383 | The Biggest Reasons People Tend To Hate On Rental Properties

Smart investors understand there are two sets of numbers when analyzing a deal: purchase numbers and long-term performance numbers.

But while it's relatively easy to get good at analyzing purchasing numbers, there is very little education out there on how to find accurate performance numbers.

That's why this show is about making you a pro at knowing the right way to get your performance numbers to actually perform!

- the difference between purchase and performance
- 3 different sources of performance numbers
- how to get them right (data flywheel)

Join JWB Real Estate's co-founder, Gregg Cohen, and show host, Pablo Gonzalez, for a master class in spotting potential problems with a real estate offer.

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Transcript

Pablo Gonzalez: 1:17

the Tuesday edition of the Not Your Average Investor Show. I'm your host, Pablo Gonzalez. And today we've got a very interesting guest. She is the new director of market, director of marketing,

Cole: 1:29

You don't even know who I am.

Pablo Gonzalez: 1:30

Oh, Nelson. Nope. Oh, Nelson. Nelson. It is a, black belt level five. name to pronounce, but, um, has come in here taking the marketing world by storm and brought with her many, many cultural references from movies that I thoroughly enjoy partaking in. And we're going to take this opportunity today. To talk about why people tend to have a bad opinion on rental income properties. What do you think about that?

Cole: 2:02

I think that I would agree and have some personal

Pablo Gonzalez: 2:05

stories to share. She's got some personal stories, folks. GC is unfortunately not here because he got a stomach bug, so he can't be here. And we are flipping the rules today. Today, I'm the expert. Cole is the noble fool and she gets to ask me her genuine questions as she is learning about JWB to market it. She has her own experience in this world. I think it's going to be super, super interesting. And it's also going to be her first bar partaking in a time old tradition that we call what Cole? Uh, the roll call. We got our lead off hitter. John Henin kicking us off today. We got the Ringmaster Drew Barnhill. We got the MVP. I know you know who the MVP is. Uh, Lee Bishop. Lee Bishop. The MVP. We got Jeff Petty. John from Missouri. Welcome back Jeff. We got Christopher Lee from Fernandina Beach back in the house. We got the better. Greg, the only Greg today. Greg Stone, howdy from New Jersey. Good to have you here. We got the mama bear checking in Cody Adams in studio. We got the fairy godmother of the not travesty best show community. We were just talking about her and how she makes people's real estate wishes come true. Jim Pilsen. We got our regulars, Gary and Rosalyn Riley from Marietta, California. We regard you, I'm going to need, I'm going to a little bit more, a little bit more jazz hands, more vocals, whatever we got, we got Val Desai from Phoenix checking back in, welcome back Val, we've got our favorite name to pronounce around here, Aaron O'Neill, into the lights, Aaron, you know, everybody was asking me in this room, how I come up with all these different nicknames, we were, and We'll get into that one of these days. We got Pamela Myers. Pamela, good to have you back in the house. Mark Norman from SoCal. I love SoCal. cool. We're ready to go. Your experience with rental properties. Give us a little history of what your exposure has been in your life before coming to JWB about all this stuff.

Cole: 3:54

Yeah. So growing up, my family, Invested in real estate. So I I came to JWB with an idea of what that looked like. And when I say we invested in real estate, I mean, we went and bought properties. I say we my dad. I didn't do anything. Let's be fair. I did nothing as a small child. I looked on as my dad even the motivation to buy rent. I did. I did. They went and they bought rental properties. I am from the New York area. So it was You know, kind of Jersey Shore. And they flipped homes. And it was laborious. And there were a lot of times where we were, you know, going to check on things and progress and construction. And I like have core memories in my childhood about kind of what a pain it was and how much time it took for my parents and all this other stuff. And there was a huge benefit to it. They retired early. They owned a chiropractic practice that they were able to retire from and they moved to Florida and they, you know, had, we had a great life. So there were clear benefits. But when my husband and I got to the age where we were starting to talk about our retirement strategy, we went the, the safe millennial route and we have invested in our 401k religiously from the day we started working. Yep. And so we've kind of, as I've started here and I've learned more about what JWB does, I've kind of started to get more curious about other options. So that kind of brings us to our chat here

Pablo Gonzalez: 5:22

today. It does bring us to our chat today. And you know, something that you didn't explicitly say there, but you are essentially like the, I, you are the. What us in the marketing world call the ideal client persona, the ICP, right? Because you are a working professional, dual income of the, the demographic that has the, the income and the, and the, and the desire to do this. You have four kids that you want to put through college, right? I

GMT20240305-172955_Recording_avo_640x360: 5:49

sure

Cole: 5:49

do. I am going to be putting kids through college for the next two decades. So four kids, one daughter, who's going to go to college in four years and a two year old son. So I, I'm thinking in my long term strategy, like, these are my prime earning years, these are my husband's prime earning years, like, we have to be really smart about what we do because as I'm coming out of those prime earning years, I'm still going to have A child going into college and then on the heels of that wanting to retire. And yes, I am insane. Is she crazy?

