403 | Rating Rental Property Markets Today- JWB's New Portfolio Builder Tool

Building an army of cash flowing rental income properties is a proven strategy to build wealth, and provide a comfortable retirement lifestyle free from the fear of market swings.

But up until now, it's been hard to see beyond the individual property acquisition and into the portfolio building mindset you need to succeed in any asset class.  

That's why the brains at JWB have been working hard to develop a new tool that does just that-

Takes the guesswork away from creating a  plan to meet your life's unique goals.

Join co-founder of JWB, Gregg Cohen, as he gives you a sneak peak into a new tool his team created that:

- gives you an understanding all 5 profit centers in rental property returns when making your investment decisions, not just cash flow
- provides clarity on how rental properties fits into your entire investment portfolio
- shows you a path for how you can grow your portfolio over time, even when you are only getting started with one property

This type of wholistic thinking can only happen when you take a vertically integrated approach, and build a data flywheel to support it.

Don't miss your chance to see the newest thinking around real estate investing from the Jacksonville market leader everyone trusts!

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https://jwbrealestatecapital.com/nyai/

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Transcript

Pablo Gonzalez: 1:17

Hey, welcome everybody to the weekly edition of the not your average investor show today. we're going to address a gap in the world of rental property, investing and retiring and portfolio building and all of this stuff. And we are going to unveil a new tool that came from the head of old genius concepts over here and the fingers of the excel team here at JWB who excels at excels. And um, it's the world premiere. You excited? I'm ready, Ben. Because I'm your host, Pablo Gonzalez with me as always. He's back from Alaska with a nice looking beard there. We call him GC because he's got the genius concepts because he knows how to generate cash flow because he's a great host. And also, it's a coincidence, maybe, or whatever, but his name is also Greg Cohen, so hello, Greg.

Gregg Cohen: 2:04

Hello, everybody. Great to be with you.

Pablo Gonzalez: 2:06

It's a happy back day. It is so good.

Gregg Cohen: 2:08

Man, it was good to be there. If anybody has been to Alaskan and gone on an Alaskan cruise, you know what I'm talking about. But it was so beautiful out there. I'm just reminiscing of sitting around and On a boat and you know I was in a hot tub drinking coffee and I've got glaciers and snow capped mountains all around me I mean it was it was epic. It was beautiful But I am excited to be here right here right now because I can't stay on a cruise doing Close to nothing for too long so too much.

Pablo Gonzalez: 2:36

It's too much

Gregg Cohen: 2:36

now

Pablo Gonzalez: 2:37

We're supposed to

Gregg Cohen: 2:37

be

Pablo Gonzalez: 2:37

you know who else is glad to be here

Gregg Cohen: 2:39

who?

Pablo Gonzalez: 2:40

Community. We like to acknowledge them. I believe I do. It's called the roll. Oh baby. We got the gro amigo. Checking in first. Early today. Bill Shields. Of course. We got our lead off hitter batting second today. John Henning. We got the MVP. You may have heard of him. Mr. Lee Bishop. Mr. Lee Bishop. We got the Maven from the mountains of Denver. Ms. Leslie Wilson. We got the mystery match. Denny Davies, Danny Davies We got the early bird driving in a little late. But who's counting, let's keep a track. Dean Curry. We've got their favorite smile on the West Coast. There you go. Miss Pamela Myers. Pamela Myers from the Seattle area. We got the ringmaster in the house. True Barnhill. True Barnhill. Check it in. We got Jeff Pettijohn. All right, Jeff. With a g'day from Missouri. Missouri. G'day to you. We got Christopher Lee from Fernandina Beach. All right, Chris. Check it in.

Gregg Cohen: 3:26

We got the Shaw, man. Nadim Shaw.

Pablo Gonzalez: 3:28

I was gonna say, he loves Alaskan cruises. There

Gregg Cohen: 3:30

we go.

Pablo Gonzalez: 3:31

He's an expert in that stuff. Drew is also an expert. He

Gregg Cohen: 3:33

is. And we got to spend a day in Seattle. I believe that's where Nadim is from, or right around there. And a beautiful city out there. Right along Raj in the house. Oh, right. Right along Raj.

Pablo Gonzalez: 3:42

The first family of the Natural Average Best Show, Ken and Carolyn Meenan, Patriarch and Matriarch. We salute you. Who else we got out here? Oh man, she hasn't been here in a minute. Who's that? I'll give her a name to pronounce. Erin O'Neill. Into the lights. Good to have you in here, Erin. We got LaCroix Towns. New name. New name, all

Gregg Cohen: 4:00

right. Representing Maryland. Nice to have you.

Pablo Gonzalez: 4:03

Lori Day from Jacksonville. That's another name. All right,

Gregg Cohen: 4:05

Lori. No, Lori, Lori. I know Lori. I know Lori.

Pablo Gonzalez: 4:09

I don't know if she's checked in before on the roll call, though. That is true. She might be a new name to all of us, but it's nice to see you, Lori. Good to see you, Lori. We got Mike Mitchell. Herman. Well, this thing's middle Berman and the word word, word. I like it. You missed the regulator show. Mound up. all right, man. Let's get into this GC. This feels like a monumental effort that you put together from, from what I've seen you working on in the background. why?

Gregg Cohen: 4:40

Started about a year ago. And, you know, the show has been such a wonderful experience for the past four years, because I've, I've been able to see firsthand and talking and being with you every single week. Now I've been able to see firsthand the challenges that come along with investing in real estate from a, call it from a brand new investor's perspective. And I think that's really healthy. I've been doing this for 18 years now and, have invested in thousands and thousands of properties. And you start to, If you don't have access to this type of perspective I can't be the best expert educator leader and ultimately the steward of your, of your money and funds. And so I really enjoy this experience. What's come very clear to me is that. Investing in rental properties is one of the most misunderstood investments and asset classes out there. And it is just really scary and complicated for especially newer investors, but also advanced investors. And they might not admit this, but it's, it's really hard to understand how rental properties work so hard for you. So the reason I sat down about a year ago and started to develop this tool is that I wanted to have something that was quick and easy and uncomplicated, made these things simple so that you could put some information in and what would be kicked out would be a very clear description of how much your portfolio would be worth. over a certain period of time and how it would be generated, meaning how those five profit centers would work for you. And this has really been missing in our space. Many people don't understand how to evaluate these investments. They don't understand why these investments work for them. When compared to other asset classes. And so this tool was built really to make it simple and easy and to further our mission of giving access to this asset class for regular everyday investors.

Pablo Gonzalez: 6:31

It's so interesting to me when you talk about this idea of like, that gap in understanding the five profit centers and coming from like a novice investor, it makes a lot of sense that that gap is there because at first I didn't know anything. And then I felt like I got to know it really well, thanks to the show and thanks to a lot of time being spent to really understand a lot of the properties of the week, all these different things that we're doing. and then I felt like I peaked, I knew what I was doing and everybody in the world knew it. And then I started interacting with experienced investors. Now that I, now that I feel like an experienced investor and I feel like I'm in the room. And it's. really remarkable to me how that gap in knowledge isn't just for the novice, right? it is this idea that even, even some of the most experienced investors I talked to that understand real estate that, that have been doing rental properties. Still don't know how to articulate, measure, plan for, visualize, the benefits that we talk about day in and day out on the show that have become so real to me now that I'm investing as well, and I know what I'm looking for. So I think it's really cool that you, Woodshed acknowledge this idea of, it's time to visualize this thing in a different way. With the numbers that include all the things that we talk about that is beyond the typical, the average investors purview.

Gregg Cohen: 7:52

Yeah. And it just feels like for the last four years, we've spent a great deal of energy trying to, articulate and narrate these five profit centers. And I think, you know, you've been able to see all of our Not Your Average investors take action and be able to use that information, but without something that's quick and easy and the point, point of a button, click of a button, be able to demonstrate this it wasn't going to be as powerful as it could be, right? If you have to spend an hour listening to the show to understand the value of the profit centers. Mm-Hmm. you know, not everybody's gonna spend an hour or an hour or, or the right hour, right. Like with the,

Pablo Gonzalez: 8:27

the 10 hours, the, the 30 hours, right. Like

Gregg Cohen: 8:29

yeah. Folks that

Pablo Gonzalez: 8:30

come up here every week. Right. So it was like

Gregg Cohen: 8:32

this was a necessary tool to, and you all will have access to this tool as well, where you're gonna be able to just point, click, say, I wanna invest this much and this is what it's going to be worth. And these are what those. profit centers are going to do for me. And it's not anywhere in our space. And so I really hope it helps a lot of people. I

Pablo Gonzalez: 8:49

have to imagine you, you tell me if I'm wrong, right. But like, I feel like it's never been harder to understand it, right? Like it was really easy when interest rates were low and you know, there was all this run up and you still felt underpriced and all these different things that are happening, but to really like, Paint the picture of it's still underpriced. Yeah. And, you know, even with the interest rates, even like how you're going to buy now with these interest rates, they're still upside in all of this. I, I have to imagine that right now people are making the worst decisions around real estate in a really, really long time because it's not so obvious.

