404 | Real Estate Insurance Rates Lowering In Florida? Did The WSJ Get The Rental Property Retirement Strategy Wrong? - Not Your Average Insights

In an already confusing economic environment, a couple of headlines seem to be a mixed bag for rental property investors.

But when you look closer, sprinkle some perspective, and makes sense of the data, it gets much easier to see the opportunity.

That's why we're diving into headlines about insurance and foreclosure in the latest edition of Not Your Average Insights!

Join co-founder of JWB Real Estate Capital, Gregg Cohen, and show host, Pablo Gonzalez, to combine the data of the Jacksonville market leader with the perspective of a 17 year real estate investment veteran about:

- how one property insurance provider is already dropping rates in Florida
- which bills have recently been signed that will continue to provide relief in insurance premiums
- what the WSJ got wrong in a piece they wrote about how Americans are increasingly turning to real estate for their retirement

Let's get over the anxiety of today's headlines, see through the noise, and make decisions based on data PLUS perspective... together.

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Transcript

Pablo Gonzalez: 0:00

Today, we are talking about something we've been wanting to talk about for two things. We've been wanting to talk about forever. Our insurance rates finally dropping some good signs out there. And did the wall street journal just get the memo. That people are struggling with retirement and turning to rental properties. Hey, welcome, welcome, welcome, welcome everybody to your weekly edition of the not your average investor show. I'm your host, Pablo Gonzalez. With me, as always, a man that I affectionately like to call GC because he's got the genius concepts, because he knows how to generate cash flow, because he's a great co host, and because his name is Greg Coe. And say hello, Greg. Hello, everybody. Great to be with you. And it is great to have the community. filtering in here already checking in. If you're new here, checking in the chat so that you can be part of a little tradition. But before we get to that little tradition, GC, you and the laboratory at JWB have been busy whipping up some thought leadership in the form of an Excel sheet plugged into a web page that allows you to do really special things that nobody else can do. It's a JWB rental profit week. Calculator?

Gregg Cohen: 2:20

Yes, sir. I got that right. I got that

Pablo Gonzalez: 2:22

right. Why don't you, why don't you tell them, why don't you

Gregg Cohen: 2:23

tell people what it is? You know, the JWB team has been in the lab for the last year developing a tool that makes it easy for you to understand how your money is going to be working if you decide to invest in rental properties. and it's based on you, so you can put in your own parameters. How long do you want to invest? How much do you want to put down? And this tool helps you see exactly how your money is going to be working. So you can make the best decisions on how to invest for yourself. Not only that, but it does something that no other tool does. First of all, it's free, so everybody can use it.

Pablo Gonzalez: 2:53

Where do, where do they go, GC?

Gregg Cohen: 2:54

You go to jwbrealestatecapital. com slash profits. Go there. It's free. But it also shows you a breakdown, not just of your overall returns and your return on investment, but also the profit centers. So if you are curious, how much home price appreciation am I going to earn over 20 years? How much net rental income am I going to earn and run all these fun scenarios? So it's there for you and for everybody. It's free. Again, go to JWB real estate. Stay capital. com slash profits. Take advantage of it.

Pablo Gonzalez: 3:23

What I like about it, GC is a new languaging that our good friends, friend of the show, hall of famer, Paul Shively, taught us this idea that every time you're investing with people and they're putting a deal eval in front of you, they're putting a performer in front of you. They're generally most likely going to just give you like a mythical ROI figure that isn't really tied to anything. JWB does a little bit different in the fact that they give you an IRR based on 10 years, but even then, even at that best effort. Not everybody here cares about what it's worth in 10 years, right? I kind of care about what it's worth in 30 years. Somebody else might be caring about what it's worth in like 16 years because they need to know if they're going to have enough equity to pull out to pay for their kids college education, which continues to go up. This tool allows you to. Understand your returns based on a specific timeline and amount of properties that you're going to build. We call it outcome based investment. We're all investing out here for a specific outcome. We all have wise, and this tool allows you to see when that outcome happens, where you're going to be and why it makes sense for you. jwbrealestatecapital. com slash profits. And now GC, it's time for the all hallowed tradition that we do on every show. What is that called? The roll call. First of all, Joanna is back. She is our back to the community manager role. Check in with her. She's in the chat.

Gregg Cohen: 4:43

Such a big part of this team, this organization. She's largely in the background. So Joanna, so nice to see you here as community manager. Joanna is the best. And. Our leadoff hitter checking in first, Mr.

Pablo Gonzalez: 4:53

John Henning. We got the MVP, you may have heard of him. Lee Bishop. We got the mountain man! Bill Green. Good morning from the tediously Sisquipildellian mountains of Colorado. Dude, I think you got it on that one. I think I got it. Way to go. Yeah, Sisquipildellian. Give me something I don't know. Way to go, Billy. Christopher Lee from Fernandina Beach. Good to have you. We got the ringster in the house. We got the early bird, Dean Curry. We got Laura Colby from back. Laura. Haven't said your name in a couple of times. Good to have you. We got game time in the house. Tamara Gamison, Tammy Gamison, Jeff Pettijohn with a hello. All good to have you, Jeff. We got her vague French swa.

Gregg Cohen: 5:29

From the dirty jurors.

Pablo Gonzalez: 5:30

What up JW Fam? Good to have you here. Ve uh, we got the shaman in the house. Nadiem

Gregg Cohen: 5:36

sha

Pablo Gonzalez: 5:36

trademark. Good morning. Good afternoon. We got Reggie F from the Inland Empire. Inland Good to have you back. Reggie. We got. Tom Inman from Jack's Beach. Tom, Tom's recurring. He's, he's coming. All right. Fantastic. Good to have you here. We got Rob, Robin Schofield from New Hampshire. Another return guest, Robin. I'm going to have it out of it. We like, we got our favorite name to pronounce Aaron O'Neill into the

Gregg Cohen: 6:00

lights. Let's give Aaron some props or her Boston team. The Celtics won the championship. I know she always rubs it in my face when Boston sports does well. So let me just go ahead and lay that down. I am not a fan of

Pablo Gonzalez: 6:10

the Celtics. Celtics, but I'm a big fan of Aaron O'Neill. Go eat. All right. So, uh, we got Joe Culler in the house from Columbia, South Carolina. Long

Gregg Cohen: 6:17

time client.