Pablo Gonzalez: 6:19

Is what Lee says. TBD. So, okay, cool. So, then let's talk about it and On top of that, you're also your social circle is ICPs, right? You live in Naugaty with a, you know, an affluent neighborhood and people talk about this stuff, right? Yeah,

Cole: 6:36

absolutely. I have a lot of friends in my neighborhood who own rental properties and manage them themselves in the Jacksonville area, more of the beaches. More than kind of thinking more Airbnb style as opposed to this kind of investing. But like, I can't wait to talk to you about all this stuff because I think it's right up the rally.

Pablo Gonzalez: 6:55

All right. So let's, let's start there. One, you intimated to me that they're generally complaining about it at times. What are, what are the main complaints that you hear? Like, why are people, as the show says, why are people dumping on rental properties? I don't know if that's what I called it.

Cole: 7:10

No, I think that's a little bit more explicit, but you know, we'll go with it. We'll go with it. So, I mean, I think they love the idea of rental properties. They love being a part of the Jacksonville and the beaches community. And they love the, the income that they're getting kind of on a, a more relaxed basis. Cause you know, Airbnbs don't rent like a lease, right? So it's a little bit more of a relaxed thing, but it is a social interrupter. Right. So we've got plans on a Saturday and they've got a stop and figure out and turn something over for somebody and now all of a sudden they can't come hang out with us because they've, they've got to go handle something at their property. I think that that's kind of the biggest thing that. That goes in terms of the things I hear. I do hear about reno's a lot. So, because we talk about design choices and, you know, fun things like that. So it's like, oh, you know, look at this new flooring. I put in at the like that those kinds of stuff. And so it. It reinforces my idea of what I grew up with in terms of, like, this being a job, like, if you invest in real estate, you're signing on for another job, and as a working mom of four, a crazy working mom of four, thank you, LeMay, I don't have time for another job. I'm running around on the weekends for sports, I'm, I'm doing all of the things and You know, I don't have time for that. So I have never actively thought of myself as a potential real estate investor because of that.

Pablo Gonzalez: 8:36

Well, this is the part of the show where we call it Pablo answers why that doesn't have to be that way. We're gonna we're gonna do multiple of these segments, right? So this first layer. Of social interrupter. I really like that because I think it sounds way better than passive and active. It's like you can invest in real estate in a social interrupter way, or you can invest in real estate and have your own weekends to do whatever you want

Cole: 8:59

way. Right. Do you want to finish that mimosa girl? Or do you want to go?

Pablo Gonzalez: 9:04

I like that. I like that. Right. So I guess what you were describing, first of all, is short term rentals, right? Which has, which has its own, its own thing. But I think more fundamentally is this idea of passive and active investing. And it sounds like your dad, it sounds like your neighbors, most of most of the people that you had exposure to before coming to JWB. are active investors, which brings with it, you know, the, the, the returns are higher for active investors, but you pay the cost of social interruptions, right? So this idea of that was something that I also had to learn about most of my social circle had. tried the rental property route at some point, but it was mostly active investing. It was like, I'm going to buy one and I'm going to take care of it. My brother, you know, my brother owned a couple of like section eight houses in, in Miami. And I remember he'd like put his little gun in his fanny pack and he'd go for, yeah, because it wasn't, it wasn't great neighborhoods. Right. But like this idea that there are ways to do this, hire a professional property manager to do this thing. And therefore the social interruptions are limited depending on the decision that you make with a property manager, I guess is the first, the first thing that people have to overcome beyond that. So like if we were to, if we were to go into other concerns, right, like you talked about buying a home yourself, like what, what are, what are other things that you, that you would associate with having an issue with rental properties?

Cole: 10:31

Yeah, so I mean, as a homeowner myself, like, my husband and I have had four homes, I think, in the past 17 years or so, and the first home that we bought, our intro home, needed to be entirely, like, rehabbed, let's say, right? It's a guy in his 90s who designed it in the 70s, everything was wallpapered, so my first thought is, okay, you're getting a home, now you've got to kind of rehab everything, you're going to run into maintenance issues, like, what happens when you're air conditioner goes out, especially in Florida, like those things, like, and it's, it's an unexpected cost if it's your primary residence, like, okay, like, you're, you know, you've built in a window for those costs, like, what do I do when something like that happens at a rental property? And that's now like an additional cost that I didn't plan for.

Pablo Gonzalez: 11:17

Yeah, yeah. So now you're talking about. Essentially unforeseen maintenance expenses and like on unforeseeable things, which is just kind of what we were. This was the real sense that I got from my friends, right? Like this idea of like, you know, it's kind of a crapshoot experience, right? Like you can buy, you can buy a property. If it's your own home, you deal with it. But if you're also buying other people's homes and it's unpredictable what you're going to have to spend on stuff then then it starts to become this like real problem. You know, one of the things that that I've learned. Through hosting the show and being part of the community, but more than anything Got really clear for me when we put together that class is that I had always heard in real estate investing that you make money on The buy right that's like the common. That's the common nomenclature like if you buy right you're gonna be good But that didn't really match up with this idea of like yeah, but what about maintenance expenses and and what I've learned is that there's There's two types of numbers. There's the buy numbers and then there's the performance numbers. And I think that in the investing world, in the home buying world, Which is largely residential, your own properties or whatever, and you know, there's a lot of experts that can put together the data for when you buy something, right, like what is the price of it, what's the price to rent ratio of it, you know, what neighborhood is it in, what, what rent do I think I'm going to get, right, like it's, it's pretty easy, like what shape is the home in right now, right, like the coming in, yeah, you get, you get a, you know, You get a fixed mortgage for 30 years, right? Like it all, it all, those are all numbers that I think are kind of commoditized in the sense that just about it's like entry level knowing that stuff. But then the thing that actually makes the experience good or bad is the performance numbers, right? So it's like what happens once you own it, predictable is that experience and. when, when you think that, you know, happiness or joy comes from this idea of like expectations being met and misery comes from like expectations not met, right? It's like, how can you set the expectations for performance numbers? And I think maintenance when it comes to, when it comes to these things, there is three different ways that once you're going to passive route and you go a property management route, there's three different ways that people get the performance numbers. And I think all three of those lead to very different experience. Would you like to know what they are? I would.