Gregg Cohen: 9:28

It's really interesting. And I, I see where you're going. I'm going to take it a little bit farther back than even your experience. Yeah. Um, you know, we haven't had, we've been in business for 18 years. I didn't feel the need to build this tool until you're 17. You know, why didn't I feel the need to build this tool? Even though I've known this, I've practiced this, we talk about this with our clients. It's because if you go along for the evolution of call it the last 18 years in real estate, you had the Great Recession and we'll say coming right out of that. Home prices were so low and interest rates were so low at that time that just based on net rental income. This asset class was winning and it was for those who knew where to look. It, it, it justified your return on your investment was high and you didn't even need to really understand those other profit centers.

Pablo Gonzalez: 10:16

Easy to visualize without a tool.

Gregg Cohen: 10:18

Exactly. So what people focused on was net rental income or cash on cash returns and it developed this bad habit. Of that being the only thing to look at for this, for this, uh, for this asset class. So that's really where it was for so long. The returns on that rental income were just so good because it was a special moment in time outside of the great recession that we're probably never going to see again. But then what happened is people developed that bad habit and that's all they looked at. And so for the last 15 years, that's how they made investment decisions. And I have seen that lead to poor decisions. Now, what we're talking about over the last, call it three, four years with the pandemic, again, that was a, another unique moment in time. And what it created was bad habits for a different reason.

Pablo Gonzalez: 11:03

And

Gregg Cohen: 11:03

people decided to say, Oh, listen, I only should be inviting investing in rental properties when I think properties are going to appreciate. 8, 10, 20 percent a year. And I only True story. I only Well, it happened to happen for you and for all those who were watching the show and took our advice. But they also developed this bad habit and they said, well, I only should be investing in rental properties when interest rates are 4%, 4 and a half percent. So where we are now is this tool I think is the most helpful because it's getting back to basics and it's showing how we win in all five profit centers, which was the same way 18 years ago. We just didn't go to the length to talk about it because net rental income was so good. And it's the same place that these five profit centers were there three, four years ago when nobody was talking about how this is a good investment, even if you have interest rates that are a little bit higher. And even if you don't see rent and price growth of 10, 20 percent a year. So it's getting back to basics and then it's quick and it's simple and it's easy. And that's what. The everyday investor needs to say, you know what? I like this investment. It makes sense to me. And I'm going to put my money here over somewhere else.

Pablo Gonzalez: 12:10

You know what it reminds me of, man, like this tools like this to be able to analyze a real estate investment correctly. Reminds me of when I, when I first started my career, right, like I, I went into a fortune 500 company that was being trained on like a division manager and training level. I remember my boss, Dave Feeney, this guy with like a really cool raspy voice, like all, all dude, he's like, he would really harp on this idea of like every month. you look at your cashflow statement and you go line by line, right? And he's like, it's really, really easy. Most of these division managers that don't get trained by me, they just go and see how'd I do at the end of the month and give themselves a high five and go. This was 2004 when being a subcontractor construction was super easy because the demand was there. Right. And I remember taking that advice for granted, right? Like, not just looking at every single number, kind of like, I would do the natural thing of rushing down. And then when I took over my own operation, things were booming. And then as things started slowing down, business got a little bit harder. I had to go back to that. I had to go back to this, like looking at line by line, where the benefit is, where the opportunity is, how do things work? Not just this like bottom line metric that I got so used to. And man, What I, what I didn't do, which I wish I would have done is create something that creates a visualization of this thing that, you know, like I wasn't an Excel wizard like you and have a company at my disposal. Right. But if I can pop all this thing into just like export out, like the key numbers that I need to see and how to compare that stuff, that would have been way easier. Right. So it's just, you know. It's way easier. It's way easier to look at bottom line stuff when everything is doing well, but when things are tricky and there's confusing information out there to have a tool like this, to look at the numbers that matter and be able to like parse down a little deeper, you know, just to me is something that's really proved valuable in my life.

Gregg Cohen: 13:57

Absolutely.

Pablo Gonzalez: 13:57

Cool. So let's get into it. This is the beta version, right? So The community obviously gets first look at stuff. Of course. Right. That's what we're here to talk about. So right now it is good enough to produce these like screenshot results, but it's not ready yet to like do a live demonstration,

Gregg Cohen: 14:12

right? Yeah. And so we are not putting it live on our website yet. But for anybody that would like to have this type of custom real estate portfolio Analysis done for you. You can just reach out to Cody here in the chat, or you can send an email to info at JWB companies. com. And our sales team is ready to walk through this this tool with you and do it for you. So anything that we see here that we talk about today is, is available for all of our, not your average investors at some point in the not too distant future. It will be on our website and it'll be available for the public to be able to do what I'm showing you here.

Pablo Gonzalez: 14:46

Okay. All right. So let's get into it, man. usual disclaimer, right? This is not financial advice. Do your due diligence. We are, um, You do it better than me.

Gregg Cohen: 14:55

Well, we haven't done this in quite a while. It's feel like anytime we talk real numbers, you know, it's important for me to remind you to do your own due diligence. the expected returns on investment that we talk about here today and that I show you are estimates only. They're not guaranteed. I am not a financial advisor and I would encourage you to reach out to your council and do your own due diligence before making an investment decision.

Pablo Gonzalez: 15:15

Okay. Dougie, let's get on it, buddy.

Gregg Cohen: 15:17

All right. So what are we looking at here? So this is a, just an image of. What this tool looks like. and what I want you to take away here is the simple, easy way to start this process that eventually will build your entire portfolio for you and show you what it's going to be worth in a certain number of years. But it all starts here with you. Literally the only information that you need to put in is your name. The length of time that you'll be holding onto your portfolio you can put it in for as little as 10 years. You can put 20 years, 30 years however long you'd like to hold onto your portfolio. Then you list the number of properties that you'd like to purchase here. So you've got a few different types of purchases as well. You've got finance purchases with conventional financing. So in this example that you see right here, we put in one property that this client will be owning for 10 years. It shows you the in average investment. Dollars per the type of purchase. So this is based on JWB's current inventory right now. So you can see for one financed, conventionally financed purchase, that's roughly about 91, 000 out of pocket. And that of course includes a down payment, closing costs and all of those things that you 35 percent

Pablo Gonzalez: 16:28

down payment,

Gregg Cohen: 16:29

that includes a 35 percent so that's assuming a 35 percent down payment. Yep. So the reason I highlighted those things down there at the bottom is because your JWB sales team member is going to be able to adjust these things for you. This is where this customization comes into play for you. So you can think about all the fun conversations you can have on the phone with, with JWB, where you can say, you know what, I'm thinking about buying one, but I want to see what it looks like if I put 25 percent down. And you know, I'm hoping that I can get a lower interest rate. Maybe I can get a lower interest rate. What would it look like if I can get five and a quarter percent interest rate? Maybe it's, maybe your plan is to refinance in a year and you want to see what that's going to look like. Well, you can adjust those items. So it's very simple and easy. And it's really your name, how long you want to hold onto it, how many properties you want to purchase. And then we also do have the flexibility to adjust some of the financing terms, based on what you want to Envision for your portfolio.

Pablo Gonzalez: 17:22

So is the difference right now? Do you see, I see a main difference here from like the, the old performance that we would send out one being the amount of time that you can hold it, right? Like this idea of like, okay, I'm thinking 10 years, I'm thinking 20. I'm a, like Drew said, I hold forever. Right. So you can put in 45 if you want or whatever. Is that one of the key differences of, of like I was before? How, how was, how are we doing this thing before?

Gregg Cohen: 17:48

Well, man, we've had so many different ways that we've been able to analyze properties for, for clients over the years. And, you know, the, what it has looked at very simply in the past has been one property and that one property, right? So that one property looked at over a 10 year span.

