When Is The Best Time To Invest In Real Estate? | REI |REIal Talk | EP. 40

Foreign. Hey, freedom fans, welcome back. I've got the Aaron Davis. I've got the privilege of being joined by Mark, our director of investments, a wealth of knowledge. Mark's. Mark is the guy that you're the guy that our investors go to to talk about. Hey, what's this product look like? You kind of lead our turnkey sales product. And that's, that's an important set of, of answers that our investors are going to you to ask. Right?

So, yeah, no worries. I mean, and believe me, I'm constantly reading articles and trying to stay up to date on, on trending because as I've mentioned in other podcasts and vlogs that I am a realtor here in Dayton and Cincinnati. But again, sometimes the real estate world is not always the same with turnkey as it is as like your classic, you know, for sale kind of house.

So it's an investment product versus a home, right?

Absolutely.

They can't overlap, but they are two different things.

Yeah, no worries. And so, I mean, I know that yourself, you have some investing. And so, you know, sometimes I'm down in your office sitting here asking like, well, how does this feel? Because again, sometimes you have to put yourself in that position of like, how does the investor feel? And so, yeah, so today's podcast, we're obviously talking about, you know, should I invest right now?

Yeah, podcast number 40.

Podcast number 40. Yes. An REI Real Talk, right?

That's right.

So, you know, what we had talked on earlier was, you know, is now the right time to invest? And we kind of had touched on, you know, some of the things that like, would make you think about is now right time. And so we had talked things about rates. We had talked about like, possible your tax returns and what your financial position is. In some of the other episodes, we had also talked about like, so what are your goals? You know, I mean, and you had kind of touched on it earlier as well, is are you ready to jump in? I mean, and again, like, what I was just referring to coming back to your office is that, you know, that first time might be the scariest time for an investor. I mean, so we may be talking to investors right now who, who have never done this. You know, everything right now is theoretical. You know, they're listening to podcasts, they're reading books, reading articles. You know, and a lot of it is, is theory. And so sometimes, you know, it is that gut feeling, am I ready to jump in? Like, so when, when you did it, you know, can what made you decide to.

Yeah, you know, what's funny is one of my first real estate investment decisions was kind of an accident. I was. And it went really well. So I got lucky. It's always better to be lucky than good. But I learned along the way and got good, I guess. But I was, I was literally in an a. Experimenting with bidding at a, at a sheriff sale and they took the first bit mine. I just thought I could bid and then sneak out after it got purchased. I was just trying to get over the nerves. I ended up with the best deal I'd ever really. It's still the best deal I ever made in real estate.

Like you were shaking the ink out of your pen or something.

I stole that property, man. I think I made $20,000 without thinking about it.

That's awesome.

But the. So that was. I got lucky and obviously that creates. If you go out and golf and your first shot is a hole in one, you're not, you're not going to.

Give that game up.

So my first experience is probably not the best one. Now my oldest son is 23, working a good job, making a good salary now and thinking about how to, you know, invest and prepare life and that kind of thing. So getting into those money making or money investing decisions and one of the things I've advised him in terms of like timing and how aggressive he should be and getting into rentals turnkey product is that don't spend your last dollar on it.

Sure.

Right. So like he's in a financial position where it would be really easy for him to go all in. He doesn't have a lot of expenses yet. And so I've just cautioned him a little bit like make sure you can afford a furnace that comes up or.

Yeah, absolutely. You got to have that couple thousand.

Bucks set aside is smart.

Don't spend under the mattress money, if you will.

Yeah. So you don't need to be a millionaire or anything. You don't have to have your retirement funded. This is a work in progress. But yeah, you want to have a little bit of cash.

Yeah, no, absolutely, that, that makes complete sense. I know that like when a lot of our investors are asking questions like so what all is the process? You know, I mean, so again, so for new investors that are watching this, the process is just like buying a regular house, you know, I mean you're, you have to go and get pre approved. You have to have down payment money. Sometimes it's 20%. Some banks require 25%. Again, you know, talk to your lender shop rates too. You know, I mean we had touched on that. Mortgage rates are, you know, at an all time low or very low. So you want to shop your rates. Do your homework on that as well. Don't just do your homework on like the place you want to invest. Obviously we can speak to Dayton, Cincinnati and how fantastic this market is, but you know, do you.

It is a great rental market.

