The Gift That Keeps Giving | Real Estate Investing | REIal Talk EP. 80

Foreign.

Hey, everybody, welcome back. This is real talk. It's real talk for real estate investors. Chris Sonino here with Mark Woodring. Episode 80 Score. Yeah, today we'll be talking about, if you saw the vlog, we're gonna be talking about why real estate is the gift that keeps on giving.

Sure, yeah, absolutely. I know that we've talked about it in other series, you know, just almost hammering at home about how real estate is so much different than other investments. You know, I mean, there's a lot of people right now with uncertainties, 401ks, different sort of investments. But real estate, as you know, I mean, some of the things that we just want to talk about is what makes it so much different, right? Like the fact that you own a hard asset, you know, the fact that you own a piece of property and year over year that is going to hopefully continue to perform. You know, then you add the fact that you're paying your mortgage and making cash flow. So we'll definitely dive into some examples later in the podcast on that. But again, just, just buying a piece of property, holding it over time, I mean, it should, should, you know, give you an asset that performs over time as well.

Right, right.

So you mentioned passive income. That's one of the things that's on our list. You know, it's interesting thing, actually one of the main reasons why I got into real estate investing, so it's to take a, to put on a different hat for a second. To just talk about just my experience and why I'm in was like an absolute aha moment. Like, why isn't everybody doing this type thing? When I realized that I could be working a 9 to 5.

And then.

Somewhere else, sure, there's I'm earning a dividend and I'm earning interest and I'm earning all these other things that's tangible. Like, I can see it in my bank account. I personally felt like, and I was in stocks for a while, right. We all, I think everybody's had some sort of 401k or IRA or something. It's one thing to have to like log into an app and like see money that you can't touch, otherwise you're gonna take a penalty on and all these things. It's, it's a great strategy. I think it's perfect for a lot of people. I also think that if you, if you're in real estate investing, you should diversify into stocks. But to be able to just pull up my bank account and move over to my business account and see that, oh, My tenant pay rent this month.

Yep. Right.

And then also know that the market's doing some cool things and I'm appreciating like it's passive.

Right.

And it's growing in value and I can watch that happen. Yeah. I mean it kind of actually goes over lots of things we're talking about here. But sure, for me like that was just a big thing, like, oh, this is real.

And would you say that like, you know, for our, for our new investors, like would you say that it's, it's, it's patience. Yeah, I mean it's, it's, it's the time that you have to purchase that home. And so say like the rent is, let's just say $1,000 a month and that you're cash flowing 200, 250 or something like that. Just small amounts that may not look like you just won the lottery.

Right.

But the patience of doing it and replicating that over and over again and then using a company like ours that does all the work for you.

Right.

We acquire the property, we rehab the property, your team rents the property and then, and then we sell the property. Basically, here are the keys.

Right, Right.

And so you don't have to reinvent anything. But like, would you say that like, you know, for that first investor, like, you know, the patience is the virtue.

Yeah, there is definitely a level of patience there. But I would follow up with a different p. Perspective.

Right.

Patience is important. Patience is important in anything.

Right?

Sure. I mean you have to be patient in a McDonald's drive thru.

Right.

Sometimes more than others. Right.

Nowadays with the hiring.

Right, Right. But perspective, that as well. You know, you mentioned $1,000 rental. You net 250, meaning after expenses, that's what you bring home, that's what you see that hits your balance sheet.

Right.

For me and the conversation I have with a lot of my clients too in ipm and we have in some capacity with, we talk about passive income here. Freedom is that $250 equates to you working that $250 a month is what we're talking about. That equates to you working a 25 per hour job, an extra $10 that you didn't have to work for or 10 hours. Right?

Right.

So I mean you do that once. Awesome. Do that two times. Sweet. Do that 10.

Right.

15 times or even put your that 250amonth position, increase the rents every year a little bit, that 250 becomes 300. Next year you get a really awesome tenant who was like oh yeah, the market's increased. Sure, I'll pay an extra 200amonth. I have no problem with that. Well, now you're not looking at 250, you're looking at 450.

Right.

And then you're moving into a whole different game. Are people that are in apartments like multifamily is anything two units or more, you're seeing that X exponentially increase. Right. So we're talking about single family home running $1,000. I know we have a couple duplexes under contract right now that are this. I mean they're going to get better returns because they're not talking about 250, we're talking about 500, $600 a month right now.