Pablo Gonzalez: 6:18

Good to have you, Joe. Who else we got in here? I'm running through. All right. Justine Herrera. Thanks for showing us the real numbers. You are welcome. Justine.

Gregg Cohen: 6:27

Thanks for being here.

Pablo Gonzalez: 6:28

Good to have you, Justine. We got Jeff Blum in the house from the 904. All right. All right. All right. The local with a Duva Hall. We got Brad Bradley. Brad. Brad. Johnson from San Diego.

Gregg Cohen: 6:38

Well, did you have problems with that name? I don't have a problem with

Pablo Gonzalez: 6:42

Brad. I have a problem with my tongue sometimes. And of course the patriarch and matriarch of the first family of the Not Your Average Investor Show with The matriarch having a happy birthday today. Hey, Carolyn, we salute you. Happy birthday. Happy birthday, Carolyn. Good to have you. And, Sean Fleming from Destin. All right, Sean. I love Destin man. And Chris saga. Long time from the illustrious Hudson Valley. Illustrious Hudson Valley. We've missed you, Chris. Good to be you, buddy. It's, it's a valley full of illustrations. Is that what that is? I guess so. It's what the kids like. This is. Alright folks, let's get into it. We. We love, you know, we call this the Not Your Average Insights content pillar that we talk about here, where we are reacting to today's headlines, and today's headline, quite frankly, is not very surprising to us. We've been talking for a long time. We know that as real estate investors, we've been going through a painful period in Florida where insurance rates have skyrocketed. been going up for a long time. We've had Richie on the show to like triage it. Tell us what's going on. About a year ago, there was a big victory. What happened was there was this loophole in code and litigation. I don't know where it was a loophole and some kind of regulation.

Gregg Cohen: 7:59

Yeah. It just made it easy, very easy for there to be a litigation filed against the insurance companies. Um, And so, you know, 15 percent of all the claims that happened. Across the country were from the state of Florida, but 71 percent of all the litigation was resulting from those from the state of Florida. So a huge imbalance.

Pablo Gonzalez: 8:21

Yeah. So basically somebody found the loophole and was able to get roofing companies to go door to door telling people that, Hey, if you file this kind of claim, I can put this in court for you and you can get the insurance to buy you a whole new roof, even if you don't need it. People exploited that, that. Scared the crap out of a bunch of insurers in Florida. They left the state and mass a whole bunch of people realize that this is a major, major problem, including JWB partners, one up to the Capitol, showed them the problem going on, got them on our side. created a new bill that eliminated that loophole. And about like what, like nine months ago, we had with Richie coming back from the Capitol saying, Hey, now that this loophole is here, we can expect to see first insurance rates slowing down in their increase as new companies come into Florida and then eventually insurance rates dropping. And we are here to happily report that as of uh, I don't know exactly when, but the first Florida property insurer has announced a trimming of rates. Peninsula insurance has trimmed their rates by a 2 percent average reduction for homeowners in Florida. I'm going to share here the the article in the chat so everybody can see it. But GC, when you hear this idea, insurance rates starting to come down, somebody has actually trimmed it across her thing. What do you think?

Gregg Cohen: 9:42

Well, I think this is great news for us as. rental property investors. And the best part is what's, what's yet to come as we start to think about what the future looks like. But, you know, this is something that was a moment in time that we all experienced some pain when it came to our insurance rates increasing. I will make sure that everybody knows that while we were experiencing pain during that time for our insurance rates increasing, We experienced a lot of pleasure and other good things happening. So overall, our returns have been incredible in rental property investing even though insurance costs went up over the last few years. What other good

Pablo Gonzalez: 10:16

things were you talking about?

Gregg Cohen: 10:17

Well, you know, our home prices went up substantially for a number of years there, you know, home prices probably went up, geez, total of 50%, give or take a little bit over those years. Which is your biggest profit center and your rents, of course, went up substantially somewhere in the neighborhood of about 20 to 30 percent substantially over those, of those few years. So, you know, net net, if we're thinking about how our investments have worked out we've all won in rental property investing, but it doesn't lessen the impact of us seeing that insurance bill going way up, maybe doubling from what it was a few years ago and thinking, Oh goodness, this is painful. So. You know, that's really kind of where we've been now. It's a credit to you know, Whitney Richie, really. She has worked very tirelessly to go up to Capitol Hill and to put this in front of a lot of the lawmakers, her, a number of other folks here locally and across the state have found this to be a big problem. Put it on the radar of our legislature and our, and our leaders out here. And these reforms have taken place. I think when which shared with me probably a year ago she was so happy when she came back from the Capitol and said about 80 percent of what we thought we wanted here was taken into account and put it in the form of this legislation. And she said, good things are on the horizon. We need to be a little bit of patient. So what I think about when I read this news is number one, this is great news for us as rental property owners. You know, in our evaluations, we expect insurance costs to increase 3 percent a year in all of our evaluations. And so, if insurance costs are actually potentially going down, even flat, even flat, that's a win for you. And I think there's just a real value for having these types of partnerships, this type of insight, this type of community, because if you know these things, that insurance costs, we're going to Settle down a little bit and then potentially come down in the future. If you know that years in advance, you have the opportunity to make good decisions, to buy that asset at that time. And then the asset only gets better in the future. And so let me stop

Pablo Gonzalez: 12:20

you there. So you're talking about somebody that. Watches the show, knows this is happening, makes the pattern recognition and be like, okay, wait a minute. I know that JWB has a performer that says insurance rates go up 3 percent every single year. If I truly believe that that's going to stay flat for the next five years, then I know that the ROI, the IRR that's being shown on a deal eval is actually lower than Then what it is, therefore I'm buying an underpriced kind of like asset that's being sold to me and I'm more likely to invest in it because I know I have a little extra juice here.