It is. It's unbelievable. And I know that like one of the things remind me to touch on later is that rent to value here in the Dayton, Cincinnati. Yeah, we'll touch on that in a sec. Because that's super important. You know, I mean, it's super important. And something to keep in mind obviously when you're. We're thinking about where to invest first.

Yeah.

Or next.

And that really is the first question before the timing question comes up. Right. And I mentioned it in the vlog that kind of led into this podcast, Warren Buffett's quote about when you're, when you're convinced that it's a game you want to be in, you know, the wrong move is to wait and pick the right time.

Sure.

When you're convinced it's a game you want to be in. So you've looked at the date and market, you talk to your lender and you kind of know what your, you know, your options are. You've thought about your cash position and your ability to make an investment like a, like a rental turnkey product. So what do you, what are you doing? Waiting. Why would you wait six months or a year or try to figure out exactly the right time in general, with some exceptions, I guess the right time is when you're convinced it's a smart investment for the long term. Right?

Yeah, absolutely. And so, you know, going back to the process, it's, you know, a, know that you're ready to go because it's not like a short thing. I mean, unless you're buying in cash, this is not a short process. So you're obviously going to talk to your lender, you're going to get pre qualified. No. Knowing what you can afford.

Yeah.

Because again, that's part of the talking to the lender is. And what you were referring to with your son is you don't want to stretch yourself too far. You know, could you afford this payment?

Sure. Right. We should not be empty, cracking open your childhood piggy bank.

Right.

Scrape together the last dollar.

Exactly. So like finding that comfortable payment and then knowing what you're shopping for. And so then once you make an offer on the house, then it's time to do Some inspections, then it's time to get an appraisal done and then it's time to close on the house and then property management gets it rented for you. And, and I mean that's the process in a nutshell. But it's just like buying your primary residence, except for you're not living in it, you're renting it. And so the process. So if you're scared about jumping in, that is it. I mean it's literally like buying your own home and somebody else is going to be living it.

Yeah.

And so, so that, that's one of the things to keep in mind. And so then going back to the Dayton Cincinnati market, so sometimes I talk to investors who have been doing their homework and some of their major concerns are either cap rate or cash on cash rates.

Yeah, those matter. Right. They definitely have a barometer for, you know, what am I, what's my cash flow going to be for the money I put in.

Exactly. And then what we had touched on earlier was that for the AI, it's.

That value to rent is what you were referencing.

Well, exactly. And so in the Dayton Cincinnati market, you're looking at something that like, let's just say we're buying $100,000 house right now that might be anywhere from 900 to $1,000 rent. So we're real close to that one to one some markets because property values are going up like across the nation. They are. I mean everybody knows that real estate's hot. So sometimes it's hard to actually get into a market that has that one to one. But like I said, when you're talking to these investors and they're using that barometer of the cash rate or you know, cash on cash, that's okay if that's what you use to make your decision. You know, I mean there's no way to make a wrong decision. Just make an educated decision. But let's just say this hundred thousand dollar house that has a $900 rent, it will go to $1,000.

Sure.

So you have to, like we had talked about, this is a long term strategy. Don't buy this house. Like, let's just say that we'll call it like 7% and everybody's like, oh, I'm not going to touch it because it's got to be above 8 or it's got to be 9 or 10 or whatever, whatever your number.

You're missing a couple of things, if that's possible.

Don't worry about that. Like eventually this rapid rate market will slow down.

Yeah, there's no inventory. Interest rates are really low. So home prices are climbing fast, maybe faster than rent prices.

Correct.

You can jack your rents up because there's a lot of demand there too. But there might be a little bit of volatility there. So if you're short of that one to one, it doesn't mean it's not a great investment.

Absolutely.

A couple of other factors you can be looking at. Right.

And I know that like when the.

Quality of the rehab and the quality of the product.

Absolutely huge. Yep.

The appreciation opportunity in that given neighborhood is huge. I mean those are. There's other huge variables beyond just these kind of cursory high level metrics.

Absolutely. And you nailed it. And you know, one of the things that our acquisitions team does is, you know, trying to purchase properties that are close to other properties that we have or have rehabbed, you know, bringing the value of that neighborhood up. So I mean there's a lot of science in what we got a whole.

Street we bought in Cincinnati.