And that, that is amazing to think about is the way that you look at it through that lens is a couple hundred dollars may not seem like a lot of. But I mean, that could be your Hulu bill, your cable, your phone that are now paid, that you don't have to pay. And so it is about getting that first one started. And then like you said, you start moving to. I know that when I'm like working and coaching through clients is, you know, where do you want to be, you know, setting yourself up for that five year plan? How many properties do you think that you can purchase in the five years? And I know that one of the things that we had like given a tidbit on and what we were going to discuss were rates and how that affects. I know that for the numbers that we send out, we're trying to anticipate what lending looks like to gauge what a mortgage would look like. And so that when we put together that pro forma, those should be fairly accurate to the cash flow that you're going to get. And so as interest rates start ticking up, you know, six, seven, maybe even eight, they're not historical highs. I mean they've been higher 20, 30 years ago. Right, Right, A lot. And so, and people were still buying houses then. So it's not that people aren't going to buy. I think what they're looking at is, you know, how, how are they going to be protected in the event that things keep going up?

Right.

You know, and I think we've talked about this in other podcasts and blog is, well, buy now because I mean, what if it does go higher? You mean, buy now, protect yourself. Now, these are the cash flow numbers. And later in the episode here, I'll dive into two particular properties that we have where the cash flows are either very close to 500 on a single family home or over 500 on a single family home at the current market rates.

Right, right, exactly.

Yeah. I mean, like, so you're Talking about a 9% cap rate single family home where interest rates are at 7%.

Yeah. Which means that in a year, once you've been paying on your mortgage for eight months or 12 months and the buyer, the investor decides to refinance because the rates may go back down or what goes up must come down capacity. So do you refinance? You're still getting 500 plus a month, but now you have less interest, so you're having to pay in the front end.

Exactly.

That's not, I mean, we're hitting on. It's not a bad time to buy.

Right.

Actually, there's no time like the present.

And that's, that's what I was getting at is when we're talking about, you know, Christmas season, the gift that keeps on giving. Exactly what you alluded to. Let's just say three years.

Right.

So you're making $500 on this house for three years. The interest rates go from 8 down to 4 and a half, 5. I mean, they just drop in half.

You're right.

I mean, you're now talking about refinancing that and having a mortgage payment that's significantly hundreds of dollars of less three years from now. You're also having hopefully more on your rent. You might have a house that's bringing in $1,000 a month.

Right?

One property, yeah. I mean, whereas if you wait this out now, what. Right, yeah, you bought that house at four and a half percent, but what you just left on the table was the equity that built over those three years. You know, the fact of, like a proven property that brings in rent and having that property that has now given you, you know, XYZ dollars over 36 months.

Right, right. So, I mean, this kind of. You were talking there and it kind of brought out a couple ideas. You know, we've, we've done a lot of these podcasts and these vlogs together. We've been on a couple other events and where we've talked about these types of things. But one thing that I don't know if we really touched on is, well, we touched on some capacity. There's so many different ways to invest in real estate too. So we're talking specifically about buying rental real estate.

Right.

Not other avenues of passive, passive investing in real estate. But when it comes to buying, there's one avenue that I don't think that we've talked about a lot and in depth, but it's a good opportunity. Now I think that some of our buyers, I don't know if they know or they've thought of this, but there's been a bit of a baby boom.

Because of COVID Right.

What better gift for newborn or 1, 2, 3 year old child than to be somehow involved in owning real estate that they get to reap the rewards of 18 years from now.

Yeah, right.

I've heard lots of trusters, I've heard lots of stories of investors building trust post Covid, buying real estate, putting in that trust. They, they refinance and they still manage it as if, you know, I mean the trust manages it, but as if it's their own personal asset. But.

Right.

Their child, their children are the beneficiary. So we talk about generational wealth. That's one strategy that if you personally aren't interested right now because you're kind of nervous about a couple things, lock it up in something as secure like a trust. And then now you're playing an 18 year game, 20 year game. Forget, if you sell it, you sell it.

Right.

But you're still in a good position. That trust that you can then buy again, we talk about equity like, sure. That, that, that's going to increase value there and it's protected and it's something that your children and your children's children can take advantage of. Sure.

And I know that, you know, I mean, we don't have the crystal ball and by no means am I making a prediction. But year over year, real estate continues to perform.

Correct?

Yeah, I mean it does. And so you buy a property even if the market crashes, let's just say worst case scenario, your house goes, you know, down less than what you bought it for. Now that would be worst case scenario. And Dayton is a very safe market, Cincinnati, very safe market. I don't think we've seen that for quite some time. But let's just say in the event that it does go down again, this is a buy and hold strategy, like you said. I mean, if you're talking about an 18 year plan for a child, I mean if you look at a house and there were two or three that I looked at prior to coming in to do the show today was, you know, what did these sell for 20 years ago?