Gregg Cohen: 12:52

100%. While the rest of the world is saying, Oh, I can't buy rental properties in Florida because insurance is out of control. You can understand that that was a moment in time. The legislative reforms are in place. It just takes time for that to go through the system. And then you can make a better decision that kind of finds hidden return on investment, that opportunity for you to under promise and over deliver to yourself as far as how your money is going to be working. This is just one example of a number of examples we talk about on the show over and over and over again, about how you all know things six months, a year before everybody else. And That's why, you know, you all make such great decisions and we're able to produce such great returns for our clients. Another shining example of that.

Pablo Gonzalez: 13:35

Yeah. I think it's really interesting, man, this idea that we talk about the information advantage. When we talk about how in real estate, having an information advantage is like perfectly legal while it's looked down and elsewhere, right? And in real estate also having the answers to the test ahead of time, right? So like what I mean by answers to the test ahead of time is that, uh, We know that over a 30 year average, we know what home price appreciation is going to do. We know over a 30 year average kind of what rent rates are going to do. We know that home price appreciation is going to go up. We know cash flow is going to go up because rents are continually appreciating. We also know, beyond a shadow of a doubt, that the biggest expense in this investment, in this like, you know, monetary equation, is Our mortgage is locked in for 30 years, and that's not going to go up unless you choose it to. But guess what else you can also do? You can choose to have it go down. When interest rates go down, you can choose to lower that, right? So like, This, this conversation that we have around cashflow being the least important profit center and recently uncovering the idea that cashflow might even be the most risky profit center to bet on really bodes well to then pairing that with an information advantage of knowing what's coming, the certainty of knowing what's the answers to the test ahead of time, and being able to make these educated decisions around, Okay, so if everybody else is saying, you know, This might not be the right time. If I'm looking at a number that feels low because everybody else is saying it's higher, but I really believe these people. So I can, I can look at this number and say, you know what? I think it's actually going to be a little bit higher, but I know that they're giving me a good deal. You're talking

Gregg Cohen: 15:22

about returns on investment,

Pablo Gonzalez: 15:24

right? Yeah. I'm talking about the return on investment number that you guys provide. Cause I've been seeing what other people do and like how they game the things, right? Like, so I'm talking about I don't know. Like I, I just think, I just think it's a really powerful cocktail of why we value this community so much and knowing these like answers to the test and, and the, you know, the answers to the test that you can get from anywhere um, and, and making these decisions moving forward of like, yeah this is actually gonna probably end up like turning out better than I even expected and live up to this under promise, under deliver, over deliver ethos that you guys have.

Gregg Cohen: 15:58

Absolutely. And, you know, I don't know exactly always know, it's not always the same way that we under promise and over deliver for clients. It's not always the same methodology. It might be that, listen, insurance costs today might be higher than they are one year from now or two years from now, we might have that higher insurance costs in our evaluations, we might have good information to think that we might be able to Yeah. overperform there. There's a number of different ways, but our, our mantra always is under promise and overdeliver. So I look at insurance costs as another one of those under promise and overdeliver opportunities for us. And I think for all of you who are interested in rental property investing, this is an opportunity to be a not your average investor to look at this differently than what others are looking at for Florida insurance because the hard part is behind us. We have been through the call it the storm when it comes to insurance rates and I get excited, just take for a minute, think about what your future profit centers look like. With some of these some of this inside information or these, these connections we've been able to draw for you, and what this is going to do to your net rental income or your cash flow. Imagine a scenario where, you know, interest rates come down in six months, one year, two years. I don't know when it's going to happen, but when your interest rates come down, what does that do to your mortgage payment problem?

Pablo Gonzalez: 17:20

Well, it lowers your mortgage payment and it increases your cash flow.

Gregg Cohen: 17:23

There you go. So you got an increased cash flow opportunity right there from interest rates coming down. When your insurance costs could potentially come down in the future over what you're paying right now, that just adds to your increased net rental income. cash flow. So you can create this world here where, you know, the, the numbers that you're buying at right now, as far as what your net rental income or cashflow is today they were already going to get better in the future because of how this asset works, but they have the opportunity to be significantly better than what you're buying at today. You're creating an opportunity to under promise and over deliver. And that future has a number of different components that are moving in that direction when we talk about interest rates, potentially you know, insurance costs. But you know, the one thing that's locked in that you can never change, you know what that is? What's that GC? Your purchase price. You know, and as we have talked about for years now, you know, home prices have continued to go up in many places across the country, Jacksonville being one of them as a growth market. You know, if you bought an investment property a year ago, it was less money than what it is today. You can never change that, but you have the opportunity to buy today before some of these things happen, because guess what happens as soon as net rental income goes up as Interest rates go down as insurance rates go down. What happens to purchase prices shoot up? We've shown the data price is going to go up. So you have this inside information. You have an opportunity here to make a better decision. And, you know, that's part of the reason for the show is to help people take advanced steps to wherever your financial goal is retirement or what have you. It's a big opportunity right now, this year. Take some action before everybody else sees what's going on in the form of these interest rating decreases. These, you know, potentially home insurance rate decreases and potentially home price increases come down the pike.

Pablo Gonzalez: 19:15

Yeah. Makes sense, man. You know, when I think of, when I think of where I want to invest my money, I think the two things one thinks of is like upside and risk mitigation. Right. And. It's really interesting to think that in, you know, risk mitigation to me is like, what are the things I can control? And then what are the things that I'm fairly certain of? And then what are the things that could, whatever, not control and are volatile? And to think that's two such huge components of like the mortgage, which is the biggest expense you have a hundred percent control on for the next 30 years until the end of the investment. The price, you control every day what you could buy, you know, like you, you have control on that price and then you have like fair certainty that it's not going to be a better price than that later. You know, right? Like, like the idea of that happening is very, very little. And then you, and then you make these educated guesses of, you know, in the future, what can change the idea that rates are going to go down as opposed to going up from here is probably a pretty good bet to make that rates are going to go down, which means that you can then control lowering the mortgage increase in the cash flow. Again, the idea that Florida insurance rates are going to go down. Seems like a likely trend or staying constant. Right. So like the idea that cashflow is going to continue to go up, um, you know, and then, and then I guess bigger picture, I think, what am I actually investing in? Right. Like, I'm investing in a, in a critical need,

Gregg Cohen: 20:40

right.