Exactly. We bought a whole street. But. And it's a perfect play because I mean there's a lot of science and they go and thinking into this and long term planning. So I know that like investors are thinking about like whether do I do this with Freedom Real Estate Group or not. Well, we're doing the homework for you. You know, I mean, we have teams here that are thinking about neighborhoods we're buying in, what is the projected values of those. And again we, on another episode, I think me and Flip talked about this one with the appraisers. Oh my gosh. You know, I could go on for days about those guys. But don't worry about what the appraisal comes back at the neighborhoods event.

A lot of variance.

Yeah. The neighborhood's going to go up, the rents are going to go up. You know, if you're looking at a property right now and you're saying like, should I pull the trigger on this or not? Like, you know, A, can I afford it? B, what's the number right now? But what could the number be in three years?

That's right.

You know, I mean if the neighborhood.

Goes up, for most of us three years is nothing. We're generally not putting, we're not acquiring volumes of doors when we're three years from retirement or something. Right. For most of us we're doing these things for long term, long term investments. Right. So absolutely nothing.

So I mean, so you're thinking in three years and again, I'm going to go back to this hundred thousand dollar house let's just say it goes up to like 105, 110. You've paid that mortgage down quite a bit. You've got your cash reserves. The rent went from 900 and then the next year maybe the property manager went to 925 and 975. And now you're over $1,000. Look at that number then what is that cash flow.

Right.

What's that worth to you?

Right.

How much real money do you have now when you go to refinance that house?

Yeah.

Pull that money out and purchase another property.

Yeah.

So I mean, it is definitely a long term strategy. I love this, you know, I mean, and so it's fun, you know, I mean, so when people are like, it is scary. It is scary. That first jump, I'm sure is extremely scary. But once you're in it and you know what you're looking for, you're going to find out that like real estate investing is fine.

You know, it does make a lot of sense. You talk about it being scary in your first jump.

Yeah.

This is a little bit outside of our subject matter here. We've talked about risk in other episodes as well. But it makes sense to be more cautious the first time.

Yeah.

Because let's say you swallow some big repair. If it's one of 10 doors, it's not a big deal. You know what I mean? It kind of, you know, it's a. You are going to have in the life of a rental property large chunks of investment that you make into. Into increasing the value in that property. Whether it's replacing a furnace or the flooring or whatever else, you hold it for a long time. At some point you're going to have investments you make into that property. Or if it happens in one of 10 doors that you own in a given day, you won't even notice it. You won't feel it. Right. It kind of blended into the cash flow. It's in your budget for repairs.

Sure.

It happens 60 days into your first property. That sucks.

Right.

So it does make sense to be a little bit more conservative on your first move. But when you've got a portfolio, even.

A small portfolio and homeowners insurance. That's right. That's exactly right.

Those risks are spread over. So anyway there's. You don't have to be as cautious when you've got a couple doors under your belt.

Sure. No, absolutely. I don't want to minimize like the ease of it. By no means is it, is it easy. So it is just keeps going back.

To that Long term view of it, right?

Long term, yeah, absolutely. And so, again, we've touched on it. You got to do your homework, you know, with the area, and anybody is more than you know, please contact me. I will. I will go over Dayton and Cincinnati at Nauseum with you on what I feel. I mean, I live here. I've lived here for a long time, so I know these markets. I've been practicing real estate in IT for a long time. So, I mean, I can give you facts, figures, anything that will help you sleep good at night knowing that you're making that decision, you know, talking to your lender, making sure that you financially are prepared to make this kind of investment, you know, and then the process. We'll walk you through the process. And then, of course, our property management team is awesome. You know, again, these guys are masters at what they do. They have over 500 doors. So we know these neighborhoods, we know these rent projections. Nobody's perfect, but we're pretty good. We're pretty good. We're pretty close to the neighborhood. Yeah, absolutely. So. So, I mean, these are things, obviously you take those things into consideration. You have your personal numbers about what makes you sleep good at night and those, you put those five things together and I think, you know, you can come up with your strategy and maybe jump into like, yeah, I'm ready to invest. You know what I mean? You mitigate that fear with some reason. And that's how we all make decisions. Right. Like, I think every decision that you make is some sort of, like, backed by reason.

Yeah. So we have, we have a lot to offer in terms of being able to engage one on one with individual experts, yourself.

Sure.

In the first call or whatever. We've got other investor relations folks who are helpful with other kinds of investment.

Yeah, CJ's a smart cat.