Right.

I mean they're almost double in value. I mean, so think of that 18 year game. Right?

Right.

Where you buy a property and again, I'm not saying that properties in 20 years are going to double double.

Right.

But they're gonna go up, right? Well, I'm gonna go up, yeah.

If they don't want to say 18 years. I'm just thinking of a child, you know, maturing of that age. The reality is, like, most people that have those types of trust don't have the same assets in them in 10 years.

Yeah.

You know, they'll hold them for five to 10. They'll, they'll, they'll milk it for as much equity as they can. They'll gauge the market. They'll have a bump like we did this year, and they're like, oh, now's a good time to sell it for more for double.

Yeah.

Perfect example is my house doubled in value in the last six years. Right, Right. I mean, can't imagine thousand, some sort of high interest, you know, yielded trust or something that would allow it to appreciate even more.

Right.

So that's the kind of the strategy I was thinking about there. But you're absolutely right. 20 years ago. Now, granted, I wasn't in real estate in 20. 20 years ago.

Right.

But 20 years ago, like, the, the general value was significantly less. Interest rates were fairly similar from what I can tell. But market trends are what they are. We could be increasing significantly over the next few years. Even in areas where the interest rates are high, like.

Right.

Value still stabilized. It may dip a little bit, but it bounces. It's just like the stock market. You think Tesla's worth what it was three years ago? No, it's. It's fluctuated quite a bit.

Right?

No, absolutely.

Yeah.

I just keep thinking about, you know, all, all the gifts they keep on giving. I mean, like, it's just, it's just with real estate, it's, you know. You know, because I've even talked to, you know, like, say, Randy or somebody like that, a cpa, very intelligent. And when you talk to them about, oh, I want to do some buy and some flips, and they're like, well, that's, that's great. But, you know, you, you may make more money up front on the buy and the flip, but then what do you have? Yeah, I mean, you, you have taxes due on the money that you pay, you know, made unless you, you know, get creative and how you roll things over. Whereas, like, you know, buying properties, there's tax advantages to that. You know, there's tax advantages on any repairs that you make. And we just talked about a few minutes ago, it's a slow grow. I mean, I don't, I, you know, my entire time here and in real estate, I'VE never seen somebody buy 10 properties at once.

No.

You know, I mean, like, you know, even the wealthiest of wealthy that you know, may have worked for Google and cashed out their stock options, they still don't buy 10 properties at once.

The closest we got was maybe somebody that bought four, bought three, but they bought them like they put one under contract and then they put like two weeks later they put another one and it was a 1031. So they had like a restriction, right. They had to use the, utilize the cash, have it claimed.

Right.

So like literally like every two and a half to three weeks they put another one under contract so that we could claim the entire fund.

Right.

But even then, like super, super rare, usually people are like buying like spring and then end of summer or fall.

Right.

So 10 1, 10 once is a bit interesting. I'd like to see that.

Yeah, right.

I think I might have actually a client, ipm that is pretty close to that. He'll probably buy five or six properties at once. Oh, nice. But a lot of times like we're talking about he's flipping two, he's wholesaling one or two and then he's making three into a rental. Like it's a different strategy than what we do. But as far as our clients. Yeah, no, sure, talk. We're talking about one or two.

And you, and you touched on IPM and I told you I was going to bring this back in just to kind of like, you know, for maybe a first time watcher or somebody who, you know, is just trying to find out a little bit more about Freedom Real Estate. And with our turnkey product, and we talked about the acquisition, the renovation, you know, getting it rented and then ready for sale is that, you know, the properties that we sell now. Right. Are a little bit different.

Right?

Yeah, yeah. So if we were having this conversation this time last year, we would be talking about, I think we even called them Promise Rents.

Right.

I think at one point that was part of the sales pro forma is that if a property wasn't rented, there was some sort of rent guarantee that we called promise rents. Of course, we don't really like lingo like that because, you know, real estate is an interesting monster sometimes. But what you're alluding to is this year we've made some pretty serious changes on how we do business here at Freedom Real Estate Group. And one of them is revolving around not just product quality, but actually selling. Selling the product we promised.

Right.

And how our client, the buyers, our investors, how they receive and you know, not just receive the property, but their experience once they buy the property. That, that big, the big one of the big changes, there's been many. But the biggest one, least that's relevant for this conversation is we don't sell properties here, Freedom Real Estate Group, unless until they're rented.

Right.

And rented, moved in and already performing the way they are in the performer.

Right.

So I mean, the, the obvious, you know, great part of that is that when you close on the property, you're instantly cash flowing, like next month.

