: it depends on so many factors, right, like the school 123 00:05:35,120 --> 00:05:37,440 Speaker 1: that your kids are going to now, your goals for 124 00:05:37,480 --> 00:05:39,800 Speaker 1: your family, and your career, the resources that are available 125 00:05:39,839 --> 00:05:42,000 Speaker 1: to you, how much school choice you have available in 126 00:05:42,040 --> 00:05:44,239 Speaker 1: your state. Can you send your kid to another public 127 00:05:44,279 --> 00:05:46,760 Speaker 1: school that's around the corner that you're not necessarily zoned for, 128 00:05:46,839 --> 00:05:49,120 Speaker 1: that's not the closest one to you. They're just and 129 00:05:49,120 --> 00:05:51,640 Speaker 1: there are lots of helpful resources now, including an abundance 130 00:05:51,680 --> 00:05:54,080 Speaker 1: of co ops for people who want to do homeschooling. 131 00:05:54,160 --> 00:05:57,760 Speaker 1: So I feel like the trade offs are less severe 132 00:05:57,760 --> 00:05:59,880 Speaker 1: than they used to be, like twenty years ago, when 133 00:06:00,000 --> 00:06:02,600 Speaker 1: in my friends were getting homeschool right, Oh gosh, I 134 00:06:02,640 --> 00:06:05,280 Speaker 1: guess that was more like thirty years ago. But when 135 00:06:05,320 --> 00:06:07,400 Speaker 1: you look at the numbers, actually the proportion of homeschooled 136 00:06:07,440 --> 00:06:10,320 Speaker 1: children in the US, it basically doubled from two point 137 00:06:10,360 --> 00:06:13,200 Speaker 1: eight percent before the pandemic to five point four percent 138 00:06:13,560 --> 00:06:16,280 Speaker 1: in the twenty twenty one school year. There's just a 139 00:06:16,320 --> 00:06:20,279 Speaker 1: massive influx, a massive movement towards homeschooling, which makes sense 140 00:06:20,279 --> 00:06:22,040 Speaker 1: to me because lots of parents they got they got 141 00:06:22,040 --> 00:06:24,080 Speaker 1: more insight into what was going on, what was happening 142 00:06:24,080 --> 00:06:27,200 Speaker 1: in their child's classroom, and they weren't loving It makes 143 00:06:27,200 --> 00:06:29,800 Speaker 1: me think of just like the how awful, how tough 144 00:06:29,920 --> 00:06:32,360 Speaker 1: virtual school was for our family and for so many 145 00:06:32,400 --> 00:06:36,240 Speaker 1: families out there. But homeschool also, it's not this slammed decision, right, Like, 146 00:06:37,400 --> 00:06:39,720 Speaker 1: we literally picked up and moved, at least in part 147 00:06:39,760 --> 00:06:42,400 Speaker 1: for school reasons, and we still wanted our kids to 148 00:06:42,440 --> 00:06:46,039 Speaker 1: have a public school experience, or at least an in 149 00:06:46,120 --> 00:06:49,200 Speaker 1: school person experience. But again, lots of factors to consider, 150 00:06:49,279 --> 00:06:50,760 Speaker 1: right And the same is true on the real estate 151 00:06:50,800 --> 00:06:53,800 Speaker 1: investing front. We love that path for some people. It 152 00:06:53,880 --> 00:06:57,560 Speaker 1: makes sense for some folks. For sure, we've done well 153 00:06:57,600 --> 00:07:00,400 Speaker 1: as real estate investors ourselves, but we did have a 154 00:07:00,440 --> 00:07:02,840 Speaker 1: nuanced conversation to help folks decipher whether or not it's 155 00:07:02,920 --> 00:07:04,880 Speaker 1: right for them. If they've kind of thought about it, 156 00:07:04,880 --> 00:07:06,640 Speaker 1: it's somewhere in the recesses of their mind. They're like, 157 00:07:06,760 --> 00:07:08,960 Speaker 1: maybe real estate investing will be right for me at 158 00:07:08,960 --> 00:07:10,520 Speaker 1: some point, or I'm kind of starting to think about 159 00:07:10,520 --> 00:07:12,480 Speaker 1: it now, Well, what factors do you need to consider 160 00:07:12,520 --> 00:07:13,880 Speaker 1: us kind of what we want to talk about today. 161 00:07:13,960 --> 00:07:16,880 Speaker 1: That's right, And if you are listening to this podcast, 162 00:07:17,160 --> 00:07:18,880 Speaker 1: there's a good chance that you want to grow your 163 00:07:18,960 --> 00:07:22,080 Speaker 1: net worth. I'm going to assume that's true, right, And 164 00:07:22,160 --> 00:07:24,200 Speaker 1: you might even be interested in some of the different 165 00:07:24,240 --> 00:07:27,600 Speaker 1: ways and the different paths to achieve that goal. You're 166 00:07:27,760 --> 00:07:29,840 Speaker 1: probably even thinking, yeah, and if I can get there 167 00:07:29,840 --> 00:07:33,000 Speaker 1: even faster, all the better. And so who hasn't heard 168 00:07:33,200 --> 00:07:36,760 Speaker 1: that investing in real estate is a great path to take, Like, oh, 169 00:07:36,880 --> 00:07:38,640 Speaker 1: he made all of his money in real estate? Like 170 00:07:38,720 --> 00:07:42,200 Speaker 1: that is literally something I've heard many times before, and 171 00:07:42,280 --> 00:07:46,720 Speaker 1: unfortunately it glosses over though the harsh realities of investing 172 00:07:46,800 --> 00:07:49,840 Speaker 1: in real estate. The different real estate influencers out there, 173 00:07:49,840 --> 00:07:52,320 Speaker 1: they can often make you feel like an idiot for 174 00:07:52,400 --> 00:07:54,360 Speaker 1: not having taken the plunge yet, for not getting into 175 00:07:54,360 --> 00:07:57,480 Speaker 1: the game. And given the number of folks who think 176 00:07:57,480 --> 00:08:01,080 Speaker 1: of themselves as Zillo experts, it might be more tempting 177 00:08:01,120 --> 00:08:03,960 Speaker 1: than ever to think that real estate investing is the 178 00:08:04,040 --> 00:08:06,640 Speaker 1: natural next right step for you. But we'll offer a 179 00:08:06,760 --> 00:08:11,000 Speaker 1: laundry list of things to consider before you start making offers. 180 00:08:11,480 --> 00:08:13,680 Speaker 1: Were our goal here is to not talk you out 181 00:08:13,840 --> 00:08:16,080 Speaker 1: of investing in real estate if that's going to be 182 00:08:16,320 --> 00:08:17,960 Speaker 1: again the right next step for you, But we just 183 00:08:17,960 --> 00:08:19,640 Speaker 1: want to make sure that you have thought through all 184 00:08:19,640 --> 00:08:22,320 Speaker 1: of the different factors before you take the plunge. Yeah, Basically, 185 00:08:22,480 --> 00:08:24,440 Speaker 1: we want to give you a realistic understanding of what 186 00:08:24,480 --> 00:08:26,400 Speaker 1: it's going to take to actually make money as a 187 00:08:26,440 --> 00:08:30,000 Speaker 1: real estate investor. And we think through all of the 188 00:08:30,440 --> 00:08:32,880 Speaker 1: good potential outcomes from investing in real estate, but the 189 00:08:32,880 --> 00:08:36,199 Speaker 1: potential downsides as well, because they are they're significant, right 190 00:08:36,400 --> 00:08:38,520 Speaker 1: And you know, just like I was talking about homeschooling, 191 00:08:38,520 --> 00:08:41,240 Speaker 1: it's it's seen some significant changes. The reality that real 192 00:08:41,320 --> 00:08:44,280 Speaker 1: estate investors are encountering in the market right now. We 193 00:08:44,400 --> 00:08:46,840 Speaker 1: was dramatically changed over the past decade, over the past 194 00:08:46,960 --> 00:08:49,199 Speaker 1: ten fifteen years. We used to talk about real estate 195 00:08:49,280 --> 00:08:52,480 Speaker 1: investing a lot Matt early on in the podcast, we 196 00:08:52,480 --> 00:08:54,000 Speaker 1: were you know, we started the podcast five and a 197 00:08:54,000 --> 00:08:57,560 Speaker 1: half years ago, and there it was a different ball 198 00:08:57,600 --> 00:08:59,679 Speaker 1: game five and a half years ago when we were 199 00:08:59,720 --> 00:09:02,280 Speaker 1: kind of pushing listeners in that direction with a little 200 00:09:02,320 --> 00:09:05,440 Speaker 1: more bigger than we do now because the facts on 201 00:09:05,440 --> 00:09:08,560 Speaker 1: the ground we're different than they are in twenty twenty three. 202 00:09:08,600 --> 00:09:11,000 Speaker 1: But when the reality on the ground changes, so does 203 00:09:11,040 --> 00:09:13,280 Speaker 1: our advice. And it's not that real estate investing doesn't 204 00:09:13,320 --> 00:09:15,920 Speaker 1: make sense for anyone at any point in time, or 205 00:09:16,320 --> 00:09:18,600 Speaker 1: for anyone right now, but the truth is that it 206 00:09:18,679 --> 00:09:21,920 Speaker 1: just makes less sense. Yeah, it makes sense for far 207 00:09:22,000 --> 00:09:24,720 Speaker 1: fewer folks given the current market dynamics. What's going on, 208 00:09:24,800 --> 00:09:27,040 Speaker 1: that's right, Yeah, and that's because home prices have gone 209 00:09:27,080 --> 00:09:30,600 Speaker 1: up dramatically over the past few years, and interest rates 210 00:09:30,720 --> 00:09:32,240 Speaker 1: that have gone up in a major way over the 211 00:09:32,280 --> 00:09:34,680 Speaker 1: past twelve months as well. We've talked about that last week. 212 00:09:34,960 --> 00:09:37,480 Speaker 1: And inventory is essentially at all time loads as well, 213 00:09:37,520 --> 00:09:40,920 Speaker 1: which is also keeping prices inflated. And so this means 214 00:09:40,960 --> 00:09:44,200 Speaker 1: that housing affordability it's essentially the worst it's been in 215 00:09:44,280 --> 00:09:48,120 Speaker 1: forty years. This is specifically coming from data from the NAAR, 216 00:09:48,240 --> 00:09:51,319 Speaker 1: the National Association of Realtors. So that doesn't mean that 217 00:09:51,400 --> 00:09:55,120 Speaker 1: becoming a real estate investor is impossible, but timing does 218 00:09:55,360 --> 00:09:58,120 Speaker 1: matter a little bit. Speaking of timing, like you can't 219 00:09:58,200 --> 00:10:00,720 Speaker 1: dollar cost average into a home just right like you 220 00:10:00,720 --> 00:10:02,959 Speaker 1: can when you are investing in the stock market, it's 221 00:10:02,960 --> 00:10:04,880 Speaker 1: going to pay, and it matters a lot to understand 222 00:10:04,920 --> 00:10:06,800 Speaker 1: the context and what is going on in the market 223 00:10:06,840 --> 00:10:09,719 Speaker 1: around you. And even though rents have gone up as well, 224 00:10:09,760 --> 00:10:12,640 Speaker 1: they just haven't kept pace with the rising prices, and 225 00:10:12,679 --> 00:10:14,640 Speaker 1: so we're just in a tough market right now for 226 00:10:14,640 --> 00:10:16,719 Speaker 1: folks hoping to buy a house, run and out and 227 00:10:16,760 --> 00:10:19,760 Speaker 1: then turn that fat profit. Yeah, exactly, it's just not 228 00:10:19,880 --> 00:10:21,400 Speaker 1: as easy as it used to be it felt like 229 00:10:21,400 --> 00:10:24,120 Speaker 1: shooting fish in a barrel kind of in twenty twenty 230 00:10:24,160 --> 00:10:27,280 Speaker 1: twelve when housing prices were basically at their bottom. But 231 00:10:27,320 --> 00:10:30,079 Speaker 1: in addition to current trends, it's important to note that 232 00:10:30,440 --> 00:10:32,880 Speaker 1: real estate doesn't perform as well as the market does 233 00:10:33,160 --> 00:10:35,800 Speaker 1: from a return standpoint on a historical basis. So the 234 00:10:35,840 --> 00:10:37,959 Speaker 1: wind is kind of in your face just given kind 235 00:10:37,960 --> 00:10:40,520 Speaker 1: of what's happening in the market as a whole, But 236 00:10:40,679 --> 00:10:42,920 Speaker 1: it's kind of always in your face actually as a 237 00:10:42,960 --> 00:10:45,920 Speaker 1: real estate investor. But you're also hiking up a hill, yes, 238 00:10:46,200 --> 00:10:48,440 Speaker 1: at the same time, right, Ellie, When you run the numbers, 239 00:10:48,559 --> 00:10:51,360 Speaker 1: you see that the overall market returns are close to 240 00:10:51,400 --> 00:10:55,680 Speaker 1: ten percent from an historical standpoint, right, that's total stock 241 00:10:55,720 --> 00:10:57,600 Speaker 1: market or s and P five hundred funds something like 242 00:10:57,640 --> 00:11:00,640 Speaker 1: that over the years. That is, that tends to be 243 00:11:00,720 --> 00:11:04,120 Speaker 1: the average different years, right, different results last year not 244 00:11:04,200 --> 00:11:07,280 Speaker 1: even close to that. But real estate has returned something 245 00:11:07,280 --> 00:11:10,520 Speaker 1: closer to four percent on average over time, significantly less 246 00:11:10,520 --> 00:11:13,000 Speaker 1: than the overall market. And that's four percent on average 247 00:11:13,200 --> 00:11:16,880 Speaker 1: across the entire country on real estate, not necessarily for 248 00:11:17,120 --> 00:11:20,680 Speaker 1: real estate investors, So different markets will see different reterns 249 00:11:20,720 --> 00:11:22,680 Speaker 1: over times, and like we'll talk about later on in 250 00:11:22,679 --> 00:11:27,760 Speaker 1: the episode, different investors, there are ways to increase that 251 00:11:27,800 --> 00:11:30,800 Speaker 1: return as a real estate investor to do a lot 252 00:11:30,840 --> 00:11:34,280 Speaker 1: better than the average. Basically, real estate investors, savvy ones 253 00:11:34,320 --> 00:11:37,559 Speaker 1: can take advantage of what's kind of a quirky market. 