Pablo Gonzalez: 20:40

That is, that is all, you know, workforce housing in a, in one of America's fastest growing cities to me. is a hedge against hedges against hedges, right? Like you are investing in like the piece of the asset class that like is most insulated as an as an asset within the asset class that has the most risk mitigation. And then now we're just talking about upside of like the growth of the Jacksonville market. The growth of your cashflow with all this kinds of stuff. I don't know man, like, like as, as you zoom out of all this stuff with this type of news, it feels like the future of whatever you're buying today or already hold looks so much brighter than I ever thought when I bought my stuff three years ago. That's

Gregg Cohen: 21:20

really cool.

Pablo Gonzalez: 21:21

Yeah, that's really cool. And it

Gregg Cohen: 21:22

hits both sides of the brain for me and probably does for you. There's, there's The conservative side, which is you're investing in a critical need for the individual shelter, right? You're investing in a critical need for the government. That's why you're seeing legislation come in to solve this problem, right? The government needs to make sure that insurance costs are fair so that people can, you know, buy shelter for themselves. So you want to be in that direction when things are moving in that direction, it's a critical need for the government, critical need for the individual that is built in risk mitigation right there.

Pablo Gonzalez: 21:54

Yeah. Love that. Love that. All right. So that being said, that is what's happening right now. And now future pacing even more, there's even more good news coming down the pike. Right? So like, this is the behavior that's happening. These rates have, have started to lower. There's also three bills that have been recently, um, Signed and passed by, by the Florida legislature. Right? So number one is house bill 7073. This bill provides a one year relief for residential property insurance policy holders by covering the cost of insurance premium tax and The state fire marshal assessment, as well as a one year insurance premium tax relief on flood insurance policies. Then there's Senate bill 70 52 also signed into law. This bill focuses on increasing consumer protection and insurer accountability, prohibiting insurers from canceling policies on unrepaired properties, ensuring citizens property insurance corporation covers policies of insolvent insurers and updating mitigation discounts every five years. Then there's Senate bill 70 28. Also passed and implemented. This bill enhances the my safe Florida home program, increasing funding for home resilience improvements and creating a pilot program for condominium associations. The bill appropriates additional funds to prioritize low income seniors and help fortify homes against storm damage, thereby reducing insurance premiums. Three bills kind of hit different things. Where does this hit you in the brain? I

Gregg Cohen: 23:24

mean, this is, It's about lowering the barriers of home purchasing in the future, of which, you know, insurance costs are you know, are an important part of that equation here. Again, this is a critical need for the government, right? The government is taking action to ensure that home insurance costs not only are Reasonable now, not seeing the type of increases that we saw due mainly to litigation that we saw previously, but they're also taking steps to make sure that we can keep insurance costs low in the future. So making investments of government dollars to reduce insurance costs in the future. These are all things that you want to be investing. And when things are moving in this direction, you want to hold assets that. the risks are mitigated by these types of actions. You could put your money in other places and you don't have this type of backing in the form of government support to reduce costs in the future. So I think this is just, this is where, this is where I want to be. This is where my retirement account is. It's a different way of thinking, but tell you what, it makes me sleep well at night knowing that I'm not the only one who's fighting for lower insurance costs in the future.

Pablo Gonzalez: 24:30

Yeah, goes back to that risk mitigation conversation and upside conversation, right? Like the equation looks good. And on top of that, you're betting on something that everybody's kind of cheering for, right? Like the sit, the access to safe. housing for our workforce class and for this idea that, you know, whatever we can all do to keep those costs down for people to be able to buy and or rent and live in homes, that that stays accessible is something that the government and the private sector have all proven is in our best interest. And therefore, whenever there's something wrong in the system, we're all going to work together to correct it. I think, I think the, you know, like that data, the, the idea that like, Hey, anytime there's a fight. Everybody gets behind this one thing is so rare, you know? So, so if I'm betting my retirement on something, I would love to bet on that. Yeah, there you

Gregg Cohen: 25:20

go. Everybody wants home price affordability.

Pablo Gonzalez: 25:23

Yeah, everybody wants home price affordability. So cool. Exciting stuff. A couple of questions you see, you want to hit them?

Gregg Cohen: 25:27

I do. And I just wanted to make one note here, because while this is very exciting, again, a lot of this is forward looking, right? This is the article that came out about Florida 2 percent decrease is now. But this takes time to go through the system and, and I just want to make sure everybody knows that, you know, by and large, we're not seeing insurance decreases right now for our JWB clients. So, just because you're not seeing a decrease right now, don't feel like you're missing anything out or missing out on anything. This is more forward looking. This is what we hope and expect to see at some point in the future as it kind of. trickles down throughout the system. So I just did want to make sure everybody knows that don't, don't call up the service team and say, ah, I need, you know, I didn't get my insurance decrease. It's not like that. We're not seeing those decreases right now for JWB clients, but we certainly do hope that will happen in the near future. And, you know, things are looking that way.

Pablo Gonzalez: 26:19

Awesome. And Victor Rader has a point where he says, this is great news, but essentially rates have gone up 50%. And I'll be shocked if they go back to where they were just a few years ago.

Gregg Cohen: 26:27

That's a great point, Victor. I would be shocked too. I don't expect that to happen. You know, any D really you win if there's anything less than a 3 percent increase year over year. Right. So, and, you know, and, and then for, for Victor, who's you know, owned property, it sounds like for quite a while, you know, while your insurance costs went up more than we wanted, you won way big time overall, when you think about how your homes have appreciated and how your rents have appreciated. So keep, keep that in mind as well. You win either way, as long as insurance costs don't go up 3 percent in the future, you're a win, it's a win for you. And, you know, if we can keep them the same or even see some type of decrease, wow, what a, what an advantage to future cash flows. Yeah.