Correct.

You know, I mean, because you're already in the process of doing this. Do you see any other benefits besides, you know, that obvious benefit of, of like, here you go, you are already cash flowing.

Yeah, there's lots of benefits.

Like does it help work out any bugs, you know, or.

Yeah, yeah.

So future.

Yeah. So internally, you know, so first off, let me just kind of rewind just.

A little bit.

You know, the beginning of the year. This is more like, more IPM centric. I think it kind of bled over to Freedom because we're all the same, you know, family of companies. So product matters. Throughout the entire pipeline here, we started really analyzing our buyer experience right from the very, very front end of the funnel all the way through living in IPM afterward or any other PM company, if they choose not to be with independents.

Right.

And in that, that experience and, and researching how our buyers are feeling, essentially their emotion, we had several aha and revelations. Right. The big one was that when we sell a product, we were realizing that there were certain things that were not performing the way they should have been. So by renting properties first, that does a couple things. First, we're able to work out any issues at the property. So we go through a strenuous inspection process in house before we even market a property for rent.

Right.

Let alone before we list it for sale.

Right, sure.

So it goes through multiple double checks, multiple quality assurances, funnels and all that to try to make sure the property is as good as it possibly can be before we sell it, even before actually before we rent it, even by renting it before we sell it. That allows us as an IPM to be in there with a resident already kind of set the tone of how that relationship is going to go. It gives us a little time while we still own it, right. To work out any maintenance issues or if there, for some reason the city comes back and there's an issue with something on a tenant moving in or for me, if there are section 8 repairs need to happen, if there happens to be a Section 8 agency, they have strict rules on what the property is performing. So it gives us an opportunity to get all of that worked out while we still own it.

Right.

So that means it's on us, it's our expense, it's our loss for our client's benefit or buyer's benefit. The other big thing is we try the market, we try to get top market rates. We finagle, we negotiate on our dimensions. Whereas previously sometimes that would happen and we would set a pro forma and we say, hey, rents are $1,000. Expect this. And then we have to negotiate and all of a sudden rents 950.

Right? Right.

Well, that's not winning, right?

Exactly.

It's better than the rent being zero.

Right.

But it's not winning because now the client's losing $50 a month.

Right.

In cash flow.

Right.

So we take that.

Right.

We, as an organization, I'm talking from Freedom Real Estate Group, we take that, holding that for you as our buyers. So that way, when we're, when we're confident going to perform.

Right.

And it's rented and it's cash flowing and there's no work orders coming in and everything's flowing fine, the tenants are happy, property looks great. That's when we presented, hey, this property is available. If you would like to be a part of this, take this opportunity. Here are the numbers. I think that's been a very major uplift and a bit of a, like.

A.

A revelation, if you will, to how we, how we present.

Do you feel that the, the investor experience, you know, is, is that they feel better, you know, like, hey, you know, John Smith, this house is rented.

Yeah.

I mean, and, and, you know, just. Can you, you know, we've only been doing this, I guess, for a few months.

Right.

Can you kind of see that that energy is a little bit different and that the, the member experience is better?

Yeah. So, like, as you said, it's kind of early. I mean, we've been doing it for a little more than a quarter. We're actually, we're about a little more halfway through quarter two of doing this. So the data's still fresh. Like, I don't know if we have enough to say yes, definitely. But I will say that in a few conversations that we've had with owners after they've been on board ipm, it's been generally a different type of conversation. It's more of a house, my tenant conversation. And then I'll just clarity on, like, when rent going to be paid. To me, those types of conversations versus what are we doing for leasing? What are we thinking for rent? Are we thinking about this? Have you talked to Freedom about that? Like, it's a little bit more of a. And we're still engaged the same level of conversation, but the conversation is less defensive. It's more. I don't know the word. It's less defensive. This is the way I want to put it.

Right.

It's not a on my toes situation. They're not dug in, like, trying to combat and trying to figure out. They're trying to be like, okay, hey, we're in a winning situation now. What can I expect? And that's much easier for us to manage on our end.

Right.

And I know for. I'm pretty confident that if we talk to those same buyers six months from now, sure. They're going to feel much better about the product they purchased and more inclined probably to buy more. I do know that there is one client that is currently under contract for a property. Dayton. Dayton. That was one of the first buyers when we started doing this a few months ago.

Okay.

And the fact that he's already buying another one just a couple months later makes me super happy.