Pablo Gonzalez: 18:06

Yeah.

Gregg Cohen: 18:06

And so the numbers were largely the same here for that one property, but it only allowed you to do it for 10 years.

Pablo Gonzalez: 18:12

Got it.

Gregg Cohen: 18:12

It was not also easy to adjust things like appreciation rates or home price appreciation, rent price appreciation rates, which we'll get into here shortly. it wasn't easy. You couldn't go from 10 years to 20 years to 30 years. You could not adjust. Down payment payment percentage.

Pablo Gonzalez: 18:30

What I'm hearing the most is like the time and the amount of properties is a major one that I've never heard before.'cause even the things they, you were saying before, we used to be able to tinker with it, it just wasn't as easy. Like it wasn't on the front page. Exactly. It wasn't on like the, the front end input. Like, you'd had to like go in and do like crazy stuff in the back and other cells.

Gregg Cohen: 18:46

Yeah. It just wasn't for, for the, for the public. It's not something they, yeah. knew how to adjust or wasn't easy for them to adjust, and you've seen us go more into that real estate portfolio mindset now for years, because I really believe that's the best way to think about this investment. And what this allows you to do is to think, okay, I have a certain pile of money that I want to put into this asset class. Let me see if I just commit to this investment type and I hold onto it for 10 years and I put this amount of money into it. How much, how many properties is that going to be? What is that going to be worth in 10 years? We get this question all the time, Greg, what's my property going to be worth in 10 years? Well, now you'll get that answer here. And oh, by the way, if you wanted to look at buying five properties, what would that be worth in five years, 10 years, 20 years?

Pablo Gonzalez: 19:34

I like, I really like the time variability because it's like, Hey, my kid graduates college in 16 years, right? Like you can really start to time that right? Like, hey, I'm retiring, you know, like most people aren't like I'm not retiring in 10 years, but you know, 1925, whatever, right? Like these different These different milestones, or even like clients that you've had in the past, community members here that are like, I want to take a, I want to go sailing around the world in 22 years. I like that a lot. And I like the idea of being able to add multiple things. And if, am I looking right here in the sense that like, I can add like two finance purchases, one cash purchase, and like four non recourse loan purchases in there. And it's able to kind of like tabulate all of that stuff. Based on the individual contribution?

Gregg Cohen: 20:21

Absolutely. You can do that. And then you can compare, you can look at how much of my returns would I be able to generate with a cash purchase versus a conventionally financed purchase, which we'll get into in some of the, the outputs of this in just a second, but it is a really cool learning experience. And the, the questions that have come from my own internal team after being trained on this tool have been really wonderful as well. I mean, this has been, uh, just a, a really, it's been a fun experience to build it. So I think you guys will, we'll get a lot out of it. And I know JWB overall, we've gotten a lot out of it too.

Pablo Gonzalez: 20:55

Awesome. Lee, the MVP is asking, are you able to change numbers based on C3X paydown schedule in case you've refinanced?

Gregg Cohen: 21:01

We do have the C3X paydown tool, but it's not linked to this. This is, this is built to give you the overview of what your portfolio will look like. Based on your initial investments. We do have that separate tool. It's not linked to this, but that is available for yet. Well, maybe. Let's go on to the next slide here. So, this is the, the continuation of the previous slide. You can just imagine it's a couple of clicks and you put that information in what it's going to kick out is this report like this. So when we talked about why did we do this, you know, previously, if you're looking at. a property to analyze and you happen to have a pro forma, which many people don't, it's really just going to show you maybe what your cash on cash return is, which is a very limited viewpoint of what that property is. It might show you other profit centers, but you don't, I have yet to see one of all of all the profit centers and actually being calculated with realistic numbers in mind. So what this does is it shows you your total growth and your total return on investment Which is your IRR or your internal rate of return and it shows you as of that horizon year for you. So, it's really interesting to know that, you know, based on historical assumptions and what we know to be true based on our data here at JWB, you invest in that one rental property that's conventionally financed. And you hold onto it for 10 years, it should return about 119,

Pablo Gonzalez: 22:25

000

Gregg Cohen: 22:25

for you. So you invest 91, 000 your portfolio value, excuse me, your portfolio value should be about 210, 000 and that would equate to about an 8. 8 percent IRR. It also displays how do you get there? So what will your total growth by profit center be based on those 10 years? So you'll see your net rental income breakdown, your tax savings, your principal pay down, your home price appreciation. It also includes the costs that come along with selling this at year 10. Again, if I wanted to point out some of the things that other providers don't share when they start to calculate these fantastic returns on investment, they don't calculate the costs that come along with it. It's not it's not the sexy thing to do when you're advertising something, but we're much more data driven and we want to show you what your numbers really are going to look like. So you can even see what your total acquisition and liquidation costs are. And you know, again, how many times we try to help people see that of all the profit centers after a full market cycle, home price appreciation is going to be the biggest driver for you, which is why you need to choose the market. So, diligently and do your due diligence there. Well, you can see that here. Thank you. Right. You can see the majority of your returns are going to come from home price appreciation. That's the same way it is, no matter what time, what year you invest you're going to find that home price appreciation is the largest driver of your returns. And again, so for anybody this is a little bit, I thought I was going to have it ready to go. But it's not available on our website just yet. So this is a sneak peek. For anybody that would like to have this done for them, just send an email to info at jwbcompanies. com or just let Cody know that you'd like us to set up a phone call. We're happy to send this your way and and have those conversations. It'll be up on the website sometime soon.

Pablo Gonzalez: 24:05

Looks awesome. before we go on to the next one HSTN here has a question on non recourse loans. Relevant to what we're talking about right now. But we love questions here on the show. Cause you're making time to be with us says a question on non recourse loans. Why does JWB only work with one lender? Now I need to get a small amount. Non recourse loan, but the fees are outrageous and doesn't make sense slash justify for an STI RA Purchase so I had to cancel the purchase. Can there be more lenders added to JWB accepted lenders list,

Gregg Cohen: 24:35

you know It is tough to find great partners with attractive rates when it comes to non recourse loans right now It's a function of the debt markets overall, you know as the Fed has continued to raise the Fed funds rate that raises the rates of all other types of debt and non recourse debt for those who aren't familiar is getting a loan on a property in your retirement account. And that was already near the top of the list when it comes to the costs of the debt. so, HS appreciate the question. Would love to continue to find those types of operators, but you know, there's again, You know, we have to go beyond just what the costs are and what the expected interest rate is when it comes to putting our name behind one of the lenders that we're going to send you to. And that's the same, whether it's non recourse lender or it's a, you know, conventionally finance lender. And we have had more than our share of experiences with non recourse lenders and with lenders overall, where it didn't work out well. And so care enough about you that we would prefer to not put you in that situation. Because we've seen it go downhill and, and ruin a relationship and so we don't want that for you. So we're not willing to budge on that. We're only going to put you with lenders that we think meet our standard as well as the fees and as well as the interest rates. But to answer your question, we are always looking for non recourse lenders. I would say probably more today than we even were. Three years ago. Sure. And so if you have somebody that you'd like us to potentially vet out, send it our way. Happy to vet them out. Certainly no promises whether or not we can take them on again because our standards are really high.

Pablo Gonzalez: 26:08

Yeah. And Drew was saying in the chat here, non recourse landers are notoriously flighty. It's tough to find reliable ones. There you go. So kind of validating what you're saying. Back to, I'm going to share the screen of the profit centers again, because we got a question here from Mark Norman, and he's saying, I'm a little confused about the tax savings profit center. I understand that you save by depreciation for the year that files your taxes. Okay. However, when you go to sell the property, there is the depreciation recapture and you have to pay that all back. So isn't it a wash at the end of the day? Also, if you, well, I'll just ask that first and then we'll go to the second one.

