The Hardest Part of Real Estate Investing | REIal Talk | The Freedom Show | EP. 84

Hi, guys. Welcome back to another episode on Real Talk. I am Caitlin and today we are here again with fabulous Cristianino. And we are going to be talking about quite a couple different things. We're going to be talking about some new rules and announcement roles and announcements and then the hardest part of real estate investing, but the benefits that come with it.

Yeah, yeah. It's going to be an interesting episode today. I think the general announcement part of it kind of goes into what we do as a company and how we're going to continue to improve through 2023 and 2024. So we made some. We had a tough year last year. I think the whole real estate market had an interesting year. Tax rates are a bit insane. So it was interesting to try to navigate that and try to still provide quality product to our clients, our buyers. We ramped up some cool things with Cash for Ohio Houses. We're working on some new acquisition disposition strategies there. But the big thing there is, you know, Guys did the commercial?

Yes, we did. So our, like you said, our acquisition company, Cash for Ohio houses, late 2022, we explored a new avenue and we are currently actively running television commercials, which has been great. It's very weird going out in public and people asking me like, I know you. Are you on tv? And I'm like, yes, that's. That is me. But that one, that was a really cool experience being able to go to a studio and see all of it. I thought our studio was pretty cool. Their studio is definitely cooler.

I mean, ours is pretty cool. Has confetti in it.

True, true. If you want to know what the confetti is about, go check out vlog episode 100.

That's exciting. Yeah. So I mentioned C4. Oh, and the cool things we're doing there because part of the goal there is, you know, we didn't. We weren't buying every property we came across. I don't think we still going to buy everything. But we started discussing Sally Seller. I still don't know if that's the real thing or not, but yeah, okay. I thought I heard us in a meeting somewhere, but I wasn't sure. So Sally Seller is who we is the Persona we give our distressed buyers that are looking to, you know, they're having pain with the property they own, whether that could be their upside down, their mortgage or they had a family member situation occur, that now they have to, you know, dispose this property or a whole list of other reasons why somebody could be selling a property. C4H has historically been the company to come in and help provide solutions to those sellers. Obviously we, we have a turnkey company that it feeds, we have a retail space that we feed, but some things don't fit those, those products. And so we're ramping up that different types of disposition for those properties. But the cool thing that we've witnessed is that's prompting more conversation about how is Sally feeling? Yes. How can we help her through this process? And then ultimately classifies that seller as one of our customers, which was a different mindset than we were doing previously where it was more of I'm going to buy this property from this person. And it was viewed transactionally. Now we're tapping into the, the emotional, we're tapping into the empathy there, which is where we've been successful as a company across the board.

Yeah.

So in that there were some title changes. Right. Some shifting.

Yes.

So you've moved into the director position, Director of marketing, which has been instrumental because it's been able to allow you to kind of focus and delegate.

Yes, very much.

But C4OH is part of that.

Absolutely.

You're taking all our responsibility there.

Yeah. C4OH has been my main priority, if you will. The marketing team is great and they've been a huge help. Lauren, she is kind of more in the driver's seat of frag, so Freedom Real Estate Group and Coco, she is a virtual assistant. She's absolutely amazing. She's kind of in the IPM space. Independence, property management. So it's nice to be able to have us each have our own main priority, if you will. And then we all kind of pitch in wherever we can help. But the delegating has been huge because it's been able to help me focus on some higher level type thinking, leadership styles too and things like that. So it's been huge. But I'm not the only one who had a title change recently.

Yeah. Yeah. So part of our discussion toward the end of the year was what are some things that we could do better? We're trying to navigate some of our sales issues with the market being restrictive and some of the cool things we're doing in marketing across the board. We came to the realization that in order for our companies to be successful beyond this year, beyond next year, would be if we focus on a major stakeholder, which is our customers and the customer experience. So yes, there, there's been a title change. So we, we decided as an organization that we needed to have a person be accountable to how our customers are feeling. Everything from acquisitions to sell it from Sally Seller to what we call. I have an investor in our. In our frag buying experience. Investors that buy with our FCC organization, Freedom Family Capital, ipm clients that have properties under management, our residents, all of those are customers. Bulldog does external deals. The people they serve are part of our customer base. So in so doing, Freedoms established my new role, which is the vice president of customer experience and asset management. So overseeing. So Frag Freedom is essentially decided that it's time to make customers priority number one.

