Ep 270 - Coffee Talk V - Top 2 Things Investors Need To Know

Hey, everybody. Flippin Danny. And our special guest Ben is here. Welcome to another episode of our podcast. And our podcast is called Freedom through Passive Income. That's right. And welcome again. This is a part of a series we're doing and the series is called Coffee Talk.

Are you gonna do that accent every time? No.

Of course, of course I am. Come on. So again, this is Ben was asking, talking about asking us questions, you know, and like as if we sat down for coffee. And of course eventually it's gonna talk. We're gonna turn this into happy hour. Watch out, watch out. Exactly. You're gonna really get us talking. Anyway, so Ben, take it away.

All right. What is. What must every real estate investor know? What is the essential. If there's just one or two things, regardless of what area they're investing in, what would you say to real estate investors?

They must know the numbers. I think real estate investing and financials, passive income, everything that is in our world and what we're after. For me, it's, if I'm going to answer just one thing, it's going to be the numbers. Because the numbers are going to tell me a whole lot of things. Is the deal a good one? Is it going to be profitable and when is it going to be profitable and how much profit am I going to have? And it's just going to dive into literally everything that I want to know. But probably the first two things I just mentioned there, Is it a good deal and what does that profit look like? When am I going to get it? How much is it going to be? Those are two things that I'm going to look at every single time I look at a deal. How would you answer that question?

Well, it's funny, you said the numbers and I went, wow, that's pretty interesting because that's everything. You know, is this a good deal? Are we going to make money? How much does my marketing cost? How many deals am I getting per dollar of my marketing costs? What's my return on my marketing costs? If I spend more on my marketing, how much more do I expect to make? It's not just numbers on the deal, it's numbers across everything. Yeah, because you know, so many people just go, I'm gonna go out, get a deal. And I just got a deal. I made $10,000.

Woo.

This is awesome. You know, but they don't talk about the nine months that it cost of time that it cost them to get that $10,000 check. You know, so it's the holding cost.

The marketing cost, the team, anybody Else you had to pay. Did you actually make money?

Yeah, yeah. I think when we first started and we started working with Phil Grove, you know, and he was giving us like all these templates of things that he uses for his company, which I love, love American Homes. Anyway, not. Not that was the plug or anything. And no, we don't get affiliates. But, you know, like, one of his spreadsheets was like. Because he's an engineer. Yeah, he's very left brain. And his spreadsheet was like, I don't know, like 50 rows long and like a gazillion rows, you know, column or columns long, down a bunch of rows deep, you know, and each one calc something different. So if you put a one here and then it put a 50 cents here, then it calculated based upon how many deals you did and, oh, it was just mind blowing. But that's what you need to know to be successful. And this isn't real estate, isn't just a fun habit, you know, or a fun little. Not habit, you know, hobby. Thank you. I knew it was an H word. Thank you.

Got you.

That was. It was an H word.

It's.

Yeah. Anyway, it's not a hobby. This is a business and it needs to be run like a business. And I always think of when people go on Shark Tank, the first thing that Mr. Wonderful always says, you have to know your numbers.

Yes.

You know, and that's so true in real estate as well.

I think one of the surprising things that I've learned about accounting when I was growing up in my early adult years, it's like, oh, you know, accounting. It's like, yes, you got to keep your checkbook balanced, but that's about it. But as this world's evolved, and especially in the computer age, so much of our world revolves around numbers. One of the great realizations for me, particularly because my wife's cpa, is that numbers tell a story. And everything that you just mentioned is one part of the story about that particular property. And I think that a lot of people who are really not drawn to numbers. I'm really not drawn to numbers. That's not what I do or what I'm really good at. But it becomes a lot more interesting and a lot more compelling to understand the numbers when you realize what the story is behind it. Yes. So you've been talking about numbers. Someone just new to real estate, or they've involved another area of real estate. They're like, okay, well, how much do I need to understand about numbers? Do I need to become an expert at numbers? Or is this part of team building where, for instance, when we have new syndication, we have a call, we have people that everybody can jump in on the call. They can hear us talk about the numbers. They can hear other people, other investors who are asking questions. They don't even have to think up the questions, but they can still learn about the numbers. Numbers. And even though they're not, you know, knee deep in the numbers, can they still understand enough about the numbers and the story behind it to say, okay, this is a good business decision for me in my investing to reach my objectives?