That's right. You get into turnkey, you're getting into rentals. There's no better first stop. And we've also got. It's not too hard to get Chris, our director of property management, on the phone as well and kind of walk you through what's this neighborhood versus this neighborhood and what's this kind of rental experience going to be and how many, how often am I going to turn a property over here versus there versus at this quality, versus that quality? Lots of depth there. That's really, that's really valuable. I didn't have that when I first got into invest. I lucked into it and I got.

Away with the story.

I got away with one.

But that's funny.

But, man, at this point, you know, there's. There's no reason why you wouldn't tap into the expertise of other people who are kind of in the ground or whatever. So that's, That's a, That's a great call.

Yeah. No, absolutely. And again, I'm not going to do any name dropping of our investors, but you know what makes me feel good about that we have a good product and we deliver a solid result is that we have a lot of local investors.

Yeah.

You know, I mean, so they're here, too. They live in Dayton. They live in Cincinnati. And you know where they shop? Right here, Freedom Real Estate Group. And they refer their friends right here at Freedom Real Estate Group because they've already done their homework on the neighborhoods. They know where they're at. They can drive to them.

I think I just saw our Q4 referral numbers. The number of referrals we get from existing customers is huge.

Absolutely.

And it's actually growing. So that's pretty indicative of our level of engagement, customer service.

Exactly. Because again, you know, we're getting better. We're always going to get better. Right. That. That should be our tagline. Right. We're always getting better because that's the. We're here for our business.

Get better.

That'. Right. Danny, what do you guys think? Invest smart. Get better. No. Yeah. Right. All right. So today's my last day.

No process improvement does matter. You know, like, we live in an era where, like, that's kind of my expertise.

Sure.

This is like processing people kind of stuff and constant improvement is important. So. That's a good point. I. I wanted to. I hate to hijack the subject.

Yeah, I know.

But there's a couple of things I wanted to. Yeah, please, like, crank your brain on. We chuckled at the beginning of our setup here about What? Those extra Rs at the end of the BRRR.

Oh, my gosh.

So I wanted to chat a little bit about, like a turnkey move versus a Brrr method.

Sure.

And kind of, you know, maybe we can help our investors understand exactly what those things are. Some, Some folks know.

No, absolutely. And yeah, I apologize for, for going over that. Or overlooking that is. Is that when you're considering, you know, not only what market to go in and all these different variables, what kind of investment do you want? Yeah, yeah. I mean, do you want a single family home? Do you want a duplex? You want a four unit? Like so. So those are things to take, take into consideration. And I know that we have other series where we, we Talk about the difference between single family and multifamily, the pros and cons. But, but yeah, cost is a big thing.

I mean like the more doors, the more, the more cost generally. That's usually.

So you're right. So the majority of what we do is turnkey. You know, probably a high percentage of what we do is turnkey because we try to make it as easy. Right. So we shop the house, we renovate the house, we sell the house and then we manage the house. So that's the turnkey process. And in the simplest form I can do it. But the BRRRR method. Yeah. Is that something that you want to get into? And that's one of the products that we offer. And so that's called our Equity Advantage series. The reason being is we've, we've purchased the house and then our investors at that point step in and they're going to pay for the renovation. You know, I mean, and then they're going to get it rented and then they're going to refinance it, pull their money out and rinse and repeat. Right. So the BRRRR method. And so that is an option. So if that's something that when you're looking at your money or your cash flow position, doing our Equity Advantage series is possibly a good move. Especially if you have some Money in a 401K or 1031 and you have and you can pay for these renovations. In one of the episodes, I think I was with Chris, we were talking about, you know, your write offs. So again, if you're looking for a write off for 2022, you know, one of those could be this Equity Advantage series because you're paying for the renovation. Not Freedom Real Estate Group. That is something that you can write off because. And again, check with your financial person, but here in Ohio, a secondary residence or an investment property, you can write off that repair versus if it was your primary residence.

That's right. So that comes down to your tax rate.

Correct? So yeah, so that comes down to your tax and like you're ready to jump in. But it's an, it's an awesome position because then when you purchase the house and you put the renovations in now, there weren't like holding costs and those other things. So you've kind of like closed the window of us holding it and that's where you're making that equity.

Right.

It could be anywhere from like three grand, ten grand, like whatever. Because what will happen is you're in again, long term play. Don't refinance this in three months, hold it for a year or two, let the market kind of keep going up, and then when you're ready, refinance it, have that money, continue to work for you.

