Quote from @Zach Lemaster:
@Alex Gerondale
Thank you for the kind words. I'm glad to hear you've found all our educational content beneficial! We really put a lot into presenting topics and interviewing guests that we feel will benefit our community. This is one example of interviewing an interesting concept that most have not thought about yet. Feel free to shoot me a message if you would like to jump on a call sometime. I am busy, but never too busy to find time to speak with someone eager to get started in real estate investing. I remember what those days were like. All I ask is that you take action as it wears me out to spend time passing advice to people when they end up never acting on it. To answer you question as straight forward as possible, if you have funds to buy a rental property, you 100% should do that! Tardsus is an interesting concept for people that want to take out credit lines to invest in short term notes (2-3 years), pay the note off sooner, and then repeat. It does not take a lot of capital to get started and you can start seeing some returns rather quickly. However, you need to fully understand how real estate builds true wealth over time and how the tax benefits work of real estate investing. When you combine cash flow, depreciation, leverage, appreciation, etc., you are growing your net worth with an asset in addition to cash flow. An asset that at some point in the future you will be able to trade up to future properties, sell for a large amount, pass to future generations, etc. So I encourage you to educate yourself to look beyond just creating cash flow. It's interesting to me because most new investors come in only thinking about cash flow because it's easy for them to apply a simply math equation of "if I earn x amount of dollars a month from x amount of properties or investments, I can retire by the time I'm X amount of years." They never talk about net worth growth investing in assets. I'm guessing because they don't really understand how wealth is built in things like real estate. On the contrary, when you speak to people who have created tremendous wealth in real estate, they never focus on cash flow. They talk about things like appreciation, tax benefits, accelerated tax benefits/depreciation, leverage, etc. That is how a true asset builds wealth for you over time. So I encourage you to make sure you fully understand the short and long term evaluation of anything you invest in.
Now, if you wanted a different answer about how you could do both as a more aggressive strategy, here it is. You could put your money down on a rental property and then use a LOC to invest in the program. Alternatively you could also put less down on a rental property with a portfolio lender that allows all the way down to 5% (depending on your qualification criteria) to invest earlier and have more capital. Just make sure you understand the loan and the cash flow scenario.
Main point in all of this: Nothing is going to beat real estate long term to create wealth predictably (so accept that), fully understand anything you invest in, be creative to know how you can do more than an either / or scenario, and ultimately take action. The worst thing you could do is nothing. Good luck!
To your success,
Zach!
Thank you Zach. I definitely understand where you're coming from when you talk about net-worth and taxes. I myself chose to work as a traveling physical therapist to have tax free benefits on my per diem. And I love the concept of lowering your taxes with depreciation on RE.
First let me say I don't want to waste your time. It's a concrete commitment on my part to do buisness with your company. Both because of your reputation online and because you take the time to talk to a nobody like me. It speaks to your character.
I guess my real goal is to figure out how to scale as fast as possible with your company. As you often say on YouTube, one door alone raises your risk. It's best to have as many doors as possible to lower any potential complications (tenant not paying, maintain, ect.)
As of right now I can barely buy one rental property, and that's if I completely wipe out my savings. Which is why I would need another few months to save for door one.
I plan to talk to tardus on Monday. If they can work my plan to buy 1-2 rental properties a year starting in the next nine months I'll go with them. If not, I'll save and talk to Lars Kappler in a few months time. We were introduced a week ago and he has already pointed me towards your recommended lenders. So far he has been a great help.
It's not ideal that I can't jump into RE right away, which is why tardus seemed like a good way to accelerate things. Personally I hate waiting and sitting around to take action, but I know in my head I also have to meet certain conditions for things to make sense for a deal.
I thought about your new construction housing in Florida with the 5% down financing, but I really wanted to start somewhere without hurricanes. My grandfather has gotten his house destroyed twice in the last decade or so living in Tampa and later in Panama City Beach. Guess the Florida market makes me a little gun shy, which is why I was hoping for the OH or ID Markets.
Thanks again for taking the time to share your thoughts. Especially when you didn't have to with how busy you are. It gave me clarity on my next steps. I'll be sure to reach out in the next 3-9 months depending on what tardus says.