A talk in a bar about real estate investing

Podcast Guest on Show #21

I talk with everyone who will listen about real estate investing. However I never take advice from those who do not invest in real estate. A lot of the information they spread is garbage.

There are also a lot of people who seem to think they know all about real estate investing based on their negative experience renting out a former primary residence. I don't listen to them either. They almost always paid too much for the house, and the rent can't cover the PITI. Not only that but they put a garbage tenant in the property who ends up trashing the place. Then they go around and tell everyone how awful it is to be a landlord and that real estate investing is a waste of time.

10 Reply

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Anthony Gayden:

I talk with everyone who will listen about real estate investing. However I never take advice from those who do not invest in real estate. A lot of the information they spread is garbage.

There are also a lot of people who seem to think they know all about real estate investing based on their negative experience renting out a former primary residence. I don't listen to them either. They almost always paid too much for the house, and the rent can't cover the PITI. Not only that but they put a garbage tenant in the property who ends up trashing the place. Then they go around and tell everyone how awful it is to be a landlord and that real estate investing is a waste of time.

Exactly and not only that they are the people who are working W2 jobs (which I still am) that won't open up their minds to the idea. I like that idea tho I'll be very cautious of who I take advice from even if they are investing!

Jeffery Waicak

Investor · Massillon, OH · Member since 2015 · 266 posts · 156 votes

9y

I was in a multi level marketing company. You try to get people to join and make money off their efforts. Not everyone wanted to join. The head guy in the office said no, not everyone will join, but someone has to make my fries so that's ok.

That said, I think I can learn something from anyone, rich, poor,investor, renter.

And go cavs

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Jeffery Waicak:

I was in a multi level marketing company. You try to get people to join and make money off their efforts. Not everyone wanted to join. The head guy in the office said no, not everyone will join, but someone has to make my fries so that's ok.

That said, I think I can learn something from anyone, rich, poor,investor, renter.

And go cavs

We were friends until you said go Cavs aha... But I agree with that everyone can teach you something and it would be surprising sometimes how much people know about a subject but never do work in it. Wts I agree with the previous comment and probably wouldn't take advice from someone who maybe knows a lot about real estate investing but lacks any experience in it.

Account Closed

Kyparissia, Messinia · Member since 2017 · 56 posts · 15 votes

9y

I have to admit that there are very few people who I've shared my passion for REI. Quite simply, because many can't afford to invest. It's more like the fox with the grapes fable. Because he couldn't reach the grapes, he said they were sour. Because they can't afford to invest.. many are struggling to make ends meet, they find many reasons why we shouldn't risk our money.

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Account Closed:

I have to admit that there are very few people who I've shared my passion for REI. Quite simply, because many can't afford to invest. It's more like the fox with the grapes fable. Because he couldn't reach the grapes, he said they were sour. Because they can't afford to invest.. many are struggling to make ends meet, they find many reasons why we shouldn't risk our money.

That's true. But I have also talked to many people who are interested in investing who may not be able to afford it or think they can't afford it. I've learned a lot of the time people have money saved up that they don't think is enough, but there are so many ways of using other people's money it may be possible. I get intimidated sometimes because I think people may give me funny looks and doubt me I'm trying to get over that.

Rogers Smith

Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes

9y

@MarieChele Porter the guy was right about lack of liquidity from a financial perspective. A real estate investment is less liquid than an investment in a publicly-traded security. But, he misses the whole point entirely that rentals are buy-and-hold investments. And you were right (in your attempt) to point out that rentals provide ongoing income, not just upon exit.

Sounds like he comes from a Wall Street or banking upbringing wherein you cannot get a good night's sleep unless you can convert your investments to cash in a nanosecond.

No worries. Less competition for the rest of us.

Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes

9y

Even Bradon of Bigger Pockets says that 90% of people on BP will never take action. You can call it negative, liquid, or whatever. I tend to think it is the risk factor. Everyone has their risk factor. Some have high tolerance, others low. For those that have low risk, can put in bank and get 1%. For those that have high, can play the stock market.

I like RE due to the cashfow, appreciation, and equity build up with monthly PI payments.

Terry Lao

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Rogers Smith:

@MarieChele Porter the guy was right about lack of liquidity from a financial perspective. A real estate investment is less liquid than an investment in a publicly-traded security. But, he misses the whole point entirely that rentals are buy-and-hold investments. And you were right (in your attempt) to point out that rentals provide ongoing income, not just upon exit.

Sounds like he comes from a Wall Street or banking upbringing wherein you cannot get a good night's sleep unless you can convert your investments to cash in a nanosecond.

No worries. Less competition for the rest of us.