Yes.

And then the second piece of that is, how are we buying properties? How are we renovating? How are we managing them long term? Ultimately thinking about how is our customer feeling through the entire process and their.

Experience through the whole process, making sure that, one, it's seamless and two, that it's straightforward and fairly easy for them. That way they don't have to, like, stress about anything or jump through hoops trying to, you know, who do I contact for this? Or I don't know what's going on. So that's something that I think has been in the works for a little bit now, but we are making it more so a priority now, making sure that, like I said, just everything is seamless for them and that really everything that we are now doing is for the benefit of them and their entire experience.

Exactly. Yeah. And it becomes. It changes the dialog of the conversation from, hey, this property's for sale to. From the marketing and, hey, this property for sale to. What are you looking to buy? What's your goal, what you're trying to accomplish with your. With your money? Which we do to some extent. I mean, we do that when we do our investor onboarding calls, when we kind of give them all of our products and kind of help them make a decision.

Right.

But now, like, when. Even when they're in contract, they get a call with me and we go over property management and some of the logistics of handoffs and what they can expect from rehab and renovations. So it kind of makes it a holistic experience across the board. And then ultimately they choose to live with us in Independence Land, where we manage the properties long term. We want to make sure that what they're buying on the front end is what they are actually receiving on the back end. Correct. And that the properties perform unilaterally. So the decision was and will remain being cognizant of the customer experience the entire process. And it's exciting for me, obviously, but it's also exciting because it makes marketing better. It makes us a little bit more clear on how we present Products. It makes our renovation team more cognizant of who's buying the property ultimately when they're swinging the hammer. Our acquisitions team is now thinking about, okay, six months from now, somebody's gonna buy this property. Are they gonna be happy with this acquisition? You know, yeah. So we're all thinking about that finish line for that customer, which is super exciting stuff.

Yeah. And there's a lot of team collaboration, making sure everyone is on the same page, making sure everyone kind of has this same. Same understanding of empathy towards, you know, each situation throughout the process. I think that's been huge. And just trying to, you know, put ourselves in Sally the sellers, Ivan the investor's shoes, if you will.

Right, exactly, exactly. So part of our. And this kind of segues into some other things we're talking about. So part of that is like, well, Chris, how do you. How do you really gauge somebody's experience from one phone call and a couple emails at the beginning of a relationship? Part of it is us educating. Right. So we talked in our vlog about the goal of this was originally just to educate, make content available, make it clear why we do how we do what we do to investors or potential investors, and then backed it up with real data, backed it up with performing properties and horror stories and wins. The pros and cons, the good, the bad, the ugly. Right. Very transparent.

So.

But honestly, the hardest part of real estate.

Is just getting started.

Is just getting started. That customer experience piece helps clients, helps the investors make that first step. Yes. Because we are 100% in it for them to win. Right. For our investors to win, whatever that looks like.

Right, right. Whatever their goal is.

Getting started, though, as we said, is the hardest part. But there's usually other. It's usually just one thing that prevents somebody from starting. It's usually like, when do I start? Or how do I start? And it's like, oh, but now I don't have money to start. Or then it's like, oh, well, you know, I don't necessarily have the time to invest in starting this or, man, my patience is really, really, really, really thin. Sometimes just a confidence thing.

Yeah.

Sometimes they're just 100%. Look, got the cash. I think I can devote some time, but I don't want to pull the trigger because. Right. So we use our experience serving currently, you know, 140 or so investors in IPM. All the sales that we've done through Freedom, all the interactions we've had through our transaction coordination team, our renovation team, our acquisition team at every level of this organization. We've had communications with investors.

Yes.

We pull all that information together and we try to develop an experience that would just kind of break down some of those barriers and generate content so it can answer these questions.

Yeah. And it goes to say, too, anytime that, you know, when you start something new, it's not always going to be easy. More than likely, it's not going to be easy because you're trying something new. It's something you haven't done yet. You aren't as well versed in it as you may be something else. So, you know, maybe you are already well versed in real estate, but maybe not the investing side of things, or maybe not the renovation side of things, or even property management. So you just have to start somewhere.

