Why Real Estate Is The Best Investment | Real Estate Investing | REIal Talk EP. 74

Good afternoon, everybody. Welcome to another episode of Real Talk. We are number 74. And I was telling Joe that was the year I was born, 1974.

I said, she did. She. I said she looked younger. And instead of saying, you look young, too, she was silent.

Hey, that is not how it went down.

Exactly how it went.

Let's get into it. Today's episode is why REI is considered the best investment strategy. Okay. And then we have a couple of talking points. I'll start it off with one of the biggest. One of the biggest benefits of real estate investing is that the value grows over time. What do you think about that, Joe?

Absolutely. It's certainly a lot better these days than putting money into a bank account that doesn't even keep up with inflation.

Yes.

If you're not investing your money, if you're just throwing it into a savings or checking, even something high yield, you're going to be losing money versus inflation. Especially when we're looking at what's our inflation rate these days, everybody? 8.2, 8.3%. And what are your accounts paying? 0102? You're losing money. If you're not considering real estate as an investment, you're really doing yourself a disservice for your future.

Agree. And it just, it happens. It's over time. It's not something that you have to actively do. If you have a stock, for example, in a company, there's only so much you can do to affect the value of that stock. And actively you can do improvements on a property, but you don't have to necessarily the market. I mean, just like Joe was saying, inflation, just the nature of time, it will increase in value, there'll be some ups and downs. But overall, you know, historically speaking, real estate does increase in value. And I just jumped right into it. So I just, I was just sitting here realizing. I didn't introduce myself. I didn't introduce you. So sorry, everybody. For anybody who doesn't know, I'm Tina. I'm CEO of Freedom Cap, Freedom Real Estate Group. Joe is one of our newest members of the company team of the All Stars, as we like to call ourselves. And he is the operations manager of Freedom Capital Investments. But he has a hand in some of the other companies as well. So welcome, Joe. And let's go into another point. Okay, let's see.

Well, let me. Let me take a minute and go back to what you mentioned earlier. You were talking about the stock market before you introduced us. And you know, one of the great things about real estate is that you can Actually leverage the money you have to invest. It's not like the stock market where if you have just $10,000 to invest, you have to take that entire $10,000.

Yeah.

And you go and you buy a stock or you go and you put it away, unless you're buying on margin, which of course is very dangerous these days. If you had $10,000 and you wanted to invest it in real estate, you can take that $10,000, use it as a down payment, depending on the vehicle that you're going to invest in, and you can, you can actually buy an asset with a much greater value, which is wonderful over time because now your money's not all tied up in just one stock or a mutual fund or thrown into even a Roth ira. You can actually invest with very little money down and, and start your journey in real estate investing right away. You don't have to wait and squirrel that money in a jar underneath your kitchen counter or in a piggy bank. You can actually become an investor very early on. And the earlier you start, the more opportunities you create for, you know, earning passive income. Creating passive income in the future.

Completely agree. It was on my list. I wrote it down here.

Leverage steal your thunder?

No, no, no, no, it's great. We're going to agree on a lot of these points. You know, it's. The little note I wrote for leverage is that it does only take a little to control a lot. So whether you're purchasing, whether you're, you know, doing other strategies, more creative strategies, you can't use it. Use a minimal amount, comparatively speaking, to the asset, can use that as leverage in real estate. Not a lot of places where you can compare like you are comparing with the stock market. Next point on here is. Oh, diversity. It diversifies your portfolio. Let's talk a little bit about that. That's for sure. There's a lot of variety. You have eight in particular. A strong self storage background. Right. That's just what piece. A little sliver of all of the different asset classes, asset types. In the game of real estate, a lot of people are familiar with single family homes, of course, and residential properties. And that's our bread and butter, of course, as turnkey providers speak a little bit more about diversity, what's the benefit, what's the benefit of having this variety at our fingertips for real estate?