That makes a lot of sense. So that brrrr. Buy, renovate, rent, refinance, refinance, rinse and repeat. Rinse and repeat.

There you go.

I kind of joked, reap the reward.

Yeah, right. Reap the reward.

Hey, get back. Back to the beginning of the line or whatever. So, you know, our EAS product, our equity managed product, is essentially that. I mean, we're just. We sell you a property and we help you. You know, we have all the tools that you need to go through that brrrr. Process.

Sure.

But you're the, you're the primary. Right. Like you're driving it. You're managing the, you know, the contractor, renovating the product and whatever. We do those things for you. But you're kind of engaged in all those transactions. Our signature series product just jumps to that third R where you buy a product and we're renting it. We're. We're getting people moved in for you.

Correct.

So. So you're ready to, you know, move somebody in and then refinance. So.

Sure. And while we're on it, we might as well talk about that in the other product line that we offer.

True. Yeah, we got a couple of those. Now. Those are looking.

Absolutely.

And, and the icf, is that what you're referring to?

Yeah, absolutely. The instant cash flow. Because they make a lot of sense. Because now you're.

That's my favorite, to be honest. That's going to be.

Yeah, because you're, you're purchasing at a lower entry point. You know, I mean, you're buying the house like as is. Like as it sits with renters in it.

Right.

You know, I mean, so I know that there's a lot of banks and again, doctor, your lender, but your debt to income ratio is not effective because it's already rented.

Right. You've got cash flow.

Yeah.

The downside is the property's generally not in as good a condition.

Correct.

It's not been renovated. So, you know, in the back of your mind, you're going to drop some money into that place six months or six years down the line when tenants move out. And you've got to put that thing, you got to market that thing again.

Right, sure.

So it kind of comes down to the quality of the tenants and how bad is the property.

Yeah, absolutely. And so some of the questions that investors should Be asking. Because again, this is a question I actually get from investors. It's like, have I asked everything I should have asked?

Right.

Here's one of the questions you want to ask in those instant cash flow properties. So we've acquired them with tenants in it. How long have the tenants been in it? You know, I mean, if you have a person that's been in there five, 10 years, they're not going anywhere. So, I mean, the condition of the property. Yeah. You still have to tune up the furnace. You might. I mean, you're a landlord, so I mean, you still got to make it habitable.

Right.

You know, I mean, so there are some fixes that you have to do. So. Yes. Be cautious of, like having some of that under the mattress Money rainy day.

Yeah, you've got to have a little set aside. If you're doing an instant cash flow property, you just know there's some hidden.

Problems for the renovation. Yeah, just some rainy day. What happens, you know, again, home warranty, you know, I mean, like home insurance. Like, get these things, you know, to make sure that you're covered. But yeah. So for the instant cash flow, how.

Long have they been there?

If they've been there five years, do they pay on time? You know, what is it?

Right.

When's the last time the rent was raised?

Yeah.

You know, could I gradually, you know, every 25, you know, 25, 50 bucks a month, you know, for the next.

Year or two, push that rent up.

To market while you're.

You get pushed back and they say, hey, but okay, well, put the carpet in. Right. I love the variable you get to mess with there. You know, you get to have a relationship with a person and make decisions about what you invest in, and it gives you more opportunity. This is my view on it, why I'm comfortable with it. It gives me more opportunities to negotiate a good ROI on my improvements to the property.

Right.

So, like, what's important to that tenant? I've got an existing customer who's saying, like, hey, you know, this. This window in the garage that's broken or whatever would mean, okay, cool. You know, we're throwing $500 into that property or whatever else, and you're buying longevity and loyalty and so it's a lot cheaper than I've got a property. I got to tear it all apart and, you know, put it all together. Now it's perfect and pretty and I can get top market rent.

Sure.

So anyway, it just gives you more variables to mess with and grabbing the best return on your investment.

Absolutely. I'M glad that you touched on that because that makes me think then, so that when you do purchase a property that's like that, you also then can, you know, using your word, the variables of like what you want to do in the event that person moves out. I mean like for the signature series, obviously it's our top line product. Most of the time we're going to be new roof, new furnace, new hot water heater. Everything's new.

Yeah.

Flooring, you know, to ceiling and everything in between. Yeah.

We're trying to get to that 80th percentile. And rent, you know, market value of the rent or whatever.