Exactly.

There's somebody that I know, and they are, like, terrified to do anything, and they're always needing to have, like, a lot of pushing to get them to do something. And so, you know, it's. If you are. If you know someone that's like that, you know, just try to encourage them. You know, there are gonna. You're gonna have a struggle somewhere. I'm sure it's a learning curve, you know, when you go do your next one, learn from it and decide what you're gonna do on the next one.

Yeah, yeah, that's a good. That's a good point. The other thing that, you know, one of the things I like to do is talk about what you do. Yeah. So. So me and my wife, right, we just bought our first rental the end of last year. It was like, October, November. And granted, this is my life. Like, this is. My job is managing properties.

Yeah.

But, you know, she hears a lot of the horror stories. Like, she hears about the client that had this water line break, and the one that, you know, the tenant damaged the place, and it was, like, incredibly difficult to navigate, and there's losses and she hears all the bad things. So when we had the opportunity to buy a rental, it was. It became. She was scared to do it because she doesn't. We don't necessarily tell about all the wins and all the great things. So I always encourage my clients and everybody that I talk to, like, talk about what you're winning at.

Yeah.

So if you buy a property and it's doing well, you pull the trigger. Right. You made that first step. Now you just tell your friends and you tell them, like, hey, I'm having this really great experience. This is what we did. This is the things that I was hesitant with. We actually have a Property under contract. Right now that it was a similar situation. We had a guy that bought a property from us here at Freedom, and one of his friends was interested, but was really hesitant about a couple different things. So prior to the contract being signed, he had a list of questions. And we went through the questions. We were like, hey, our investors usually have this experience. This is what you kind of expect from this. And just by handling those objections, he's under contract for Duplex, and, you know, we're most almost through that contract period. And it's going to be a good. It's going to be a good experience for him because he had somebody else he could rely on to help kind of curb some of those initial confidence issues. And some of it's also not confident. Some of it's just, I'm experienced enough to know that this is a new market. How is it different than Houston? Right.

Yeah. Something else, too is, you know, you brought up the questions, and I'm glad you did ask questions. We've all heard the saying there's no bad question or no wrong answer, if you will. But there was something that I recently heard that has really stuck with me, and it maybe was just the first time I've heard it. I don't know. But they said that there is no dumb question when you are learning something new that you don't know anything about because you don't know what is a quote, unquote, dumb question or what is not right.

Exactly. We joke sometimes in the office about, you know, when somebody's taking on a new responsibility. I'm only so many days old at this job.

Yeah.

I actually use that for the first two weeks. Hey, I'm just. I'm new here.

Yeah.

But it's okay. It's okay to be in that space of vulnerability because that invokes curiosity. Yes. And that curiosity should manifest questions. Yeah. And the only way that you're going to be able to, you know, catalog new information is if you ask the questions. You know, the process of thinking about something without new information is hard to come to a new conclusion. You have to have input. So, yeah, absolutely. Ask questions. Even if you think you know, or Google may have showed you something like, verify it, ask. Hey, I saw this. Is this real? Especially with interest rates, that's like one of the big things that we get a lot of questions about right now. You know, we. We calculate, I think, like 6.34 or something. 6.37. Yes.

6.37.

Yeah. On our pro formas. Well, you may. The. The Investor may run their numbers and their best rate that they're gonna get is, you know, 6.7. Like, okay, well, ask. We'll, we'll adjust the pro forma if we need to, to be able to tweak your numbers. But to say, oh, I'm not interested because my lender says this is the interest rate, because of that, I'm not gonna, I'm not gonna go, yeah, let's talk about it.

Right, yes, absolutely. And that, that goes to say too, you know, in that at least specific example is there are going to be different instances. Instances. So you can, like if you go to different banks or if you go to a private lender, they might all have different interest rates that they are going to offer you. So, you know, don't just go to one and assume that's what it's going to be. I just bought a house last year and we shopped around for interest rates because interest rates were crazy high. So we know we shopped around for the best one. But there's also different things that you can do with that as well, which at least I personally think that your lender, whoever you're working with, should tell you that you have options like you could buy down your rate if you were interested in that.