Gregg Cohen: 26:43

Excellent, excellent question, Mark. Fantastic question. And it's one of the misunderstood values that come along with So, to answer your question, you do get the write off of the, the taxable income when it happens. So your taxable income largely is your net operating income. You also cannot write off your principal pay down as well. So your taxable income is a little bit higher than what your net operating income is, but you only get to take that in the years where you receive that. So what happens is if you made 1, 000 of taxable income in year one, you're going to be able to write that off, meaning not pay the taxes on that in that year. And you basically. Defer the taxes until the future. Now, Mark's question is, now at the end when you sell the property, you have to recapture that. And he's like, why does this even make sense? Because if you're deferring it from the beginning in year one until the end and paying it back, are you, are you really getting tax savings? Well, you're getting tax savings in two years. Places, Mark. So the first place is that when you're not paying taxes today, you're able to use that money and invest in other things. So the opportunity cost of paying taxes today is actually high. If you pay the taxes, you can't use that money to invest in something else. So you're winning with tax savings because you're not paying it today and simply just paying it back later, you would have some tax savings value there. That's not the big thing. I didn't even include that potential opportunity cost savings there as your tax savings. Just for you to know. The real value is that when you pay that, that recapture, when you recapture the depreciation and basically pay the taxes at that time, you're doing it at a lower tax rate. So your taxes in year one, let's say, are based on what your federal income tax bracket is. Your taxes that you pay are long term capital gains when you pay it off in, let's say, 10 years or 20 years or any time after year one. So instead of paying whatever your tax bracket is, it might be 35%, You might be paying that down, you'd be paying that back at lower tax rates in the future, which is somewhere between 20 to 25 percent for cap gains today. Might be higher, lower, or the same at some point, you know, 10 years from now. So that difference in the tax rate and what you're paying later on is what's reflected here as your tax savings.

Pablo Gonzalez: 29:12

Okay, but I'm not a CPA and there's a disclaimer. I just know what I'm talking. Yeah There's a disclaimer Drew in the chat who helps people with his taxes all day long for a living. He's Saying some stuff here. Yes, always can configure opportunity costs. Anyways, reach out to Drew. Drew helps people with taxes. And then Mark also asked if you do hold the property for the full 27. 5 years and it is fully depreciated and you go to sell it then, is there depreciation recapture at that time too?

Gregg Cohen: 29:36

Yes, there is. Can't avoid depreciation recapture unless you do a

Pablo Gonzalez: 29:41

1031 exchange.

Gregg Cohen: 29:43

Yeah.

Pablo Gonzalez: 29:44

All right, cool. I cheated because drew put that in the chat. Okay. Let's go on to also with depreciation recapture. If you leave your properties to your heirs, they don't have to pay the recapture. Mike Foster is

Gregg Cohen: 29:55

one up in me. You definitely can't avoid depreciation recapture. You leave your properties to your heirs. You don't have to pay the recapture, which is. Another way to change the perspective on what a great asset you can lead to future generations and not be so scared about having rental properties, uh, at the time of your passing.

Pablo Gonzalez: 30:12

There you go, Mark. It feels like if you take this conversation to the chat, you're going to get a whole bunch more advice. So, let's keep going here. GC. Talk to me while I'm looking at here. So

Gregg Cohen: 30:21

then I just wanted to show some of the possibilities. You let us know you've got a portfolio of three properties that you want to build, or five properties that you want to hold onto it for 20 years. This is all flexible and easy to be done at the click of a button. So for this plan, it's a client who wants to hold for 20 years. There's five conventionally financed properties, and then we'll click to the next side and you'll be able to see how that would work. A lot of your questions have come, Hey Greg, I think there's two million dollar, not your average investors, out there,

Pablo Gonzalez: 30:52

who

Gregg Cohen: 30:52

are JWB clients, that have made over two million dollars with our investments. And one of the questions was, What does it look like to become one of those investors? How can I do that? Well, it first starts with a plan like this and reaching out to my team so we can set up a phone call and start you on your way. But just to show you, this is what it looks like. You hold on to five properties, you hold on for 20 years, and you're going to return over 2 million. from those properties based on historical assumptions and JWB internal figures based on maintenance and vacancy costs and things like that. So you're going to have a two and a half million dollar portfolio at that time. This might be a retirement plan. This might be part of your retirement plan. But isn't that cool to see how much this is going to be worth even before you start to invest?

Pablo Gonzalez: 31:36

Yeah, it is, man. it's incredible to think that it just takes five properties to get there. Right. You know, like I was, I was looking at, I was doing some reflecting a couple of, like a week ago, and I was just thinking about all these different things that, you know, I've had a lot of context changes in the last five years. One of the things that's happened is that I think five years ago, I was probably, I probably had a net worth of about like 130, 000 or something like that and some change. And now I look at my like three property portfolio, my five property portfolio, and I'm like right around a million bucks. So this idea that in, you know, if I can in three and a half, four years go from like a hundred thousandaire to like, I'm not going to call myself a millionaire, but like to, to have, to have like that amount of like assets on paper that it makes you worth that. And to think that five properties, 20 year hold. you know, two and a half million bucks portfolio value. That's, it's pretty attractive, man. Like it just seems so doable.

Gregg Cohen: 33:15

this asset class is so beautiful because it performs so consistently over time. So that allows you to look at this and be like, oh my gosh, I can do this.

Pablo Gonzalez: 33:25

Yeah.

Gregg Cohen: 33:26

Right. It is totally. This tool helps us kind of remove a lot of those barriers or those obstacles that we've created for ourselves and saying that we can't retire, we can't retire comfortably. Well, this is all based on data that's been there for 40 years. That's what's driving these numbers. They're historical assumptions based on how the real estate market has performed in Jacksonville. And then when it comes to the cashflow numbers, those are based on JWB's performance. So there's 18 years of data, you know, so I love that we are kind of taking this and making it more accessible, making it easier, making it easier to overcome some of these obstacles that have prevented folks from either understanding or taking action. In good old fashioned, boring old rental properties, right? Look what it can do for people,

Pablo Gonzalez: 34:09

for

Gregg Cohen: 34:09

folks.

Pablo Gonzalez: 34:10

It's incredible. It's incredible. Question. Oh, and Kate Sutherland. I believe

Gregg Cohen: 34:15

I know

Pablo Gonzalez: 34:15

Kate. I believe I know Kate. She kind of is foundational to everything that we've created here. Of course. She says not to mention that the JWB Elite Effect will kick in with five properties. There we go. Yeah, Elite. There we go. Is that built into here? Yeah. That is not built into here. Okay. Okay. So I don't want to go too far down the rabbit hole. There's a couple of questions about ROI and RRI.

Gregg Cohen: 34:33

I should probably explain what Elite is at least. Let me explain what Elite is. If you must. And then we'll move on. Yeah. So Elite is when you get to five JWB properties, we drop your property management fees from 5, 000. 10 percent down to 9 percent at the five property level. So the numbers would actually be better than what are referenced here. If you get to the five J2B properties level, and then when you get to 10, as many of our clients are at, we drop it again from 9 percent management fees down to 8 percent management fees.

Pablo Gonzalez: 35:00

Got it. Okay. So Mitchell Berman and Tyler Ladeepo both have kind of like different phrase questions about IRR versus ROI. Love this. Mitchell says, I hate IRR. Tell me what my actual R. I. is upon maturity. And Ty says, what's the major difference between R. O. I. and I. R. R.? I love this. I think they're both, you can answer both in one. Yeah.

Gregg Cohen: 35:19

man, I just love the honesty. Yeah. Because I. R. R. is hard to understand. If you don't understand why it's so powerful, then it's a lot more. Difficult than just a straight return on investment. Your internal rate of return is the accepted way to make decisions on how you're putting your money towards things when they take a long time for your money to come back to you, like more than a year. And when you have variability in the cash flows. So if you're making a decision on how to invest in a business, right? You don't know when that's going to come back to you. many times, or it's going to be over a year, and you don't know what your cash flows are going to be. So you're going to use IRR because what it does is it evaluates how your money is working for you all throughout the process. IRR calculates the discount rate, That makes the net present value of the cash flows, of the future cash flows equal to zero. So I say that, nobody really knows what that means. So just think about it. It's really necessary when you are investing in something that you're investing for longer than a year and has variable cash flows.

Pablo Gonzalez: 36:27

And it's money in 2022 is worth more than money in 2032. Exactly. Right. So it's, it's more accurate.