Pablo Gonzalez: 27:07

Another reason to check out that home profit calculator that you guys have created so that you can really like parse out how you're winning. With the five profit centers, knowing that your appreciation has gone up so much more, even if your cash flow has grown smaller, you know, Dean Curry, the early bird. That's a question that may not be on topic. He says. This question is unrelated to today's show, but this morning I met with someone asking me about my real estate investing. And I told her about the program you developed. He must be talking about not your average investor guide to rental property investing. Where can I get the link and send her so she can pay and learn? Thanks.

Gregg Cohen: 28:24

It is at not your average guide. com.

Pablo Gonzalez: 28:28

Your average guide. com. I will post it here in the chat. we recently developed a new intro for the class, but yeah, you watch it while I send it to you. You're on your cruise, you're on your cruise, but yeah, we recorded a new intro. So if you haven't, logged in in a while, you may want to check it out. It's, uh, it's a new one. It's, it's, it's all right. Jeff blunt says, is there a minimum length of holding for investing with JWB? To make financial sense.

Gregg Cohen: 28:53

Great question, Jeff. Yes. The best returns are for holding for a full market cycle. But the minimum hold period that we ask clients to, to hold on to is five years, because that sets you up for success, you know, when it comes to buying and selling real estate, real estate is expensive to sell. It's expensive to sell though when you think about costs, you know, you might lose somewhere around 10 percent of the value of the asset when you go to sell it in the form of real estate commissions or closing costs or just regular general holding and selling costs that you might find transactional costs. So while your property might appreciate year over year, if. You have to pay a realtor 6 percent to sell the house. You're not going to want to sell it one year after you buy it. So this is a part of how we prepare clients to buy and hold of course. So at a minimum where it makes sense is a buy and hold period of at least five years. But again, you know, a full market cycle is where you see your best returns on investment.

Pablo Gonzalez: 29:49

There you go. And your performance normally when you show them to somebody that it shows 10 years

Gregg Cohen: 29:53

minimum of 10. And of course, it's, it's variable now, meaning if it's 10 or 20 or 30, depending on the length that you would like to hold on to, but

Pablo Gonzalez: 30:00

you're saying psychologically, you want to go in there thinking this money, I'm not going to touch it for five years. That mitigates the risk of like short term stuff happening and you think that that'll, you'll be happy with it as long as you're holding for less than five years. Cool. Jeff, great question, man. I appreciate you. Lee Bishop, he's the MVP. You may have heard of him. I have. He says, will JWB change the maintenance rates as estimates due to these changes, or is JWB going to keep the maintenance at under 5 percent to continue to under promise and over deliver?

Gregg Cohen: 30:29

I'll answer that in just a second. But first, I have to give Lee and Kelly Berenbaum just an incredible shout out. I did listen to their show, by the way. I did not listen to your show. I know who you care about. But I listened to, uh, Lee and Kelly and Bill Shields who was there for, for the show when I couldn't be here two weeks ago.

Pablo Gonzalez: 30:49

And

Gregg Cohen: 30:50

you all just did such an incredible job, just man, I was, it just made me feel so good how far this community has come and what great community members we have, leaders in the community like Kelly and Lee and Bill to just know that I can go on vacation and Know that we have just a top quality show delivered by our, our community is just really incredible. So Leah, super, super appreciate you, buddy. To get to your question there, we have no plans to change our expectation as far as what operating expenses should increase that in the future. It's again, it's another under promise and over deliver moment for us. And so you'll see on the pro formas insurance costs along with other operating expenses are expected to go up 3 percent each year. And in the short run, it looks like that's going to be an under promise and over deliver moment because we expect, you know, those to not go up 3%, at least on the insurance side.

Pablo Gonzalez: 31:42

I think we have a moment here to appreciate one of JWB's core, core, core values under promise and over deliver. The more that I touch other parts of the real estate ecosystem, the more apparent it is to me that the numbers people like to represent are at best case scenario the, you know, what they really, you know, hope can happen. And at worst case scenario, they're really just like manipulating things to make it to, to like over promise. Right. And. You guys and this entire team has been completely ingrained in this idea of the value of under promising and over delivering to the point that even though your historical rates of returns have proven to be underperforming, What, like I just saw like a stat on it was like 20 percent or something like that?

Gregg Cohen: 32:34

Our clients have received 22 percent returns year over year. That's their IRR. That's our performance over the last 18 years.

Pablo Gonzalez: 32:42

There has never been a performer put out by JWB that shows more than like 12 or 13 percent or something like that? Probably 12

Gregg Cohen: 32:47

at its highest.

Pablo Gonzalez: 32:47

12 is probably the highest. Right now it's at like 9 or 10.

Gregg Cohen: 32:50

Right.

Pablo Gonzalez: 32:51

And Just a little peek behind the curtain. You and I are good friends. You and I run in the mornings. I run, you know, I'm building my business. I use you as a mentor. I don't use you. I look, I look to you as a mentor and you've ingrained this like idea of under promise and over deliver as not just like a. a thing that you do in sales, but a thing that you do in everything in business. If you can only promise the things that you are a thousand percent certain are going to happen, plus you're probably going to exceed it at any juncture that you interact with people, you are going to compound that promise. your success. Yeah. And you're going to compound the relationships that you have with people and continue to make them, you know, like to continue to like grow your business and grow your success. And I, I just think that that is such a foundational concept in everything that you think and everything that you have built this company to do that I think is really awesome.