Yeah. No, believe me, as far as, like on the frag side or the Freedom Real Estate Group side, speaking to investors, you nailed it. Where we're not talking about, we anticipate the rent. These are hard rent numbers. This is what's actually coming in. So these are the performance numbers. So, you know, there's investors that still use maybe different metrics as to how they look at how property performs. You know, any capex numbers that they may substitute over what we do. And that's okay. I mean, but at the end of the day, here's. Here's the cost of the house, right?

Yeah.

I mean, and we're doing market rent. I mean, there are companies out there that, you know, either have you bid on a house, you might be over bidding on a house. There's companies out there that may even set it high and expect you to pay differences on it. Whereas, like, we're literally selling you something that's market rent or I mean, value to the market. And then these rents, I think you talked about it earlier as well, we're trying to get higher than we think. Like, so, for example, the one that I brought with me, this is our property on Prosser. It's in Cincinnati. When we originally put in the pro forma, we put in 1300 for the rent. And this property is actually performing at 1350.

Right.

Because it's A great neighborhood, great area. The rehab was done, you know very well. It's kind of like an open house. This property is a. Is a 9.2 cap with almost a 17% cash on cash. And like I had talked about earlier, this is when we're looking at. That's at the current interest rate, right. So this property, like I said, is 1350. So it is bringing in $455. So let's just call it 450 per month rent after expenses are paid.

Right.

With the current interest rate.

With the current interest rate.

Correct.

So, I mean, if you drop the interest rate in half, you know, and. And just going through the quick numbers on what the difference in your mortgage would be, you're looking at a cap rate that's almost 15 or 16% and a cash on cash at 25 or more percent.

Right.

I mean, that's insane. Like, if two years ago, when interest rates were low and the market was going crazy, if I would have came to you and said, hey, Kris, I have a property that's cash flowing at $700 a month. You know, I mean, and single family home. A single family home, cash flowing for $700 a month. The cap rate is 16% and the cash on cash is 25%. How fast do you think you would be signing anything?

Like, well, at first I'd probably try to laugh you out the door, right?

Be like, that's not.

That's not realistic, man.

What are you doing?

I think you got a decimal place wrong on your proforma. Exactly. But as soon as you showed me, and I'd be like, absolutely. Where can I sign? Here's my. Here's my wallet.

And so that's. That's kind of like what we're talking about with this gift that keeps on giving is because, you know, although markets change and rates change, these are still performing. They're real. I'm not saying that, like, you need to run out and buy as much investments as you can. Do your homework, obviously, but.

But.

But these are real, and they may not be recession proof because there's some things obviously, you know, like during COVID you know, a lot of people were worried about, like, whether rents were even gonna get paid.

Right.

So, I mean, those are real fears. You know, I mean, I'm not trying to discount those at all, but, you know, there. There's obviously some things that we can do to mitigate losses and things like that when. If that ever comes around. But, I mean, you know, hopefully we're through the woods on most of that stuff. But you know, these are things that you should maybe consider adding to your portfolio as something that can be a. Either generational wealth. Like as you touched on something that you can add for just, I mean, gosh, even, even if this is just money to replace for vacation.

Right.

Once a year, like you weren't able to go on vacations during COVID lockdowns and things like that. You know, if you're bringing in 450 bucks a month, you can either put it back towards the mortgage and buy it down or literally just put it in a fund.

Yeah. Just set aside 10, 15% of your cash after expenses and then you take your wife and kids on a good vacation.

Exactly.

Yeah. I mean that's literally a strategy that I have when I'm investing because I do both passive, like strictly passive. And rentals. Yeah. It's a good strategy to have the other thing like as you were talking, like rents are going to go up a little bit.

Right, Right.

So one of the things like with the new process of us renting them before we even list them for sale, we. The way we comp rents is very, very involved.

Right.

So for those that are like maybe new to our podcast or new to our company, you're just kind of toe dipping into real estate. You know, we have set, well, six companies.

Six.

I'm saying six. There might be seven.

Yeah.

There might be another one.

Yeah.

So six companies doing all sorts of things in real estate, from acquisitions to dispositions to large scale syndications for apartments and debt funds and all the whole, the whole kick caboodle.

Right.

Freedom. Real estate is all encompassing of all of that. So when we were going through this change, I mentioned all that to say I. Our company, ipm, our sub company or department is what I'm going to call it, we weren't involved in the acquisitions end of it at all.

Right.

Really?

I mean, every now and then when I might get a message that says, hey, curious about rents on this, you know.

Right.

But most of the time our acquisitions guys are just making decisions on just sheet numbers, a spreadsheet of whether or not something was good to buy. Now, mostly because of this type of decision, almost every single one is thoroughly vetted with a very strict rent procedure that's been approved by us in some capacity. And the ones that are like, I'm kind of on the fence about this, then we're brought in and then those rents are also checked periodically throughout the rehab.