Well, when you have a variety, variety of investments, whether they be real estate or a combination investments, you're hedging against volatility. If we look at the stock market's performance Today, today is the 4th of October was a great day for the stock market. It was up 700 points the last time I saw. But at the end of the day is coming, and I'm sure it'll be 600 by the end of the day. But you can even see how those intraday changes are very unpredictable. And if we look for, for those people who are looking to get into investing, if you put some money in the stock market just a year ago, you've lost 20% of your investment. So by diversifying your holdings, you are minimizing the overall risk to your portfolio. So whether it's spreading your investment over different vehicles or spreading your investment over different types of real estate vehicles, it's something that you really need to consider doing and continuing to do on your investment journey. Real estate gives us so many choices, and that's what's great about it. To invest. Tina mentioned turnkey, multifamily. There's storage. You could buy a property and turn it into an Airbnb. And that's a type of real estate that has pluses and minuses. Right, Tina? We have a lot of people who like to do that nowadays.

Definitely. Oh, gosh. I was going to mention a couple more, but I don't, I don't necessarily want to go down that rabbit hole.

It's fine. For those people who don't know, there's. There are things. And I'm learning about this type of real estate as well. Again, I'm from the commercial sector, but there's something called fix and flip. Right. We buy it, fix it and flip it.

Right.

Then for those people with maybe a little less cash, they do a live in flip, where they buy it, live in it, and fix it up with the intent of flipping it for profit and moving on to the next. So, I mean, there are so many ways to get into real estate, and that's why it's just such a great investment to make.

Yeah, agreed. The old adage, not putting all your, your eggs in one basket. Right. Spreading it out a little bit, too, to hedge against volatility, like you said. All right. Oh, full control of your investment. Yeah. The market plays a part, but definitely have more control over an investment in real estate than in other. Other examples, for instance. You do. Yeah. Like I have a couple of rentals. I have more control over that rental and what I do to that property and what I don't do. You know, I'm very. I want to make sure the maintenance is kept up. I want to make sure it's. The property is Taken care of because I know the better I take care of the property, the better the tenant and the resident is going to treat it. You know, things like that. So little more control than if, if I'm buying a different type of investment. I know you're getting introduced more to the residential side, but what do you have, like a take on that for the commercial side and level of controls that you have in real estate investing?

It depends on how active or passive you want to be. Again, you have a choice. You can hire a third party management company if you find a great investment that's not in your geographical area, so that you can't be there every day, you can't ensure the maintenance is done. Of course, when you do that, remember that you're going to pay your management company a percentage of your gross income. And it varies. In commercial and industrial properties, it's usually around 5 or 6% when you're talking turnkey, when you're talking multifamily, I believe it's closer to 10% in most cases. But sometimes those management companies have resources that you as an individual don't, and it allows them to take advantage of businesses of scale. So they may get lower rates for maintenance projects, they may get lower rates for security, they may get lower rates for utility.

Right.

And by employing a property management company on the commercial side, you can actually increase your cash flow because they have efficiencies that you or I as individual investors don't have.

Mm. And as far as speaking to levels of control, you have complete say so on who you're going to hire as a manager, who you're going to partner with in taking care and managing of a property. So you just. There, there are certain levels of control that you are privy to in real estate in the real estate world that you don't necessarily have in other investment types. All right, next point. Passive income through renting. Oh, I'm sorry, did you have another.

No, I was just gonna, I was just gonna ask, did you ever have a situation at your properties where you felt there was a benefit to being in control, where maybe a third party management company might not do as great a job for you?

Yeah, so that's an interesting question. I have some properties that are out of state. I, they, they're not very close by and I can't just drive down the road and get to them. And it would seem like it's better to have a management company take care of it. However, it's only three units and it's not that hard to take care of or handle myself. And I do have a lot of contacts in that area, so a lot of resources that I can reach out to for help, but I just like being able to vet the applicants and the people who are applying and kind of making those decisions. Like I said, because it's only three units and, you know, it's not a huge tax on my time, and I have other resources and things that I can lean on if I need to. So that's an example. It's just a personal preference of mine. I can totally. I'm totally open to, you know, if. If that doesn't remain the case or if my schedule becomes, like, if it's too much, I could either sell it or. Or I could hire a property manager. It's up to my husband and myself. It's in our control, our purview, to make those decisions. So even though it's far away, I still like that. Helps me sleep at night knowing that I have that level of control over the properties and what I want to do with it. Does that answer the question? Sorry. Yeah.

But I think that's what you said about, you know, the ability to lean on others is important, too. You know, if you're just getting into real estate or you're, you know, somewhere down the path of investing, you need to make sure that you make those contacts, that you build those networks.