Gregg Cohen: 33:42

Well, thank you, man. I mean, it's how we are all wired here to JWB. And I think I just go back to like myself as a client, if I can work with a company, or buy a product, and it told me it was going to do this. And I'm just pleasantly surprised it did a little bit more than what it told me it was going to do. I'm just like, Oh, man. It makes me feel really good. And the first thing I think of is going back to that client, excuse me, going back to that company or buying that product and doing it again. Yeah. You know, cause I've created this aura that they probably are under promising and they're probably going to over deliver. And it doesn't have to be, you know, the greatest things in sliced bread. But if you can just constantly do that and try to do that in all of your interactions, you create this wave of good feelings. You create this wave of. Positivity between your clients and that company. And that is really the secret sauce of JWB. It's been pretty cool to detail it and how our evaluations work. So I think another reason that I love the show in this community is because we've been able to do this over and over and over again and show other examples outside of JWB that are not done that way. But you know, that's, I just think that's the essence of how you, you know, I love to be a raving fan for a company and it's always when they told me I was going to do this and then they did this a little bit more and they do it every time and I'm like, man, I can't wait to talk to them again. You know, I can't wait to buy something from them again and tell my friends about it and tell my friends about it. Yeah. Yeah.

Pablo Gonzalez: 35:09

Cool. All right. Ready to move on to the next story. GC, you know, I am. Oh, I know. I think we've been wanting to move into this story for a long time. I

Gregg Cohen: 35:17

know.

Pablo Gonzalez: 35:19

Some may say that JWB has a direct access line to the wall street journal because you've been on the front page of it twice, not, not advertise on the front page. They've written about you on the front page of the wall street journal a couple of times. But what they've never written about that I've seen of what we're talking about here on the show is this idea that You look at the stats around retirement. They are bleak. All right. People are really struggling with it. And there is a big growing trend of people that are not thinking average like all of us here and are understanding that real estate can create a much better life scenario in the years where you are no longer having an active income. When you are counting on that thing that you saved the, the, the, the, the nest egg that you built for retirement. And they wrote a whole piece on how people everywhere are starting to. look to real estate, have real estate in their 401k, see real estate, not just like as an active piece of their life and what they do for a living, but as a way to invest in their future as a way to create a more stable retirement. They wrote a whole article about it. They released a podcast on it. I listened to the podcast. I giggled and, and enjoy. Yeah. I sent it to you. We want to talk to Veronica Dagger and Ann Terragason that wrote this article. We want to have him on the show. We want them to come to our next event. But GC, when you read this article and you see the Wall Street Journal now really talking about the plight and mission of this community that we've built, what, what goes through your head, man?

Gregg Cohen: 36:54

You know, I guess questions, I started to think of questions. First of all, I was like, wow, for the Wall Street Journal to do a very well done article where it actually went through all of the numbers of. For retirees and broke it down, like they put a lot of time and energy into this piece. I thought they did a very really wonderful job with it. What, what was going on? And then

Pablo Gonzalez: 37:16

repurpose it into their other media, right? Like not every wall street journal article makes it to that daily wall street journal briefing that I listened to every week, right? Like

Gregg Cohen: 37:24

what was going on with the powers that be at the wall street journal? Like what is the, is there a shift that's starting to happen? Are they feeling the same things that we're all feeling here, where retirement is broken and you know, it starts with a better asset class, which is rental properties, right? Real estate, right? I'm, I'm really, that was my first thought as I'm seeing this, I'm like, man, this is, this is different than what I usually read in the finance Wall Street Journal section. Yeah. What, what is, what is out there? What's to come? And just the thought of doing a, a, A piece like this, I thought was very exciting for the message that we try to get across in the show.

Pablo Gonzalez: 37:59

Yeah. Agreed, man. I, listen, I, this, this sounds douchey to say, but like, I am somebody that is used to being ahead of the market, right? Like I am, I'm, I'm always out there in the future. I'm a visionary, whatever. And, and I've now in my career multiple times had the experience of, Oh yeah, I saw this coming, you know, like I've been talking about this for five years. Let's talk about it right now. And, you know, to me, this is a blip like that, right? Like this feels like that. And this wasn't something I saw coming on my own. This is something that I've gotten to experience by sitting here and hosting this show with you, right? Like why, why we get a hundred folks showing up live here in the middle of their workday on a Tuesday and why people come to our events that sell out in a week and, and why everybody's so like fervently behind this and loves JWB so much is because I think this pain of Man, and I echo with this myself personally, right? Like this idea of like, man, retirement went from this like nebulous, scary thing that I feel way behind on to, Oh my God, I'm in the driver's seat.

Gregg Cohen: 39:03

Yeah. That shift right there.

Pablo Gonzalez: 39:05

That happens to me like this, man, you know, like as soon as, as soon as I did it and I have this community to think but it is, yeah, that, that, that shift right there is a very, very real thing. And I think as the pain continues to increase on. On the retirement vehicles that already continually exist. And as I like to say to me, the internet is the truth, right? Like, it shines a light in every crevasse. I think long term, the internet will play out to be a positive force on humanity, even though it has its like, shortcomings. Because at the end of the day, In the giant tournament of like what is right and what is wrong the more information, the more freedom of information that's out there, the better we're all going to end up doing it. We're all going to settle on these like fundamental truths. And I think one thing that is starting to become obvious is that if you can find a way to make a part of your retirement, an army of rental income properties, you are going to have a better retirement than most. Is that a good.

Gregg Cohen: 40:02

Mm

Pablo Gonzalez: 40:02

hmm.

Gregg Cohen: 40:03

Yeah, and that's what these folks that they profiled largely said. They asked them, why did you choose this? And a lot of it was control, like you just talked about. A lot of it was, well, I understand this asset class. A lot of it was, you know, I, and they even had one. person who decided to sell out of their 401k just like you did. It's like a buy their rental properties. And it was back in like 1982 and he said it made pretty good for me then. Pretty good. And so I'm seeing that guy as you, you know, you just made that decision a couple of years ago.

Pablo Gonzalez: 40:35

I've done a little bit of all of that, right? Yeah, you

Gregg Cohen: 40:37

absolutely

Pablo Gonzalez: 40:37

have.