Gregg Cohen: 36:37

It is, it is the only way to make a sound financial decision when you're investing for something that is longer than a year and it has a variable cash flow. If you're investing for one year and, or if you're investing in two years and the money coming back to you is the exact same every single year, you don't need IRR. IRR is the same as return on investment. But to your point, the longer you have to wait for the money to come to you, it affects what your return on investment is. Because if you receive that money today, you could then reinvest that money. And that's worth something. And so, I know it's hard. I know a lot of other turnkey providers do not go down the path of trying to educate IRR. Because guess what? It lowers the returns I put in front of you as well. If I just showed you your, your ROI, I would be able to put 20%, 25%, 30% returns on investment in front of you for the same exact property that JWB advertises at 8% to 10%. It's the same property, but it's the only way to evaluate this asset class. And it's a not your average way to do it. It's harder. But at the end of the day, I'm responsible for managing your money. And at the end of the day, you're going to hold me accountable to how did I make your money in return for you over 10 years, 15 years, 20 years. I can't put 25 percent out there and tell you that's what it's going to be when I know at the end of the day, That's not real, right? What's real is the internal rate of return approach. And so, so that's why we do that. So, I don't know if I answered both of those questions.

Pablo Gonzalez: 38:14

Well, I, I hear you essentially saying IRR is a more accurate assessment of what it's worth to you.

Gregg Cohen: 38:21

It is the way to evaluate what, how hard your money is working for you over that period of time.

Pablo Gonzalez: 38:26

Now, when you look at something that is, you know, 20 years out, And you say total return on investment 20 years out. The fact that it's already 20 years out is 9. 4 percent already an ROI or is it an IRR? It's an IRR. Okay.

Gregg Cohen: 38:39

So that's saying your money for every single one of those 20 years is performing at the equivalent of what 9. 4 percent would be each and every year.

Pablo Gonzalez: 38:48

Okay.

Gregg Cohen: 38:49

So what's happening in. In, in this property, you can see with that 1. 8 million of home price appreciation, it's a, this formula is built on that coming to you in year 20, because that's how it comes to you. When, if I put that, you know, appreciation happening every single year for those year, 20 years, it would skyrocket what the return on investment. Would be Got it. But, but that's not real because the money doesn't come to you every year from home price appreciation in rental properties. And this is a common trick that other turnkey providers use to inflate their returns. It's just not real though. So you've gotta develop a a, I won't say you have to love it, but you have to develop an appreciation for IRR or else you're just not gonna be informed on how your money is working for you compared to other. Asset classes and compared to other properties and other markets with other providers. But it's worth it. If you're like me, and you actually want to know how your money's going to perform so you can make the best decision of where to put your money. It's worth it. Got it. Okay. Should we keep, keep going here? So this portfolio generator helps you see how your Jacksonville portfolio will be built across these five profit centers, but it also helps to compare. properties across other real estate markets as well. So this is something that we do on the show quite often, but we've never been able to do it to this degree. And so, well, we get the question often. So I thought we would go down that path. So let's go ahead. And here's one thing I did in preparation for the show is I went and I, you know, received a property pro forma from another turnkey provider and it happened to be in the Dallas market.

Pablo Gonzalez: 40:32

Yep.

Gregg Cohen: 40:32

And my thought was, okay, let's, let's compare that Dallas turnkey provider's pro forma, let's recast it.

Pablo Gonzalez: 40:39

Mm hmm.

Gregg Cohen: 40:40

From an IRR perspective to show what that really is from an IRR basis and look at some differences that that provider might use versus what JWB uses and kind of get to an apples to apples comparison. So we did this with the Dallas property first. So if you look at that first column, the Dallas turnkey properties pro forma shows a purchase price of 270, 000. Their maintenance costs, though in the first year, it's 0%. I've yet to see 0% maintenance cost for any period of time. But after that, it goes to two to 4% for every year thereafter.

Pablo Gonzalez: 41:15

Mm-Hmm.

Gregg Cohen: 41:15

again have never in my history, seen two to 4% maintenance costs. So just keep that in mind. Okay. Your

Pablo Gonzalez: 41:21

history, 6,000 properties. 17 years. Yeah. We were running your own property management in

Gregg Cohen: 41:28

house, tracking all the stats. I mean, we work so hard to, to deliver low maintenance costs and our, our actual data is seven and a half percent. So common question that I would encourage all of you before you're making investment decisions and you're starting to see maintenance costs of 0 percent or 2 percent or 4%, ask them where they're getting that data. Most of the time it's not bad. Backed by Dada. Saying that kindly. Vacancy costs. So, in this Proforma's Providers Proforma, it's 0 percent vacancy costs forever. Never gonna be vacant. Never gonna be vacant.

Pablo Gonzalez: 42:01

Always occupied. Yeah, never

Gregg Cohen: 42:03

seen that you know, for any length of time. JWB's, own internal data shows a 4 percent vacancy cost. That's 4 percent of the gross rents that are collected. So,

Pablo Gonzalez: 42:13

4 percent equates to, I guess it's, I guess it's 1 out of 20 is 5%, which means like one month every 20 months is, is vacant kind of thing, like.

Gregg Cohen: 42:27

So, I mean, you can just think about what a, a normal property is for JWB. So yeah. A normal property rents for about 1, 400 a month. So that's 16, 800 for the year of rental income. And so if you took 4 percent of vacancy, that's like giving up 672 every year

Pablo Gonzalez: 42:46

in

Gregg Cohen: 42:46

vacancy, which is not really how vacancy works. What happens is You, you hopefully adopt policies like JWB so you can keep residents in long term. And then those residents stay a long time. That means your rental income is higher for many years. And then when that vacancy does happen, which for JWB on average is four and a half years into it. Then you give up two months on average of costs. For that vacancy, it takes two months to get it re rented basically.

Pablo Gonzalez: 43:18

So basically you're at this 4%, you're essentially giving the assumption that the person's going to live in this unit, that they're going to match the performance of JWB and they're only going to turn a property on average every four years or so.

Gregg Cohen: 43:32

Yeah, exactly.

Pablo Gonzalez: 43:33

Okay. Just checking.

Gregg Cohen: 43:33

Exactly. That's what I was trying to. That's exactly right. Yeah, okay. Home price appreciation. Well, this Dallas Turnkey Providers Proforma said it was 5 percent home price appreciation. I actually went and looked at the data and I looked up the Dallas market. This is using John Burns Real Estate Consulting's data going back from 1982. And from 1982 until 2023, the average annualized home price appreciation rate for the Dallas market is actually 4. 8%. So, not exactly on, but I'll tell you, each one of these points matters over time for sure.

Pablo Gonzalez: 44:05

Yeah.

Gregg Cohen: 44:05

I'd looked up the same thing for rent price appreciation and they had 3 percent rent price appreciation. The actual numbers, according to John Burns is 3. 6%. So you know, it's, it's what the data is and it's not here to make it better or worse or whatnot. It's just data backed is what I would want to do or how I would want to invest. And that's the goal here for the recasted proforma. and then taxes, insurance, and costs increasing each year. I haven't seen that at a one and a half percent increase clip. In my experience, we use 3 percent because that's what we've seen here internally at JWB. So I recasted that using our numbers, which we know are data backed at 3%. So what it took was, if you go and you look at the same property, drew

Pablo Gonzalez: 44:46

says in tech in Texas, tax rates are three times what they are in Florida too, by the way. Exactly. Yeah, exactly. So again, you are giving them the, the numbers that you use in a different market that is kind of like advantageous to that as well.

Gregg Cohen: 44:58

I, yeah, I'm being very generous here. Yeah, yeah, yeah. I'm being very generous. But it, you know, I wanna help people see an apples to apples comparison of what you're being, what is being put in front of you. Mm-Hmm. by those, who. might not use data to make their assumptions or use a different approach than IRR. Which is just flawed again, if you're not, you're going to be holding onto this asset for longer than a year and cash flows don't all come in at the same time.

Pablo Gonzalez: 45:23

Got it. So this tool beyond at some point, once this thing is like fully live and people can use this for themselves, or if you come to the JWB team and you have these other, you know, Properties you might be looking at in other markets. You can use this tool as long as you are conscious of these numbers and being able to like put the right inputs and looking for this kind of stuff, which is something that we teach in our class, the Not Your Average Guide to Rental Property Investing.

Gregg Cohen: 45:46

Yeah, exactly. Right. If you, if you're some, we want to be a resource on the sales side. And if you are, you know, you want there, you know, when you're thinking about making a decision to invest with us or somebody else, tell that to my sales team and say, you know what, I've got this property over here that I'm thinking about. And then, you know, I, I see what JWB's property looks like. Help me make the right decision because over here, it's saying 25 percent returns. JWB says 9%. What am I missing? And this tool will allow my sales team to compare apples to apples for you, just like we're able to do right here. In this example, that 21% return proforma for that Dallas turnkey provider, really, it has a recasted proforma using IRR principles and using data. And that's an 8. 7 percent IRR. Got it. Okay. So,

Pablo Gonzalez: 46:35

you kind of did a little bit of that over here as well, right?