Right.

Because the rehabs take anywhere from two and a half to six months. Depending on lots of factors there, Mark can do a lot in six months. We're sitting in the middle of a six month cycle right now with interest rates. So. And then right before we list them for rent, we go back one more time and we say, okay Mark, this is where I call you.

Right.

Mark came in. What do you think this property is going to sell for?

Right.

This is what I'm thinking for rents. Do I need to, should I go up a little bit? Do we maybe make concessions on where we're pricing it? So that way we make sure that the numbers look good, if it went, if and when it rents, and then we have, actually we have a meeting every twice a week to go over those pro formas and the market and what people are saying when they're viewing properties during leasing to see if we need to adjust prices, if we need to concede on a few things or what needs to happen in order to make this a good experience for our buyers and our clients long term.

Right.

That's been a game changer. But ultimately that decision is less for us than it is for our buyers.

Sure.

Because it's important that if you buy $150,000 property or more or less that it performs the way we sold it.

Sure.

And one of the perfect examples of how those numbers changed over, over time with a longer rehab was the other one that I brought, and that was our 820 Dayton Street. It's in Hamilton.

Right.

This one is in what they consider the oil light district. It's a historic district. You know, rehabbers know that, you know, purchasing in historic districts can be a challenge because there's a lot of permitting things for external, you know, the way the home looks. So when this home was originally set in a pro forma, we had it slated to be a retail because the value of the homes in that area were higher than the rents at the time in order for the cap numbers and things to even be attractive for our investors. Over the time that it took for this home to be rehabbed and permitted correctly, the rents had gone up almost 200, $250 in that area alone.

Right.

And so the value of the home was still going up a little bit, but I think we had it maybe, you know, around 155. So the home now is for sale. It's 165, it's a four bedroom, two bath, it's a big house. You know, like I said, in the historic district there, it was probably pretty easy to rent and we rented it for 1600. I mean, that's a. I mean, we're talking. So according to my numbers here, that's a $520 a month on one house, right? 9.2, you know, cap rate again with the 16% cash on cash again, three years into the future. Just think what those rents might climb to, right? Because this, I think this rehab took us almost a year, right? So just think that went up 250 bucks in rent over just that year. Now, a lot's happened, obviously, but you'd have to think what's going to happen three years from now. The value of this home is going up, the rents are going up, and let's just say rates drop. Even if rates don't drop, right? You're locked in on making at least $500 a month, right?

Exactly.

You're locked in. So it doesn't matter. Rates could go to 15. It doesn't matter because I own this property and I'm making $500 a month minimum, right? And then as rates go up, so if I can rent this for 1700, I'm now making $600 a month. So it just, you know, it just. It just goes to show that, you know, the longer you sit on the sideline, a lot of things can change. You know, the value of the property, the cap rates, the cash flows. Whereas if you decide to, you know, be aggressive and, you know, address your fears and concerns, you know, with us, review the numbers, you know, come to me, ask me any questions you have about fears, concerns, the area, whatever, let's get them all out of there. And then once you feel safe and ready to go, you know, you start investing. These are things that year over year have shown to perform, right?

Yeah. So, like, I love this property.

I mean, do you?

I mean, it's a good look. It's a good looking house.

Yeah.

I was just down in Hamilton this morning.

I was actually. I just remember. I remember when we. I was first brought in on Dayton, I remember actually telling him that the 1200 rent was a stretch, right? I was like, man, I think you were the one that actually called me on that one. You were like, man, I need to get 1200. I was like, dude, I'm seeing like 11, 11, 15 tops, right? You're like, I really need 1200. I'm like, I mean, I'm gonna do what I can. And then here we are, you're later talking about 1600. And it did. It rented in like a week and a half or something, like, and it moved in within two weeks. Like, it was insanely quick. How that blew. You know, I was thinking what you're talking though about that. It was all good information. You know, it's a good time to buy. We keep saying that, but want to kind of bring another perspective into it.

Sure.

People need a place to live.

Yeah.

The same insecurities and fears that our potential buyers might have about, oh, I don't know, now is a good time to buy. It's not a good time to buy a PS4.5.

Right.

But when it comes to real estate, like, the reason, one of the, one of the many reasons why real estate's a good place to be is because right now, the same insecurities that our buyers have about buying investments homeowners are having about buying their first homes or their second homes, we're seeing an unprecedented number of people choosing to rent instead of buying because they don't want to have the high interest rates. They don't want the market they feel is inflated or whatever reason they may have. They're making a purchase decision out of fear, which our investors can actually capitalize on.