Absolutely. So I think part of that comes down to the initial conversation with you, right. And they're talking to you about your. Their goals. And let's just say their goals is to have the highest interest possible, plus tax benefits. They don't need the money right this second. It can be tied up for five, seven, even longer years. Some of those goals, if that's what you were saying, then they're probably a good fit for a syndication type deal or the fund. And when we're talking through those numbers, you get the story. We're going to buy this 48 unit. Here's why the seller was selling. He wants to actually go buy another commercial property. His passion in real estate changed. Happens all the time to all of us. It's here in Hamilton, so it's local. We just did Middletown, it was 56 units. So we know how to do it. We did it in 21 months. And it's got the same, similar size properties, similar problems. And so you're getting the story. And then here's how much we're buying for it. Here's the projected renovation. And you know, from this one, what we projected it and how we turned out and that we were pretty accurate there. So you have a little bit of faith here and you're hearing all of these pieces and you've got all the numbers sitting in front of you and, and your brain typically goes to. I talked to Ben. This was the things that were going to hit my goals. This is what he said these types of investments have. And they just laid it out for me how I'm going to get that, how I'm going to get this. And, you know, the estimated time frame. And it's, it's a very simple way to apply a conversation to a real deal and have that confidence level that you can say yes.

Right. And by the way, when you call in and talk to C.J. or myself, there's a balance there between not just the questions and the type of offerings that we make available to you, but also we're asking questions to you to find out what your specific unique investing objectives are. Because that helps us to know what to recommend to you. It helps us to explain to you the numbers and the story behind it in a way that makes sense for you to reach your objectives. Because that's the key here. We want to have, as we've talked about in previous podcasts, we're not here to say, okay, we got this specific deal, we want you to get this deal. We want you to be have a lifetime business relationship with where we have this pipeline of quality, profitable real estate backed investments that, and from that you can choose which of those investments best fit your investing objectives. On that.

Yes.

So we just talked about what the essentials of what every real estate investor would know. The numbers. The numbers which we can help, you know, explain to them in a way that makes sense for them. What must every real estate investor, what's important for them to keep track of as time goes by? What, what do they keep track of? If it's they've got several different investments, what would you say is the important thing to allow them to track their progress towards their objectives?

I think it's their freedom number. I think if you're a passive number, passive investor. For us, Flip would do spreadsheets, right. And he would know what is our outgoing expenses, how much do we need to be able to feel like, hey, we don't have to, we don't have to do this anymore. We can do it if we want to, but what we have coming in every single month reliably is going to cover the expenses that we have. And some of these expenses are discretionary, Right. Because we put that number on the mandatory need to pay. Absolutely. But we had some discretionary stuff. So that freedom number was like a couple levels, right. This is what we have to have. But we really like spending our money on these too. And you know, so we made decisions on how to get there and that's how we measured our, our success and progress. When it came to passive income, when it came to active, it's a lot different. It's the investment and you're digging in, right? Because you're the operator and you want to know certain things. So many times it's just the net operating income. Are we making money? Are we making the money we plan to make? And then if you're not, you just dig in, right? If you are, then you can be hands off. Right? You just, you check that one number all the time, and you're okay. So I think there's two points of view there, at least for me.

Excellent. Yeah, yeah. And there's two. There's two different. When we're working with people, investors have different levels of reporting that they want. So for some investors are like, look, I. You know, the business. Here's the investment. We'll see on the other side. And others are like, hey, can we get a quarterly report on this? Because I want to see how the property's going. And they dig into the, you know, the sheets and they're looking, looking at the numbers, and it's, like, pleasurable and it's helpful and assuring. So this is all great stuff.

Yes. I love it too. And I think Tiffany could speak to your point very, very well. Some of our investors are like, you can stop emailing me and updating me. I don't care. And some of the investors are like, can I see pictures and progress? So I think it's a good conversation.

Awesome. Well, we hope that you enjoyed this episode. Oh, before I did want to actually ask you a question, Ben, earlier in this episode, you referenced something that. Balancing your checkbook. Can you explain to half of the millennials out there what that means?

There's this thing they used to have. It was like a paper thing that was about one third the size of these sheets.

But did you have the leather case on it?

And it had. Well, mine was actually always vinyl. Starting to level my accounts. And people would write in it, and it was sometimes cuneiform or actual hieroglyphics, but they would keep track of the numbers in honor of the ancient Egyptians and the medieval people that did things in writing, man.

When they came out with the checks that. When you pulled off the check, there's the white piece that copied everything you just wrote of the check so you didn't have to rewrite. I'm like, that was genius. Anyway, welcome back. We hope you enjoyed this episode. Make sure you're heading on over to our website, freedomcapitalinvestments.com to join the investor club and make sure you're catching us on all the social medias as well. But we like to end all of our episodes with investmarmart Live. Happy. Bye, everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit and loss.

Sam.