Gregg Cohen: 46:38

I, I used another example or a different market as well. And you can see The assumptions are very similar. Basically that Memphis turnkey providers pro forma kicked out a 26 percent return. Yeah. That's what is being put out there for this property. If you analyze it the way the JWB does, that's an 11. 1 percent return.

Pablo Gonzalez: 46:58

Yeah. Yeah. That makes sense. And then I remember when you were showing me this, I was like, yeah, GC, but like, Is it fair to give a Memphis property that's not being managed by JWB the assumption that they're, that they have a four and a half year vacancy when we know that most property managers sign one year leases, when we know that most property managers don't have the economies of scale for maintenance and purchasing and stuff like that, the JWB has for being in one market. So we once again, you applied it to show a little bit better of, you know, like if you were to adjust the different property management fees and like what you explained. Well, let's go back.

Gregg Cohen: 47:36

Cause I want to give a little bit, let's go back to one more slide here because I just want to show this.

Pablo Gonzalez: 47:40

Okay.

Gregg Cohen: 47:41

I want to show how the JWB property compares or the recasted financials of the Dallas property and the Memphis property. And I thought this was really interesting. The Dallas property recast is 8. 7%. The Memphis property recast is 11. 1%. And Jacksonville's property is right here in the middle. This is JWB's investment properties that we're advertising right now. So I just think it's really cool for you all to see that JWB is not always going to be the winner here when we go to recast these financials. And especially if we're comparing it for different properties in different markets here. But, if you can see how this Memphis property is doing it, it's that expected net rental income category. Now we need to start thinking about what is the most risky of the profit centers that I will actually see. This is where the team component comes into place. So now that we've recast and we've got apples to apples, now we need to think about the what ifs. Well I can tell you that. net rental income or cash flow is the most risky as to whether or not it's actually going to be delivered because it's all based on the value of that vacancy maintenance vacancy and maintenance right yeah absolutely so the next step that you encourage me to do is to say what happens to these numbers if people don't invest with a vertically integrated provider like jwb Who signs long term leases, two and three year leases, and whose average duration of residence stay is four and a half years. 80 percent renewal rates. Exactly, right? What happens? And so what I did was I started to put that into real numbers to show how these numbers would once again be recasted. If I wasn't being so generous and giving them the JWB. Maintenance and vacancy costs.

Pablo Gonzalez: 49:20

All right, continue. So what happens if the, not the same low maintenance, right? So then what,

Gregg Cohen: 49:25

what does it make? So this, you know what, I hadn't put these numbers to it in a little bit of time, but I think this is really interesting to note. Okay. You've got providers out there that are putting somewhere around 0%. Or 2% or 4% for maintenance costs.

Pablo Gonzalez: 49:41

Mm-Hmm.

Gregg Cohen: 49:41

and very, very few out there actually sign long-term leases and have a commitment to renewals like we do. So it's very fair to assume that those maintenance costs are absolutely not accurate. I know it to be true for a lot of providers out there, it's just not accurate. Yeah. I would encourage you all to ask them where they get those maintenance numbers. If you're seeing anything around 0%, 2%, 4% but when you start to actually think about what those costs are in a percentage. For signing one year leases and having one year stays for your properties, it's. The costs are really high. So the average cost for a property term for a client is between 7, 000 when it comes to maintenance cost, vacancy cost, and property management fees. And so what I did was, we know the JWB standard. We know that we sign long term leases and we have an average duration of residence stay of four and a half years. I know that our maintenance costs are seven and a half percent and four percent when it comes to a renovated property. So that's a total of 11 and a half percent. But what happens if somebody else is having those yearly stays? Well, if you have that 8, 000 cost every single year, your maintenance costs skyrockets to 32 percent maintenance and vacancy.

Pablo Gonzalez: 50:55

Maintenance vacancy. So the repainting of the walls that you have to do inevitably, right? Like the changing out of, of like things that you've got to do when you're turning a tenant and the diminished rent collection that you get. And the maintenance. The tenant placement fee when they put in the new tenant is basically those three things, right?

Gregg Cohen: 51:14

Yeah. And I didn't even include the tenant placement fee here in that 32 percent because I was limiting it just to maintenance and vacancy costs.

Pablo Gonzalez: 51:21

Okay.

Gregg Cohen: 51:22

But yeah, basically what I took is two months of vacancy. So, two months of rent. And I assumed an out of pocket cost of 3, 500 for a property turn. And for these properties, it came out to a little bit over 7, 000. And the total income from the rents each year was about 22, 000. Okay. Yep. So boom, there's your 32 percent cost. Now go plug that back into those. recasted proforma. I can do that with one button. And this is why JWB tends to win. Yeah. It's because even when you recast the numbers to compare apples to apples, you'll largely find many other providers will show much bigger cash flows than JWB. But that is the easiest profit center to diminish and just vanish when you don't have a vertically integrated approach and a commitment to low maintenance and low vacancy like we do here. You know, and unfortunately this is This is more realistic what others find. If you look at the Dallas property, you were just barely breaking even on net rental income and cash flow before. And if you subscribe to, you know, those one year stays, well, now you're looking at a significant loss when it comes to net rental income. And nobody likes that. Plus the experience. That's the other thing, man. It's like, you know, investing in real estate, it's not just the numbers, it's the experience. It keeps people away, and if you're getting a turn every single year, if you're allowing one year residence stays, it's not just the cost, it's the experience. Every year when that happens in those two months to get it re rented and then in those two months getting that.

Pablo Gonzalez: 53:00

Not to mention the two months or three months of, are they going to renew? Are they not? Like that, that conversation sucks. A

Gregg Cohen: 53:06

hundred percent.

Pablo Gonzalez: 53:08

Yeah.

Gregg Cohen: 53:09

So it's that experience component.

Pablo Gonzalez: 53:10

Four months of the year, you're like in a, you know, Tough conversation with your husband or wife about it.

Gregg Cohen: 53:16

And then what you find out is that the rest of this, the rest of these returns, when you're having that conversation with your husband or your wife, doesn't matter.

Pablo Gonzalez: 53:23

They don't matter.

Gregg Cohen: 53:24

Doesn't matter. So this is the, this is the progression of how average rental property investors wind up in a place where they're like, Hey, listen, this asset class doesn't, isn't right for me. You know, the ones who have enough courage to give it a shot, they go down this path. I've just put some numbers to it, but you all know somebody, or maybe you've been down that path before. And you know how this feels. You get to a place where you're like, yeah, the numbers look good, but I'm never going to get there that long. Cause I'm not going to be in the game that long because my experience was not good enough.

Pablo Gonzalez: 53:53

Yeah. So just reminding everybody, if you want to like go through this exercise, use this tool right now, it's not being published in public because we're still beta testing it. But the JWB team can apply this to your portfolio. They can apply this to, if you are comparison shopping between a couple of properties elsewhere and properties here or just elsewhere, right? Like bring it to the team, right? So you just got to go to either chat with JWB. com and book a call, chat with JWB. com. You can just. calendar right there. Or if you prefer just to send an email to info at JWB companies. com, you can set up a call. JWB team will walk you through it. Right. A hundred percent. Cool. I was just answering HS questions there of how to do it. Good stuff. GC. Like you know, man, As you know, I now we're now writing this like newsletter that comes from the show of like the media is part of the show. So I'm like conscious about it. To me, those last six minutes right there is something I don't think we have ever addressed the idea that how does each profit center pay me back normal. We talk about it all the time. Home price appreciation is the biggest one. The fact that which is the riskiest property center profit center to count on. We have never mentioned that before. And we are so obsessed with cashflow. We're so obsessed with like that part of it, which is really nice. It shows on the, on the tool that if the cashflow is true, then it has this extra value of getting it this year versus in 20 years. Yep. Makes a lot of sense. The question is, you know, are you betting on a team that has proven data and performance and processes and technology in place that paint a picture that makes you say, Oh, you know what, I can believe that spreadsheet because at the end of the day, what we're just talking about this idea of for like two to three months before a tenant renews and for two to two to three months while they're like, you know, like the two months of the turn, it is not fun around the dinner table. So, so I know I've lived it, right? So, so this idea of betting on the team. I, like, I thought that this was just going to clear up the IRR conversation, but what it's done for me is clear up the value of the team conversation in a very, very real way.

