12: Wealthbuilding Tip: Know who you're invested with

Welcome to the Purpose Driven Real Estate podcast. This is where passion meets purpose in an ever changing real estate market. I'm your host, Steve Valentine, former real estate agent turned real estate entrepreneur, speaker and guide to all things real estate. And this is my co host, Paige Tons, former D1 college athlete turned real estate adultrepreneur. Whether you work in the industry or you are a consumer of real estate, with each episode we intend to raise the bar in our industry and show you the purpose behind every piece of real estate in your life. What's up? It's Steve Van Valentine here and we're back on the Purpose Driven Real Estate podcast with my co host, Paige Taunts. And I'm your host, Steve Valentine. And today we're talking about what, Paige, what are we doing?

We have a wealth building tip today and the wealth building tip is know who you're invested with.

Oh, I like that. So who are you invested with?

Valentine Group.

Well, you're kind of employed there, so pretty good call, right?

Double dipping.

All right, so what are you. So knowing who you're invested with. So I'll start off with a story that it actually kind of saddens me, but I think a lot of people end up this way when it comes down to it is that they hear something either from a referral source or maybe they heard a podcast or they read something and what happens is they jump into that without deeply vetting. It's kind of like you remember the bitcoin thing. Everybody started jumping into bitcoin cause their friends were doing it and people were making money and then all of a sudden it crashed and they lost or crash burned. So recently I had a friend that invested in a gentleman that was doing investments. And I'll keep all the names off of it just so I don't get myself in trouble, which is possible. But the guy was a Fox News guy that started this big investment deal and he was in, I think Jacksonville, Indianapolis and a couple other places. And so he was showing people how to invest similar like what we do. And then they would do a cash out refinance. So basically they would buy the house, they would get the deed, and then there would be money put aside for rehab. And the rehab money would go to the property management company. And it was supposed to go through that. It was supposed to get rehab. So this particular friend of mine is about 50 grand into it and then he starts getting reports that things are almost done, going through the process. And again, he's 2,000 miles away or however far Indianapolis is from Here and not necessarily checking up on it or can't check up on it, and has found a layer of trust with this investment company. And what ends up happening is two or three months into it, he finds out that the house has never been rehabbed. He got pictures from a friend that was out there, hasn't been touched, the money for rehab is no longer to be found. And there's multiple hundreds, even thousands of people that this has happened to. And you know, we talk about knowing who you're invested with is that, you know, sometimes we invest in things maybe because our friends did it or our parents did it, whatnot, so want to be careful with who we do invest with. And you ask the right questions and you see what the security is and the right reports. Because a lot of people, unfortunately there's some unscrupulous shit going on in this world right now as far as the fraud goes.

Right.

And so, you know, the wealth building tip is to really know who you're dealing with, what they're really doing and what they really stand for. And the way you do that is either by references or doing your research, actually meeting with them, making sure that sometimes boots on the ground are real important as well.

Yeah, it's an unfortunate situation that when people get into situations too quickly or you know, we get excited when we hear something, not only just investments, but anything that you can buy, um, you know, you're here about it or someone's telling you about it, and then you get all excited and you click that buy button right away, right without. And you're more emotionally invested rather than just keeping the emotions out of it and really understanding what you're getting into. So, so how do you know who to trust when it comes to an investment in real estate?

I think you have to ask the right questions, which is what, what's really possible. You know, a lot of people, anybody in this current market that's offering you high double digit returns, you gotta really step back and look at what that cap rate is and what's really being offered there. Because sometimes what happens is, and think about this, is that if somebody offered you a 15% rate of return on $100,000, that's pretty good, right? You know, an annual return to where most of the time you might be getting, you know, 6 to 8% on a deed of trust, you know, investment, which is where your money is secured by a deed of trust against the property. Well, if somebody's giving you an unsecured note at 15%, there's no security behind it. So you're having faith and trust in that person. Now there's sometimes we have some investors that do have that trust and faith in us where we do have loans with the unsecured line on it.