254 00:11:37,760 --> 00:11:40,200 Speaker 1: It's so much more localized, and so people are able 255 00:11:40,200 --> 00:11:44,040 Speaker 1: to use sweat equity and market inefficiencies to their advantage 256 00:11:44,120 --> 00:11:46,840 Speaker 1: to juice returns. To see you see the four percent 257 00:11:47,480 --> 00:11:49,640 Speaker 1: number and you think, well, why would anybody ever invest 258 00:11:49,640 --> 00:11:51,640 Speaker 1: in real estate? And it's like, well, yeah, like you said, Matt, 259 00:11:51,679 --> 00:11:54,319 Speaker 1: that's it's because that's the average, and because there are 260 00:11:54,679 --> 00:11:58,760 Speaker 1: significant ways to increase your returns in real estate. Whereas 261 00:11:58,840 --> 00:12:01,320 Speaker 1: when we talk about investing in the stock market, the 262 00:12:01,400 --> 00:12:04,040 Speaker 1: boring take your ten percent approach makes sense for the 263 00:12:04,040 --> 00:12:07,760 Speaker 1: average investor, but real estate investors have outsized abilities to 264 00:12:07,840 --> 00:12:10,520 Speaker 1: kind of control their own destiny and push those returns higher. 265 00:12:10,520 --> 00:12:12,880 Speaker 1: That's right. Yeah, So let's clear the air and talk 266 00:12:12,880 --> 00:12:16,640 Speaker 1: about what real estate is not for a second. And 267 00:12:16,880 --> 00:12:18,719 Speaker 1: first of all, one of the points Joel, that you 268 00:12:18,800 --> 00:12:20,720 Speaker 1: know and we wanted to cover is that real estate 269 00:12:20,800 --> 00:12:23,680 Speaker 1: is not passive. Yeah, and that's a common thing like 270 00:12:23,720 --> 00:12:27,200 Speaker 1: people commute your passive income over here invest in real estate. Literally, 271 00:12:27,440 --> 00:12:30,760 Speaker 1: none of the steps to real estate investing include passivity. 272 00:12:31,600 --> 00:12:33,719 Speaker 1: There is a lot of upfront work needed in order 273 00:12:33,760 --> 00:12:36,520 Speaker 1: to educate yourself, and then there's getting hyper familiar with 274 00:12:36,559 --> 00:12:39,160 Speaker 1: a local area to know when a deal pops up 275 00:12:39,200 --> 00:12:40,800 Speaker 1: so that you can pounce on it. And then once 276 00:12:40,840 --> 00:12:43,120 Speaker 1: you do have that place locked down, you've got to 277 00:12:43,160 --> 00:12:46,520 Speaker 1: find good tenants and landlords. Screw that part up all 278 00:12:46,559 --> 00:12:49,120 Speaker 1: the time, all the time. That's like the biggest reason 279 00:12:49,160 --> 00:12:50,959 Speaker 1: I think why people who do invest in real estate 280 00:12:51,000 --> 00:12:52,679 Speaker 1: they get out of it. So big four jobs, the 281 00:12:53,160 --> 00:12:56,160 Speaker 1: greening tenants. Yeah, and they're like, Okay, real estate investing 282 00:12:56,200 --> 00:12:58,079 Speaker 1: is terrible, and they tell everybody they know that. But 283 00:12:58,160 --> 00:13:00,000 Speaker 1: that's not that's not necessarily the case. It's like, oh, 284 00:13:00,080 --> 00:13:01,640 Speaker 1: you're bad at the most important thing. So, I mean, 285 00:13:01,679 --> 00:13:03,319 Speaker 1: bottom line, investing in real estate. It just takes a 286 00:13:03,360 --> 00:13:06,079 Speaker 1: lot of energy and hustle. It is not passive income 287 00:13:06,800 --> 00:13:09,680 Speaker 1: like some online marketers like they might lead you to believe. 288 00:13:10,080 --> 00:13:12,760 Speaker 1: We actually talked about real estate and whether or not 289 00:13:12,840 --> 00:13:16,080 Speaker 1: it's passive in the episode where we talked about passive income. 290 00:13:16,360 --> 00:13:18,840 Speaker 1: It was passive income a myth. We wanted to know 291 00:13:18,880 --> 00:13:22,280 Speaker 1: if it was this elusive unicorn that was impossible to find. 292 00:13:22,480 --> 00:13:25,560 Speaker 1: That was episode three fifty three. If I away interested 293 00:13:25,600 --> 00:13:28,160 Speaker 1: in other types of passive income, I mean, passive incomes 294 00:13:28,160 --> 00:13:30,680 Speaker 1: sounds so nice on it on the surface, but the 295 00:13:30,760 --> 00:13:32,120 Speaker 1: reality is it takes a lot of hard work to 296 00:13:32,120 --> 00:13:34,360 Speaker 1: get there exactly. And that doesn't necessarily mean that the 297 00:13:34,440 --> 00:13:36,720 Speaker 1: juice isn't worth the squeeze when it comes to real estate, 298 00:13:36,960 --> 00:13:40,240 Speaker 1: but newbie landlords they often make massive mistakes when it 299 00:13:40,280 --> 00:13:42,960 Speaker 1: comes to finding that first property, and mistakes are incredibly 300 00:13:43,000 --> 00:13:45,480 Speaker 1: high when you're talking about sinking a ton of money 301 00:13:45,520 --> 00:13:47,360 Speaker 1: that you've worked to save up into a down payment, 302 00:13:47,720 --> 00:13:50,040 Speaker 1: not to mention like kind of all the other expenses 303 00:13:50,080 --> 00:13:53,560 Speaker 1: oftentimes associated with an investment property. Yeah, I mean talking 304 00:13:53,559 --> 00:13:55,439 Speaker 1: about the transaction costs for real estate. And if you 305 00:13:55,480 --> 00:13:57,120 Speaker 1: get into it and you realize, wait, this wasn't a 306 00:13:57,160 --> 00:13:58,880 Speaker 1: great by Oh wait now I need to get rid 307 00:13:58,880 --> 00:14:01,360 Speaker 1: of it. You could be out tens of thousands of dollars, right, 308 00:14:01,360 --> 00:14:04,160 Speaker 1: You could lose a lot of money on that one investment. 309 00:14:04,440 --> 00:14:07,440 Speaker 1: And landloarding isn't easy. That's important to note here. That 310 00:14:07,559 --> 00:14:10,400 Speaker 1: is that's what makes it not passive. And you can say, well, 311 00:14:10,400 --> 00:14:12,559 Speaker 1: I'm going to hire someone to do the landlording for me. 312 00:14:12,600 --> 00:14:15,760 Speaker 1: I'm going to hire a property management company. Well, that 313 00:14:15,920 --> 00:14:17,800 Speaker 1: might work out for you, but that's going to cost 314 00:14:17,880 --> 00:14:19,840 Speaker 1: money too, that's going to reduce returns. And it doesn't 315 00:14:19,880 --> 00:14:22,640 Speaker 1: necessarily mean that it's passive either. And so whether it's 316 00:14:22,720 --> 00:14:24,880 Speaker 1: underestimating you know what repairs are going to cost, or 317 00:14:25,000 --> 00:14:27,600 Speaker 1: screening tenants poorly, like you mentioned, Matt, we don't want 318 00:14:27,640 --> 00:14:30,040 Speaker 1: people to be fooled by the passive income claims that 319 00:14:30,080 --> 00:14:32,320 Speaker 1: people are making all over the internet when it comes 320 00:14:32,320 --> 00:14:35,200 Speaker 1: to investing in real estate. But another important distinction to 321 00:14:35,240 --> 00:14:38,040 Speaker 1: make is that real estate is not a diversified investment. 322 00:14:38,320 --> 00:14:40,240 Speaker 1: You know, we're talking about putting a lot of money 323 00:14:40,240 --> 00:14:43,760 Speaker 1: into a single investment. So you're you're betting a lot 324 00:14:43,840 --> 00:14:46,680 Speaker 1: of marbles. You're taking a big swing, and if it's 325 00:14:46,680 --> 00:14:48,600 Speaker 1: a big swing and a whiff, this could cost you 326 00:14:48,640 --> 00:14:50,680 Speaker 1: in a big way. So it's just important to know 327 00:14:51,160 --> 00:14:55,000 Speaker 1: that circumstances outside of your control can impact your investment. 328 00:14:55,400 --> 00:14:58,640 Speaker 1: Like what if your town's major employer closes up shop? 329 00:14:58,800 --> 00:15:01,800 Speaker 1: If they what if they elsewhere? Depending on the size 330 00:15:01,800 --> 00:15:03,480 Speaker 1: of that town, it can have a significant impact on 331 00:15:03,560 --> 00:15:07,400 Speaker 1: local housing demand and rent levels. There are things outside 332 00:15:07,400 --> 00:15:09,080 Speaker 1: of your control as a real estate investor. What a 333 00:15:09,440 --> 00:15:12,680 Speaker 1: crappy neighbor with like three Doberman pinchers moves in next 334 00:15:12,720 --> 00:15:14,960 Speaker 1: door and they're really loud and noisy and they bite, 335 00:15:15,520 --> 00:15:17,080 Speaker 1: like snapping to people as you, why buy while you 336 00:15:17,160 --> 00:15:20,000 Speaker 1: hating Doberman I'm just saying, man like you never these 337 00:15:20,000 --> 00:15:22,120 Speaker 1: are the kind of things that can happen that can 338 00:15:22,160 --> 00:15:26,560 Speaker 1: actually inhibit your property from attracting the good tenants from 339 00:15:26,680 --> 00:15:28,880 Speaker 1: rising in value. Like you're hoping. You just kind of 340 00:15:29,000 --> 00:15:30,600 Speaker 1: you kind of don't know. There are things out of 341 00:15:30,600 --> 00:15:32,520 Speaker 1: your control as a real estate investor. It doesn't mean 342 00:15:32,880 --> 00:15:34,880 Speaker 1: that it's like you said, the juice is are worth 343 00:15:34,880 --> 00:15:38,680 Speaker 1: the squeeze and it's not worth looking into owning rental 344 00:15:38,760 --> 00:15:40,600 Speaker 1: real estate, But there are a lot of other factors 345 00:15:40,600 --> 00:15:42,480 Speaker 1: you need to consider, and there's more risk. The stakes 346 00:15:42,480 --> 00:15:44,600 Speaker 1: are just higher. Yeah, And I mean what you're talking 347 00:15:44,640 --> 00:15:48,200 Speaker 1: about are externalities essentially, but in addition to that, even 348 00:15:48,200 --> 00:15:52,120 Speaker 1: there are intrinsic factors to a given specific property as well. 349 00:15:52,160 --> 00:15:53,880 Speaker 1: Because you can do all the research in the world 350 00:15:53,920 --> 00:15:57,840 Speaker 1: and you might have nothing externally impacting your investment. But 351 00:15:57,840 --> 00:15:59,920 Speaker 1: the fact is we're just talking We're talking about the 352 00:16:00,040 --> 00:16:03,760 Speaker 1: versity here, diversification and with a singular investment, and so 353 00:16:03,800 --> 00:16:06,680 Speaker 1: it just might not pan out like you might