REIA 203 Dani Beit-Or: Why Boring Real Estate is The Better Way yo Invest for the Busy Person

Welcome to Real Estate Investing Abundance, the show for busy, fulfilled professionals like you to learn how to develop financial independence built on solid passive real estate investments. Now here is your host, Dr. Allen Lomax.

Hello, enlightened investors, and I'm so delighted to be back with you again today, and we are going to take a look at Why boring real estate is the way that the best investors go. So let us get into our conversation today with Danny Bator, who has had over 18 years of experience investing in United States real estate. Danny uses his knowledge and experience to secure financial growth for beginners to experienced investors. Since 2004, Danny has worked with many hundreds of investors on close to 5,000 transactions, helping them to build strong real estate property portfolios by investing in various US markets. Danny helps both beginners and experienced investors by customizing each strategy based on experience, age, goals, knowledge, and financial ability. So Danny, take us into the show and share a memorable experience that helps you to be who you are today.

First, thank you for having me and thank you for giving me the opportunity to share. I think what actually put me on a course of where I am today, it's probably around 22, 23 years ago. I'm originally from Israel. I've been to the Israeli Special Forces. I got my engineering degree after my 3 years military service, started working for some Israeli high-tech company. And here I am, a young individual earning relatively nice income for a young engineer. And I'm in pretty big, what seems to me pretty big debt at the time. Today it looks very small debt to relatively to what I've been been able to do over the years, but back then that seems to be horrible or just that I couldn't understand how I got to this point. What am I doing wrong? I'm a young guy, you know, starting his adult life, you know, independently, and what is going on here? I was kind of lost about it, and actually that's I don't know if I'll call it a curse, but that situation kind of had to shake me shake me a little bit, and I realized. I need to do two things, and that two things are probably are the roots of what I've been doing ever since. The first thing is I realized I am real life economics illiterate. I know numbers. I have a degree, but I know nothing about investing and nothing about finances and real life finances and mortgages and leveraging and analyzing and stocks and all of those things. So I realized. I am making income, I'm paying some pension stuff related to it, and I know nothing about it altogether. So that was the first thing I realized is I felt truly illiterate and I decided, or I put myself on a self-educating course or self-autodidacting path, not course but path to learn where my vision or my motto for that journey at the time was every dollar, or every cent I should say, that I'm spending, I have 2 questions, or maybe 3. Like, why am I spending it? Do I have to spend it? And can I spend it better? So those were 2 questions I kept asking myself. And I remember, because it was so critical for me to, to learn, I would stand at the supermarket and I would argue with the cashier over a few cents because On the shelf, the price was one thing, and then the cashier, she was telling me a different one. And it wasn't about the 5 cents, it was about the principle within.

Mm-hmm.

And that kind of put me on a path of always asking those questions, learning, continuing to learning, educating myself about real life finances. Around the same time, or maybe, Just a bit further, a year or two later, I realized that now that I am out of that debt and I am more knowledgeable about real life finances, I realized my job, which I was really bored with it at the time, wasn't bad at all. It was just not challenging for me. It was easy for me, and I did it well. But because it wasn't challenging, and I thought it was really long hours. I kept asking myself, is this the right path for me or is this the right path to wealth? And I knew looking at my parents and looking at my uncles and my parents' friends and my older cousins and everybody that I know that is 10, 15, 20 years older than me, I saw how these guys are working long hours, working hard and missing on the good stuff in life, which is family and traveling and all that fun. And I told myself, I don't know what the answer to wealth is or what the right path is, but I know that the path that I'm being put on with a W-2 job, you know, traditional trajectory that a lot of people take, it's just not the answer for me. I didn't know what the path is. I knew one thing, I don't know the circuit to do a short-term, you know, how to create short-term wealth. I know some people really have it in them and they are able to do magic and make a lot of money in a short period of time. I just couldn't find the formula to do it. So I just told myself, if I don't know— if I know all those things, I taught myself about real life finances. I taught myself, kept asking myself, what's the best way to go about my own personal finances? And I knew my W-2 job is not gonna be the right path for wealth. I started looking for avenues that are not short-term trajectory or path to wealth, but a long patient path to wealth. And that kind of put me on that path around probably the year 2000, maybe just around the year 2000. And since then, that eventually within a year or two led me to start investing in US real estate, which eventually I made a full 18 years career of doing so and helping others. So that was a really pivotal point, point in my life that just put me on a path and that I'm very thankful because I love what I do and I'm enjoying it. That's the benefit of that situation.