Right.

And I'm not saying that in a way to discredit my renters at all, but they're making a decision to rent because they don't. They're afraid to buy in some cases, not all cases, some are just very much. I'm a lifetime renter. And that's fine, that's important to know. That means that at least for the next year you have somebody that's going to be in your property and renting it. And then we talk about rent increases and stuff like that. Like this year was, it was. Rent increases were pretty significant. Obviously the market went up quite a bit. So there were some gaps. We had to close on market rates next year. I projected to be a little bit slower, just a little bit. Because we are in a recession by definition. We have to have the. Let the economy catch up a little bit with some things that are happening. But I'm still projected like a 6 plus percent increase, probably pushing closer to 10% to be honest.

Would that also, like, would it be fair to say. And again, here's possible ignorance here is like, it's fair to say that right now, like, because the rental demand is so high, you're getting the highest, so it's hard to push high. Higher.

Yeah.

You know, when you're already at it. Because I know, you know, sometimes when I talk to investors, they'll ask me the question, you know, so what do you think rents will go to next year?

Right.

I don't have A crystal ball. I know you don't as well.

Right.

You know, we can, we can take a look at trending numbers and make that call, but you know, when the demand is high right now and the rent's high, it's hard to push high, higher.

It is hard to push high, higher. But I will say that we are setting rents. Okay. So we do market analysis many different ways for rents. I'm talking more rent comps right now, not sales comps. So they're kind of similar in how you analyze them. Rent comps. It's not as simple as just going to Rentometer or any other tool right now pulling an average. Like, we have to dive into the numbers, you have to dive into the comparable properties. Really look at what we're trying to compare. Knowing that there's product and finish differences, the assets are different, different builders, different renovators, different homeowners. Like two properties on the same block could be completely different. Yep.

Right.

So knowing those and taking those factors in, where is a half a medium on rent or where we can still be competitive but not the top person? So though I appreciate the compliment, we're top market, we're close.

Right.

So a perfect example is we have a property coming soon. Those of you watching, you're going to see this probably come up in our emails soon. Probably in the next couple of weeks. It's going to be pushed out for sale. Well, I'll say within the next month or so it's been put up for sale. It's Helen street in Cincinnati. Oh, yeah, that one is one that we did. We've done rent comp several times. I just this week bumped the rent like $600 before we listed it. And that 600 bump puts it in like to a $2,600 price range. And even then, like it probably could go up another two or 300.

Wow.

But because there's not a lot of comparables immediately next to it, I don't want to necessarily risk that.

Right.

Because I have to be able to. In a worst case scenario, if a tenant only stays for six months, eight months or a year, and they have to move out, I have to re rent it next year.

Right.

So I'm also thinking about that experience far further down the road than today. I have to be able to re rent it. The cool thing about properties like Helen, though is that I know that we're going to be higher than a lot of properties in the area, but the other properties in the area are going to catch up.

Yeah.

It may not be this Year, it might not be next year, but there's going to be a point where $2,600 is a wink.

Right.

In a big bucket.

Right.

So we're going to be able to push that higher. So that's what we talk about, small increase. There's always a small increase on rent. It's where those big increases happen is when we've. Now everybody else is catching up to where we're setting.

Right.

So Dayton was an interesting one. I'm not sure the bump was because of that or if it was just job growth, market growth, more property selling the area.

Right.

I have seen more properties in Hamilton in the last year than we had previously. So that this might be it too.

Well, that whole area, you know, I mean with the spooky nook, you know, sports complex.

That's true.

So again that, that's going to bring people, I mean, who knows? I mean you might consider short term rentals, you know, down the road down there. Who knows.

Right.

Yeah, that's, that's a little more dangerous than, you know, having monthly income versus, versus, you know, something like that. But you know, again with Prosser, you know, I mean I think that that one was a fairly quick rehab on that one. But again, just being able to get that extra 50 bucks a month on that one. Again, extremely affordable property, you know, 145 on this one. You know, when you're talking about it's that we're changing the neighborhood, you know, that we're going in there, we're buying these houses and changing the market and so things are starting to go up. And so I know that we're doing a better job of that, you know, on the acquisition side of the house is trying to buy properties, clusters in clusters close to other places because again that's, that's only going to benefit our investors in the long term.

Yeah.