Yeah.

So that you have that support system in place. We all recognize there's plenty of business to go around for all of us, and ultimately, if you succeed, we succeed. So, you know, whether you're dealing with Freedom Capital Investments or you're dealing with a single investor, you know, keep those lines of communications open. You're going to need to lean on others to be successful. And we're all there for one another, you know, and whether it's picking up the phone and calling you or emailing me, if somebody out there listens to this podcast and they have any questions, they're welcome to reach out to us. They don't have to be one of our customers or one of our clients or one of our tenants. And we're happy to. To guide them or help them find the answers that they need if they're an investor. So we're here for you.

Yep. Definitely support that.

I sound too much like an infomercial.

No, not infomercial enough. Give me more. Well, no.

I mean, even. You know, it's funny because when I started working for Freedom Capital Investments, I never thought that we would think about taking the foray into self storage, but we Might just do that. So it was wonderful to be able to reach out to a contact in self storage I've known for years.

Yeah.

Who was able to sit down with Danny and Flip and kind of talk them through how funds within the self storage industry work. But leveraging those contacts is very important. It'll help us grow and it will help you grow too.

Yeah. That kind of touches on one of the things on my list of the ripple effect. So networking, meeting other people and not. I think what I love most about the family companies and the leadership and the team is like, everybody is so open. Like you mentioned saying, hey, you don't have to be a client of ours. Reach out. If you have a question, we'll be happy to answer it. It's because we just have that we know that we've benefited from others who have helped us and answered our questions. And we are more than happy to do the same for others. And it just has. That's one of the things that I love about real estate too, is that the ripple effect, it touches so many different things. You know, every house that we rehab and improve helps the community, helps, you know, the market helps so many different. The team, the contractors that are working on the properties, you know, and all the people that you meet along the way. And it's just another opportunity to connect with somebody, to help somebody to ask for help if we need it. It's just a very supportive environment within our company. And I've worked for companies where that's not the case. You know, it's very dog eat dog and that's why I love the family company so much, because it's. It's completely not like that. We're. We have a very healthy, giving, open culture. I mean, you know, and if you.

Want to meet Tina or anyone else, come to Ohio next week where we're having an event at our Centerville offices.

I love that.

No, just kidding.

But wait more, seriously.

You're going to be in Ohio next week and we have an event going on.

Mm. It'll be the week after. So sadly, I'll miss the event, but I'll be. I'm going there for the quarterly stuff, the quarterly planning and meeting and everything. And to walk the properties. Some of the properties I haven't physically seen yet, but for sure, if you're ever in town, Please reach out. Ms. Betty will happily give you a tour of our offices and you'll get to meet some of the people that you've seen and heard on the on podcast past. All right. Any other I mean, we didn't really touch on tax benefits or we did talk about flexibility and variety, the ripple effect, leverage, tax benefits. I mean, it's pretty well known, you know, appreciation, like we touched on, as far as the asset growing in value, there's depreciation. You could take advantage of all sorts of things. And, you know, we do encourage people who are interested in real estate investing to reach out to a tax professional, an attorney. You know, we are not those things. We can just. We can share what our experiences are. But to get to nitty gritty and knowing things particular to your specific situation, it's always good to reach out to a professional. Those are my final words. Do you have any final words for this episode?

Well, I do. Thank you for making this easy, Tina. This was not easy for me. For those of you listening, podcasts are not my thing. Vlogs are not my thing. But if you want the best advice possible when it comes to commercial real estate, turnkey, and multi family, you can reach out to me anytime. I'm. I'm happy to be there for. For anyone who's listening.

Love it. Perfect. Thank you, Joe. Thanks for being my. My partner in this. This is great.

I mean, we'll have to do it again sometime.

Oh, no. Oh, no. Now Coco's got it now. You just told Coco she's gonna assign us another one.

Coco, we're ready.

No Coco. All right.

We're gonna talk about Cats.

Okay, That'll be fun. Thank you again, everyone. This has been episode number 74, my year. Right? And we appreciate it. We always end our episodes with invest smart and live happy. Yay. Thank you, everybody.

Bye, everyone.

Bye.

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.