expect 354 00:16:06,680 --> 00:16:08,800 Speaker 1: it to, right, Like, maybe it doesn't quite have the 355 00:16:08,840 --> 00:16:11,840 Speaker 1: curb appeal that maybe you thought, or maybe it's only 356 00:16:11,840 --> 00:16:14,920 Speaker 1: got one bathroom and folks are like, yeah, everybody wants 357 00:16:14,960 --> 00:16:17,160 Speaker 1: two bathrooms now, Like, there are just a host of 358 00:16:17,200 --> 00:16:20,760 Speaker 1: factors that could influence that specific property, as opposed to 359 00:16:20,960 --> 00:16:22,600 Speaker 1: spreading that risk out, which is what you do when 360 00:16:22,600 --> 00:16:24,880 Speaker 1: you invest in the market as a whole, in the 361 00:16:24,920 --> 00:16:29,160 Speaker 1: stock market. But real estate is also not ubiquitous. Because 362 00:16:29,600 --> 00:16:31,640 Speaker 1: I'm thinking about again the market. I can log into 363 00:16:31,640 --> 00:16:34,400 Speaker 1: Fidelity or Vanguard like right now, and I can invest 364 00:16:34,400 --> 00:16:36,680 Speaker 1: more money if I went to I can easily log 365 00:16:36,760 --> 00:16:39,880 Speaker 1: in and snag more shares of my favorite index fund, 366 00:16:40,240 --> 00:16:43,640 Speaker 1: which is Vanguard's SMPF I funded by the way voo Vo. 367 00:16:44,000 --> 00:16:46,360 Speaker 1: And so if you're looking to find a solid or 368 00:16:46,360 --> 00:16:49,400 Speaker 1: real estate investment, there's no guarantee that one even exists 369 00:16:49,880 --> 00:16:52,600 Speaker 1: in your market, at least at the moment. Right there's 370 00:16:52,720 --> 00:16:55,240 Speaker 1: just a limited supply of homes out there, but there's 371 00:16:55,240 --> 00:16:58,560 Speaker 1: an even smaller supply of properties that will be effective 372 00:16:58,760 --> 00:17:01,000 Speaker 1: for you as a I'm told that's going to give 373 00:17:01,040 --> 00:17:03,400 Speaker 1: you that return on your investment. Yeah, we were just 374 00:17:03,440 --> 00:17:06,399 Speaker 1: looking at the graph Matt just this week of the 375 00:17:06,480 --> 00:17:08,800 Speaker 1: supply of homes available in the United States, and it's 376 00:17:08,800 --> 00:17:10,760 Speaker 1: still pretty pretty close to an all time low. And 377 00:17:10,800 --> 00:17:12,280 Speaker 1: so when you think about that, the fact that there's 378 00:17:12,359 --> 00:17:14,280 Speaker 1: very little supply, well, how many of those are actually 379 00:17:14,280 --> 00:17:16,080 Speaker 1: going to make good rentals too? Because there's million dollars 380 00:17:16,080 --> 00:17:18,520 Speaker 1: homes on the market that almost never make good rentals. 381 00:17:18,640 --> 00:17:21,840 Speaker 1: It's usually the less expensive homes that make for a 382 00:17:21,880 --> 00:17:24,520 Speaker 1: great rental property. And so when you're talking about a 383 00:17:24,600 --> 00:17:28,680 Speaker 1: low supply, high demand, higher prices, higher interest rates, you 384 00:17:29,080 --> 00:17:31,399 Speaker 1: just really are talking about like all of those factors 385 00:17:31,480 --> 00:17:33,760 Speaker 1: kind of pushing against the likelihood that you're going to 386 00:17:33,760 --> 00:17:35,840 Speaker 1: be able to find a great rental property exactly. But 387 00:17:36,359 --> 00:17:39,359 Speaker 1: now that we've been negative, Nellies, we can talk about 388 00:17:39,400 --> 00:17:42,160 Speaker 1: some of the questions to ask yourself to know whether 389 00:17:42,480 --> 00:17:45,000 Speaker 1: or not taking the plunge into real estate is going 390 00:17:45,040 --> 00:17:47,399 Speaker 1: to be the right move for you. And we'll get 391 00:17:47,400 --> 00:17:58,679 Speaker 1: to those questions right after this. All right, let's keep 392 00:17:58,720 --> 00:18:01,600 Speaker 1: talking about real estate and whether investing in real estate 393 00:18:01,720 --> 00:18:04,399 Speaker 1: makes sense for people. Man, I feel like what we 394 00:18:04,440 --> 00:18:07,840 Speaker 1: have been pretty down so far on investing in real estate, 395 00:18:07,840 --> 00:18:09,439 Speaker 1: Which is so funny because if you'd asked me ten 396 00:18:09,520 --> 00:18:13,000 Speaker 1: years ago, I would have had a very very positive, 397 00:18:13,080 --> 00:18:16,480 Speaker 1: upbeat way of thinking and talking about investing in real estate. 398 00:18:17,240 --> 00:18:19,760 Speaker 1: But like I said at the beginning, like factors on 399 00:18:19,760 --> 00:18:23,959 Speaker 1: the ground change, and if real estate was priced at 400 00:18:24,119 --> 00:18:27,240 Speaker 1: twenty thirteen levels, I would be still probably seeing the 401 00:18:27,240 --> 00:18:29,840 Speaker 1: same tune that I was. But it's just not as 402 00:18:29,920 --> 00:18:32,440 Speaker 1: easy to become a real estate investor in twenty twenty 403 00:18:32,440 --> 00:18:34,360 Speaker 1: three as it was a decade ago. In a sense, 404 00:18:34,359 --> 00:18:36,760 Speaker 1: we're kind of like financial journalists. Right as the facts 405 00:18:36,760 --> 00:18:39,240 Speaker 1: on the ground change, we should be willing to make 406 00:18:39,240 --> 00:18:41,480 Speaker 1: sure that we're still reporting what's act, like what is 407 00:18:41,600 --> 00:18:44,560 Speaker 1: truth and as we come across new data were the 408 00:18:44,560 --> 00:18:49,159 Speaker 1: Woodward and Bernstein don't new facts? As new facts on 409 00:18:49,160 --> 00:18:52,480 Speaker 1: the ground present themselves, we should be able in certainly 410 00:18:52,520 --> 00:18:55,040 Speaker 1: willing to change our tune slightly. And I feel like 411 00:18:55,040 --> 00:18:56,680 Speaker 1: that's what we're doing here right, Like we're not doing 412 00:18:56,680 --> 00:19:00,399 Speaker 1: a complete one eighty, but we, like you said, we're 413 00:19:00,480 --> 00:19:02,760 Speaker 1: much more hesitant to push people in that direction. And 414 00:19:02,800 --> 00:19:04,600 Speaker 1: let's talk about leverage. For a second back, because that's 415 00:19:04,640 --> 00:19:08,040 Speaker 1: a really important part of thinking about investing in real estate. 416 00:19:08,320 --> 00:19:11,280 Speaker 1: Because yeah, like we said, real estate is historically a 417 00:19:11,359 --> 00:19:15,000 Speaker 1: worse investment than the stock market from an overall return standpoint. 418 00:19:15,119 --> 00:19:17,280 Speaker 1: We're talking about it in the most bland way possible. 419 00:19:17,600 --> 00:19:20,160 Speaker 1: But part of what helps real estate investors earn more 420 00:19:20,560 --> 00:19:23,240 Speaker 1: than what their stock market investing counterparts are able to 421 00:19:23,240 --> 00:19:26,199 Speaker 1: earn is smart use of leverage. So it's not just 422 00:19:26,240 --> 00:19:28,320 Speaker 1: that they're able to force equity in the house, appreciate 423 00:19:28,359 --> 00:19:31,199 Speaker 1: that property by doing work to it, by working their 424 00:19:31,240 --> 00:19:35,080 Speaker 1: butts off, but they are also able to make money 425 00:19:35,200 --> 00:19:37,160 Speaker 1: because they only have to put a certain percent down 426 00:19:37,280 --> 00:19:39,280 Speaker 1: on the home that they're buying. And so yeah, without 427 00:19:39,280 --> 00:19:42,280 Speaker 1: the ability to take out that loan for the majority 428 00:19:42,280 --> 00:19:44,719 Speaker 1: of the purchase price, most investors wouldn't even be able 429 00:19:44,720 --> 00:19:47,159 Speaker 1: to consider buying a rental property. So like, sorry, move on, 430 00:19:47,240 --> 00:19:49,119 Speaker 1: go do another investment because you you don't have the 431 00:19:49,520 --> 00:19:51,000 Speaker 1: skin to be able to get into this game, all right, 432 00:19:51,040 --> 00:19:54,119 Speaker 1: poor guys, Sorry, no investing in a real estate for you. 433 00:19:54,160 --> 00:19:56,439 Speaker 1: The poorers can invest in real estate apparently, right, and so, 434 00:19:56,800 --> 00:19:58,480 Speaker 1: but leverage can swing either way, and I think a 435 00:19:58,480 --> 00:20:00,640 Speaker 1: lot of people think of leverage as only a good thing, like, oh, 436 00:20:00,680 --> 00:20:02,640 Speaker 1: it helps me get into this like three hundred thousand 437 00:20:02,640 --> 00:20:05,400 Speaker 1: dollars property that otherwise I'd be unable to purchase, but 438 00:20:05,760 --> 00:20:08,119 Speaker 1: an intelligent use of debt it can help make returns 439 00:20:08,119 --> 00:20:11,040 Speaker 1: look better than they otherwise would, especially in a booming market, 440 00:20:11,160 --> 00:20:13,600 Speaker 1: you know, putting something like forty thousand dollars down on 441 00:20:13,600 --> 00:20:16,320 Speaker 1: a two hundred thousand dollars home that doubled in value 442 00:20:16,320 --> 00:20:18,760 Speaker 1: over the past five years, which is not too far 443 00:20:18,880 --> 00:20:21,320 Speaker 1: from the truth in some markets. It means that, in 444 00:20:21,359 --> 00:20:24,720 Speaker 1: the simplest terms possible, you turned forty thousand dollars into 445 00:20:24,720 --> 00:20:27,639 Speaker 1: two hundred thousand dollars thanks to leverage. So that is 446 00:20:27,640 --> 00:20:32,119 Speaker 1: how leverage can be beneficial. But the truth is leverage 447 00:20:32,119 --> 00:20:34,840 Speaker 1: can also bite you in the button. I mean talking 448 00:20:34,880 --> 00:20:36,680 Speaker 1: about who about real estate back in two thousand and seven. 449 00:20:36,720 --> 00:20:38,720 Speaker 1: They'll tell you they'll see the tune of how leverage 450 00:20:38,720 --> 00:20:40,080 Speaker 1: can work the other way too. Yeah, and that's not 451 00:20:40,119 --> 00:20:42,520 Speaker 1: counting the transaction costs of real estate, right, and those 452 00:20:42,520 --> 00:20:45,560 Speaker 1: are pretty high. But yeah, from the most basic vantage point, 453 00:20:46,040 --> 00:20:48,480 Speaker 1: that example helps you to see how leverage can accelerate 454 00:20:48,480 --> 00:20:51,040 Speaker 1: your ability to build wealth. Because if you know were 455 00:20:51,040 --> 00:20:53,120 Speaker 1: you to take that same amount of money and stick 456 00:20:53,160 --> 00:20:56,280 Speaker 1: it in the market, and even with healthy returns like 457 00:20:56,320 --> 00:20:58,840 Speaker 1: a ten percent rate of return, you might have only 458 00:20:58,840 --> 00:21:02,000 Speaker 1: earned something like twenty five thousand dollars on forty thousand 459 00:21:02,000 --> 00:21:04,440 Speaker 1: dollars worth of capital within a five year time span. 460 00:21:04,720 --> 00:21:06,879 Speaker 1: But like you said, you do need to be careful 461 00:21:06,960 --> 00:21:10,480 Speaker 1: because leverage can swing both ways. We are not against 462 00:21:10,680 --> 00:21:13,120 Speaker 1: using it to your advantage, but it's something that you've 463 00:21:13,160 --> 00:21:16,280 Speaker 1: got to be very careful with because we're you to 464 00:21:16,320 --> 00:21:19,320 Speaker 1: be overleveraged, and were we to see a massive downturn 465 00:21:19,320 --> 00:21:22,000 Speaker 1: in the market like we did back during the Great Recession, 466 00:21:22,119 --> 00:21:24,280 Speaker 1: you would see yourself completely upside down. You would see 467 00:21:24,280 --> 00:21:27,680 Speaker 1: yourself underwater with your real estate. Yeah yeah, And then 468 00:21:28,040 --> 00:21:30,439 Speaker 1: if you don't have the cash flow to cover your losses, 469 00:21:30,680 --> 00:21:33,120 Speaker 1: you end up in a really difficult situation that leads 470 00:21:33,119 --> 00:21:36,040 Speaker 1: to foreclosure for a lot of people. And so investing 471 00:21:36,040 --> 00:21:39,479 Speaker 1: in real estate it's just not as straightforward as it 472 00:21:39,560 --> 00:21:41,720 Speaker 1: is to invest in the market, and so bigger there's 473 00:21:41,760 --> 00:21:45,280 Speaker 1: potential for bigger returns for savvy real estate investors, but 474 00:21:45,440 --> 00:21:48,280 Speaker 1: there's also a bigger risk at the same time. So 475 00:21:48,359 --> 00:21:51,080 Speaker 1: let's talk about Matt A. Few questions, a few things 476 00:21:51,080 --> 00:21:53,560 Speaker 1: that people need to think through before they decide that 477 00:21:53,680 --> 00:21:56,480 Speaker 1: real estate investing does make sense for them. So we've 478 00:21:56,480 --> 00:21:58,480 Speaker 1: got kind of a few factors who want you to consider. 