And the overall market, like, honestly, I've personally had some conversations with municipalities about what we're trying to do and you know, they love it. They love the fact that we're, that we have buyers from all over the place buying properties in those areas and a lot of them are willing to help us out through that process. So buying clusters is a good strategy. Also helps on the rental end a little bit too. There's lots of situations we may manage this property and the one across the street and the one a couple house down, you know, that's helpful especially when we're trying to manage from like a community aspect. Sure. So that's, that's cool.

Yeah, I Mean, it's, it's solid. I mean, these are all great conversational pieces just by themselves.

Right.

Let alone, like, trying to, you know, put it all into, you know, less than an hour or whatever of talking about, like, you know, the advantages of real estate, how to, you know, maybe guard against market corrections and things like that. These are, These are all valid points, you know, great properties. I'm so glad to see the changes that, that we've made as a company, but.

Yeah, yeah, yeah. So I think to recap, like to recap further, I should say, do your research. The things that Fox News and random news outlets and articles that you read online, not necessarily all true, especially in this market.

Right.

They may be true in, like, overinflated markets like California and New York and maybe Dallas, you know, areas where we're talking about a different beast entirely when it comes to real estate. But specifically, we're talking about Ohio, Southwest Ohio, Dayton, Cincinnati, a little bit of Springfield. We're not quite in that market yet. At least from Freedom's End. Middletown, Hamilton, Franklin, all those areas, Southwest Ohio, pretty much the whole strip down, what, 75, 70.

Right.

We talk about that. Our market specifically, it's going up. It's still moving up, still trending upwards. The actual value of the properties may decrease or fluctuate or whatever, but rents are higher than they are. Have ever been the engagement of renters to rent? Like, there's not enough rentals for the number of renters there are in our market.

Yeah.

It's definitely a time to be a landlord.

Yep.

Or I shouldn't say a landlord. Nobody wants to be a landlord. It's definitely time to be an investor in real estate. And there's definitely, like, good opportunities, not just even within these two properties that we've mentioned, but, like, I think we're wholesaling one right there. So those that want to dip their toe into some renovating.

Yeah. Depending on what you're. It's a whole other conversation.

Yeah. Obviously our bread and butter is the turnkey asset where we've done all the legwork and the hard work and we've done all the vetting and taking all the. The lashings and the licks.

Right.

For you. But, yeah, there's. There's got some good opportunity here.

Yeah, absolutely. I mean, it's a strong market, you know. I mean, you're a realtor. I'm a realtor, you know, in the area. I think the only thing that we've maybe seen, you know, slow down is maybe holding times, you know, I Mean time, time, times that things are listed. I think that if you as a realtor list the property at the correct price, it'll still sell it just, you know, not like two years ago when it would sell in two hours.

It may take more than a couple hours.

Correct.

You may have to make one extra phone call. Right, exactly. They do move. I don't think we're suffering a lot of, I don't think we're suffering that much from that. I think a lot of it's just the fear of should I be buying right. Right now with the interest rates, who.

They are.

Historically, people aren't going to remember what happened 20, 30 years ago because they probably weren't buying houses at that point, at least not from this type of perspective. So, yeah, it's all good stuff. I mean I, I mean I'm excited about it. I mean I come in every day excited about stuff.

So I was gonna say I come in, you know, and I, and I see the board on what's coming down the pipe and what's available. So for our investors who, you know, either your first time watchers or, or you know, re engaging again, you know, welcome back. I mean, we have the new stuff here. You know, we have again, you know, great rehab. Things are already being rented, you know, so all of those numbers are going to be real and you know, lots of stuff. Like I said, we have a couple available properties now. You know, make sure that you stay tuned for the other stuff. And you know, consider some of the things that we were talking about. Are these the things that are in line with what your, what you want to do for income? You know, whether this is to replace a job or if it's just something that you, you know, want some extra money for, travel plans, whether it's something you're passing off to your kids into the future, all great, you know, ideas. So you just have to sit down, you know, do your homework like you said, and come up with your plan. You know, where do you see yourself? You know, one year, five year, ten year. And you know, I'm more than happy to go over any of that with you. I know that Chris is available speak to you at any time. And so we definitely appreciate everyone turning in.

Absolutely. So before we close, I do want to say stay tuned. I'm actually gonna let Mark, I didn't let Katie know I was gonna do this, so surprise. But stay tuned. In the coming weeks, we're gonna try to do a live Facebook live, hopefully before Christmas is our goal. So if there's any topics you want to talk about or questions you have that you know you want to have us answer on that, feel free to just drop them in comments or send us a message we'll like. We want to engage with you and we want to talk about the things that you guys find are most important. But for now, Mark and I are going to sign off. We usually do that by saying invest.

Smart and live happy.

Thank you.

Thanks.

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