Gregg Cohen: 40:38

You know, so, so, but all of these, These reasons that we echo on the show are making sense to, to these folks as well. It was really interesting though, going through and listening to the article and, and, or reading the article and listening to it as well. I would highly encourage all of you to do that. There was one theme that I was also feeling, and I think you, you were feeling the same, I'm like. Man, these all, these individuals were courageous. They did something that not your average investors do. They built their retirement accounts based on real estate and rental properties and all this, but man, JWB could have helped them so much because a lot of them worked really hard in real estate and continue to work really hard in real estate to make this happen. So the article positions it. largely as an alternative way to build your retirement account. But it certainly highlights the pain points of doing real estate as well. And I just, I, I'm fairly certain that none of these folks know about a vertically integrated turnkey rental property company. And I'm just dying to get in front of. Those folks and and others. Yeah, I like them.

Pablo Gonzalez: 41:43

I completely echoed with all their pain points and all they're like kind of like Explanation of like taking the leap and I completely did not relate at all right there lived experience You never would have

Gregg Cohen: 41:54

yeah dealt with that pain of the lift. Yeah, if there was not I wouldn't I'm way too lazy

Pablo Gonzalez: 41:59

for that Yeah, yeah, like like to me to me. It was just like so obvious that But like what made sense to me was just like, oh, okay, this can happen and I literally never have to see this house. Yeah, exactly. Or talk to someone that's gonna live in it or plunge a toilet or call a contractor or, you know, Go put up shutters before storms happen, you know, like whatever man. So, so yeah, it is, it is pretty interesting that they got it right in the sense of like the pain point and the trend and It blows my mind that at no point in like doing the research and uncovering this and blah, blah, blah, blah, blah. Like if I was to build a story, I would have built a story around like, this is all happening. All these people, blah, blah, blah. And like, there's the Goldilocks of like, I worked this hard. And then the, the one of like, then I worked this hard and then I worked just right. Which was nothing. Which is what investing with a turnkey vertically integrated. People don't even know, people don't even know that that's a possibility.

Gregg Cohen: 42:51

Think about what Kelly was saying on the show two weeks ago. I mean, Kelly is financial advisor. She's dedicated her life to understanding. You know, how, how money moves and she is inclined to understand real estate too. She's really educated, but you know, more than two years ago, three years ago, she never had the idea and never entered in her mind that there would be a company that could make investing in rental properties easy, like a turnkey. rental property company like JWB. So I just think that, you know, Veronica and, and, and who wrote the articles have no clue that companies exist like this.

Pablo Gonzalez: 43:26

Oh, come

Gregg Cohen: 43:26

on. Anybody knows them? Come on. We got a seat for them.

Pablo Gonzalez: 43:30

Go ahead. Tweet them or DM them or whatever you got to do. I would love to talk to them and, and just, man, it, it really does. Again, I have the greatest cognitive bias of all time because I didn't know, I didn't It wasn't just like, I knew about real estate, but I didn't know about turnkey. At much, you know, like, it was like, I didn't know anything about real estate. And then all I've learned is vertically integrated rental property investing. So, so for me, when I, you know, and now that, you know, of course I'm like representing JWB at events, and I'm talking to like other parts of the ecosystem. 000 on a real estate education, you know, still don't know that this, this way of doing it, That's like as painless as possible exists, still blows my mind. Yeah, it's pretty cool. That's very real. And I know I said that I'm a

Gregg Cohen: 44:16

trendsetter, but

Pablo Gonzalez: 44:16

you guys are trendsetters, man. Like you guys have been way ahead of this thing, right? At least 14, 15 years ahead of it. This is why you've been written about on the front page of the Wall Street Journal of your innovative ways of bringing this stuff to market from the turnkey side to the build to rent side and doing it in info lots and all this type of stuff. So like the fact that y'all have not just Been 14, 15 years ahead of the market, but like you continue to push the envelope of what's possible, even within the people that are already doing what you're doing to me is one of the reasons why I love knowing you well, and, and being, And having you guys in science and whatever, that's

Gregg Cohen: 44:54

the value of this team. You know, I get to be the front person here and be on the show for you, but I represent 130 folks here at JWB that have dedicated their careers to being one step ahead because we own the same assets that we recommend for you all to own. So we're right there with you. We're constantly thinking about it, dedicated our careers to it. And you know, that collective brainpower is how we get to stay, you know, innovative and, and get some of these opportunities to be featured on the front page of the wall street journal and and whatnot. So it's a, it's a good group to be a part of.

Pablo Gonzalez: 45:23

It's cool, man. It's cool. All right, cool. Let's uh, let's have, we got two questions. First is Victor Radar is asking, do you advise clients on setting up

Gregg Cohen: 45:32

LLCs? We do not advise clients on setting up LLCs, we're here to answer questions for you. But the best person to actually give you advice, legal advice would be a lawyer. So we're happy to make recommendations to you to the legal teams that serve our clients and serve JWB. So we can answer some high level informational questions about it and tell you what clients have done. But when it gets to the actual legal advice, we're going to make a recommendation to a legal professional to help you out.

Pablo Gonzalez: 45:59

In general, do you think it is necessary to have an LLC to do this stuff?

Gregg Cohen: 46:02

You know, I don't think it's necessary. I think it's dependent on your goals and the risk profile that you have. And so for myself, when I started to invest in rental properties, there were advantages for me to own them in my personal name. And so I did not have my properties. Now I'm going back to when I had less than, you know, 100, 000. 40 rental properties collectively, so probably less than 10 in my name. I did not have them in an LLC and there were advantages to that. Now as we own over, you know, 300 rental properties as a company here, right? Obviously they're in LLCs and things of that nature. So wherever that switches from you, maybe that's property one should be in an LLC, depending on your goals and your risk profile. Maybe it's property five, 10, or. Maybe not. There's always different ways to accomplish it. So that's really where a conversation, you know, starts with our team and, and then of course we can direct you to those professionals. Or if you have those professionals in your sphere, I would highly encourage you to reach out to a legal professional to help you get, get the game plan for you.