479 00:21:58,560 --> 00:22:00,960 Speaker 1: First is, how are you doing with those tax advantage 480 00:22:01,000 --> 00:22:03,199 Speaker 1: retirement accounts? If you don't know what a follow one 481 00:22:03,280 --> 00:22:05,600 Speaker 1: key is or you haven't considered a roth IRA yet. 482 00:22:05,800 --> 00:22:07,840 Speaker 1: First things first, we want you we want you to 483 00:22:07,880 --> 00:22:09,720 Speaker 1: be at least getting the match from your employer if 484 00:22:09,840 --> 00:22:12,920 Speaker 1: you're employed at a full time gig, who offers you 485 00:22:12,960 --> 00:22:15,639 Speaker 1: a retirement account. That's kind of the minimum threshold, right, 486 00:22:15,840 --> 00:22:18,600 Speaker 1: I mean, hopefully you've been stocking away meaningful amounts for 487 00:22:18,720 --> 00:22:21,280 Speaker 1: years before you even start thinking about investing in real estate, 488 00:22:21,480 --> 00:22:25,840 Speaker 1: and largely because since real estate lacks diversification, we want 489 00:22:25,880 --> 00:22:27,439 Speaker 1: you putting some money to work for you in the 490 00:22:27,440 --> 00:22:30,119 Speaker 1: market before you start saving up for that first rental 491 00:22:30,119 --> 00:22:32,159 Speaker 1: property down payment. I mean, we want you to have 492 00:22:32,440 --> 00:22:34,960 Speaker 1: just a solid financial foundation, right. We want you to 493 00:22:34,960 --> 00:22:38,240 Speaker 1: have no high interest rate debt. Who want you to 494 00:22:38,280 --> 00:22:42,000 Speaker 1: have a fully funded emergency fund. You're just not ready 495 00:22:42,600 --> 00:22:45,520 Speaker 1: to even start looking at properties. You can start learning, right, 496 00:22:45,560 --> 00:22:47,840 Speaker 1: you can start researching, You can start listening to podcasts 497 00:22:47,840 --> 00:22:50,040 Speaker 1: and reading books. But you're just not ready to start 498 00:22:50,280 --> 00:22:54,040 Speaker 1: like hopping on redfin and zillo and making offers on 499 00:22:54,160 --> 00:22:57,159 Speaker 1: properties that are in your neighborhood until you've got a 500 00:22:57,160 --> 00:23:00,320 Speaker 1: solid financial foundation, until you started investing, I think in 501 00:23:00,440 --> 00:23:04,000 Speaker 1: some of the more boring index fund style routes. First two. Yeah, basically, 502 00:23:04,080 --> 00:23:05,560 Speaker 1: we want you to do things in the right order, 503 00:23:05,560 --> 00:23:07,920 Speaker 1: and it starts with, like I said, you'll having some 504 00:23:08,119 --> 00:23:10,719 Speaker 1: margin in your life, an emergency fund, but getting rid 505 00:23:10,760 --> 00:23:13,800 Speaker 1: of that high and straight debt, but then also making 506 00:23:13,840 --> 00:23:17,119 Speaker 1: sure you are invested in the most simple of ways 507 00:23:17,320 --> 00:23:20,640 Speaker 1: before you then start saving up. Yeah, for that first 508 00:23:20,640 --> 00:23:22,880 Speaker 1: investment property. It's kind of like becoming a parent before 509 00:23:22,920 --> 00:23:26,480 Speaker 1: becoming a grandparent. You just kind of gotta do it right. Well, yeah, 510 00:23:26,600 --> 00:23:29,040 Speaker 1: there's only one way you do that. Whereas you can't 511 00:23:29,080 --> 00:23:30,840 Speaker 1: get out of you could do it, Yeah, you could 512 00:23:30,840 --> 00:23:32,159 Speaker 1: get this one out of order, but we don't want 513 00:23:32,160 --> 00:23:33,359 Speaker 1: you to do Yeah. And so after you have that 514 00:23:33,359 --> 00:23:36,439 Speaker 1: financial foundation, you need to have a down payment saved up. 515 00:23:36,600 --> 00:23:39,639 Speaker 1: You'll not only need the money to put probably twenty 516 00:23:39,640 --> 00:23:42,439 Speaker 1: five percent down on the unit that you want to purchase, 517 00:23:42,640 --> 00:23:44,880 Speaker 1: but you'll need what most lenders want from you yeah, 518 00:23:45,200 --> 00:23:47,040 Speaker 1: save us for twenty five percent down, but beyond that, 519 00:23:47,160 --> 00:23:49,480 Speaker 1: you're gonna need a fair amount of additional cash to 520 00:23:49,640 --> 00:23:52,160 Speaker 1: just get it into shape for renting, and you'll want 521 00:23:52,160 --> 00:23:54,800 Speaker 1: to have reserves on hand to pay for any potential 522 00:23:55,200 --> 00:23:59,439 Speaker 1: major upgrades or major expenses, unforeseen expenses that might pop up. 523 00:23:59,520 --> 00:24:02,240 Speaker 1: And so this is in addition to what you're sticking 524 00:24:02,280 --> 00:24:05,320 Speaker 1: into your traditional investment accounts, and in addition to the 525 00:24:05,359 --> 00:24:08,959 Speaker 1: cash that's sitting in your own personal emergency fund for 526 00:24:09,160 --> 00:24:12,359 Speaker 1: your personal emergencies. Essentially, it's like having a like an 527 00:24:12,400 --> 00:24:15,520 Speaker 1: emergency fund for each of your properties basically, and it's 528 00:24:15,560 --> 00:24:18,400 Speaker 1: so true. I mean there's always something that's needed at 529 00:24:18,440 --> 00:24:21,679 Speaker 1: rental properties and doing work at multiple rental properties as 530 00:24:21,720 --> 00:24:23,639 Speaker 1: we speak, Matt, not me, but I have people that 531 00:24:23,680 --> 00:24:25,400 Speaker 1: I'm hiring to do the work putting in a whole 532 00:24:25,400 --> 00:24:28,080 Speaker 1: new bathroom in one unit. And so these are the 533 00:24:28,119 --> 00:24:29,520 Speaker 1: kind of things that you have to be ready for, 534 00:24:29,520 --> 00:24:33,040 Speaker 1: these upgrades expenses. It's not cheap and it's a long 535 00:24:33,200 --> 00:24:35,400 Speaker 1: term play, but you've got to have the cash flow 536 00:24:35,400 --> 00:24:37,880 Speaker 1: and you've got to have the reserves to cover those 537 00:24:38,080 --> 00:24:41,000 Speaker 1: upgrades that are necessary. Definitely, don't want to get caught 538 00:24:41,000 --> 00:24:42,600 Speaker 1: off guard that would be a bad place to be. 539 00:24:42,600 --> 00:24:44,239 Speaker 1: If you're going to be investing in real estate, You're right, 540 00:24:44,240 --> 00:24:46,760 Speaker 1: you need a significant amount of extra cash on hand, 541 00:24:47,280 --> 00:24:49,719 Speaker 1: or you should probably not consider it at all. All right, 542 00:24:49,720 --> 00:24:51,320 Speaker 1: You also need to think about what market you're in, 543 00:24:51,480 --> 00:24:53,320 Speaker 1: because real estate is a very local thing. We've been 544 00:24:53,320 --> 00:24:56,200 Speaker 1: giving kind of some generalized numbers about how real estate performs, 545 00:24:56,560 --> 00:25:00,320 Speaker 1: but so much depends right. Real estate is about location, location, location, 546 00:25:00,480 --> 00:25:02,919 Speaker 1: and it's about specific location, but it's also about just 547 00:25:02,960 --> 00:25:04,719 Speaker 1: like what part of the country do you live in. 548 00:25:04,840 --> 00:25:07,040 Speaker 1: So if you live in New York City, San Francisco, 549 00:25:07,280 --> 00:25:09,560 Speaker 1: it would likely mean losing money each and every month 550 00:25:09,920 --> 00:25:12,760 Speaker 1: in hopes that that property would appreciate and that that 551 00:25:12,800 --> 00:25:14,280 Speaker 1: would pain out in the end, that would make that 552 00:25:14,320 --> 00:25:19,680 Speaker 1: a good investment. Incredible incredibly expensive markets make it ridiculously 553 00:25:19,680 --> 00:25:22,800 Speaker 1: difficult to invest and make money, But there are lots 554 00:25:22,800 --> 00:25:25,960 Speaker 1: of other markets where investor opportunities still exists. And even 555 00:25:26,000 --> 00:25:29,120 Speaker 1: though the market has from a broad national standpoint, made 556 00:25:29,160 --> 00:25:31,119 Speaker 1: it more difficult to find deals that makes sense for 557 00:25:31,160 --> 00:25:33,880 Speaker 1: real estate investors, some markets still at homes for sale 558 00:25:33,960 --> 00:25:36,240 Speaker 1: that are going to be profitable, and where you live 559 00:25:36,480 --> 00:25:38,600 Speaker 1: is just going to have a massive influence on whether 560 00:25:38,720 --> 00:25:41,280 Speaker 1: or not you opt to invest long distance is possible, 561 00:25:41,280 --> 00:25:44,160 Speaker 1: but that's just another can of worms. So where you live, 562 00:25:44,400 --> 00:25:46,960 Speaker 1: the kind of deals that are available in your neighborhood 563 00:25:47,000 --> 00:25:49,600 Speaker 1: or in surrounding neighborhoods, that's probably going to have an 564 00:25:49,600 --> 00:25:51,760 Speaker 1: impact on whether or not you decide to proceed. You 565 00:25:51,840 --> 00:25:54,000 Speaker 1: might say, no, wait a second, I am living in 566 00:25:54,080 --> 00:25:58,080 Speaker 1: downtown Los Angeles and there are no deals to be 567 00:25:58,119 --> 00:26:00,400 Speaker 1: had that would make sense from an investing stand point. 568 00:26:00,680 --> 00:26:03,000 Speaker 1: But you might say, I live in Cincinnati, and actually 569 00:26:03,200 --> 00:26:06,160 Speaker 1: there's some good quads right around the corner quadplexes, and 570 00:26:06,280 --> 00:26:08,920 Speaker 1: maybe I'll buy one of those. I ran the numbers 571 00:26:08,960 --> 00:26:11,760 Speaker 1: actually look really good. So again, so much of it 572 00:26:11,760 --> 00:26:14,240 Speaker 1: comes down to where you live, and if the deals 573 00:26:14,240 --> 00:26:16,600 Speaker 1: exist where you are, that's right. Yeah, this is a 574 00:26:16,720 --> 00:26:19,479 Speaker 1: very broadbrush that I'm pinning with here, but generally speaking, 575 00:26:19,560 --> 00:26:22,560 Speaker 1: on the coast it's way more expensive versus buying and 576 00:26:22,600 --> 00:26:24,720 Speaker 1: investing in the heartland or in the sun belt, where 577 00:26:25,040 --> 00:26:28,160 Speaker 1: more and more folks happen to be moving to these days. 578 00:26:28,560 --> 00:26:31,120 Speaker 1: But just because you are in the right market, though, 579 00:26:31,240 --> 00:26:33,840 Speaker 1: and just because you've got your financial ducks all lined up, 580 00:26:34,080 --> 00:26:36,680 Speaker 1: it's still not a slam dunk decision that you should 581 00:26:36,720 --> 00:26:40,240 Speaker 1: invest in real estate because you also need to want 582 00:26:40,600 --> 00:26:44,080 Speaker 1: to invest in real estate. Yeah, you gott need to 583 00:26:44,119 --> 00:26:47,199 Speaker 1: have that fire if you aren't even interested in learning 584 00:26:47,240 --> 00:26:51,200 Speaker 1: about the mechanics of real estate, like, that's okay because 585 00:26:51,200 --> 00:26:53,119 Speaker 1: of the nice thing about investing in the stock market 586 00:26:53,240 --> 00:26:55,240 Speaker 1: is that you don't need to know very much in 587 00:26:55,320 --> 00:26:58,560 Speaker 1: order to land in the index funds rule you camp 588 00:26:58,600 --> 00:27:00,720 Speaker 1: you can get rich while being bliss fully ignorant, which 589 00:27:00,720 --> 00:27:02,360 Speaker 1: I think is the best part about index funds. It's 590 00:27:02,359 --> 00:27:05,679 Speaker 1: like you can be like completely removed from your day 591 00:27:05,720 --> 00:27:07,600 Speaker 1: to day It's completely removed from how it is that 592 00:27:07,640 --> 00:27:10,239 Speaker 1: you think about. Yes, yeah, real estate investing is going 593 00:27:10,280 --> 00:27:13,240 Speaker 1: to take more due diligence, and if the desire isn't there, 594 00:27:13,400 --> 00:27:16,000 Speaker 1: like it's it's going to just quickly begin to feel 595 00:27:16,000 --> 00:27:18,520 Speaker 1: like a slock. And it's okay to work for those profits. 