Cole: 13:54

So Aaron asked, what does your family think about you investing in rentals now that you work at JWB? And it was one of the first things that I, I went home and talked to my husband about because I was like, you know, we think about this and we talk about our retirement all the time. Now that we are old and we kind of pitch ideas to each other and, you know, he's super open to it but we just, we don't know, right? Like that's kind of part of my learning experience here is from an investor standpoint, what does that really look like? So when you talk about like the three ways, it's like, you know, that's kind of the meat of what I need to understand because for, you know, what I consider to be like, I'm an average person, I'm, you know, average. How do I become not your average? You like that little? I do like that. No, that wasn't purposeful, but it worked. Yes.

Pablo Gonzalez: 14:48

Thank you. So are these are these conversations and like you've you've gone home to your husband and be like You know, we should look at this, like, was that kind of when it first started or had y'all had those conversations

Cole: 14:58

before? So it's funny because right before we had our fourth and he was a surprise blessing, we will call him. We were talking about, cause my next youngest was going into kindergarten. And so that was the first time in 12 years that we did not have a daycare payment, which I don't know if anybody is familiar, but a daycare payment is a mortgage payment. Like that is you know, something significant. So we are now talking about, well, you know, we can invest that someplace else. And we actually talked about doing what my family did. Okay, flipping. Buying a property, improving it, and then kind of doing more of a rental scenario. And then we had Milo and that, that, we were like, never mind, back to daycare. But it's, so that's the only conversation we had really had up until this point. And we had really only thought of it from that possibility. Right, like the, the way you invest in real estate is to buy a property and to manage that property, right, like, that was the only, so I think being here has opened up that conversation into different paths, because now I understand, at least at the most basic level, that there are options. Yeah,

Pablo Gonzalez: 16:08

there's options where you don't have to Have like a plumber, three plumbers in your phone and two painters in your phone and a drywall person and a do it all handyman and a roofer, right? I'm starting to, it's funny because now I've, I've only bought through JWB and now that I got this duplex and I have tenants next door, residents next door, even though I'm turning it over to JWB. The experience is becoming much more real because I'm a homeowner too now, right? So it's like these little fix it all things. I'm like calling around people to like, Hey, you guys got like a do it all handyman. Cause I got like a toilet that doesn't work. I got this, like one thing over here on a wall that's bothering me. And these tiles are loose. What's up with these tiles? Right. Yeah.

Cole: 16:47

And I'm not going to lie. Like my husband and I are very hands on and I promise you that the second I said to him, let's buy a rental property. He was like, great. Now I am a do it all handyman. Yeah. A hundred percent. Cause most of the time, like we try and fix something ourselves first before bringing somebody else in. So I'm sure that that. Would be a detractor for him and wanting to move forward with that because he knows that there's going to be a responsibility for him tied to that. And so when I talked to him about JWB, like I'm, I'm lightening that load for him.

Pablo Gonzalez: 17:19

Yeah, that makes sense. That makes sense. So. Once you, once you get into that process, if, if you, you know, decide to like look into it and then they, you know, you convince him that it's passive, he's not going to have to be the do it all handyman, right? And they're going to put these numbers in front of you and he's going to look at performance over 10 years. If he looks at, yeah, but how can I trust that that's all that that's going to cost on month four of year three, right? Yep. Now you can use this language. You ready? Ready. So there is so, okay. So three different ways that you get these performance numbers of in general, right? All performance numbers, there is the industry standard. So it's like, what is, what does the magazine tell me that it should be? What does the book, what does the textbook tell me it should be? What is commonplace placeholder of whatever, right? Those are Not very precise because there is no like one real estate industry and there's no, you know, there, there, there, there isn't standardization across the industry. Then there is the data, right? So you can, you can go. You can like hire like John Burns real estate to find out more specific data for your market. You can go networking out and talk to maybe three or four other home flippers, ask them their numbers or, you know, property managers ask them their numbers and like, be like, okay, cool. If they're all saying this, I can average it out to this. And that becomes more specific or there is proprietary data, right? There's the um, Don't you worry kiddo, I've done this 6, 000 times. Yep. And this here are my averages, this is what it looks like. And then depending on how well you keep that data. You can start to set, you're a marketer, right? Like you can start to segment and you can start to really, really understand it. So,

Cole: 19:08

and I should share, I'm a marketer and my husband's a data engineer. Oh boy. So we are very data driven people. The way we selected our kids names was through a shared Google spreadsheet and an algorithm. Not really an algorithm. Yeah. Yeah. So, The data piece for sure is something that's really important to both of us.

