Ep 30 - Why Real Estate vs Other Investments

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.

Podcast, Freedom through Passive Income.

That's right. And today's episode is entitled, why Investing in Real Estate versus other Investment.

That's right. We love real estate.

That's right. And so. Well, first of all, I believe it was Andrew Carnegie. 80% of millionaires are made through real estate.

Yes.

And it's still. I mean, that was a stat years ago, decades ago. Still true today.

Yes.

And then the interesting thing that you had said you found Yesterday was that 90% of millionaires invest in real estate.

That's right. It's part of their portfolio.

So we picked up another 10%.

Well, they aren't made, you know, the real estate. And I don't even know that 80% is the right stat anymore. But Andrew Carnegie is just famous for that quote. Right, right. That it's made more millionaires than any other, you know, investment vehicle.

Anything else. Absolutely. But, you know, with investing in real estate, it's safe, it's easy, and it's incredibly profitable.

Yes. And these are all the things that I found that the articles are saying, why 90% of millionaires are investing. Right. This is. This was. Hey, why are they all doing this?

Many things come and go. Real estate still here.

Yes.

It's not going nowhere.

That's right. We all need a place to live.

And they're not making any more of it. No more land, no more dirt. But it's the best way to maintain wealth.

Yes.

Especially over the years. 50% of all businesses fail in the first five years.

Yes.

That's important. I know that there was probably maybe 10, 15 years ago, you and I had a fun thought of opening a restaurant, Sports bar.

Oh, that's right.

And they say, what is that? Like nine out of ten restaurants fail in the first three years.

Yes. It was something different stats for different types of businesses. Yes.

It was incredibly drastic.

Yes.

Therefore.

Glad we did not.

We never did that.

No.

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Yeah. So again then you got crypto. Everybody's jumping on the crypto bandwagon right now. Incredibly volatile, incredibly speculative.

Yes.

And so you never know. I mean, we have some. I open up my thing every morning going, oh, that's interesting. And then I shut and then I.

Turn off my phone dip right now. Right. So for those of us who have like a little, you know, I believe.

They call it a crypto dip.

Yes. We have our money that we're lighting on fire. We're buying right now because it is a low dip.

Occasionally it shows back up and then it turns on fire.

Right. But we're not counting on it.

No, no, exactly. And then you've got banks. That's lovely. I don't even know what interest. It's like, it's like point something, something, something, 6%. Every so often we get a penny.

Yeah, right.

Which is awesome.

Yeah. We're just losing money there.

Exactly. Yep. And then you got retirement accounts. Now, whether you're maintaining them or not and really driving what your investments are in your retirement accounts, you could be.

Just losing money 100%. We have an episode actually we're going to talk about because, man, it's really important. Education. So we want to hit on seven benefits. The reason that Flip started the episode with talking about millionaires and those stats that we wanted to share with you is because you always want to watch other people that are successful. Right? We want to watch other people that are where you want to be. And so we are taking these gold nuggets of this is what I mean. 80 to 90%. That's a majority of all millionaires are putting their money into real estate.

That's a lot.

I mean, that just says something, Right? So they feel good about it. Their financial advisors obviously feel good about it. So, you know, it's a step to say I should probably research this. So there's seven benefits and I'm going to go through them fast because we like to keep these short and sweet.

That's right.

So the very first benefit is for real estate is cash flow and passive income. That is why we're on this podcast.

Freedom through Passive Income.

That is right. We are all about cash flow and passive income and reaching your freedom number so that you can live the life that you desire. Number two is appreciation. Appreciation for single family housing. We're in Ohio. We say don't count on Appreciation. But quite frankly, historically, if you're holding the property for 20 years, you're going to have an appreciated asset. Of course you are. We just say don't count on it, cherry on top. But multifamily, totally different. That's forced appreciation. We're always buying value add properties where we can either increase income or decrease the expenses. So there's always going to be appreciation in a multifamily asset. Number three is tax benefits. So we've talked about this before. The government loves real estate investors and the fact that we improve housing and we provide affordable housing for people to live in. So you're going to have a lot of tax benefits, including depreciation. That could be straight line depreciation or bonus and accelerated depreciation. You're going to have long term capital gains. You're going to have the opportunity to do a 1031 exchange if you want to. Mortgage interest. There's just a ton of tax benefits. We have multiple episodes on tax.

Exactly.

So I won't go into it. Number four is leverage. You can leverage money by getting a mortgage. You can leverage time through other people's time. That's us. You can leverage experience through other people's experience. Again us. And you can leverage the property through the number of units. So we've talked about the difference between single family versus multifamily. We actually did a long podcast in one of our other podcasts about that. I think it's real talk. Real talk for real estate investors. That one. We did a very long one about it because we're. There's so many benefits to multifamily. We actually said everybody has a different opinion. And I asked you flip, right? I said, I'm putting you on the spot. What do you think? So that was a really great episode. But the point is, is that you have one single family resident or property. If it's vacant, it's 100% vacant. Right. But if you have 100 units and one of them or two of them are vacant, you still have 98 or 99 people paying rent. Well, hopefully they're all paying rent.

Right.

But it's a different ballgame. And even with rent increases, if you're going to increase your rent $50 a month on your single family, well, that's great. You know, that's always great. But if you're going to do it $50 a month on 100 units, that's big. You know, it's just a. Economies of scale is what we always talk about with multifamily. The Number fifth benefit is principal pay down. So you're going to be building equity as the principal is paid down. And who's paying down your. The principal balance?

The tenant.

That's right. Number six is a cash out refi that ties into number five, because as you have principal pay down and you couple that with appreciation, you can do a refinance and you can take some cash out. We'll just say that you increase your mortgage. Yeah, but that mortgage is probably at 3% or just something low. And then say you can take the money that you came out, either buy another property or put it into another investment that's going to give you an 8% return, 10%, whatever it is, you're going to have that delta or the difference between the two, where you're going to be making money because you took money out of that investment. Number seven is inflation. So just like it erodes your savings, it does the same thing for your mortgage, making your loan easier to pay back over time. It's also a hedge against inflation because as the economy rises and we do experience inflation, our rent is also increasing and there's a larger demand for real estate. And number eight, this is all you. Flip.

The last one's fun.

Yes, exactly. That's why I said it's all you.

It's a way to give back. I mean, I mean, I love, Absolutely love it. Because it's a win for so many people.

Yes.

You know, it's a win for us, obviously, because it's a great investment vehicle, but it's a win for the tenant, which we call residents.

Yes.

You know, we're giving them a great place to live. We're not throwing paint and carpet on a place, you know, we're. We're doing these properties upright.

Yeah.

You know, so it's a win for them, it's a win for the neighborhood, it's a win for the community. It's a win. There's so many wins. And so it's one of the main reasons why we love. And then of course, wealth building and the ability to give back more and to achieve our freedom.

That's right. Freedom.

Freedom. So again, we hope that you enjoyed this one. We like to keep them short and sweet.

Yes.

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Yeah. Even the podcast. Subscribe to those.

Yeah, absolutely. And leave us comments. Ask us questions. Tell us how we're doing. Give it. Give us suggestions, whatever it is, I don't care. But just head on over to one of our groups and let us know how we're doing. But we always like to end these with invest smart, live happy. Bye, everybody. Nothing on the 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 or loss.