Pablo Gonzalez: 47:00

Gotcha. Am I right in just kind of like from recall of how we've answered this question in the past. It does feel that people sometimes trip over. You know, like they'll trip over this, like LLC, not LLC question and slow them down and getting started when in reality, there's a lot of things that if you listen to the average advice of why they tell you to get an LLC, it gets covered by good advice on what you should get for insurance. And then the LLC conversation can come a little bit later, and do all the things that it needs to do. So like no need to over. You know, overcorrect on LLCs in general.

Gregg Cohen: 47:39

A hundred, blanket statement right there. A hundred percent agree. It is one of those things that comes up very early on and people are like, Oh, what do I do? I can't move forward unless I figure this answer out. Please don't let that be you. This is such a, a simple question and answer to solve. Just have to ask a few questions and understand what your goals are. And you know, the, you know, your team, your legal team, who we could introduce you to point you in that right direction. But this is not a big reason to not move forward. It's a very simple question with many different correct answers.

Pablo Gonzalez: 48:11

Yeah. Totally. All right,

Gregg Cohen: 48:12

cool.

Pablo Gonzalez: 48:12

HSTN you're a recurring guest and I appreciate you asking great questions and it's awesome and I want to pronounce your name correctly and if there's a way to, to do that, I would, I would love to do. I hope I'm not, I hope I'm not butchering it, but question from HS is hello. Number one, can JWB prepare the annual FMV documentation for STIRA property? Okay. I don't know what any of those acronyms are.

Gregg Cohen: 48:33

I do. So FMV is a fair market value. It's paperwork that needs to be filed with a self directed custodian annually and JWB can do this for you. We do it for all of our clients. So the answer is yes.

Pablo Gonzalez: 48:46

So SDIRA is a self directed IRA. There you go. You

Gregg Cohen: 48:49

know

Pablo Gonzalez: 48:49

baby. I am a smart. You know it. All right. Number two is since there are no taxes filed for SDIRA, self directed IRAs, how How and if can you deduct annual LLC fees?

Gregg Cohen: 49:00

You know what? Probably best for you to reach out to your tax professional on that one. I'm not 100 percent certain on that one. HSN.

Pablo Gonzalez: 49:07

Cool. There you go. Honest questions from GC. GC, we finished the show in under an hour, bro. This is a good show. This is a good show. We had really good attendance. You know, whenever we bring up this like insurance stuff, these like big questions that we have on the show, you always show up en masse. And it's really you who takes an hour out of your day to like Make this awesome. Make this an interactive conversation. Give us great context so that we can answer questions better, really know what's going on inside of your head, and provide value like at scale instead of like one to one. So, I really appreciate you being here. Again, if you want to mess around with that rental profit calculator thing, what's it called again? The Real Estate Profits Calculator. Real Estate Profit Calculator. That was not the name that I picked, just for the record. But Nobody's bitter

Gregg Cohen: 49:52

though.

Pablo Gonzalez: 49:53

Nobody's bitter. What did I say? I was like, I was like, rental return regressing. I think it was

Gregg Cohen: 49:58

the P's. You wanted it to be the P3 calculator.

Pablo Gonzalez: 50:00

Oh yeah. Yeah. What was it? Predictor. Profit predictor. Yeah. Yeah. Rental property predictor. Rental property profit predictor. There we go. But anyways, go to jwrealestatecapital. com slash profit. Profits.

Gregg Cohen: 50:12

Profits.

Pablo Gonzalez: 50:13

Profits. Because you're going to get more than one profit. There you are. Five. By Profit Centers.

Gregg Cohen: 50:17

We like multiple profits.

Pablo Gonzalez: 50:17

Yeah. It's jwrealestatecapital. com slash profits. And, check that thing out. Next week. We got a interesting show. We got an interesting show. There is a Giant seismic shift that is taking place right underneath us and we are not talking about the La Brea fault line We are talking about the greatest generational transfer of wealth that is going on right now I you know, it is the idea that Baby boomers is one of the biggest generations to have ever been birthed in the U. S. In the world, and millennials are the biggest to ever be both birth in the world. And as baby boomers get into retirement age and end up passing away, there's a giant age Wealth transfer that is going to happen from them to their kids, their millennial kids. I have boomer parents. I am a millennial. You have boomer parents, you're a millennial. And this has giant, giant ramifications. And at the end of the day, context shifts, create opportunities, right? So the more that you can understand how a context shift is coming and what the, what the new problem it's going to create, or what the missing gap to fill that is going to do, the better that every everybody does. So we're going to dedicate a show. To talking about this giant generational shifts. And I'm really, really excited to do it. Cause I was actually brought up by one of the, one of the sales team members, Frank. Absolutely. Been having these conversations with people on sales calls.

Gregg Cohen: 51:41

Just another example of our community coming together to, you know, propose and request and ask about show topics. And we always want to offer that up. To all of you and having to be Frank on our team who sent this over was like, we're like, man, this is gold. We're going to do a show on this. So thanks to Frank. Thank you to all of you for being here. I also want to take a special moment to thank everybody. Last week at the very end of the show, we said, Hey guys, we're going to do this special webinar on Thursday of last week. And, it was about tax strategies and, you know, Downtown Jacksonville and quite honestly Pablo and I were supposed to talk about it a little bit earlier on in the show We didn't talk about it until minute like 70. Seven. Beyond one hour. Beyond one hour. Yeah. And so within like five seconds At least like 25 of you registered to attend the show. I mean you all showed up we had some challenges to actually get on the show with some registration challenges you persevered And you showed up and Pablo and I were just talking about just the strength of this community with almost zero notice to let you all know. And then some challenges with the registration for you all to show up in mass like you always do really means a lot to Pablo and myself. So we're excited about doing more of these webinars in the future with some of our best partners that we have and we'll be bringing those to you in the coming weeks. And so, we'll make sure we give you a little bit more heads up than we did last time. But thank you to all of you who attended and excited for the next one.

Pablo Gonzalez: 53:07

All right, hope to see you all next Tuesday. GC, any little bit of advice until then? Happy 4th of

Gregg Cohen: 53:11

July and

Pablo Gonzalez: 53:11

don't be average. Happy 4th of July, y'all.