Pablo Gonzalez: 19:29

Yeah, interesting. All right, cool. Well, I'd be interested what your, what your husband says about JWB's data flywheel, right? Because it's, it's this idea that. You know, you can, you can hire consultants, but at the end of the day, if it's performance, right? Like if you're, if I'm going to ask you how fast can I run a mile, you're going to like, look at me, look at my body type and be like, Oh, probably about 10 minutes, bro. And, uh, or if, or, or if, or if asked you how long, how fast you can run a mile, cause you're a runner. You can be like, I know what my mile is. I think I could beat you in a foot race. I would not be, I would not be surprised. Right. But like this idea of like. Learned data of exactly what you can benchmark against yourself is like super super valuable and that is the thing that JWB has created since they have been in business for 17 years Have done it now for 6, 000 properties and they continue to add that thing and it becomes this like compounding advantage piece. Right? Yeah. So

Cole: 20:25

I think what I love about that particularly is just like the depth and breadth of data specific to Jacksonville, right? Because I'm, I'm somebody who's going to go and Google. And so is my husband. And we're going to find all of those Burns real estate type things. And we're going to do our due diligence on anything that we do. But, right. You know that like true understanding of a particular market. I think it really resonates with me from a credibility standpoint,

Pablo Gonzalez: 20:53

and I would even I would even go a step further that it isn't just Jacksonville. It is. These very specific workforce housing neighborhoods that surround the urban core that they've completely normalized their data around to understand the difference between the maintenance rate of a new build and a remodel. You know, the life expectancy of the critical elements that they put in, right. Cause they standardized to a certain level before they like sell it. And you know, how long tenants actually stay in that asset class, right? Like there is a difference between how long somebody stays in Airbnb versus a long term rental. But there's also a difference between how long somebody stays in a. Beachfront property that they're that, you know, like a luxury rental versus a workforce housing rental versus with a landlord that they really admire and respect versus a landlord that they're just like, man, this person doesn't even pick up the phone. Right. So like all that stuff has infinite variability and they're able to do that. So with that regard, there's also the data around what are the materials that you can put into the home that reduce maintenance long run. Yeah. and that makes a big difference as well. Can you guess what that is?

Cole: 22:48

Alright, let's see. Yeah, let's see if I've got, kid knowledge of this.'cause my kids destroy everything. Okay. Okay. So, the first thing I did when I moved into my new house was do paint. that you could wipe down versus the paint that just pulls everything, right? Easily scrubbable paint. Flooring choice, I would definitely guess is a big one. I have not found an indestructible flooring choice, so I would be completely open to understanding what that one is because

Pablo Gonzalez: 23:18

you want to know? Yeah, I want to know. So with flooring, there is a, there is a certain durability component, but as you've learned, It's not going to withstand this truck, destroy your kids, right? So the thing about flooring is that it's important to get flooring. That is easy to replace without having to replace the whole thing. Right. So people might think, Oh, the carpet's cheaper. You're not going to mess up carpet that bad. But at the end of the day, if you ruin one part of the carpet, you got to replace the whole carpet. Whereas if you put in these like, these modular things, one, like one part is ruined. You can just replace that one part, not the entire room. So that makes sense. That's that that's flooring. What else you

Cole: 23:56

got? I mean, I've got some crazy stories. My son once hung from the curtains and pulled the, the full thing out of the wall for drywall. So Okay.

Pablo Gonzalez: 24:08

I don't know about that. I know, I don't know if there is a hang, like a chimpanzee proof.

Cole: 24:12

Well you wanna talk about crazy tenants? Yeah. Like kids will do

Pablo Gonzalez: 24:17

it. So do you think about how easy it is to clean things in order for them not to not to go bad, right? I mean

Cole: 24:23

that kind of goes back to the paint thing, right? Like i'm thinking walls, but it's really all surfaces, right? Like how do you every surface needs to be wipeable?

Pablo Gonzalez: 24:30

Exactly. So easy to maintain easy to reach things that don't have a lot of seams in the middle that can that can grow dirt right like standard practices of durability and ease of maintain ease of maintenance and ease of replaceability or it's kind of like the The triumvirate that they look for when it comes to services. Yeah. And that reduces maintenance and reduces maintenance spends throughout, right? The other thing is these numbers become normalized over time, right? So, but if somebody's telling you, Oh, don't worry about it. That's happening right now in year one and a half, it's going to be fine. It's not gonna give you the warm and fuzzies unless somebody can be like because we have done this so many times, right? Like if you're if you're like, oh man, I just had this problem again. Yeah, but the book says Doesn't doesn't feel as good. Right. But it's like, yeah, yeah, you know what this is how it's going to end up performing. And if it doesn't, you know, we'll see about fixing that. You know, it's like a totally different experience as well. Coming from me who has had some issues already. Right. Like I've had a couple of I had an eviction. That ended up being you know, and it ended up being one of these things where like we had to have some elevated, some elevated costs. But at the end of the day, I'm like, okay, cool. They were able to rationalize. Okay. So these elevated costs happen because this person was in before we manage it. The next person that we replace it. Is going to be better screened and the materials that we're going to put in for this are not going to have the same exact symptoms, right? So, what do you like? Somebody put something in the chat. I'm laughing at all the comments. Somebody put something in the chat. I just thought he was calling me out. Yeah, Lee likes to do this. Lee likes to send private messages to us to like divert our attention. Like he used to make fun of my eyebrows whenever I whenever, like if I type I start going like this. And, uh, yeah,

Cole: 26:20

well, full disclosure, Pablo and I were both talking about the funny faces that we make before we, we started, so we were just kind of, yeah, um,

Pablo Gonzalez: 26:29

so you were also telling me something about your monthly payment. You want to talk about that again?