But, you know, and what's. Can you explain again to the audience what the difference between a secured and an unsecured notice?

I mean, unsecured is like a credit card. Okay, so you have a visa with a $25,000 limit on it. There's no security on that.

Right.

The only thing the bank can do is come after you on your credit collectors, those types of things. I mean, they can ding all those things. They can garnish wages. An investor does it and there's no security, say, for $100,000. Well, you really look at what's the recourse for them to get their money back if you can't pay it back. And so you have to be careful with who you're investing with and knowing what they're doing, especially in real estate. So, you know, a lot of people, I believe, trust us and our investment strategies because one, we have a pretty long line of family legacy in the Valley. We're not going outside our box. I'm not playing in commercial because I don't know enough about it. We're staying inside residential. Our clients can walk in the door and we can talk about it. We can go through the properties that we own, we can go through the asset that they're tied to. And we have a lot of conversations, a lot of communication with them in order to make them comfortable and understand where their money's going. And the great thing about it too, is that, you know, our investors that do the private money, they're. They're investing in their own community as well. So they understand how many lives are impacted by the money that they're investing. And again, that's knowing what you're investing in. You know, it's like, what's the.

What are the morals behind that person and what are the values and the give back for the company or whoever is running that investment? Because I think a lot of times we talk about the community and the impact that we're making on the community. So I think that goes well.

I think it's important to some people faith piece. And I think it's just important to people that they know what they're getting out of their investment. Not only are they getting a return, but what were the return that they're getting, but also the impact that they're having. And they talk a lot about like your generation, where it's not all about money in their job, it's about what's being given back and what, what does it stand for and what does the company stand for and where are we going and what direction are we going in? And I believe that that's one of the things that we've created. And I think that other people can create the same thing in helping people to invest because they trust them and they have knowledge in those aspects. And I just think it's kind of that buyer beware in a time that we have right now that if it's too good to be true, you really need to look into it and make sure that you're protecting yourself and your family. You know, the last thing you want to do is, you know, you didn't live through the 2005, 2006 days, and there was a ton of this type of stuff going on back then. I mean, back then, the difference was the appraisal fraud was much easier to do. So you had people buying houses in their name, other people refinancing and pulling the cash out and causing liability and all kinds of craziness. I mean, some people went to jail for all kinds of appraisal fraud and different embezzlement things. So it's just really important to check into who you're, you're investing in and make sure that you know what you're doing and how you're doing. And if not, ask more people about it before you do it. Especially if you're going to make a $50,000, $100,000 investment. You really want to know what you're jumping into?

Well, it's just like I was just thinking a second ago, just asking someone who has already been through the entire process and seen results. And I think also oftentimes clients, when they come in to our office and are learning about our different investments and the opportunities there, you're always, you know, the first to show them your portfolio and you that you've done it and what you're doing and how that looks even like even between the single family typical rental versus the vacation rentals. I know you weren't really comfortable telling people to do the vacation rentals when you hadn't done it yet.

Well, I think that that's, you know, you make a really good point. There is that there's nothing that we'll talk to our clients about investing in that I haven't already done myself. So, you know, we've done some deed of trust investing. We, we own vacation rentals. We Own a ton of single family homes we've owned. So we're very knowledgeable in those things, which gives me the ability to help guide people to their investment strategy, whether it be deed of trust, whether it be buying rental properties or buying vacation rentals. So it really gives us that ability to do that. And I also believe that we've had a lot of people that, hey, can we get some references? You know, here's your references. People that we've done business with for a long time, people that you, you know at some point in time. There's a couple of investors that we've been, you know, two to $3 million deep with that are great references for us because they've always been paid back, they've always been paid back on time and there's no, there's no issues whatsoever with them loaning us money based on our deed of trust program.

Right, Sweet. That was actually my next question was how do you, how do you help your consumer understand that this is the right investment for them? Because a lot of times it's dependent on their situation, their finances and those sorts of things. So how does someone know that it's the right investment for them when, you know, their friends doing this? But maybe it's not, maybe that's not right for them in their, the time frame or, you know, whatever that is.