Exactly. So that is going to be top of the market. The renovation value is already there and set. Whereas if I buy an instant cash flow, let's just say, you know, for argument's sake, $100,000, go back to the 100 grand property. Right. So $100,000, it's cash flowing, you're making your money, no problems. Tenant moves out. Let's just say that we know that that house could be worth 150. Done. Signature series style. It doesn't mean that you have to do that.

Right.

You can go in, put some new flooring.

Right. Put a 10 grand renovation into it.

And shop the cabinets, the kitchen, you know, I mean, give it, give it a 10 grand makeover.

Yeah.

Raise the rent.

Right. It doesn't have to be the top percentile, doesn't have to be highest of the market.

Correct.

You get to mess with that. How much do I want to put in versus how much do I expect to get out kind of thing.

Absolutely. So one of those questions that, you know, the investors maybe should be asking is, do I? Because we will give. When we send out our numbers, when our marketing department sends out the numbers, they will show what our signature series will cost. You know, I mean, if you want to, but it doesn't necessarily mean that that is what is good for you or what you need to do. You don't have to. So you have that ability to say, you know, right now I can only afford a ten grand makeover. Yeah.

I like the idea of jumping into. Here's why I love one of, one of the reasons I love the instant cash flow approach. Buying a property that's, let's say it's a duplex, you got two tenants. One's been there for a year, the other's been there for six years. Six year tenants, you know, been late three times. Okay. Who cares? It's six years. You know, I do care, but I Mean three times over six years. I can live with that. The new tenants paying on time. So you got a good. You got good tenants in a property. And, you know, both properties need renovated. One's worse than the other. Right. So if I can look at, you know, in our product, for instance, I can look at what our renovations group has said it's going to cost to bring these up to the top of the market quality. Right. If I can look at that, I know I don't have to have that cash sitting there, but I have to have a plan in the back of my head for if I want to bring that product, bring that property up to that quality. Right. So, you know, something's fairly liquid or whatever. I know if I need to drop that $30,000 into that product or whatever to kind of bring up that level, I can. Right. That's what I love about it, because you're. You're making a. You have an opportunity to win a different way, as opposed to just highest quality product to get the highest quality rent. I might be able to win with what I've got sitting there. Right. And maybe it goes another five years without having to put money into it, and I'm getting great, you know, return on my cash, and Maybe it lasts two years, maybe it last 10. But there's an opportunity there to kind of win bigger. That's why I love the icf. It's just. It gives you a, you know, roll of the. It gives you one more role that everybody else doesn't get. Yeah. Right.

So anyway, and I would say that maybe the final thing to take into consideration, and I know, you know, everybody in the world's talking about it, the Voldemort of what's going on here in reality is Covid. Yeah. And how does that come into play?

Yeah.

You know, what would you think would be some of the things that, like, you know, would make you pump the brakes or jump right in, you know, like. So there's two different ways of thinking about, like, how will Covid affect us again? You know, with rents, you know, we're going to make sure that. We're checking with the property manager, making sure that this is, you know, obviously a rentable market. We've done our homework. You know, Covid really hasn't affected the rents here in the Dayton, Cincinnati market, especially Ohio, altogether. So that's something to keep into consideration. You know, when you're looking at which market to jump into. Ohio is a very safe market. It protects its landlords. You know, Covid is really not Affecting.

It is a pretty landlord friendly.

Yeah, absolutely. So I mean, that's one thing to take into consideration, but then for your own personal, you know, I mean, again, take a self reflection of like where you're at financially. Like if something happened to you due to Covid, you know, I mean, the loss of an income or something, like.

Yeah, yeah.

And I think sometimes, you know, that it may actually want you to jump in and start collecting some passive income. Because in the event that something happened, having passive income may be a way to help supplement.

You know, diversifying income streams is a huge theme in our economy in general. Over the last decade, it's going to become bigger. So I came out of like the contingent staffing personnel world. I spent a lot of time in that professionally. And the amount of people who do contract work, independent contractor work, or do side gigs, that's growing and will continue to grow.

Absolutely.

So the ability, it's just, I think as an economy at a macro level, we've all learned as people who participate in the buying and selling of things, that diversifying the way that money comes into your life is an advantage. It's just a huge advantage. And so more people are engaging in that in various ways, whether it's doing consulting or investing in real estate as a, as a side income.

Absolutely. So I know that, you know, that's something obviously to keep into consideration.