Cole: 26:36

Yeah. So, I mean, I think like it kind of ties back to all of the costs, right? Like I'm, I'm managing a world. Right. Like I've got costs that are going to my own home. I've got costs that are going to our retirement. I've got, you know, just standard of living costs. And then, you know, how do, how does someone plan on a month to month basis to make sure that like, let's say my, house stays vacant for, for three months, or there's unexpected maintenance costs. Like, how does someone make sure that they don't wind up underwater on something that is supposed to help them long run? Because I know, I mean, I understand from listening to everything that you guys have talked about that, you know, it's a, a long term investment and then those are the things you kind of have to wait for, but like, how do you make sure you get to that point without winding up in a bad

Pablo Gonzalez: 27:24

situation? Definitely. So the first thing is, Again, with proprietary numbers are when you go to hire a property manager, cause you want a non social killer experience, right? Asking them, do they know their, their average length of stay? Right. So like number one is number one is asking to see if they have that data because from my understanding is not a lot of property management companies even track that number because many property management companies are like optimized to just like turn and burn tenants and get people in every year. Right. So it's just like a matter of like, no, no, I get to fill it, but like, they're not thinking about how long they're going to stay. Right. So the idea of average length of, of stay. Here at JWB, I think it's like four and a half years because they sign a minimum of two to three year leases when people first show up, right? So this idea of the name of the game and doing well is to your point, having it occupied, right? Like not having an empty home. So somebody is paying my mortgage as often as possible throughout the 30 years that I own this thing, right? So this idea of Trying to sign long term leases and making sure that they're doing it. The other thing that JWB does apart from tracking it is treating renewals as a thing right like this idea of Six months prior they are they've first of all throughout the length of the stay they have this like relationship building Strategy in place with the residents so that they're not strangers that only shows up when something's wrong, right? I remember it's funny Did you watch the show with Alex's mom last week? I only call part of it, not a trick question. Yeah, she was, I was working, um, she was talking about from the investor standpoint, that at first she used to get anxiety when the phone call rang from JWB. Cause she was like, Oh my God, if they're calling something's wrong, it means I'm gonna, I'm a, I'm a out a thousand bucks. I would

Cole: 29:18

be a hundred percent like that. Right. So, so also because just someone's calling me and that

Pablo Gonzalez: 29:23

just triggers my, um, so they, so they changed the way that they reach out to investors to just have regular checkpoints, right? Like call you regularly to be like, Hey, How you doing? Everything good? Super. I was just telling you that your rent is paid on time. So it wasn't just like, Hey, toilet's broken or a tree fell on someone's roof. So, so they changed that. And then, and they've also realized that that works on the tenant side, on the resident side, this idea that having proactive communications with them so that you don't have a negative association with that relationship. It's big, right? So then they treat these like renewal opportunities as it's like sales training, right? It's just like, how do you, how do you increase the lifetime value of the client by, you know, creating these opportunities to continue to stay there. So they're heavily, heavily focused on that. And the key differentiator is most property management companies make the majority of the revenue when they turn a tenant, right? Because most property management companies, JWB included, when they place a new tenant, they, they keep the first month's rent, right? Like that is the tenant placement fee. Because JWB is revenue model is made to Make money when you're doing well, it's when you're investing in the next property. So they're not trying to maximize their tenant placement fees or maximize length of stay. So you're like, Oh, this is a good experience. I want more. Right.

Cole: 30:43

So, you know, it's funny is I'm going to put my marketing hat on for a second. I actually, this week was just working with the property management team for a new piece with where the residents about understanding the true costs of moving and why renewing your lease makes more sense. Because there are a lot of hidden costs with moving that you don't think about and they add up and it actually averages to about, you know, 4, 200 for a move, even a local move where you're not factoring in mileage for U Hauls just based on all of those little things. So we're. Actively working on the

Pablo Gonzalez: 31:18

interesting thing. You're working on that sales piece with marketing air cover. Yeah, I like that 4200 bucks without counting psychological damage. Yeah. No kidding. That's the worst moving is the worst. It is interesting. That's really, really cool. So that's cool. that makes me think of today's Tuesday morning meeting of how there's, you know, all this like cross department collaboration here and the fact that you being here has now allowed for marketing to be something that isn't just Pablo being funny on a show when I was trying to sell homes, but they're, they're putting like the whole power of marketing into like all these other departments. Yeah. Yeah.