Gregg Cohen: 56:00

Yeah. No, I love that. We've always talked about the benefits of having net rental income. Yeah. We've called it the, it's risk mitigation, which it is when it's there, but it is the riskiest of the asset classes to actually be there.

Pablo Gonzalez: 56:15

Yeah.

Gregg Cohen: 56:16

You know, your tax savings are going to be there. Your principal pay down is going to be there. Yeah. Home price appreciation over a full market cycle is predictable. It is going to be there. Net rental income, well, that determines, that's determined by your team. And honestly, that drives your experience more than the others.

Pablo Gonzalez: 56:35

Good stuff, man. All right, let's jam through some of these questions right here. Mitchell Berman is asking, do these need to be in LLCs or, or property deeds?

Gregg Cohen: 56:41

Mitchell, they do not need to be in an LLC. You can own them personally or you can put them into an LLC.

Pablo Gonzalez: 56:46

Got it. He's also saying who's holding my funds. I think what he's asking is like, do I own this house? Is it free? Like what's

Gregg Cohen: 56:51

going on here? Very simple, Mitchell. you own these properties. You have the title to these properties. So you hold your phone.

Pablo Gonzalez: 56:56

You can do whatever you want. If you decide to go to a different property manager, you can, if you want to sell it tomorrow, you can. It's all yours, baby. Patriarch of the first family. Ken Lane says we salute you. Is net rental income an annual amount on these uh, sheets? Is it an annual amount? Yes,

Gregg Cohen: 57:11

it

Pablo Gonzalez: 57:11

is an annual amount. It's annualized on, on those reports of how it kicks out. Right. Mike Foster asks, if you are a JWB lender, you can use ROI. If you buy properties, you use IRR. That's a good point.

Gregg Cohen: 57:24

That is a very good point because JWB lenders get paid each year. So the bank, the money hits their bank account every single year. That's why you can use ROI. In essence, it's the same as IRR.

Pablo Gonzalez: 57:35

Ah.

Gregg Cohen: 57:35

But Mike, it's both. And so Mike owns turnkey properties as well as being a lender. And see, he understands the value of owning the turnkey properties. You have to wait longer to get the majority of the funds, but it's a big ol payout. bigger pile of money. and so thank you, Mike, for showing why this is valuable.

Pablo Gonzalez: 57:50

Mike Foster, always so helpful, man. Mitchell Berman has another question. I don't know how you want to answer this because of regulatory concerns, but he says, I can earn 10 percent IRR in the S& P over 20 years with full liquidity. So what's so special about this?

Gregg Cohen: 58:05

That's a really good question. And Mitchell, I would love to go into more detail to compare the different asset classes, but I'm not able to do that. That would be, investment advice. So I can't really speak to the investment returns in the S and P 500 over 20 years, but I can tell you that rental properties is a great place to have your money. If you want consistent above average returns it's proven over full market cycles. And we're coming off of. Some of the biggest, I would say challenges to that thesis when we talk about the pandemic and we talk about eviction moratoriums and things of that nature. And this asset class is just consistent, dependable and above average returns. And you know, most people need some diversification in their portfolio as well. So it's an opportunity to invest in a solid dependable asset class. that you might not have thought was possible. And that's why we're here.

Pablo Gonzalez: 58:55

I would lean on a couple of things that the community has said recently. Number one, in the chat, Drew is questioning whether or not 10 percent is the number that you use for the S& P in the chat. The other thing I would say is you weren't here last week, man, but Lee really, Lee really brought to light this idea of I'm gonna paraphrase or quote, right? He says we are taught to save, save, save, save, save, then spend, spend, spend, spend, spend when we are, when we're saving for retirement. And what happens is you save up this amount of money and then you start like, kind of like leeching off of it. You start kind of like milking off of it. And the way I like to put that is you become your most vulnerable at your most vulnerable when you're, when your plan is to like save up a whole bunch of cash and then live off of that cash. Because then you can't. You know, like you can't move it at that point when you're in retirement when you don't have an active income when you are what you have taught me and what Lee realized was this idea that if what you do is build up, you know, part of a portfolio to be rental properties, then it's not just like a pile of cash that you're mooching off of. It is a performing asset that continues to perform, that continues to spit off cash and continues to appreciate the whole time. While you are in retirement which is why in, the piece that I wrote about it, like I see it as like this growth, then cash portfolio to a cash growth portfolio that is already, that is always happening to me. That's what's special about it. I don't know if I'm allowed to say all those things.

Gregg Cohen: 1:00:19

Well, you know what? It was sad. So no, it's all fine. It's all good. I mean, it's, it, it, there's, we believe that retirement is broken. We believe that it starts with a better asset. We believe that rental properties are something that this country. This world really needs, especially with the ways that we get to invest in the United States with the debt that we have available to us. It just, it takes a community to help get people over the hump and it takes some education and some tools just like we talked about today.

Pablo Gonzalez: 1:00:45

You know what? It was said. I like how you hedged there. Alright, Stevie B says, Can you add net present value to the tool IRR? MPB.

Gregg Cohen: 1:00:52

Can I add that, you know, I don't know if that would be really valuable, Stevie, so maybe we can just answer your question on a, on a one off basis, rather than going back into the lab to redo the tool, but whatever you need there, just reach out to the team and let us know, and we'll be happy to get you that answer you're looking for.

Pablo Gonzalez: 1:01:07

Got it. Mark Norman also says, in all your years in real estate and with all of the many houses, residents and landlords that you have known, how many times have you encountered or heard of an incident that resulted in a serious injury to a resident that led to a significant liability lawsuit to the landlord, e. g. that had a monetary award above and beyond what the insurance policy would cover? While I know it could happen, I am trying to ascertain what is the realistic statistical risk of such an occurrence.

Gregg Cohen: 1:01:37

Hard to get your numbers there. I could just tell you that, I mean, JWB owns over 300 properties, close to 400 properties of our own. And I know that we had one property where there was a fire and somebody was hurt in the fire. and it was terrible. And that person was hurt, very badly. And of course, You know, it, it was this person living in the home and, you know, we had nothing to do with it. It was a home, you know, there was a fire. so these things can happen. I, you know, that happened in one of my homes and we felt for that, uh, family that was going through that. you know, I think you had a question about the insurance.

Pablo Gonzalez: 1:02:09

Does it, yeah, where, where it supersedes the insurance coverage.

Gregg Cohen: 1:02:13

And that's why you have insurance, you know? So of course the human element here is, is the most important thing to think about here. Secondarily here, as far as, protection of our investment, that's why you have insurance and the insurance covered more than the replacement costs. The replacement cost is what the insurance were. So that more than covered what the loss war loss was to, make sure that our investment was taken care of. And that's the same type of protection that you have when you have, uh, The strong insurance partners that we're gonna set you up with here as far as being a JWB client So hope that gives you just a real life Scenario story it can happen, I've owned, you know, 400 homes for close to 18 years though So, what are the odds? I don't know.

Pablo Gonzalez: 1:02:51

Yeah. So what I'm what I'm reading between the lines is like tough to put a number statistically on it because it has more to do with your choices in insurance coverage than it does with like statistical average of it happening. And you're only pair people up with insurance companies that give them advice that It's not hard

Gregg Cohen: 1:03:12

to make sure you're insured for scenarios like that. Like that

Pablo Gonzalez: 1:03:19

is just

Gregg Cohen: 1:03:20

standard working with a competent insurance broker. So, it, you know, while we never know the terrible thing is going to happen or it could happen, that could happen on any one of your properties. You should have peace of mind knowing that insurance is there to protect your asset. In that case, you're of course going to be set up with that, with the insurance teams that we set you up with. And even beyond, if you invest with JWB, any competent insurance provider should be able to provide you with that peace of mind. If you start asking some of those questions about what are real worst case scenarios, you just, you know, you pay for the insurance, the insurance, you know, insures you to a certain level and. then you can sleep all night.

Pablo Gonzalez: 1:03:58

Hall of Fame basement, first baseman, Jim Kirko, says using this new tool and being able to compare IRR to other investment opportunities is incredibly powerful and can help us make decisions on asset allocation as well. Proper allocation is the highest hurdle for me and my family and making the decision on single family resident purchases. Thanks for your guidance.