Yeah, yeah. And one of the things that you and I are working on are thinking about, like, creative ways to structure how we are selling our products, including like possibly covering some closing costs or things to just sweeten the deal for our. Because we, we understand like we're, we're investors. Like, we buy properties in our market, we renovate them, obviously. So, so we know what the interest rates are doing. We know that sometimes lending is difficult, the market's scarce, and we know all of the things when it comes to the markets that we're in. So we get some of the hesitancy. But the conversation piece isn't just, hey, buy this property from us.

Right.

We have lots of options. There's lots of things you can do turnkey and buying rental real estate and may not be the best option for you in this current moment. And maybe your normal strategy and the market may be not allowing you to do that. You talked about, we talked about lenders and restrictions and different things. There's some hesitancy there. There's also other ways that you can generate cash flow passively in real estate without necessarily holding an asset.

Right.

And we offer a lot of that here. I know there's other companies in our market and other similar areas that do that too. But the main Benefit, I think when everybody's in real estate is mostly cash flow driven, but tax advantages. So even if there's high interest rates, if your cash on cash is good and your cap rate's good, like you're going to be still making money. Appreciation is a big one.

Yeah, that's huge. So, you know, there are, you know, a car collector, for example. I love cars. I grew up with two dads having motorcycles and all kinds of cars and everything. So I love cars. But when you drive a brand new car off that lot, it immediately depreciates. Real estate is not that way. Real estate continues to appreciate.

Right, right. Even in periods where the market as a whole may not be performing well. An individual asset could.

Right.

You know, I mean, we're not always going to have slam dunks that we've had in the last couple of years where people's properties appreciated by 30% over the course of 12 months. But there are situations, I mean, the market, even when it goes down whenever, even when it drops, it still drops to a level that is a new high.

Yeah.

Based on other drops have happened in history. So I mean, we're seeing it still. It's still doing good things and appreciation is still there. And then when you factor in the fact that like you're making small improvements to the property, that'll force appreciation. When you have a renter in there that's paying rent and we're increasing the rent 5 to 10% per year, that forces the appreciation up too. Is when you're dealing with an investment vessel, your value is calculated also by property performance too. So it's not just. It's not just the bones that are structured on a lot. It also matters that it's making money. Right. Yeah. So there's lots of benefits to real estate because of all the different ways you can make money.

Yeah. And like you were saying, you touched on it a little bit is there's so many different ways to invest in real estate. It doesn't just have to be a rental property, if you will. You know, you can do fix and flips if you wanted, which is what, you know, like you typically see on like Home Garden tv, hdtv.

They love that on hdtv. Loves that.

Not that those are completely accurate, but do your research. But there are all kinds of different strategies. You know, rentals, fix and flips. You can do private lending. So there's. You can do the. Oh my goodness, my brain is flaking.

SCI or fc, like syndication debt.

Yes. Thank you, ffc. Now, excuse me, but there's all kinds of different things that you can do. And the benefits with them are different but also the same. You know, it's gonna be passive income. Great return on your investment, right?

Yeah. I mean, yeah. So a couple, like, a couple differences there. Like if you did private money or like a debt fund or syndication or something like that, you know, $100,000 at 10 to 12% returns annually still pretty good.

Yeah.

I mean, I would love to be able to sit back and get, you know, a 10 grand check. Yeah, 10 to 12 just by letting somebody borrow my money. It's also backed by real estate, so it's a little bit more secure than lending somebody money for a car.

Yeah.

Which depreciates value, by the way.

Yes.

Or you can take the same hundred grand. You could both buy a rental that is rented for $1,000 a month and after expenses, you may bring home three or four hundred dollars per month.

Yeah.

And over the same period of time, like you're still making around the same amount of money, maybe a little bit better one versus the other, but they're still both methods of I'm putting my money to work. It's also something that appreciate in value. So you may sell that property, you know, two years from now and it's worth 130,000.

Right.

In some situations. So I mean, there's definitely, like you said, multiple different ways to get involved with that, all of which are driven by what's best for you as the investor.

Yeah. And there is something. There is a podcast episode that I believe you and Aaron actually did not that long ago, you know, talking about, you know, don't wait for interest rates to drop. One, they've been holding pretty steady the past couple months. But two, going back to that appreciation factor, you know, yes, you're going to buy in at this rate right now, but you're buying this property at this price. Once you buy that property, that price isn't going to change.