596 00:27:19,040 --> 00:27:21,600 Speaker 1: But it's even more fulfilling when it's something that you enjoy, 597 00:27:21,640 --> 00:27:24,639 Speaker 1: when it's something that you are excited about, as opposed 598 00:27:24,640 --> 00:27:26,400 Speaker 1: to something where you're just like, oh, I don't want 599 00:27:26,400 --> 00:27:28,400 Speaker 1: to have to deal with that. Think about what you 600 00:27:28,480 --> 00:27:30,560 Speaker 1: actually want your life to look like and what you 601 00:27:30,560 --> 00:27:32,320 Speaker 1: want to spend your time doing I think I think 602 00:27:32,320 --> 00:27:34,159 Speaker 1: that's a great point because some people are like, I 603 00:27:34,160 --> 00:27:35,720 Speaker 1: feel like I'm supposed to that's the next step in 604 00:27:35,760 --> 00:27:37,520 Speaker 1: wealth building. But no, you don't have to if you 605 00:27:37,520 --> 00:27:40,040 Speaker 1: don't want to, And it's if an interests you, if 606 00:27:40,040 --> 00:27:41,879 Speaker 1: a picture like I always liked it, like I always 607 00:27:41,880 --> 00:27:44,080 Speaker 1: found it to be like fun and fascinating and like 608 00:27:44,119 --> 00:27:46,879 Speaker 1: a learning experience. But not everybody feels that way, and 609 00:27:46,960 --> 00:27:48,840 Speaker 1: other people are like, I want my weekends to be 610 00:27:48,920 --> 00:27:50,640 Speaker 1: my weekends. And it's not that being a real estate 611 00:27:50,680 --> 00:27:52,560 Speaker 1: investor means all your weekends are going to be spent 612 00:27:52,640 --> 00:27:55,240 Speaker 1: working on that property. Probably not, but it's important to 613 00:27:55,280 --> 00:27:58,080 Speaker 1: have the desire because there are inevitably going to be 614 00:27:58,440 --> 00:28:00,240 Speaker 1: times when you've got to devote attention and to that 615 00:28:00,280 --> 00:28:02,159 Speaker 1: rental property when you'd rather be doing something else. And 616 00:28:02,160 --> 00:28:05,120 Speaker 1: so exactly, like, if it annoys the ever living crap 617 00:28:05,119 --> 00:28:09,119 Speaker 1: out of you, then you're it's probably not meant for you. Yeah, 618 00:28:09,160 --> 00:28:11,880 Speaker 1: this is a rare instance in investing where I think 619 00:28:11,880 --> 00:28:15,520 Speaker 1: it makes sense to say follow your heart, yeah, which 620 00:28:15,560 --> 00:28:19,240 Speaker 1: is rarely the best advice in investing, rarely exactly, but 621 00:28:19,320 --> 00:28:21,520 Speaker 1: in this case, like, well, truly, like what we're talking 622 00:28:21,520 --> 00:28:23,280 Speaker 1: about how you're spending your time, what you want your 623 00:28:23,359 --> 00:28:26,000 Speaker 1: days and your hours to look like. And I kind 624 00:28:26,000 --> 00:28:28,199 Speaker 1: of like like architecture, and I like these and so 625 00:28:28,240 --> 00:28:29,680 Speaker 1: I like street to street and I like that kind 626 00:28:29,680 --> 00:28:32,400 Speaker 1: of So I'm my interestingly in the old neighborhoods in time, right, Yeah, 627 00:28:32,440 --> 00:28:35,160 Speaker 1: my interests aligned with this form of investing. So to me, 628 00:28:35,600 --> 00:28:37,919 Speaker 1: that actually made it make more sense. And so that 629 00:28:37,960 --> 00:28:39,520 Speaker 1: makes me think it's not just desire, But do you 630 00:28:39,560 --> 00:28:41,840 Speaker 1: have the time to do this? Because sure, that's another 631 00:28:41,840 --> 00:28:45,000 Speaker 1: important question, another important filter to run this decision through. 632 00:28:45,440 --> 00:28:47,400 Speaker 1: Do you have the time that it takes to be 633 00:28:47,440 --> 00:28:50,200 Speaker 1: a real estate investor, because you know a significant amount 634 00:28:50,520 --> 00:28:52,400 Speaker 1: of both are going to be necessary to make this 635 00:28:52,560 --> 00:28:55,680 Speaker 1: a success. And you know, we've talked about how it's 636 00:28:55,720 --> 00:28:58,840 Speaker 1: not passive income. It has aspects of a part time 637 00:28:58,920 --> 00:29:00,640 Speaker 1: job to it. But I just want to drive that 638 00:29:00,680 --> 00:29:02,880 Speaker 1: point home because there are so many folks out there 639 00:29:02,880 --> 00:29:05,840 Speaker 1: approaching the exact opposite message. They're talking about the passive 640 00:29:05,880 --> 00:29:07,960 Speaker 1: income side of things. But time and effort really are 641 00:29:08,000 --> 00:29:10,400 Speaker 1: required to be a successful real estate investor. And so 642 00:29:10,720 --> 00:29:12,960 Speaker 1: I would say count the cost before you proceed. That's 643 00:29:13,040 --> 00:29:15,800 Speaker 1: really important. If you're working a full time job, so 644 00:29:15,960 --> 00:29:17,920 Speaker 1: is your spouse, and you want to be at your 645 00:29:18,000 --> 00:29:20,920 Speaker 1: kids soccer games on the weekend. All the above, Well, 646 00:29:21,240 --> 00:29:23,920 Speaker 1: real estate investing might eat into that. And so it's 647 00:29:23,960 --> 00:29:25,800 Speaker 1: important to figure out whether or not you've actually got 648 00:29:25,800 --> 00:29:28,080 Speaker 1: the time to commit to this new endeavor, because yeah, 649 00:29:28,080 --> 00:29:30,680 Speaker 1: it's going to take some time, that's right. Yeah, Okay, 650 00:29:30,680 --> 00:29:32,760 Speaker 1: So even if you've got the desire, you're in a 651 00:29:32,800 --> 00:29:34,880 Speaker 1: great market, and you've got the time, and you've got 652 00:29:34,920 --> 00:29:37,920 Speaker 1: the money, Well, it's also worth considering that you might 653 00:29:38,000 --> 00:29:42,000 Speaker 1: already have a decent amount of local real estate exposure 654 00:29:42,040 --> 00:29:46,720 Speaker 1: already via your primary residence. Right, And so this isn't 655 00:29:46,760 --> 00:29:49,680 Speaker 1: to say that quote unquote investing in the home where 656 00:29:49,720 --> 00:29:52,040 Speaker 1: you live like that that is the most optimal way 657 00:29:52,040 --> 00:29:55,120 Speaker 1: to invest in real estate, but it is the reality 658 00:29:55,520 --> 00:29:59,280 Speaker 1: for American homeowners at least sixty five percent of Americans 659 00:29:59,360 --> 00:30:02,080 Speaker 1: net worth, it's tied up in their homes. Dude, Like 660 00:30:02,120 --> 00:30:04,640 Speaker 1: that is a lot of eggs in a singular basket. 661 00:30:05,000 --> 00:30:08,080 Speaker 1: And we're not against buying a primary residence that you love, 662 00:30:08,520 --> 00:30:10,480 Speaker 1: but it is a good idea to consider how buying 663 00:30:10,640 --> 00:30:13,520 Speaker 1: some additional local real estate how that will impact the 664 00:30:13,600 --> 00:30:17,320 Speaker 1: diversity of your overall portfolio. We see we're talking like, hey, 665 00:30:17,360 --> 00:30:19,040 Speaker 1: I've been maxing out my wrath for two years, but 666 00:30:19,080 --> 00:30:20,960 Speaker 1: that's all you've done in the market. But you own 667 00:30:20,960 --> 00:30:22,600 Speaker 1: a primary home and now you're looking to buy a 668 00:30:22,640 --> 00:30:25,160 Speaker 1: rental property. Yeah. Yeah, if you've got twelve five hundred 669 00:30:25,160 --> 00:30:27,600 Speaker 1: dollars sitting there, or hopefully a little bit more with 670 00:30:27,880 --> 00:30:29,440 Speaker 1: gains in the market. But if that's all you got, 671 00:30:29,520 --> 00:30:33,360 Speaker 1: then yeah, maybe you want a little more exposure broadly speaking, 672 00:30:33,440 --> 00:30:35,880 Speaker 1: across all the companies. Look at it Deer in the 673 00:30:35,960 --> 00:30:38,280 Speaker 1: US or that trade on the New York Stock Exchange. Yeah, 674 00:30:38,280 --> 00:30:43,080 Speaker 1: before sinking a significantly larger amount than that into a 675 00:30:43,120 --> 00:30:45,360 Speaker 1: local piece of property via a down payment. Yeah. I 676 00:30:45,400 --> 00:30:47,880 Speaker 1: mean this goes back to that diversification point that we 677 00:30:47,960 --> 00:30:49,960 Speaker 1: made earlier a little bit, and a lot of people 678 00:30:50,040 --> 00:30:52,840 Speaker 1: are not diversified in terms of their net worth because 679 00:30:52,880 --> 00:30:54,400 Speaker 1: so much of it is tied up in their home. 680 00:30:54,440 --> 00:30:57,360 Speaker 1: They think of that as their forced method of savings, 681 00:30:57,440 --> 00:31:01,280 Speaker 1: as their way to retirement. But you're mary, home isn't 682 00:31:01,480 --> 00:31:03,560 Speaker 1: typically a great investment. We'll talk about that a little 683 00:31:03,600 --> 00:31:05,640 Speaker 1: bit more, but we also want to talk about alternatives 684 00:31:05,640 --> 00:31:08,760 Speaker 1: to buying actual physical real estate. Do any of those 685 00:31:08,800 --> 00:31:10,960 Speaker 1: makes sense for investors who want to grow their net worth. 686 00:31:10,960 --> 00:31:22,400 Speaker 1: We'll get to all that right after this. All right, 687 00:31:22,400 --> 00:31:25,760 Speaker 1: we are still talking about investing in real estate, and 688 00:31:25,840 --> 00:31:29,160 Speaker 1: the good news is that even if you feel completely 689 00:31:29,160 --> 00:31:32,200 Speaker 1: overwhelmed by what we've said so far, you can still 690 00:31:32,200 --> 00:31:35,640 Speaker 1: participate in seeing your net worth grow by investing in 691 00:31:35,640 --> 00:31:39,520 Speaker 1: real estate. Oh yeah, let's say you've heard as talking. 