Cole: 31:52

We're really working on integrating and just kind of, adding value across all of the solutions and just trying to elevate a little bit across the board. If

Pablo Gonzalez: 32:01

I hear 4, 200 bucks to move or A hundred extra bucks a month. I'm thinking a hundred extra bucks a

Cole: 32:06

month, right? And that's the thing is that you don't you don't necessarily think that because you're you're just looking, you know apples to apples But you're not it's it's apples to oranges and you don't even realize it until after you've moved and you spent all this extra money I love that. That's so smart and by the way that's without professional movers to like we assumed in the workforce housing that most people would rent a u ball like You know, if you factor other costs in, it gets even bigger. 4, 200

Pablo Gonzalez: 32:32

bucks. That's crazy. Yep. Yeah. Okay, cool. That's awesome. What else?

Cole: 32:36

So I, I mean, I can just like, if I'm thinking about all my concerns, I'm going to put all my anxiety on the

Pablo Gonzalez: 32:43

table. I want you to hate on rental properties. Hate them.

Cole: 32:47

I am going to just like, You know, we bought two years ago, I think, everything in the world that we bought before all of the interest rates started to rise, but we have a fixed mortgage, but our escrow payment has gone up twice in two years because our property taxes went up, you know, probably our insurance went up because we live in Florida, like all, all of those things, and I think when you go into it, you're thinking to yourself, like, I have a fixed mortgage, this is my family. And you Monthly payment and you plan for that. And, you know, that's where you are. And you don't really necessarily think like that's going to continue to grow, go up, you know, if you're in a position where you own six properties and one only one is your primary residence and they all go up at that, you know, like all the property values are increasing. Like, Does it get to a point where it's too much or does it end up paying for itself? Like how, how does that all work and how do you predict that? Yeah. Good

Pablo Gonzalez: 33:44

question, Aguado. So this is something that we've actually talked about recently on the show, right? Is this idea that property taxes have gone up because property values go up in, in the past, insurance has been going a little bit crazy because there was this like big. There was a glitch in the matrix, right? Like they, they, they, these roofers figured out a loophole that paired with these attorneys and they figured out a way to get insurance people to just buy people's new roofs willy nilly and people started abusing it. But we had a group, including Winnie Ritchie that went over to Tallahassee to do a little lobbying and they got that fixed. Right. So going forward, that stuff is not going to continue to skyrocket the same way because that the giant loophole that was just. Basically killing insurance companies has been, has been plugged, right? So more normal insurance is going up. The other piece of it, this idea of property taxes. So when, when you are looking at your buy numbers on property taxes, the property taxes are estimated to the previous. value of the property. So as you can imagine, Jacksonville high growth market property values go up. If you don't understand that you need to price it to the future value of the home, then when your mortgage goes to escrow, they're going to ask you for less than what they actually are going to need in order to cover those taxes with the mortgage. And that's actually a pretty common thing that happens with inexperienced buyers. With JWB investors, it happens every once in a while, but it doesn't happen to the same level because they're used to selling the house next door already because they've got 6, 000. So they know the current property tax value. They've sold houses in that neighborhood and they work with. The same mortgage providers over and over that they really, really trust. It's like this like tight little group of super mortgage providers that, that, that understand this deal better than everybody else. Right. It's like one of the reasons that they only work with these selected ones. So what ends up happening if the. If they underestimate on the front end and it goes up on the back end for a certain amount of time, that only happens for a certain period of time because the, the, the delta, the difference in what they actually need is never going to be so big that it doesn't, you know, like that'll last for too long. And eventually the numbers even out, right? Like in once, once you get to that 10 year timeline, all that stuff's going to even out. The return is going to be right. And it's just going to be like a short time period. And in the front end, if the mortgage company didn't do it right, you're making extra money on the front end. Right. So that gets returned. Yeah. Correct. Okay. Yeah, buddy. Good questions. Call anybody. I would love to hear from the community. Is there, I know that, you know, it was Michael Santorio's at the summit that said at the end of every webinar, something pops up that says. What's stopping you from getting a rental property or what's stopping your friends from investing in rental properties? He's like, what's the answer to those questions? And I said, I don't know because I Forgot about that that that was happening and I honestly haven't figured out how to find zoom To tell me those answers that people are putting in even though we're furiously looking into it So I'd love to know from our community. Is there is there Is there something that you know what is stopping your friends from renting it for for rental properties? One of the things that I think when we were just kind of like talking about what we're going to talk about on the show as we wait for our community to dutifully chime in is you said some people don't realize that. You brought up private lending as an option when I hadn't even thought about that. You want to tell me about that?

Cole: 37:16

Yeah. So, I mean, I, when we were chatting about what we were going to talk about and kind of figuring out what my thoughts were initially private lending is. Obviously something that JWB does as well. But when we talk about turnkey and we talk about private lending, we typically talk about it separately as, as opposed to talking about all of the different ways that you can invest. And again, coming from a background where I thought there was only one way to invest in real estate, it's interesting to not just hear about the turnkey side, but also understand that there's more ways to kind of Closer and safely invest like in terms of how I think of it like a 401k, right? Like, oh, I'm putting money aside and money comes back to me and it, you know, it's just. more comfortable maybe for somebody who's a little bit more risk averse. And I think it's really cool that you can do one thing, you can do both things. You can kind of layer things. And so I thought that was kind of an interesting piece to talk about as well. I think