Right.

But you can refinance and you can do all kinds of different things with your interest rate to get that down lower.

As soon as you own it, the equity starts growing.

Yes.

And so, and that's like experienced investors, so people who've done this for a while or like understand the concept of appreciation and equity and hard assets like this. It's more than just a face value performer. Right. Because we're going to show you like, hey, this is the purchase price, this is the expenses, this is the income, this is your estimated monthly profit after expenses. We'll calculate, you know, the fancy Things like the cash on cash, the cap rate, the rtv, the rent to value percentage, like all of the fancy things everybody wants but we don't necessarily just say is like hey, average appreciation. This property. Is this in this example? Yeah. You buy a property right now and the interest rates are stabilized. Ish. But they're higher than what we wanted a year ago, two years ago. You own that property for a year, it might take a year or more or so for the race to go back down. Who knows, right? But when they do go back down, as you said, not only have you collected money on that property for the last year, you've paid down your mortgage and your, your financing for the last year and the properties appreciated in some value over the last year. So realistically you should be able to refinance into a lower rate as you said, maybe even pull some cash out depending on how the appreciation worked for you. And you still have a cash flowing asset at the end of the day and it's still paying the bills, you're still collecting a little bit of money and now you probably have your down payment back because it's appreciating, able to refinance out. So you may then, you may then not have any cash in the deal, which is a perfect strategy if you're like, okay, well now I'm going to buy another one or I'm going to try this different strategy. Yeah, either way, like whether you're buying a property or you're doing like, like the debt fund or whatever, where you're putting money to work that way. Similar strategies hold for a year and then figure out how to get your cash and roll it into something else. Appreciation's your friend.

Yes, absolutely. In this aspect.

Yes.

And so kind of circling back to the hardest parts about real estate, you touched on confidence, money, time, patience and just starting. We talked about questions a lot. Asking your questions is starting. That is starting somewhere. You're educating yourself and you're preparing yourself to make that next step. There's all kinds of places that you can go to to learn. Even it's about time. Like there's all kinds of Facebook groups you can join and be like, hey, I'm struggling to find time to do X, Y and Z. Does anyone have any advice or personal experience on what they've done in a similar situation? Not saying that it's always right, but there are people out there who have probably experienced a similar situation who can help you or at least kind of guide you in the right direction on where to step next.

Exactly. Yeah. And so if you're. If you're listening to this now, reach out to us. Yeah, I. I will make myself available to hop on the phone and answer some questions. I know we have other members of the team that'd be more than happy just to talk to you. I will say one benefit to us. We're not. We're not salespeople by trade. That's why we talk about customer experiences. The goal is always just to provide quality services. And sometimes it's just a conversation that's just handling 10 to 15 questions that is holding you back from making a decision on investing in real estate. We have a lot of content, too. So if we don't answer all the questions, then you have all of our content available to you to answer things that you may not. You may not have thought that you knew.

Right.

Question to. Yeah, they may open up your door some more questions, which is fine. We can provide some links for them to contact us in the description of this. But, yeah, communicating what your concerns are or, hey, I'm thinking about doing this, or this is my situation. I don't know what's best. Yeah, that's. That is the first step.

Yeah. And you can also talk to your CPA or whoever is preparing your taxes. They might not be a cpa, but someone. That way you can understand maybe the tax benefits or different tax strategies that you can do along with your investing journey. That way you can understand it, you know, kind of all 360. So there's plenty of avenues. Like Chris said, we are absolutely more than willing to help. We're investors ourselves. The company obviously flipped, Danny, So, you know, we are learning and growing along with you guys, you know, and you can ask anything, whether it's from property management to renovating to acquiring what have you. So.

Absolutely.

I don't have anything else.

No, I think we touched it all pretty good for now. Yeah. Now we gotta clean up confetti.

Yes, we do. I mean, I have to clean up. All right, guys, well, that's all that we have. I hope you guys reach out to us. If you have any questions. Seriously. We are more than willing to help guide you in any way possible, give you any kind of advice that we can, but we always like to end these with invest smart and live happy. Bye, guys.

Bye. 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 this show are not guaranteed. All investment strategies have the potential for profit or loss.