Gregg Cohen: 1:04:18

Thank you, Hall of Famer. Appreciate you being here. And I love when him and his son watch the show, listen to the show. It's man, It's pretty awesome. I

Pablo Gonzalez: 1:04:24

like to, it fills my bucket and I. I appreciate that he goes along with the joke of the Hall of Fame first baseman thing. He's not really a Hall of Fame first baseman to my knowledge, but I like calling him that. Mitchell Berman will reach out and Stevie B says, Greg, a 2 million nest egg projection is nice, but to compare it and make it real to today's dollars, put that nest egg in today's numbers. Not a question, but that's the value.

Gregg Cohen: 1:04:46

That's a good point. You know, what he's talking about is As inflation continues to happen for the next 20 years, that two and a half million dollars isn't going to feel like the two and a half million dollars it is today. so that's a fair point, but guess what? None of the investment dollars that you earn from any of these asset classes out here are going to feel the same. And, we'll just call it a nice headstart on retirement, I guess.

Pablo Gonzalez: 1:05:03

Yeah. That's what we'll call it. Jim Curtis says we're both here today. Good to know. Thank you both. Home run today. He buys it. He buys it. Thank you, Jim. I appreciate you validating my insecurity of continuing that job. Good stuff, GC. Yeah. You put a lot of work into this, man. You know, at first I was just impressed with your Excel skills because I think it's like you're underratedly like an Excel wizard. People don't even know that about you because you're such a good communicator. They don't expect you to be that big of a nerd,

Gregg Cohen: 1:05:26

but I'm gonna start getting a lot of Excel requests coming out of you. If you guys,

Pablo Gonzalez: 1:05:30

if you guys ever want to know an Excel shortcut, just hit up, hit up, head up GC over here. How you link a tab hit up GC. that being said, I thought the real genius concepts came from when we start looking at this data, when we start tinkering with it, the questions that come from it, I think, is the real value. The real value is to, is to do this with somebody that knows how to like, Take the maintenance and contextualize these things, allow you to make better questions that then allow you to ask bigger questions about what your plans and what you really believe in, how comfortable you are with the risk of cashflow and these kinds of different things. When someone's just putting a, it's so tough, man, when someone puts a pretty number like 25 percent IRR and you're looking at JWB properties, like 10%, you're like, Hey, really? That looks stupid. But you know, you gotta be able to ask these great questions. And without something like this that visualizes it. It's going to be really hard, man. So I applaud you for all the hard work you put in on this. You know,

Gregg Cohen: 1:06:23

it's been a labor of love because ultimately we're going to have more successful, better informed rental property investors out there and that should be the goal of any expert any show, any platform community like we have here. So I hope this tool is something that you all use. Again, this is the way that we do things internally at JWB. So for many, many months now, we've had this rolled out and our sales team had builds these custom portfolios and is trained to help you. understand what your custom portfolio would look like. So that's, that's normal course of business. You can reach out to us info at JWB companies. You can go to the website and request a consultation as well. JWB real estate capital. com. You can let Cody know here in the chat that you'd like us to can contact Mitchell. Thank you for your questions. I saw that you asked to be in contact with us. That's, that's really a great great opportunity for us both to, to get to know each other. So that's all there. And then, you know, coming soon in the near future, we're going to make it available on the website for everybody to be able to do an element of this. And I think that's going to be really cool as well.

Pablo Gonzalez: 1:07:23

That is going to be really cool. And speaking of great questions, the community, as always adding value. We never take it for granted that you take an hour out of your day today, an hour and 50 minutes to be here, to like add the context that we need to explain this stuff, the better way so we don't get lost in our own heads and all that stuff. So really, really, really appreciate you all being here. You sent us

Gregg Cohen: 1:07:42

off.

Pablo Gonzalez: 1:07:42

Yeah,

Gregg Cohen: 1:07:42

we forgot to tell them about Thursday.

Pablo Gonzalez: 1:07:44

Yeah, what's going on on Thursday? Thursday the

Gregg Cohen: 1:07:46

special webinar that we're doing. Yeah, what's going on? Well, we told all of you that we were going to, bring some opportunities for us to do special webinars when we saw the opportunities. We have heard

Pablo Gonzalez: 1:07:55

from you that you have, you're looking for things to do on Thursdays at 1230. Exactly,

Gregg Cohen: 1:07:59

since we started. Scale down, there's twice a week. There's a gap

Pablo Gonzalez: 1:08:01

in your life. And we're here to fill that gap

Gregg Cohen: 1:08:04

this Thursday. And we are, so we're starting at this Thursday. There is a special webinar that we're doing with a great partner of ours. Daniel Canty from James Moore. CPA and accounting firm is somebody that I've gotten to know really well and he's a huge Jacksonville fan. Yeah. I mean, I did a webinar with Daniel not too long ago, and I think this guy knew more about downtown Jacksonville than most other people, almost more than me. I was sitting over there working on a newsletter, hearing him talk,

Pablo Gonzalez: 1:08:30

and I was like, I love this dude. Oh man, he totally gets it.

Gregg Cohen: 1:08:34

Yeah, yeah, yeah. And so we're going to be doing a webinar for those who are interested in investing in Jacksonville, want to understand why it is such a great investment, we'll certainly be talking about downtown, and Daniel's going to bring there to talk about the specific tax strategies that make this such a winner. So you'll get even more tax answers than I'm qualified and able to bring to you here on the show. And Daniel is going to be there to provide that expertise. So it is going to be this Thursday at 1230 Eastern. The old Showtime when we used to do it Thursdays at 1230 different zoom registration link. I put the zoom link in the chat. There you go. Thank you for, for putting that in there. So if you would like to be a part of it, really only offering it to our, not your average investor community. It's kind of a special group that we have here. So we're not sending an email out to all of our clients and whatnot. But if you would like to be a part of this, just go to the chat here. There's the registration link. It's really long and funky, so I can't even read. Yeah, there's no way you can read this out here. So again, a big value for showing up live here on the show. Yeah. The only And staying till the end. And staying till the end. Yeah. We would love to have you join here on Thursday and and really jump into a topic that I think you guys are gonna love.

Pablo Gonzalez: 1:09:42

Yeah. I think, I think hearing, hearing it from Daniel, what he sees in Jacksonville and also. You know, this opportunity. So this, this comes from the fact that Daniel has, he's a CPA that works with real estate investors. I think he's a little bit too big for my britches. I try to see if so don't be surprised if he turns you down. But that being said, like he works with big time real estate investors that have. You know, a lot of them are from Florida. A lot of them invest outside of Florida and he's like, man, you know, I really want to, I really want to bring this to the people that I work with so that they understand the opportunity that like, if you've divested out of Florida or you have other things in Florida, like the time to jump into Jacksonville is right now and, and. You know, doing it with a 1031 exchange right now is particularly really, really good. And he can talk to both sides of those things. So that's what this thing is going to be about. It's going to be really, really interesting, I think.

Gregg Cohen: 1:10:31

I think so. And we get to hang out more, you know, we used to be able to hang out Tuesdays and Thursdays. But, you know, something that Pablo and I are currently doing right now is vetting other, you know, partners to be able to do more hanging out on Thursdays. And so consider this the first big step. And we would love to have each and every one of you join. So just go to that registration link.

Pablo Gonzalez: 1:10:51

And, and in reality, you know, like just speaking from a marketer, like the welcome that you get from being, you know, when people show up to a webinar and get surprised, like all these people that we actually know hanging out with us is like an unbelievable surprise and delight, which I know is a core thing that JWB likes to do. So if you want to be part of the surprise and delight team, that would be really, really awesome. If you show up at least for the beginning of that webinar and check in, like you normally do beyond that next Tuesday, super interesting show. GC, did you know that insurance rates have dropped recently?

Gregg Cohen: 1:11:21

Yeah. Yeah. Yeah. We're going to talk about that. I've been waiting to talk about this for like

Pablo Gonzalez: 1:11:25

three years. Yeah. We're going to dive into the insurance rates drops. And did you know that they published an article saying that Jacksonville is the foreclosure capital of Florida? Did they? Yeah. Yeah. We're going to talk about that too. Yeah. Yeah. We're going to talk about it too. So we're going to do a little data with perspective about news. That sounds good. And data with perspective about news. That sounds bad on next Tuesday show. It's going to be a good one. Do you see from now until Thursday and then until Tuesday, what should people do in the meantime? Don't be average CNX or Thursday.