Well, very interesting story. And I know that many of us can certainly relate to that because very, very few of us have been born into money and not being born into money, we don't know anything about creating financial wealth because we've had no mentors, no No family members, nobody there to show us that. I mean, first of all, that it's that it's possible. And well, you were certainly asking the right questions at at a young and early age. I wasn't even asking the questions. I didn't even really have a consciousness that it was that there was a possibility of developing wealth. So I just obliviously. I mean, of course, I always. You know, dreamed that yeah, it would be so nice to be wealthy, but that's all it was. You know, there was no reality to it, and I was just oblivious, and I stayed unconscious for many, many years before I finally started asking the right questions. But you were, you know, you were asking those questions at a very young and early age, which has been very beneficial for you. So thanks for sharing that very cogent story with us. So. You talk about boring investing and that's the way to go. And, you know, I think a lot of very successful investors would agree with you that the flashy things generally don't pay off. So tell us what you define boring investing as.

Well, the way I look at it is most of us, or many of us, you know, investors, whatever, whether we're beginners or or experience, many of us are— I would say we are, you know, very generally, uh, cutting it— divided into 2 groups. There are those who keep chasing the short-term wealth or solutions that they want to wholesale or they want to flip, and which is fine. But many of us, probably even most of us, have 2 main challenges. One challenge is I have a job And my job is demanding, whether it's more demanding or less demanding, it's still demanding. And between a job and a family and life, I don't have time to start learning to wholesale and make phone calls and flip houses, et cetera. Plus it always comes, or most times comes with our basic feature or characteristics that we are not very fear— sorry, risk lovers, on the contrary. So for my philosophy or my kind of concept is we don't need to chase this wholesale or flip or short-term or creative investing. We can just buy a nice single-family home or residential property in a good US metro that shows some growth in good school districts that will attract an upper middle class, a middle middle class, lower middle class tenant. And if we are buying quality and holding it long-term, there's a very good chance we are gonna mitigate against different risks that will present themselves. And if we just hold it long-term, you know, in a good area, most likely this property will be very financially beneficial for us if we are patient, right? Patient means at least 5 years, preferably 10. And more. So if we have that patience, and many of us do, then this can be an investment that pretty much sits in the background of our life, what I call the boring investing. Because the way I look at it is this. We buy a rental, let's just say in a nice suburb outside of Kansas City or Nashville, and we have tenants and the house is 30 years old. It's a 3/2. And it's rented out to a family and managed by a qualified property manager. And in the next 10 years, it's gonna look like this. Tenants are gonna move in and out every 2 or 3 years on average. Every once in a while, something will break, right? And every once in a while, there's gonna be some, maybe a tenant being late or something along those lines. And it's gonna cost a little bit money here and there, the turnover. And fixing, and there's gonna be some miscommunication with the property management company. But overall, in 10 years, 15, maybe give or take, what have we done? We've rented it out. Usually the rents tend to kind of creep up over the years. Cash flow slowly gets better and better and better. During that time, we're gonna pay off the mortgage, and the house tends to appreciate over time, tends to appreciate, as we know. And all of a sudden, you know, we sit back 5 years later, 10 years later, and we've accumulated some wealth. Most of it is still stuck in a house. But now, 10 years later or 15 years later, if we look at it and we just do the math thing a tiny bit and say, okay, we have a bit of a cash flow over the years which accumulated, we have some appreciation, we pay down the mortgage, All of a sudden we put $50,000 down, maybe another $20,000 over the period, over the years of additional contribution. And now we are, if we would sell tomorrow, we would make $100,000, $150,000, whatever the number is. And that's for me very powerful, very powerful. If we do it this way, the type of neighborhoods and the type of properties and the type of metros, That's what I call, you know, and holding long-term, that's why I call it boring. Is it buy and forget? No, there's gonna be some friction and miscommunications and stuff will happen. But for the most part, it is in the background of our life and in the background of our lives. And the beauty of it is that you buy one, you may be doing it for the first time, you get used to it, you see that the devil is not that terrible. And you see that you can handle the problems that are coming. Your way, and then what you do? You just duplicate it. You buy another one, and then another one. Maybe you do two a year. Maybe you do one every other year. Whatever your pace is, whatever your abilities, that's fine. And slowly, if you've accumulated two, three, four, five, maybe more properties, and just let them sit there, and that is super powerful. One of the sentences that I keep hearing from my veteran clients that have been with me for more than 10 years, it's almost always the same. There's 2 sentences I hear all the time. I should have started sooner. I should have bought more. Should have started sooner. Should have bought more. That's like a repetitive— and by the way, as someone who's been doing it for so many years, guess what? Should have started sooner. Should have bought more. Even myself.