692 00:31:39,560 --> 00:31:41,960 Speaker 1: It sounds like it's too much work. Let's talk about 693 00:31:42,000 --> 00:31:44,320 Speaker 1: a few alternative ways to get exposure to real estate 694 00:31:44,480 --> 00:31:49,080 Speaker 1: as an asset class and reats, which stand for real 695 00:31:49,160 --> 00:31:52,680 Speaker 1: estate investment trusts. They are the main way to gain 696 00:31:52,800 --> 00:31:56,680 Speaker 1: some of that hassle free exposure to real estate, and 697 00:31:56,760 --> 00:31:58,640 Speaker 1: there are a few a couple different types that we're 698 00:31:58,640 --> 00:32:02,200 Speaker 1: gonna talk about today. Ereates are becoming more and more popular, 699 00:32:02,240 --> 00:32:06,920 Speaker 1: and ereates basically mean the reats available through specific investing platforms, 700 00:32:06,960 --> 00:32:10,040 Speaker 1: of which fund Rise tends to be the best of 701 00:32:10,040 --> 00:32:12,560 Speaker 1: the bunch. Yeah, probably the most popular too. But even still, 702 00:32:12,560 --> 00:32:14,800 Speaker 1: this isn't our favorite way for folks to invest in 703 00:32:14,920 --> 00:32:20,120 Speaker 1: real estate, largely because of the pretty high, pretty hefty fees. 704 00:32:20,120 --> 00:32:23,560 Speaker 1: We're talking one percent. There's just at a complexity as well, 705 00:32:23,600 --> 00:32:27,040 Speaker 1: and just how tied up your money is, even though 706 00:32:27,080 --> 00:32:29,400 Speaker 1: it is you know, it is easier than actually buying 707 00:32:29,440 --> 00:32:32,840 Speaker 1: a duplex, and their website, the apps, they make it 708 00:32:32,880 --> 00:32:36,040 Speaker 1: really easy to invest as well. But like, honestly almost 709 00:32:36,040 --> 00:32:38,320 Speaker 1: see this as a downside because it could mean that 710 00:32:38,320 --> 00:32:41,040 Speaker 1: investors they just run the risk of having not performed 711 00:32:41,520 --> 00:32:43,280 Speaker 1: their due diligence. Right if you're kind of just sitting 712 00:32:43,320 --> 00:32:44,560 Speaker 1: back and you're thinking, oh, I want to be a 713 00:32:44,600 --> 00:32:48,200 Speaker 1: real estate investor, Swoop swoopsoopoop, and you know, double click 714 00:32:48,200 --> 00:32:50,400 Speaker 1: your side to download the app, you log in, and 715 00:32:50,480 --> 00:32:52,720 Speaker 1: before you know it, your money's tied up in which 716 00:32:52,720 --> 00:32:56,640 Speaker 1: atall hansas and you haven't given much thought to whether 717 00:32:56,840 --> 00:32:59,000 Speaker 1: or not you are going to need access to those 718 00:32:59,040 --> 00:33:01,320 Speaker 1: funds in two months. And the truth is that when 719 00:33:01,320 --> 00:33:03,800 Speaker 1: we're talking about investing in real estate, it's a non 720 00:33:03,880 --> 00:33:07,960 Speaker 1: liquid form of investment. It's hard to sell that property anyway, 721 00:33:07,960 --> 00:33:10,880 Speaker 1: and if you try to sell it in a short timeframe, 722 00:33:11,000 --> 00:33:12,920 Speaker 1: you're going to lose money, like we talked about earlier, 723 00:33:13,040 --> 00:33:15,680 Speaker 1: So the same thing is true with these erets where 724 00:33:15,680 --> 00:33:18,680 Speaker 1: your money is often locked up for a number of years. 725 00:33:19,040 --> 00:33:20,920 Speaker 1: But you're right, a lot of people don't realize on 726 00:33:20,960 --> 00:33:22,760 Speaker 1: the front end, or they haven't thought thought it through 727 00:33:23,160 --> 00:33:26,000 Speaker 1: long enough before they make that purchase. So real estate 728 00:33:26,080 --> 00:33:29,680 Speaker 1: is just a liquid in general, unless we're talking about 729 00:33:29,680 --> 00:33:32,600 Speaker 1: publicly traded rates, which are different. It's true, publicly traded 730 00:33:32,640 --> 00:33:34,600 Speaker 1: real estate investment trust they're a better option for a 731 00:33:34,640 --> 00:33:36,880 Speaker 1: lot of folks if you want to invest in real estate, 732 00:33:36,960 --> 00:33:39,720 Speaker 1: let's say, from the comfort of your couch and buy 733 00:33:40,080 --> 00:33:42,280 Speaker 1: a few clicks on your smartphone. And what we mean 734 00:33:42,320 --> 00:33:45,720 Speaker 1: by that is like a specific fund and this fund 735 00:33:45,800 --> 00:33:48,920 Speaker 1: that you could invest in itself invest in a ton 736 00:33:48,960 --> 00:33:51,920 Speaker 1: of different rates that are offered by some of our 737 00:33:51,960 --> 00:33:55,160 Speaker 1: favorite brokerage companies. And so you're talking about investing in 738 00:33:55,600 --> 00:33:58,120 Speaker 1: real estate all across the country, and different kinds of 739 00:33:58,160 --> 00:33:59,880 Speaker 1: real estate. You might be talking about office real estate, 740 00:34:00,040 --> 00:34:02,920 Speaker 1: might be talking about hospitals, you might be talking cell 741 00:34:02,960 --> 00:34:06,959 Speaker 1: phone towers, all sorts of different real estate classes. And 742 00:34:07,000 --> 00:34:09,759 Speaker 1: so V and Q, for instance, is a solid fund 743 00:34:09,760 --> 00:34:12,000 Speaker 1: that Vanguard offers if you want to invest in real estate, 744 00:34:12,160 --> 00:34:14,400 Speaker 1: but you want to have that investment be somewhat liquid. 745 00:34:15,000 --> 00:34:21,040 Speaker 1: Sh from Charles Schaub, that's a great one too, Yeah, 746 00:34:21,040 --> 00:34:24,279 Speaker 1: shut up, and like this is this is a great 747 00:34:24,320 --> 00:34:26,799 Speaker 1: way to invest in real estate passively, but in a 748 00:34:26,840 --> 00:34:30,680 Speaker 1: diversified manner. But know this, it's not doing much actually 749 00:34:30,680 --> 00:34:33,239 Speaker 1: for you on the diversification front. So if you're like, 750 00:34:33,280 --> 00:34:36,320 Speaker 1: I want some real estate exposure. These publicly traded reads, 751 00:34:36,320 --> 00:34:38,680 Speaker 1: they sound like, you know, the costs are low and 752 00:34:38,760 --> 00:34:41,000 Speaker 1: I can get in and out when I want to. Well, 753 00:34:41,200 --> 00:34:44,319 Speaker 1: they're but and then maybe they'll diversify me from my 754 00:34:44,400 --> 00:34:47,240 Speaker 1: total stock market holdings. That that might be the best 755 00:34:47,320 --> 00:34:49,759 Speaker 1: solution for me. Well, it's important to note that because 756 00:34:49,760 --> 00:34:52,720 Speaker 1: you're already plenty diversified by holding hundreds or even thousands 757 00:34:52,719 --> 00:34:54,880 Speaker 1: of stocks in that total stock market fund or the 758 00:34:54,920 --> 00:34:57,680 Speaker 1: SP five hundred index fund, because again you are doing 759 00:34:57,719 --> 00:35:00,759 Speaker 1: that first, or you are investing in real est right right, 760 00:35:00,920 --> 00:35:02,839 Speaker 1: But yes, as you should be. But then you start 761 00:35:02,880 --> 00:35:04,760 Speaker 1: adding a little bit bit of vm Q or something 762 00:35:04,760 --> 00:35:06,600 Speaker 1: in there, which is that Vanguard read fund I was 763 00:35:06,600 --> 00:35:09,600 Speaker 1: talking about, Well, most if not all, of the one 764 00:35:09,680 --> 00:35:12,640 Speaker 1: hundred and sixty seven companies that V and Q is 765 00:35:12,800 --> 00:35:15,240 Speaker 1: investing in are already a part of the total stock 766 00:35:15,280 --> 00:35:18,799 Speaker 1: market fund that you got. So if you're investing in VTI, right, 767 00:35:18,840 --> 00:35:21,800 Speaker 1: which is which is the ETF, that that's your favorite, 768 00:35:21,880 --> 00:35:25,520 Speaker 1: right Vanguard's total stock market. That's a killer one, right 769 00:35:25,560 --> 00:35:28,200 Speaker 1: If you're investing in that, well, you're already kind of 770 00:35:28,200 --> 00:35:30,319 Speaker 1: by proxy investing in vm Q, and so you might 771 00:35:30,360 --> 00:35:33,840 Speaker 1: not necessarily need additional exposure. So for a lot of people, 772 00:35:33,840 --> 00:35:36,680 Speaker 1: it's probably, like I said, more trouble than Athwarthness, right, Yeah. 773 00:35:36,760 --> 00:35:39,440 Speaker 1: And you you also don't have to be fully team VTI. 774 00:35:39,560 --> 00:35:41,560 Speaker 1: You can also come over to my side and join 775 00:35:41,640 --> 00:35:45,640 Speaker 1: Team VO. They're both very similar and both wonderful syndication deals. 776 00:35:45,880 --> 00:35:48,160 Speaker 1: This is another way to invest in real estate in 777 00:35:48,200 --> 00:35:51,760 Speaker 1: a more passive manner, and that basically means just investing 778 00:35:51,760 --> 00:35:54,279 Speaker 1: in other people's real estate deals and other folks in 779 00:35:54,320 --> 00:35:57,480 Speaker 1: other companies real estate deals. So oftentimes you're coming alongside 780 00:35:57,560 --> 00:36:01,080 Speaker 1: other investors to say, purchase an apartment complex, Joe. This 781 00:36:01,160 --> 00:36:03,200 Speaker 1: is something that you've done a couple of times. But 782 00:36:03,239 --> 00:36:06,080 Speaker 1: if you pick the right operator, the right investment, it 783 00:36:06,120 --> 00:36:08,640 Speaker 1: can definitely work out well. But the problem with these 784 00:36:08,840 --> 00:36:12,040 Speaker 1: is that there's a massive barrier to entry. A lot 785 00:36:12,080 --> 00:36:15,680 Speaker 1: of them won't accept an investment less than fifty thousand dollars. 786 00:36:16,000 --> 00:36:17,879 Speaker 1: Some will start as low as like twenty or twenty five. 787 00:36:17,880 --> 00:36:19,160 Speaker 1: But you're right, a lot of those, A lot of 788 00:36:19,200 --> 00:36:21,440 Speaker 1: them say no behind those though. If he's the minimum 789 00:36:21,520 --> 00:36:23,680 Speaker 1: and so it's it's hard. It's just the same as 790 00:36:23,800 --> 00:36:25,400 Speaker 1: trying to save about that down payment if that's kind 791 00:36:25,400 --> 00:36:29,359 Speaker 1: of what's prohibiting you from buying the property in your area. 792 00:36:29,360 --> 00:36:31,080 Speaker 1: Like I gotta say about that down payment, Well that 793 00:36:31,160 --> 00:36:33,480 Speaker 1: syndication deals definitely don't make sense for you either, exactly 794 00:36:33,520 --> 00:36:36,000 Speaker 1: because it's a big it's a it's a big slog 795 00:36:36,080 --> 00:36:38,279 Speaker 1: to save about that that kind of money. So yeah, 796 00:36:38,320 --> 00:36:41,960 Speaker 1: but I think syndication deals are they're interesting, but you've 797 00:36:41,960 --> 00:36:45,200 Speaker 1: got to be really careful in that space too, because 798 00:36:45,239 --> 00:36:48,160 Speaker 1: there are a lot of crafty salespeople who want to 799 00:36:48,200 --> 00:36:50,759 Speaker 1: make their syndication deals sound like the greatest thing since 800 00:36:50,760 --> 00:36:53,160 Speaker 1: slice spread you're going to get rich in just three 801 00:36:53,200 --> 00:36:55,680 Speaker 1: to four years time. But how conservative are are their 802 00:36:55,719 --> 00:36:58,319 Speaker 1: projections and what kind of operator are they? Like, can 803 00:36:58,360 --> 00:37:00,319 Speaker 1: you trust that they're going to be able to form? 804 00:37:00,480 --> 00:37:02,440 Speaker 1: And so it makes you have to do a lot 805 00:37:02,480 --> 00:37:05,080 Speaker 1: of due diligence on those deals too, which makes it 806 00:37:05,320 --> 00:37:08,480 Speaker 1: not necessarily passive either. Yeah, that's right. It takes some 807 00:37:08,520 --> 00:37:11,040 Speaker 1: time to know what it is that you're you're getting into, 808 00:37:11,160 --> 00:37:14,759 Speaker 1: especially with a buy in at that level. Yeah, and 809 00:37:14,760 --> 00:37:17,760 Speaker 1: so if you're unphased by all of these ever roadblocks 810 00:37:17,880 --> 00:37:20,520 Speaker 1: roadblocks that we've mentioned during this episode, it just might 811 00:37:20,520 --> 00:37:23,440 Speaker 1: make sense for you to start learning a little bit more. So, 812 00:37:23,520 --> 00:37:25,799 Speaker 1: we wanted to mention a couple of resources that we 813 00:37:25,880 --> 00:37:28,879 Speaker 1: think can be helpful as you're trying to increase your 814 00:37:29,000 --> 00:37:31,560 Speaker 1: knowledge when it comes to investing in real estate. And 815 00:37:31,680 --> 00:37:34,000 Speaker 1: Bigger Pockets is a great website. They've got a solid 816 00:37:34,000 --> 00:37:36,880 Speaker 1: form where investors can help each other out, ask and 817 00:37:36,960 --> 00:37:40,680 Speaker 1: answer questions. Coach Carson, he is a good friend of 818 00:37:40,680 --> 00:37:43,400 Speaker 1: ours and we love his philosophy when it comes to 819 00:37:43,440 --> 00:37:45,920 Speaker 1: investing in real estate. He's all about reaching what he 820 00:37:45,960 --> 00:37:49,800 Speaker 1: calls small but mighty real estate investors. I love that approach, 821 00:37:50,760 --> 00:37:54,560 Speaker 1: the mighty mighty mouse sort of take. He takes the 822 00:37:54,600 --> 00:37:58,080 Speaker 1: approach if you buy maybe one property every two years 823 00:37:58,239 --> 00:38:00,279 Speaker 1: and then you seek to pay that off until you 824 00:38:00,280 --> 00:38:03,200 Speaker 1: reach retirement and age, like you can get really really 825 00:38:03,280 --> 00:38:07,040 Speaker 1: rich buying just a hand having just a handful of 826 00:38:07,239 --> 00:38:10,279 Speaker 1: investment properties. And I like that because sometimes you'll hear 827 00:38:10,320 --> 00:38:13,120 Speaker 1: people talking about, like, you know, thousands of units or 828 00:38:13,200 --> 00:38:15,680 Speaker 1: hundreds of units, and it feels so inaccessible and the 829 00:38:15,680 --> 00:38:18,680 Speaker 1: way Coach Carson talks about it feels and seems and 830 00:38:18,920 --> 00:38:21,680 Speaker 1: is I think very accessible for people who are interested 831 00:38:21,719 --> 00:38:23,520 Speaker 1: in investing in real estate. Yeah, for folks who are 832 00:38:23,520 --> 00:38:26,640 Speaker 1: looking for it to be like a sustainable part of 833 00:38:26,640 --> 00:38:29,319 Speaker 1: your lifestyle. Yeah, that's what Coach Carson does. Will link 834 00:38:29,360 --> 00:38:31,480 Speaker 1: to those resources in our show notes, but they can 835 00:38:31,520 --> 00:38:33,760 Speaker 1: help you to you know, to get up to speed quickly. 