Exactly and I agree with all those points. His degree was in political economy so there was probably something with that psychology as well. Like you said less competition for us all! :)

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Terry Lao:

Even Bradon of Bigger Pockets says that 90% of people on BP will never take action. You can call it negative, liquid, or whatever. I tend to think it is the risk factor. Everyone has their risk factor. Some have high tolerance, others low. For those that have low risk, can put in bank and get 1%. For those that have high, can play the stock market.

I like RE due to the cashfow, appreciation, and equity build up with monthly PI payments.

Terry Lao

I have a passion for real estate as well. And unfortunately people with low/no risk tolerance sit there money in the bank and can't even get 1% more like .01% :( there's also the people who just don't know that there are other things that can be done to grow their money. That's why it's good to talk to people because you never know who could be your next private money lender...

Rogers Smith

Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes

9y

@Terry Lao and @MarieChele Porter actually, the bank account earning >1% is one of the riskier long-term strategies for investment. With inflation taking 3% of his buying power annually, the savings account investor is loosing 2%+. Meanwhile, the real estate investor profits from inflation by enjoying property appreciation and rental increases. It's a wonderful thing.

Andrew Johnson

Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes

9y

@MarieChele Porter I'd have been the person to say: "You're nuts, don't get into day trading!" Everyone has their own risk profile, what they grew up with, their comfort-level, their tax situation, etc. I don't talk about real estate investing with everyone but when it does come up there isn't usually negative feedback, just rather: "I wouldn't know where to start" Fear of tying up money, fear of buying the wrong property, not knowing what makes a good deal, etc. And they likely don't have an investment thesis about what they want to buy/own or have those goals set out.

For what it's worth real estate seems to either get incorrectly cast in light of "easy money" (thank you HGTV and your house flipping shows where everyone makes $50K->$150K in 3 months) or impossibly risky and difficult (thanks 2007-2008 real estate crash!).

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Rogers Smith:

@Terry Lao and @MarieChele Porter actually, the bank account earning >1% is one of the riskier long-term strategies for investment. With inflation taking 3% of his buying power annually, the savings account investor is loosing 2%+. Meanwhile, the real estate investor profits from inflation by enjoying property appreciation and rental increases. It's a wonderful thing.

Aha this is right too and that's a good way to think of it that you're actually losing money due to inflation as it's sitting in the bank.

https://macro.economicblogs.org/calculatedrisk/2017/06/mcbride-las-vegas-sales-28-yoy-inventory/

Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes

9y

@MarieChele Porter and @Rogers Smith

Agree with your 1%, 2%, and 3% statements.

Here's some numbers for home sales in Las Vegas, which is where I invest in 4 plexes. Double digit homes sales is the result of demand over supply. The cash flow received actual is 10-14% ROI/CoC. The appreciation is about 10% annual. The reduction in principal is about 3k and 6k, respectively. Overall, good time to be in real estate.

May was up 28% YoY.

Rogers Smith

Developer · Covington, LA · Member since 2017 · 224 posts · 124 votes

9y

@Terry Lao Man you're in a strong market. Ride the wave! My market is not as strong, but we're expecting steady growth in the coming 5 year horizon.

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Andrew Johnson:

@MarieChele Porter I'd have been the person to say: "You're nuts, don't get into day trading!" Everyone has their own risk profile, what they grew up with, their comfort-level, their tax situation, etc. I don't talk about real estate investing with everyone but when it does come up there isn't usually negative feedback, just rather: "I wouldn't know where to start" Fear of tying up money, fear of buying the wrong property, not knowing what makes a good deal, etc. And they likely don't have an investment thesis about what they want to buy/own or have those goals set out.

For what it's worth real estate seems to either get incorrectly cast in light of "easy money" (thank you HGTV and your house flipping shows where everyone makes $50K->$150K in 3 months) or impossibly risky and difficult (thanks 2007-2008 real estate crash!).

Haha see everyone has their own risk tolerance. Having money tied up is an issue for a lot of people too... That's why I always say invest what you can afford to lose. An investment should never be up to your last dollar, especially starting out. The flipping shows are a phenomenon if people followed up with the education behind it that would be great to go with the motivation. I know I didn't believe it was real when I first started watching them. I thought it was fake living in California I was naive to the fact that you could buy a house for 30k put 20k into it and sell it for 100k. You seriously can't even buy a lot for 100k here in SF !! Lol pretty bad.

Linda S.

Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes

9y

https://macro.economicblogs.org/calculatedrisk/2017/06/mcbride-las-vegas-sales-28-yoy-inventory/

One of my favorite quotes is "Don't listen or take advice from anyone you wouldn't trade shoes with" and those guys at the bar, seem very average and ignorant of the whole thing. Most average people don't get it, and they won't-- they just see fear, whereas investors see potential.