Pablo Gonzalez: 38:17

that is interesting. And honestly, I'm kind of upset at myself that I didn't think about that because my first investment was private lending, right? Like I, I, I better at this. This is why you're the director of marketing and I'm the monkey on the show. so yeah, I agree. I think this idea of if you, if you want to get exposed to this asset class and you don't have, you know, Leah saying that he talks to the younger people and they're saying that they don't have enough for the down payment, you know, you can private lend for less than that and let that thing accumulate interest at a higher rate than what you would get in, in the bank account or something like that. And just let that compound until you get there. All right. To Lee's point of. young people not having enough for a down payment. We are going to be doing a lot more content on creative ways of coming up for this. Namely this idea that we talk about investing in retirement and outside of retirement funds, right? We've talked about that with Jason Debono in a non recourse loans, but there also is this idea that, man, maybe you have what you were going to have for a private lending loan, but you don't have enough for a down payment. But there is a way to get a loan from your 401k to invest in a rental property outside of your 401k. And if you match that 401k loan with what you were going to put into private lending, now you have enough for a down payment. Now you get that flywheel going of real estate that ends up, you know, the five profit centers compounding over time and, and gets you in the game as well while paying yourself back into the 401k too.

Cole: 39:49

Yeah. And I think that's really cool. And being here, that's the first time I'd ever heard anything like that. And I have sat through an HR seminar on 401k investments literally once a year for the past 20 years. Right. Something they always bring somebody in. It's always, you know, all what you can do with your 401k and nobody has ever mentioned the ability to diversify into an asset class that has a potentially better

Pablo Gonzalez: 40:12

return. Yeah. Yeah. Let's talk about that. I remember I haven't worked big company in a long time, but I remember when they first. Give me the primer on my 401k people are like, yeah, you can do this and you can do this and you can do this and you can get a loan, but you never want to get a loan. That's crazy. Not only do they not teach it to you, they, they de incentivize you to do that, right? Like, they're just like, that's nuts. You don't want to do that. And it isn't until you meet real estate investors that, that have done this. I remember the first guy that I met was this guy, Doug Orr, who was on the show of season one. He was a assembly line factory worker in a Honda factory in Indianapolis, like in Indiana, outside of Indianapolis, red rich dad, poor dad took a 401k loan to buy a rental property in his area, went the active route, did it himself. And now six years later, the guy has like 103 doors. He is definitely not a factory worker anymore. Like I call him the American dream, right? Like, it's like, he really. Exemplifies his American dream of like sourcing capital, putting it to work for you in real estate, getting his way out of this, like, you know, the assembly line factory worker life. And so now he's a full time

Cole: 41:21

real estate. Literally went from rise and grind. Yeah. To

Pablo Gonzalez: 41:24

a hundred percent. Yeah. He's a big hero of mine. Yeah, that's awesome. Super cool guy too. Reminds me of Chris Farley. It's really, really funny guy. So what else we got in here? If you have for older folks, it's tough to get a down payment. Leah is saying that these days, young people are paying as much as 40 percent of their total income for mortgage. That's another thing I would like to touch on. I think this idea, I, I talked to those people because they live in Miami, right? it's interesting to note. When you're from the Northeast like you are, or you're from South Florida, like I am, it's so, it's so easy to think, Oh, real estate prices in my backyard are what real estate prices are when there is cities like Jacksonville that are still below the median. price of real estate. And you can buy something here for way less than what you thought you can get in your own backyard. But you need to have that example of, Oh, you can do this passively. You can rely on a professional property management company. You can trust their numbers because they're proprietary. And okay, now I'm willing to invest 3000 miles away, 400 miles away, stuff like that.

Cole: 42:28

Yeah. I mean, at the end of the day, it's access to education and data so that you can make the right choices. And I mean, I have felt at least in my career that it has been like, these are the right choices and it's a very narrow path and then, you know, maybe branch out into stocks or something like that. But like, the path is pretty narrow to get from point A to point B. And I think that, you know, what being here has made me see is that there are branches to that path.

Pablo Gonzalez: 42:55

True. True. That's awesome. I mean, it's, it really is the thing. I don't know if I, if I hadn't done private lending and then pulled out early because I thought it was something different than it was. And then wish that I had stayed not just wish I had stayed, but wish I had at that point actually bought the rental property instead of just doing private lending and wasn't. Somebody trying to solve my own problem by creating this community full of people that I can get advice from And and like you're all being used an educational program, right? Like no, it's it's the whole like founder solving their own problem. Yeah It's a powerful thing, right? So I think the education piece the community piece the the cognitive by the positive cognitive bias that you get By seeing a person after person giving the same story of like, no, no, this is how I did it too. It's not crazy just because your mom and dad think it's crazy. Is a

Cole: 43:48

better thing. Yeah, it's just because they didn't know better. And I mean, I think that is something that we can all just keep learning. And you know, that's the spirit of which I come into the investment world here is, you know, what don't I know and how do I find it out? And then how do I make it better for my kids? Yeah,

Pablo Gonzalez: 44:06

I love that. Have you read Rich Dad Poor Dad yet? I have not. I'll let you know that this community peer pressured me for at least nine to ten months before I read it. Okay. You should do it sooner. I should add portly. Yeah, you

Cole: 44:17

should. I have a, a to be read pile on my nightstand about this, this yay high, and I will add

Pablo Gonzalez: 44:24

it to the stack. Well, if Jen Filson and Lee Bishop have anything to say about it, it's going to go to the

Cole: 44:29

top. I send me all your recommendations. I am an avid reader. I told Pablo this at the beginning of the year, one of my goals this year is to read a hundred books. Ninety four was last year, so I was so, so close. So, get me over the limit there.