836 00:38:34,040 --> 00:38:36,719 Speaker 1: And the Millionaire real Estate Investor, that's actually the first 837 00:38:36,760 --> 00:38:38,840 Speaker 1: book I've read on investing in real estate. That's a 838 00:38:39,760 --> 00:38:41,600 Speaker 1: Gary Keller. I thought you're gonna say, that's actually the 839 00:38:41,640 --> 00:38:44,600 Speaker 1: first book you ever read ever, aggressive Matt, you were 840 00:38:44,640 --> 00:38:48,120 Speaker 1: like four years old. Yeah, No, this is a fantastic 841 00:38:48,160 --> 00:38:50,319 Speaker 1: book that covers all of the basics. And so if 842 00:38:50,320 --> 00:38:53,240 Speaker 1: you're looking for like a comprehensive manual, I would highly 843 00:38:53,320 --> 00:38:55,120 Speaker 1: recommend that book as well. I think there's a lot 844 00:38:55,160 --> 00:38:57,080 Speaker 1: of great resources. And so if you're like, yeah, the 845 00:38:57,120 --> 00:39:00,279 Speaker 1: market conditions, they don't seem favorable right now based on 846 00:39:00,320 --> 00:39:01,839 Speaker 1: what I'm seeing, based on what Matt and Till we're 847 00:39:01,840 --> 00:39:05,560 Speaker 1: talking about, well, at least start doing the research because 848 00:39:05,880 --> 00:39:08,719 Speaker 1: you never know, maybe in six months or a year's time, 849 00:39:09,080 --> 00:39:13,040 Speaker 1: the winds change, right the market conditions change and we're 850 00:39:13,080 --> 00:39:15,920 Speaker 1: starting to see more deals, more inventory on the market. 851 00:39:16,200 --> 00:39:19,840 Speaker 1: So having that knowledge and getting prepared is never a 852 00:39:19,840 --> 00:39:21,919 Speaker 1: bad thing, that's right. It pays to dig the well 853 00:39:22,000 --> 00:39:24,479 Speaker 1: before you need it. Yes, like our friend Jordan Hartminger says, 854 00:39:24,600 --> 00:39:28,839 Speaker 1: take the well before you're thirsty, the well of knowledge. Yes, yes, 855 00:39:28,880 --> 00:39:30,719 Speaker 1: I'm still impressed with you reading those books of that 856 00:39:30,760 --> 00:39:32,719 Speaker 1: magnitude at four, but I was a quick reader. Yeah, 857 00:39:33,120 --> 00:39:35,880 Speaker 1: smart kids up through it in one week, you know. 858 00:39:36,080 --> 00:39:39,000 Speaker 1: I think in a way that people can gently ease 859 00:39:39,040 --> 00:39:41,319 Speaker 1: into investing in real estate, kind of like the Chad 860 00:39:41,320 --> 00:39:44,000 Speaker 1: Carson method. And it's actually the way that I first 861 00:39:44,360 --> 00:39:48,040 Speaker 1: got into investment real estate is by transitioning your primary 862 00:39:48,080 --> 00:39:52,880 Speaker 1: residence into an investment property. And basically, if you've got 863 00:39:52,920 --> 00:39:55,120 Speaker 1: a locked in low mortgage rate in a neighborhood that 864 00:39:55,120 --> 00:39:57,759 Speaker 1: has good long term prospects, and if the numbers on 865 00:39:57,800 --> 00:40:01,279 Speaker 1: that home that you own actually makes ends, if that's 866 00:40:01,280 --> 00:40:03,920 Speaker 1: the case for you, then it might be a good 867 00:40:03,960 --> 00:40:06,279 Speaker 1: idea for you to save up enough so that you 868 00:40:06,320 --> 00:40:08,719 Speaker 1: don't have to sell the current place you're living in 869 00:40:08,760 --> 00:40:10,759 Speaker 1: when you buy your next place. And this is just 870 00:40:10,840 --> 00:40:12,560 Speaker 1: a great way that a lot of landlords are able 871 00:40:12,560 --> 00:40:15,320 Speaker 1: to get started. You're familiar with the home and it's quirks, 872 00:40:15,360 --> 00:40:18,359 Speaker 1: and the barrier to entry is lowered because you're buying 873 00:40:18,360 --> 00:40:20,880 Speaker 1: the next home is a primary residence, which means you 874 00:40:20,920 --> 00:40:23,400 Speaker 1: get better financing, which means you have to come to 875 00:40:23,440 --> 00:40:26,279 Speaker 1: the table with less money down. And so Matt, you 876 00:40:26,280 --> 00:40:28,040 Speaker 1: and I, we've both done this a couple of times, 877 00:40:28,040 --> 00:40:30,399 Speaker 1: and it doesn't make sense for everyone. If you're living 878 00:40:30,400 --> 00:40:32,840 Speaker 1: in a million dollars home or seven hundred fifty thousand, 879 00:40:33,560 --> 00:40:35,960 Speaker 1: four thousand square foot home, it's unlikely to be a 880 00:40:35,960 --> 00:40:38,520 Speaker 1: great rental from a number standpoint, So it depends on 881 00:40:38,600 --> 00:40:40,960 Speaker 1: the specifics of your property. But I just love this 882 00:40:41,000 --> 00:40:43,480 Speaker 1: as a way for people to get into real estate investing. 883 00:40:43,760 --> 00:40:46,080 Speaker 1: If you're kind of living in a starter home and 884 00:40:46,120 --> 00:40:49,080 Speaker 1: you're ready to upgrade, well, instead of selling that home 885 00:40:49,360 --> 00:40:52,360 Speaker 1: and using your equity to kind of buy help you 886 00:40:52,400 --> 00:40:55,000 Speaker 1: purchase a bigger home, keep that home and save up 887 00:40:55,040 --> 00:40:57,360 Speaker 1: the down payment for that next home. That's just a 888 00:40:57,480 --> 00:41:00,000 Speaker 1: really excellent strategy for a lot of people to get going. 889 00:41:00,120 --> 00:41:02,680 Speaker 1: That's right, Yeah, Well, house hacking, that's another way for 890 00:41:02,800 --> 00:41:05,960 Speaker 1: first time investors to also get into the landloading game. 891 00:41:06,280 --> 00:41:09,839 Speaker 1: And so whether that's buying a single family house where 892 00:41:09,920 --> 00:41:12,040 Speaker 1: maybe you're just running out, you know, just a portion 893 00:41:12,080 --> 00:41:14,719 Speaker 1: of it, like a room where you've got roommates, or 894 00:41:14,760 --> 00:41:17,160 Speaker 1: even a duplex or a quad, but buying something that 895 00:41:17,239 --> 00:41:19,839 Speaker 1: you can live in that also generates income. That makes 896 00:41:19,840 --> 00:41:21,839 Speaker 1: a ton of sense for lots of folks. It can 897 00:41:21,840 --> 00:41:23,960 Speaker 1: just be a way to minimize their housing costs in 898 00:41:23,960 --> 00:41:26,839 Speaker 1: a pretty major way, allowing you to then save up 899 00:41:26,920 --> 00:41:29,600 Speaker 1: even more money for that next real estate investment much 900 00:41:29,640 --> 00:41:32,520 Speaker 1: more quickly than you otherwise would be able to. We 901 00:41:32,600 --> 00:41:35,920 Speaker 1: talked with real estate investor Craig Cherlot back in episode 902 00:41:36,440 --> 00:41:39,319 Speaker 1: four forty five, and he's, I don't know. He might 903 00:41:39,360 --> 00:41:41,800 Speaker 1: have the most inspiring story when it comes to house hacking, 904 00:41:42,680 --> 00:41:44,160 Speaker 1: done in a bunch of different ways. He's done up 905 00:41:44,239 --> 00:41:47,120 Speaker 1: multiple times, multiple different ways, one of which was the 906 00:41:47,160 --> 00:41:50,319 Speaker 1: home that he owned. He was sleeping in the living 907 00:41:50,360 --> 00:41:53,799 Speaker 1: room and he partitioned off. He basically made a room. 908 00:41:53,920 --> 00:41:55,600 Speaker 1: He's like, no, no, no, this is my house, so 909 00:41:55,640 --> 00:41:58,520 Speaker 1: a living room is now a bedroom. Well, he got 910 00:41:58,520 --> 00:42:00,560 Speaker 1: to decide you don't have to do it as hardcore 911 00:42:00,600 --> 00:42:02,880 Speaker 1: as Craig did necessarily like and in his book he 912 00:42:03,000 --> 00:42:05,080 Speaker 1: outlines can have an actual room with a bathroom if 913 00:42:05,120 --> 00:42:07,120 Speaker 1: you'd like. Yeah, and he outlines multiple ways to do it, 914 00:42:07,120 --> 00:42:09,560 Speaker 1: and it takes some sacrifice, right, It's house hacking is 915 00:42:09,600 --> 00:42:12,640 Speaker 1: not for the fate of heart necessarily, but it can 916 00:42:12,800 --> 00:42:16,080 Speaker 1: completely change your financial trajectory. Have taking on roommates or 917 00:42:16,400 --> 00:42:18,320 Speaker 1: buying a house that has like a basement apartment that 918 00:42:18,360 --> 00:42:20,839 Speaker 1: you can rent out, whether it's on Airbnb or whether 919 00:42:20,840 --> 00:42:22,879 Speaker 1: it's full time to attendant, like, those are the kind 920 00:42:22,880 --> 00:42:26,640 Speaker 1: of things that can really completely change your finances moving 921 00:42:26,680 --> 00:42:29,120 Speaker 1: forward because you're able to generate a whole lot more 922 00:42:29,120 --> 00:42:31,480 Speaker 1: income or maybe even like live for free. Think of 923 00:42:31,480 --> 00:42:33,080 Speaker 1: what you could do if you were living for free, 924 00:42:33,120 --> 00:42:34,840 Speaker 1: think of how much you could save and invest and 925 00:42:35,280 --> 00:42:39,080 Speaker 1: start banking towards like future projects, Like it's pretty impressive. 926 00:42:39,400 --> 00:42:42,440 Speaker 1: And again, it's like amazing how much our tunes have 927 00:42:42,520 --> 00:42:44,759 Speaker 1: changed on real estate investing. When the price is right, 928 00:42:45,080 --> 00:42:46,400 Speaker 1: you know, we think it can make a lot of 929 00:42:46,440 --> 00:42:49,000 Speaker 1: sense for folks who have the real estate investing bug 930 00:42:49,160 --> 00:42:51,279 Speaker 1: to take the plunge. And even just two and a 931 00:42:51,320 --> 00:42:53,120 Speaker 1: half or three years ago, I think it was possible 932 00:42:53,160 --> 00:42:55,480 Speaker 1: to find deals that made sense in Atlanta where we live, 933 00:42:55,800 --> 00:42:58,480 Speaker 1: although even then it was getting harder and today it's 934 00:42:58,480 --> 00:43:01,000 Speaker 1: just gotten incredibly difficult to make the numbers work, and 935 00:43:01,160 --> 00:43:05,080 Speaker 1: less you're willing to take those more intense approaches like househacking. 