It's a low-risk, almost failure-proof strategy. And you can set your own pace. Like you had mentioned, you could do One house a year, a house every other year. You could do 2 or 3 houses a year, 4 or 5 houses, depending on how aggressive you want to be on that. But whatever your pace, the outcome over time is going to be phenomenal compared to other investments. I mean, I really don't know of any other investment that has that same level of low risk and almost guaranteed payoff. You know, through those years, you're going to have Excellent tenants, you're gonna have mediocre tenants, you're gonna have bad tenants. But all of those things, the worst tenant in the world, if you're doing this correctly, you can mitigate even that nightmare tenant and survive that. So current times and investing in this strategy, we're recording this in June. Of course, it's not going to air here in June, but we're recording it here in June. And there is, Tremendous uncertainty in the economic world and due to inflation, due to situations in Eastern Europe. And so there's just tremendous questions on people's minds. Should we invest now? Should we hold off? Should we wait? What is your advice in these current times?

Yeah, so this is, you know, really, I think we are in the middle or the beginning of a transitional period. Which we're not sure where it's going, obviously, just yet. Because while interest rates are going up and we feel there's some uncertainty, and I think there's some mixed, you know, mixed messages from the media. Redfin announced that they're letting, I think, 10% of the workforce, you know, go. And Compass did the same. And other companies are not hiring or less hiring. Some of those companies, I think they're just projecting where we're going and getting ready for it and not necessarily are crashing or suffering, or they're just using this opportunity of the general mindset to kind of cut the fat a little bit. That also can be, you know, the situation. So it's hard to tell where we're going, obviously. Real estate-wise, we are still seeing, you know, the demand for housing, it's still greater than the supply. With supply chains is still challenging, workforce is still challenging. So from the supply and demand, you know, basic fundamental economical, you know, aspect, we are still a lot of demand and short supply, and that usually beats other mechanisms, right? I think that we are maybe going to, in my opinion, what I think will happen is we're going to go from a strong seller market or very strong seller market to a less of a strong seller market. Seller market. I don't think necessarily going to go. I don't think we're going to a crash because of the supply and demand, and I do think that the buying power of people, investors, and people remember investors are in the residential world are the big tail of the of the homeowners. They're not leading the charts. Plus, since the crash of 2008, you know there was a lot of cleaning house. So since 2008 crash, we have healthier mortgages, so much healthier economy. We have many more, probably percentage-wise, cash buyers than before. So a lot of cash in real estate as cash only. So that makes it more stable. And we still have more buyers coming in from different segments. So I think that we are gonna shift over towards more buyer's market or less strong seller's market. I will tell you one thing that I've learned and kept telling myself every time after the fact, and I think this is exactly where we are. Anytime in the past, at least my 18 years of operating, anytime there was a time of uncertainty was an excellent time in retrospect to be aggressive buyer. People in uncertainty, A lot of unknown people sitting on the sideline not knowing what to do. If you're a buyer and you believe that the US real estate is a strong segment of the market, which I am biased and absolutely believe so, and you buy it, use it to your leverage. Make a stronger offer, make a more educated offer. You don't necessarily have to play with above asking price, maybe even offer at asking or a little bit below. If you do that, that uncertainty, you can leverage it to your benefit. That's the way I've seen it because every time in the past that has always been the situation. And I'll give you a very recent example. You remember March of 2020, we welcomed someone new to our life, COVID, right? Everybody was kind of in shock, right? In a deer-in-the-headlights kind of a situation. I had a conversation with all my teams every so often to check and see what's going on. One team from Nashville kept telling me, Danny, tell your buyers to leverage that uncertainty. All our veteran buyers in Nashville are buying like crazy. So people in the Nashville area or the veteran investors locally in Nashville were buying in March and April and May as much as they could. And they couldn't care about the, you know, what COVID is doing because they saw an opportunity of uncertainty. Uncertainty, leverage it. That's my experience from going back to 2009, from going back to COVID and other situations, you know, that I've been through in my life. So I think if you're smart, you'll know to leverage that opportunity. And it is an opportunity.

Well, Danny, tell us about Simply Do It.