Pablo Gonzalez: 44:43

I love it. any notable books you've read in the last year out of these, like, ninety four books? Like, what's the most recent book that you've actually taken action on that's moved the needle for you? Man, you're

Cole: 44:52

gonna, you're gonna have me do business books now. Yeah, please. And I don't know that I read that many business books.

Pablo Gonzalez: 44:58

Okay, you're doing a lot of, you're doing a lot of like fiction books.

Cole: 45:01

Yeah, I like I like murdery books. And I like historical fiction, so. Cool. But no, the community book that you gave me was the last one I read, so. You already read that thing, huh? Yeah, I already read that thing. Super impressive. You know how many books you have to read a week to get to 100 books a year?

Pablo Gonzalez: 45:20

Do the math, I'm gonna guess a little bit under two. Just simple math. Yeah. There you

Cole: 45:25

go. Nice.

Pablo Gonzalez: 45:25

Nice. I'm a numbers person now. Yeah. Just so everybody knows.

Cole: 45:29

Watch out,

Pablo Gonzalez: 45:29

Craig. Last question. So what are you, so what are you going to do to get to a real property call?

Cole: 45:36

no. Is that really? No.

Pablo Gonzalez: 45:37

I'm just kidding. I'm just kidding. Unless you want to call your shot right now. Awkward. Awkward. Okay. Well, this Thursday we are back with a guest investor. We've got the man of steel, Vincent. You guys want to know where the nicknames come from? Yeah. Why is he Superman? Vincent Barbarite is the newest nickname that I've come up with because we were at the summit. He was telling me that he's got a steel, like his family has, uh, like a steel working company. And I was like, ah, man of steel, man of steel. Yeah. So I'm pretty proud of that one. I'm not going to lie. Cause I like these ones that are just like. You know, make you feel good about yourself and stuff like that and have like a quirky explanation to it. So yeah, that's her latest nickname. I was talking to him earlier this week. He's like, hey man, you know, Like i've done a lot of commercial investment. Is that a problem to talk about? I was like no talk about it, right? Like we're gonna talk about this idea that he's done a lot of commercial investing. He's thinking about single family homes He's done a couple things here. I think he's got some stuff with jwb. So he'll be joining greg live on thursday As a guest investor and I want to thank the community for showing up without the community. We don't have nearly as many things to bounce off of each other at. This would have been like a 15 minute conversation between me and Cole.

Cole: 46:47

Yeah, I can't, I can't talk to Pablo that long. I can't talk

Pablo Gonzalez: 46:49

that long. Every time we try, it just doesn't work like that. Unless the community is here. So thank you. Do you want

Cole: 46:53

to just do five minutes of uninterrupted eye contact? No, no, no,

Pablo Gonzalez: 46:57

I definitely don't. Um, it doesn't work for podcasts. So I want to thank you for taking, you know, an hour out of your day, like you always do on Tuesdays and Thursdays to be here, it really makes a big difference. Denny Davis, late arrival, mystery man. We call him the mystery man. I'll start explaining. Yeah. Why call him the mystery man? Because he's got a job title that's really, really important and we can't disclose it. So he's the mystery man. That's why. But he's also the number one attendee. of the show over the last year. Lee does have a Q and a. All right. Lee says, Cole, I love that you were exposed to real estate investing at a young age. Jane and I are jealous that we got into the game at a late age. My question is, how are you looking for homes in the area?

Cole: 47:40

So I am obsessive on realtor.com. I think that even when I am, whether I'm looking for a home or not looking for a home, I'm like looking at homes in Tennessee, I'm looking at homes like, pretty much, I Google what are the, what's the next big area, and then I spend an inordinate amount of time looking at homes online. Interesting.

Pablo Gonzalez: 48:03

Yeah. Did you ever see that Saturday Night Live skit about like Zillow as like a late night entertainment for millennials? That, yes. That's me. Like they talk about it. It was, it was like, uh,

Cole: 48:15

yeah, it was, I do house and I do murder.

Pablo Gonzalez: 48:18

Yeah. It was, it was exactly that. It was house porn. So like it was the guy from Schitt's Creek that we were just talking about, like looking through this, like, Ooh, this one's got a shower, you know, like having all this. It's really, really funny. I'll send it to you. Yes.

Cole: 48:31

Yeah. That is me. I've got. You know, I've got it all under wraps. Look at that.

Pablo Gonzalez: 48:36

We got, we got, we love you coming in, Lee. I'm sorry that I overlooked your question earlier. Thank you for bringing that attention to me. He

Cole: 48:42

told me he was going to do that purposefully to you.

Pablo Gonzalez: 48:43

Lee. That's not truly, that's not true at all. That being said, Oh, Rosalind, the Riley's are saying another great show. Pablo and Cole. Thank you. Thank you. Thank you for being here. We don't take it for granted. This community is what makes this place great. We will see you on Thursday back with. GC, hopefully he's feeling a little better. if you got some time, just send him some good vibes. So it heals his tummy. And from now till then, Cole, you got any advice for people until Thursday?

Cole: 49:07

what could it be? What could it be? Uh, should you be average? Don't be average.