936 00:43:05,560 --> 00:43:08,520 Speaker 1: But that's our location rights, that's where we live. And 937 00:43:08,719 --> 00:43:11,000 Speaker 1: even still it's it's not that it's impossible to find 938 00:43:11,040 --> 00:43:13,800 Speaker 1: something that's worth investing in, but it's important to figure 939 00:43:13,800 --> 00:43:16,520 Speaker 1: out what your town or city dynamics are like before 940 00:43:17,000 --> 00:43:20,799 Speaker 1: swearing it off altogether, or before jumping in with both feet. 941 00:43:20,840 --> 00:43:24,799 Speaker 1: I think I still like the path of real estate 942 00:43:24,880 --> 00:43:27,880 Speaker 1: investing for a whole lot of people. It's just that 943 00:43:27,960 --> 00:43:30,160 Speaker 1: it's more difficult than it has been in a long 944 00:43:30,239 --> 00:43:33,319 Speaker 1: time to actually start going down that path. Absolutely. And 945 00:43:33,360 --> 00:43:35,880 Speaker 1: if there's one thing I think that prevents folks from 946 00:43:36,000 --> 00:43:38,319 Speaker 1: investing in real estate when it actually makes sense for them, 947 00:43:38,400 --> 00:43:40,120 Speaker 1: right like, if they have run the numbers, if they 948 00:43:40,160 --> 00:43:43,720 Speaker 1: have thought through how this is going to impact their 949 00:43:43,760 --> 00:43:46,799 Speaker 1: personal life, I think it's just being afraid to take 950 00:43:46,800 --> 00:43:48,880 Speaker 1: the risks, right Like, there's a I think there can 951 00:43:48,920 --> 00:43:51,560 Speaker 1: be a fear that can keep people from maybe achieving 952 00:43:51,560 --> 00:43:53,799 Speaker 1: some of their financial goals even faster than they would 953 00:43:53,840 --> 00:43:56,800 Speaker 1: have otherwise. Obviously, real estate investing it's not for everyone, 954 00:43:57,000 --> 00:43:59,120 Speaker 1: but we don't want the work part of this to 955 00:43:59,120 --> 00:44:02,040 Speaker 1: freak you out, because like buying the right property, finding 956 00:44:02,040 --> 00:44:04,600 Speaker 1: it at the right price, and managing that property effectively, 957 00:44:04,600 --> 00:44:06,839 Speaker 1: that can just be a great way to grow your 958 00:44:06,840 --> 00:44:09,880 Speaker 1: net worth over time, and again, depending on where you 959 00:44:09,920 --> 00:44:13,399 Speaker 1: live and where you are with your financial goals, now 960 00:44:13,560 --> 00:44:16,480 Speaker 1: might actually be a really solid time to buy a 961 00:44:16,480 --> 00:44:19,360 Speaker 1: great property. But we recorded this episode made it a 962 00:44:19,400 --> 00:44:21,799 Speaker 1: topic because we wanted to make sure that you were 963 00:44:21,880 --> 00:44:24,560 Speaker 1: equipped with all of the different factors to think through 964 00:44:24,920 --> 00:44:28,160 Speaker 1: before taking the plunge, right before entertaining the idea of 965 00:44:28,200 --> 00:44:30,520 Speaker 1: all right, maybe maybe it's time for me to get 966 00:44:30,520 --> 00:44:34,120 Speaker 1: fancy with my investments, and I don't I shouldn't have 967 00:44:34,120 --> 00:44:37,040 Speaker 1: even said that, because I think a part of what 968 00:44:37,040 --> 00:44:38,640 Speaker 1: we wanted to do with this episode is to be 969 00:44:38,760 --> 00:44:41,759 Speaker 1: realistic about where the market is currently. But we don't 970 00:44:41,760 --> 00:44:44,640 Speaker 1: want to build up investing in real estate as this massive, 971 00:44:44,719 --> 00:44:48,359 Speaker 1: unattainable thing. It's honestly, it truly isn't all that complicated. 972 00:44:48,680 --> 00:44:50,200 Speaker 1: We think it's something that you can do as well, 973 00:44:50,239 --> 00:44:52,200 Speaker 1: but it's also not the savior that's going to lead 974 00:44:52,200 --> 00:44:54,359 Speaker 1: you to financial independence, like a lot of people say too. 975 00:44:54,400 --> 00:44:56,400 Speaker 1: So we want like a rational level headed approach to 976 00:44:56,600 --> 00:44:58,879 Speaker 1: real estate, which was kind of what we were trying 977 00:44:58,880 --> 00:45:00,279 Speaker 1: to do today. I hope that helps, But I think 978 00:45:00,280 --> 00:45:01,759 Speaker 1: one of the other things to man I want to 979 00:45:01,760 --> 00:45:03,520 Speaker 1: say is that that we were talking about the harsh 980 00:45:03,520 --> 00:45:05,880 Speaker 1: realities of investing in real estate, and the truth is 981 00:45:05,920 --> 00:45:08,239 Speaker 1: that the current marketing conditions make it more difficult. But 982 00:45:08,480 --> 00:45:10,640 Speaker 1: I think some of the harsh realities are also overblown, 983 00:45:10,880 --> 00:45:14,000 Speaker 1: like three am toilet malfunctions and your tenant calling you. 984 00:45:14,320 --> 00:45:16,719 Speaker 1: Some of the horror stories that you hear from real 985 00:45:16,800 --> 00:45:19,400 Speaker 1: estate investors are a little over the top as well, 986 00:45:19,480 --> 00:45:21,640 Speaker 1: And so I just want people to know that going 987 00:45:21,680 --> 00:45:23,520 Speaker 1: into it, it's not like you're getting a call from 988 00:45:23,560 --> 00:45:25,640 Speaker 1: your tenant twice a week in the middle of the 989 00:45:25,760 --> 00:45:29,120 Speaker 1: night because your house is on fire or something like that. 990 00:45:29,160 --> 00:45:31,560 Speaker 1: And I think that those kinds of things, it's it's 991 00:45:31,600 --> 00:45:34,000 Speaker 1: kind of like how maybe we freaked out about crazy 992 00:45:34,040 --> 00:45:36,520 Speaker 1: stuff in Halloween candy and like the eighties or something 993 00:45:36,560 --> 00:45:38,360 Speaker 1: like that. It's like it became this full blown panic 994 00:45:38,440 --> 00:45:40,120 Speaker 1: from I don't know, if you go back and look 995 00:45:40,120 --> 00:45:41,840 Speaker 1: at it on a Halloween candy panic, It's not like 996 00:45:41,920 --> 00:45:44,239 Speaker 1: it was a real problem, right, but we made it 997 00:45:44,280 --> 00:45:47,320 Speaker 1: into this thing and countless articles written about it, countless 998 00:45:47,360 --> 00:45:50,359 Speaker 1: discussions on stuff like The Today Show or whatever. But 999 00:45:50,560 --> 00:45:54,040 Speaker 1: while the occasional inconvenience does happen as a landlord, don't 1000 00:45:54,080 --> 00:45:57,240 Speaker 1: let those stories and don't let those the hyperbolic nature 1001 00:45:57,280 --> 00:46:00,440 Speaker 1: of some of those discussions scare you, put fear into 1002 00:46:00,480 --> 00:46:03,120 Speaker 1: your heart, like prevent you from even kind of thinking 1003 00:46:03,160 --> 00:46:05,879 Speaker 1: about doing this. Yeah. Absolutely, man, all right, let's shift gears. 1004 00:46:05,920 --> 00:46:07,399 Speaker 1: Let's get back to the beer that you and I 1005 00:46:07,520 --> 00:46:11,640 Speaker 1: drank during this episode. And this is an US alive. 1006 00:46:12,480 --> 00:46:14,360 Speaker 1: I think that's how they wanted wanted us to read it. 1007 00:46:14,880 --> 00:46:17,799 Speaker 1: There you're hired, I think is a beer yemkeller. What 1008 00:46:17,840 --> 00:46:20,080 Speaker 1: were your thoughts on this one? Yeah, I wasn't too impressed. 1009 00:46:20,120 --> 00:46:23,319 Speaker 1: I know, no hope for more. It's a Belgian wild ale, 1010 00:46:23,480 --> 00:46:25,840 Speaker 1: by the way, and I like wilds a lot typically, 1011 00:46:25,880 --> 00:46:28,120 Speaker 1: but this one was like kind of like a brown 1012 00:46:28,280 --> 00:46:32,360 Speaker 1: ale with a little bit of funk, kind of sweet it. 1013 00:46:32,840 --> 00:46:35,560 Speaker 1: I don't know, man, it hit it. I'm a little surprised, 1014 00:46:35,560 --> 00:46:37,879 Speaker 1: I guess because I'm I am in agreement with you. Okay. 1015 00:46:37,920 --> 00:46:40,480 Speaker 1: It kind of had like this like uh like it 1016 00:46:40,520 --> 00:46:43,120 Speaker 1: definitely had the funkiness going on from the bread that 1017 00:46:43,440 --> 00:46:47,120 Speaker 1: Breta nomiases, and it had the fruity sort of Belgian 1018 00:46:47,200 --> 00:46:50,840 Speaker 1: vibes going on that you typically can expect with a Belgian. 1019 00:46:50,920 --> 00:46:53,480 Speaker 1: It was something. Yeah, it definitely had like Belgian yeast flavor. 1020 00:46:54,400 --> 00:46:57,040 Speaker 1: So I had this weird kind of like stinky funkiness 1021 00:46:57,080 --> 00:47:03,160 Speaker 1: combined with like funky fruitiness. And I've never ever described 1022 00:47:03,200 --> 00:47:04,799 Speaker 1: a beer this way, but it reminded me of like 1023 00:47:04,840 --> 00:47:09,320 Speaker 1: a baby's dirty diaper. Well, now you're selling everybody on it, 1024 00:47:09,600 --> 00:47:13,040 Speaker 1: you know. So like oftentimes, like the fancier diapers, they 1025 00:47:13,080 --> 00:47:14,880 Speaker 1: come scented and so they kind of have like this 1026 00:47:14,960 --> 00:47:18,640 Speaker 1: floral not fruitiness, but it's almost like there is a 1027 00:47:18,960 --> 00:47:23,800 Speaker 1: like a fruity scent kind of masking the underlying stinky funkiness, 1028 00:47:23,800 --> 00:47:25,920 Speaker 1: you know. Yeah, you know what I'm talking about here. Yeah, okay, 1029 00:47:26,040 --> 00:47:28,359 Speaker 1: so that's kind of what this beer did in beer form. 1030 00:47:28,520 --> 00:47:31,120 Speaker 1: I'm not saying that this beer tasted like a baby's diaper, 1031 00:47:31,680 --> 00:47:35,520 Speaker 1: but the dynamics that you typically find with your classes 1032 00:47:35,520 --> 00:47:38,120 Speaker 1: empty over there. So yeah, I mean, maybe you're a 1033 00:47:38,120 --> 00:47:40,399 Speaker 1: glutton for punishment. I don't know. I don't I eat 1034 00:47:40,400 --> 00:47:42,680 Speaker 1: all my leftovers or I drink all that will, except 1035 00:47:42,680 --> 00:47:44,960 Speaker 1: that one beer. I talked about it earlier. I did 1036 00:47:45,000 --> 00:47:47,440 Speaker 1: pour down the drink because that one, that joker was bad. Yeah, 1037 00:47:47,440 --> 00:47:49,360 Speaker 1: but yeah, it wasn't a terrible beer. It wasn't my 1038 00:47:49,440 --> 00:47:51,840 Speaker 1: absolute favorite, and so I'll just say it that it was. 1039 00:47:51,880 --> 00:47:55,160 Speaker 1: I Yeah, okay, I'm typically a huge fan of McKellar beers, 1040 00:47:55,200 --> 00:47:56,920 Speaker 1: but this one was the least favorite IVE ever had 1041 00:47:56,920 --> 00:47:58,520 Speaker 1: from Yeah, kind of missed the mark for Rosy and 1042 00:47:58,560 --> 00:48:01,640 Speaker 1: they've had some really good beers. Absolutely, Hopefully we'll get 1043 00:48:01,680 --> 00:48:03,920 Speaker 1: on track with the next McKellar beer that we have 1044 00:48:03,920 --> 00:48:05,560 Speaker 1: on the show. And who knows, maybe this one was 1045 00:48:05,600 --> 00:48:09,520 Speaker 1: a little past it's it's date, could be, could be? Yeah, Yeah, Well, 1046 00:48:09,560 --> 00:48:11,560 Speaker 1: we will link to some of the different resources that 1047 00:48:11,560 --> 00:48:13,680 Speaker 1: we mentioned during this episode, some of the pratt some 1048 00:48:13,719 --> 00:48:16,840 Speaker 1: of the past conversations we've had with other guests, in particular, 1049 00:48:16,880 --> 00:48:19,319 Speaker 1: I guess we just mentioned Craig Curelap when it comes 1050 00:48:19,320 --> 00:48:22,640 Speaker 1: to house hacking. But you can find those resources up 1051 00:48:22,640 --> 00:48:25,239 Speaker 1: in our show notes at how tomoney dot com. R 1052 00:48:25,440 --> 00:48:27,880 Speaker 1: But Joel, that's going to be it for this episode 1053 00:48:27,920 --> 00:48:30,640 Speaker 1: until next time. Best Friends Out, Best Friends Out,