Well, it's, it's one of those great questions when you look at why we do a wealth building blueprint is because most people in our industry are quick to sell somebody an investment based on commission rather than looking at their current situation. So you've been in wealth building blueprint appointments with me where it's, you know, we're looking at their retirements, we're looking at how long do they have, when do they want to retire, what's their number? There's so many questions that go into investing in real estate in figuring out how to guide them to the correct piece. Now, you know, it's based on what's currently happening, not what's potentially going to happen in the future because you can't predict the future. But you do look at, you know, if you're in your 70s, you may not want to own rental properties. And we go through what the cap rates are and the rates of return and what, you know, an AC unit potentially could do to your rate of return that year for your retirement. So there's a lot of different planning in what we do. And again, it's based on our experience with all the different investors and how to get them to where they want to be by looking ahead 5, 10, 15, 30 years down the road to not just at the commission the company's going to get now. And that's where our wealth building blueprint really comes into play and really guiding them through it. And again, it comes just through the experience of working with investors on a day to day basis.

It's funny because as I've learned, oh my gosh, it's almost been like two, two years now. Two years after I've learned the past two years listening to the clients and asking them questions to figure out kind of what direction to guide them in when it comes to the investments and the different options just in our space. I've. After listening and listening and listening to these people, I. It's funny because I kind of, in my head, I know, okay, well they should probably do this or this and this and like you kind of like it starts to lead them in a certain direction.

Right.

So that's kind of been interesting.

Yeah. Because there's, there's so many pieces to it that people don't take into account. And it's you, I guess I look at our appointments and we go hover at 30,000ft and we look at, oh, you own a second home here and you own a primary here and you have equity in this home and you're wanting to do this. And so you start moving the pieces in order to create. It's kind of like a puzzle. So you move the pieces to create the big picture. And it depends on what their big picture is. And everybody's big picture is different.

Right.

Some people have kids, some people don't. Some people want to do college, some people don't. So you look at all the different plans and pieces that go with. That's how we arrive at what their investment strategy is in order to get them where they want to go. And some people we've told not to invest, they're not ready for it yet because you could jump into it because your friends are doing it, which is exactly what happened in 2005. And they ended up losing their rear ends because their friends were buying things with, you know, neg am loans based on, well, it's going to appreciate every month 5% like ours has. And all of a sudden you've done follow the leader right off the cliff.

Yeah. That's interesting because I just had a conversation with someone yesterday talking about a program that I'm interested in doing and something that we talked about was, you know, making. She wanted to make sure it was the best fit for me because if it isn't and I'm not a good fit for the program, then I'm not going to be satisfied. And that says she wants to be able to give the best product that she can to the perfect client. And instead of just, you know, instead of seeing dollar signs and another payday or a paycheck or whatever you want to call it. Yep. It's making sure that your clients are satisfied because that'll come back.

Well, again, it's not about. There's nothing we're doing on the investing side inside Valentine Group that is selling or pitching anybody anything. It's about guiding them through the process and providing value in real estate and showing them all the things that they could be doing that they might not know about. And hey, please don't go to, you know, the, the free seminar, which. Can I call bullshit today?

Sure.

So, I mean, just because we're doing wealth building. Tip. But this kind of the point in it, you, you know, I call bullshit on Tarek and Christina. So they're here in Phoenix sometime in July or we're here in Phoenix in July, depending on when this airs. And I watched his little promo video and his promo video, number one, it says their people are gonna be here. They are not. So they have this little real estate team that's selling their how to flip homes and how to find deals. So, in fact, I'd love to go just to see what kind of BS they're pitching. But in his promo video, he starts out with the average flip is $68,000 profit. Right. Some of you can't see Paige's look on her face, but the look on.

Paige's face, that'd be a red flag.