So Simply Do It has been around for many years. You know, it's everything that I'm kind of, we're touching on in the conversation. When I talk about boring investment, Simply Do It is the execution of that. Meaning what we do is we go and identify good US metros to invest in. We set up local teams of property managers and realtors that we would like to work with. We vet them. We train them. We carefully, you know, look into their businesses, and we line up quality, trustworthy, reliable people in order to both find us properties, properly filter them, properly evaluate and analyze them, and then present them to our, you know, list of investors. And our investors buy those properties, and we also have property managers in place that take immediately take over. after purchase and manage those properties. The big difference that we make in people's life is because of our scale, we are able to create a lot of systems and excellent systems and processes. And we are typically the property manager's biggest account. So any one of our clients who owns a house that they purchased by themselves through the Simply Do It services, they are actually part of the Simply Do It account with the property manager. they get discount, but more importantly, they get better service. So all the property managers that we work with, they see our clients as the VIPs, and they are providing services, you know, exactly that way. And we stay in our clients' life. We get involved when they are— most of the time, what I found, people, you know, want to buy real estate, they heard about the concept of out-of-state They heard about buying in different parts of the country, but they are fearful how to do it, who to trust, how to analyze, where to buy. There's tons of questions about executing it. And that's what we come in and we say, here's the knowledge gap and execution gap. We close that gap from handholding system processes and helping you find the right property for you, purchase, close, lease. And so on. And we stay in our clients' life and support them post-purchase. So any issue that will come up after the purchase, the ongoing issues of management, if they are unable to resolve it or they need to consult or they need our help, they let us know and we get involved and we help them resolve and we help answer questions all the way to the point that they have— when they want to sell, they first call us up. If they want to do a 1031 exchange, we help them with that as well. So it's a full cycle of purchasing, you know, going, you know, purchasing, managing, maybe selling, continuing to grow. It never actually stops. Most of my clients, they're repeat clients and we keep going and working with them over many years.

How do we find Simply Do It and connect with you?

The best way is to just go to our website, which is simplydoit.com. SimplyDoIt.net. My web identity is Simply Do It. So anyone who will just Google Simply Do It or Simply Do It Real Estate, it will lead to our YouTube channel, our website, and from there it's kind of easy to get in touch with us.

Dani, how does the beginner, the raw beginner, get into this? Just real quickly, we've just got a few minutes here, so just wrap us up by telling how the beginner can Get started?

So I want to answer it in 2 tiers. The simple tier that I always tell beginners is take a minute with yourself and ask yourself some important questions, such as how much money you have, can you get a mortgage, you know, how much time do you have, how much experience. I just always seems— for me, it always seems like people jump and start signing up for mailing lists and websites and asking questions. They don't even take a 5-minute with themselves to clarify their criteria. I call it the baseline criteria. What is a good investment? What is a bad investment? What is an okay investment? And then they, you know, that's usually what I tell investors. Just take 5 minutes, ask yourself a few important questions. And if you wanna, I have those questions. If someone reach out to me and ask for them, I'll be happy to share it. It's 12, 13 questions that like a self-test, self-assessment. If someone wants to maybe have more support, then we hold anyone who's interested for free, usually 30 to 45 minutes, what we call a strategy session. We just talk and try to figure out if there's a good fit between you, the investor, whether experienced or beginner, and what the services that we provide. It's not a sales pitch. I don't do books, I don't do tapes, I don't even talk about specific real estate. or specific investment in the conversation. It's all about what's the challenges, what you're trying to accomplish, is what we offer a good fit for you? And if it is, we may work, you know, end up working together. If it's not, it's okay. We do it all the time. I had 3 already today and I have another one right after this conversation.

Enlightened investors. What a delightful conversation we have had today and many things to think about and to chew on. I'm so glad you were with us today. And Danny, thank you for sharing your time and your wisdom and expertise with us. It's been a pleasure.

Thank you very much for having me. Much, much appreciated.

Thank you for tuning in to Real Estate Investing Abundance, brought to you by Steve Talker Capital, a company working for passionate professionals like you to develop financial independence built on solid passive real estate investing. As part of our efforts to make the world a better place, Steve Talker Capital contributes to activities and organizations committed to better understand the equine. These endeavors attempt to enhance the human treatment of horses worldwide. Steve Talker Capital, working for a world where all creatures, great and small, flourish abundantly. For resources to develop your financial independence, connect with us at stevetalker.com.