My son, who's an engineer, he has a, you know, we talked to, I talked with him about investing, whatever he's hoping over a decade that, that, you know, multiple income streams, the balance of it changes, you know, and ultimately he can be an investor and you know, put more work and attention into it, obviously. But that can be more primary. Right.

The younger you can get in it. I mean, I mean, Gosh, I'll be 45 here this month, but that lucky.

Guy, that lucky little turd.

I tell you what, if I could.

Have started this when I was 25, right.

20 years into this right now, oh.

My God, us old guys learning these things. I'm like, I'm 20, 20 years late.

I might be making what you guys are making, right?

Yeah, man. I've told him I'm going to be working for him.

Yeah, exactly. So anyway, I mean, is there anything else that.

Yeah, so one other thing that came to mind that I thought would be worth touching on is 401ks and the HELOC. So. Because there are other avenues that might answer that question of am I ready now? Can I do this now? Right. I think those are avenues that provide Somebody an opportunity to say yes. Right, so, so what do you know about those, those vehicles and how they can be utilized?

Yeah, absolutely. So, so a HELOC is a home equity line of credit and you use that against your primary residence. You've been in your primary residence either for a long time and you got some equity there.

Yeah.

You paid your mortgage down. Or your neighborhood is skyrocketing like the rest of the neighborhoods are.

Yeah.

You know, a HELOC might be a good opportunity for you to take out that equity of your house. It's a fairly quick and simple. I mean, of course you're going to have to have an appraisal of your house. Different banks have different rates. But let's just say the general rule of thumb is you're prob going to be able to borrow, you know, 70, 80% of the equity you have in your house.

Okay.

I mean, of the equity. So let's just say you have a $300,000 house and you owe 150. So you have $150,000 of equity. You'd be able to borrow 70 to 80% of that.

So let's say you pull out 100.

Yeah. You don't have to use it. Don't use the whole HELOC.

So now you say you pull out 20. Right. And then you go 20% into $100,000.

Exactly. And what it is, is like a long term credit card. So most of them again, check with your bank to make sure. But like, so let's just say a typical one, let's call it 15 years. Right. So, so for 15 years I have that $20,000 credit card and so I can make a purchase with it and you'll pay the interest only on that 20 grand. So you're, you know, you could be making some cash flow and you're slowly starting to pay this HELOC back. If you refinance that house in two.

Three years, your investment property.

Correct. Your investment property, refinance your house, pay that 20 grand back and then use it again. Typically the rates are a lot lower as well. Yeah, so. So the HELOC is definitely a way for you to get in. You know, when we're talking about our high level, is now the time to invest?

Right.

Take a look at all the way you can get money.

Right. So for 15 years you've been paying down your mortgage and putting all of your disposable income into your 401k and your IRA and you don't necessarily want to disrupt it or whatever. That heloc is a great avenue.

Yeah, Absolutely. Take a couple months, pay down the principal of your house. I mean, do things like that so that, like, say, maybe you're not ready to do it now, but you're like, okay, I'll tell you what, I'm definitely getting to a house by. By July or August.

Great.

Start making the moves now. Start paying down that principle. Yeah. You know, I mean, so that you can borrow more money.

Yeah.

There's just so many avenues to get money right now. I mean, literally, just contact your local bank. Contact. We have a list of lenders, you know, reach out to me. We have a list of lenders that we work with. It's not that we have any ties to them. It's that we know that they deliver a great product for our investors or we wouldn't refer them.

Yeah, that's exactly right. They're people that. We've had good experiences. Our investors have had good experiences with them.

So. Yeah, no, excellent point. HELOC is definitely a great position that you can use. And it's safe.

Yeah.

You know, it's safe because you have plenty of time to pay it back, number one. Number two, you're. You're borrowing it against your primary residence that you've already established that equity, which will continue to grow. Yeah. You know, so it's not going anywhere. Pretty safe.

Yeah.

I mean, I'm not saying that there's no risk.

Yeah. Everybody's situation is unique, but it's a good avenue to vet.

Absolutely.

Sounds like a good opportunity. Cool. Well, we've hit on a lot of stuff. We could spend days on any one of these subjects. I guess you'll have to tune into the next episode if you want to go deeper on any one of these things. So we'll call it a day.

Sure.

Freedom fans. In the meantime, invest smart and live happy. Thanks for joining us.

Thanks, guys.

Thank you, Mark.

Thank you, sir. 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.