Also, a lot of guys get intimidated when a woman talks about real estate, I don't know why, but it's just a fact of life. Don't worry about them, just know you are, or very soon will be significantly more wealthy then them! Small minds--small pockets.

3 Reply

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Terry Lao:

@MarieChele Porter and @Rogers Smith

Agree with your 1%, 2%, and 3% statements.

Here's some numbers for home sales in Las Vegas, which is where I invest in 4 plexes. Double digit homes sales is the result of demand over supply. The cash flow received actual is 10-14% ROI/CoC. The appreciation is about 10% annual. The reduction in principal is about 3k and 6k, respectively. Overall, good time to be in real estate.

May was up 28% YoY.

Alright! Looks good I looked into the Vegas market a bit but not in depth its so big and the prices that were in my range are really distressed and in pretty bad areas.

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Linda S.:

One of my favorite quotes is "Don't listen or take advice from anyone you wouldn't trade shoes with" and those guys at the bar, seem very average and ignorant of the whole thing. Most average people don't get it, and they won't-- they just see fear, whereas investors see potential.

Also, a lot of guys get intimidated when a woman talks about real estate, I don't know why, but it's just a fact of life. Don't worry about them, just know you are, or very soon will be significantly more wealthy then them! Small minds--small pockets.

Haha thanks Linda I like that! Can't let fear hold me back and I definitely see potential with REI !!

Christopher Blanco

Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes

9y

I am HUGE proponent of networking and talking to anyone and everyone. Here is a story that has kick started my career. I was talking to someone on BiggerPockets about a bank to talk to for a rental I was looking at. I went to the bank they recommended. The commercial banker was impressed with my drive, my story, and my knowledge. She said she wanted to sponsor me to come to a REIA meeting as a guest of the bank and introduce me to another investor who is doing exactly what I want to do. I met the investor and immediately hit it off. I also got involved with the REIA and met another contact who introduced me to my current HML lender and several private investors...and it just keeps going. All from one recommendation for a bank.

NETWORKING is the THE power in this business.

3 Reply

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Christopher Blanco:

I am HUGE proponent of networking and talking to anyone and everyone. Here is a story that has kick started my career. I was talking to someone on BiggerPockets about a bank to talk to for a rental I was looking at. I went to the bank they recommended. The commercial banker was impressed with my drive, my story, and my knowledge. She said she wanted to sponsor me to come to a REIA meeting as a guest of the bank and introduce me to another investor who is doing exactly what I want to do. I met the investor and immediately hit it off. I also got involved with the REIA and met another contact who introduced me to my current HML lender and several private investors...and it just keeps going. All from one recommendation for a bank.

NETWORKING is the THE power in this business.

Wow, that's amazing! Sometimes all you need is to meet that 1 right person!

Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes

9y

https://www.biggerpockets.com/forums/12/topics/147823-who-do-i-turn-to-when-initially-searching-for-my-investment-prop?page=1#p988452

There's a break even article and calculator by Eric Fernwood, who posts on BP. Very detailed analysis. Compares Austin, Las Vegas, and Cupertino.

I like to keep it simple. Las Veas 4plex selling for about 230-240k. Where else you can buy 4plex today that was about same price 15 years ago, see below chart.

Terry Lao

Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes

9y

https://www.biggerpockets.com/forums/12/topics/147823-who-do-i-turn-to-when-initially-searching-for-my-investment-prop?page=1#p988452

There's a break even article and calculator by Eric Fernwood, who posts on BP. Very detailed analysis. Compares Austin, Las Vegas, and Cupertino.

I like to keep it simple. Las Veas 4plex selling for about 230-240k. Where else you can buy 4plex today that was about same price 15 years ago, see below chart.

Terry Lao

MarieChele PorterPro Member

OP

San Francisco, CA · Member since 2016 · 193 posts · 98 votes

9y

Originally posted by @Terry Lao:

https://www.biggerpockets.com/forums/12/topics/147823-who-do-i-turn-to-when-initially-searching-for-my-investment-prop?page=1#p988452

There's a break even article and calculator by Eric Fernwood, who posts on BP. Very detailed analysis. Compares Austin, Las Vegas, and Cupertino.

I like to keep it simple. Las Veas 4plex selling for about 230-240k. Where else you can buy 4plex today that was about same price 15 years ago, see below chart.

Terry Lao

Thanks checking it out!

Justin Schaefer

Real Estate Investor · Mukwonago, WI · Member since 2017 · 76 posts · 16 votes

9y

I would say to do what T. Harv Eker would do and look at them and say, "oh my God, you're broke aren't you?". LOL but in all seriousness, it is different strokes for different folks. Some people may have heard something from someone and chosen to believe it even though it is obviously not true, but for them it is. Say thank you and move on.

Seek out the truth that works for you and that your gut tells you is what works best for you.