But that's a red flag to me. You're giving somebody false hope. Do you know what our average profit was last year out of 170 flips? It was probably about 15 to $20,000. And we know what we're doing. So for somebody to say a 68,000 average over hundred. Right? So, yeah, we did well on some, we lost money on others. But for somebody to come out and tell somebody that you can make $68,000 per house, that you do, and this is how we did it. I just think it's B.S. you're just giving somebody false hope and you're not giving them the real facts. You're trying to get them to buy your 2995 BS. That does not work for everybody. I know, totally different topic.

But it just feels. Then your sales just feels gross and Bad and right.

I mean you're.

I don't, I can't imagine what they feel like. So.

Yeah. Anyway, sorry.

Do you run your ideas and your investments by when you're considering a new investment or opportunity?

So anytime. It's an outside the box something that I'm not familiar with yet. I have a group of guys that, you know, George Lawton, Ryan Banovac, we'll go through Dave Carrick, we'll go through and really look at, hey, what do you think about this? Because a lot of different eyes from title to, you know, George runs a pretty big team here in the Glendale area. Dave's been in the business 30 years. So we'll just kind of talk about it and see like, what does this look like? Does it make sense? Run the numbers forwards and backwards and then look at it to see whether or not you dive into it. And sometimes kind of fun where you may do something new or a new venture with a partner, you know, and that's, that's a whole nother topic. Conversations when it comes down to partnerships. But it does give you some ability to experience it together. And two minds, you know, are greater than one when it comes down to making those decisions. And we've done lots of different partnerships with different people which definitely allow us to experience something different. Because two people coming together with those ideas, someone may see something different from their experience that really helps the other one and then it kind of skyrockets that piece into a better experience.

Sweet. So wrapping up our wealth building tip today. How can our listeners learn more about what our investment and our investment strategies are?

Where can they go find this valentinegroupaz.com you know, in the investor side of the wealth building. I forget what the tag is on it labeled investors. Okay. Page of the website. So it's labeled investors. So if there's something you. Right. If there's something you want to invest in or you want to talk about or you really want to look at a wealth building blueprint. Now the cool thing about the wealth building blueprint is you may not be ready to invest, but it's still a good idea to have the conversation to say, well, I'd like to. What do I need to do to get there?

Right.

Because some people there's, there's a lot of myths out there that you need certain things in order to invest in real estate. That's not really the case because we have that creative way of handcrafting the real estate solution that really puts into perspective what you can and can't do. But it's also like, here's your homework, here's the things you need to do. We're gonna keep pumping information into you so that you can see what our inventory is, what it looks like, what the rents are. Because if you don't know any of that, you can't even start to have.

A glimpse or start like, understanding what your, what the options really, truly are and safely and.

Yeah, because a lot of people just.

Kind of reminds me of how I'm, I'm trying to, to teach and help more 20somethings millennials buy homes. And I think the biggest thing for me was I thought that I couldn't and then until I knew that I could.

Right?

So it's kind of like you don't know what you don't know until you learn a little bit more about it or, you know, poke some holes in it.

And well, that's the myth. And we've had some clients where you look at, again, see what the challenges are. Right. We've gone through the wealth building blueprint and we've painted the picture, both the pros and cons. Because here's the thing most people will tell you, well, rental property is going to be great and the rents are good and you've got cash flow and blah, blah, blah, but they don't go through the cons. They don't go through, you know, the tenant moving out, it being trash. What are those things? So you got to be prepared for some of that. And so you start looking at how do you move equities from your primary into a rental. Again, you're not taking an equity line to buy a boat. You're moving equity from one house to the next. So there's a lot of different ways they can be done and people just don't see what it looks like. So, yeah, we encourage you to go into the website and sign up and subscribe so you start getting tips. And if you want to do a wealth building blueprint appointment, we'll certainly set that up and make that happen.

Yep.

Sweet. All right, that's all we got. We're out of here. Thank you for listening today. If you loved this episode, please share it with somebody you think would also love it or be inspired by it. Without you guys, we can't create more purpose. Please leave us a review and a truthful comment or thought. And until next time, this is Purpose Driven Real Estate.