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Is Now a Good Time To Invest in Real Estate According To Experts

Kathy Fettke

Kathy Fettke

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Webinar Description

What happened to the cash flow? If investors are still buying, where are they buying? And are home prices going to drop if we go into a recession?

We’re fielding questions like these nearly every single day. And we get it — the market doesn’t look like it did a year ago. With higher prices and increased interest rates, numbers are tight nearly everywhere.

Our top four real estate experts, Kathy Fettke, RW Co-Founder, and our three investment counselors addressed these issues (and more) during this webinar. They also answered investor questions live, which may answer some of your top questions too.

Webinar Topics:

  • 00:00 – Introduction
  • 02:18 – Agenda
  • 02:39 – Why 2022 Isn’t 2008 (with Kathy Fettke)
  • 11:46 – I’m worried about a possible market correction and recession. Does it still make sense to buy? (with Joe Torre)
  • 21:10 – My properties have equity. Should I do a cash out refi or 1031 exchange? (with Aristotle Kumpis)
  • 26:54 – Is now still a good time to invest in real estate? (with Leah Collich)
  • 41:33 – Investor Questions and Answers

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Webinar Transcript

Kathy: Good afternoon and welcome to our weekly webinar. I’m Kathy Fettke, Founder of RealWealth and we’re here with our investment counselors. This is going to be such a great webinar, so welcome. We’ll start just in a few minutes to make sure everybody’s joined us. If you haven’t met our team, here they are. We’ve got Joe Torre, Leah Collich, and Aristotle Kumpis. 

Our audience has probably met at least one of you hopefully, over time and maybe all of you at this point through the webinars. We have a really important topic today. Of course, we know that rates went up again yesterday that was fully expected and probably priced in already into the market. Still scary and unknown as to whether we’re going to see more rate hikes in September and who knows. We’re hearing all kinds of different things. In this uncertain time when things are changing so rapidly, of course, there’s fear in the air, and that can be a good thing. [laughs] That can be a good thing, because it can open up opportunity.

We are just dedicating this time to discover what’s really– or at least give just our opinions on what’s really happening in today’s market and more importantly what to do. We did a survey to find out what is most concerning to you and got some great feedback so we put that feedback in here, and we’re going to be addressing those concerns and questions that people had. We’ve broken it up, with me starting with the first question that so many people have. Let’s see if my arrow works.

You’ve seen this before our disclaimer. Just make sure that anything you hear today you double check with your CPA, with your attorney to make sure it applies to you and your specific situation because [00:02:00] everyone is different. That is our disclaimer, and of course, past performance is no guarantee of future results. We are giving our opinions, so always do your own due diligence. I already did this part. There’s the slide, [chuckles] our great team, and they are all very, very active investors too. Our team has definitely their finger on the pulse of the market just personally, because they all own properties in these markets along with Rich and me.

Again the agenda, why 2022 isn’t 2008? I’m going to start with this little section, and here are my thoughts on it. This is the big question people have, because 2008 was awful. If you owned real estate, you felt it somehow. If you owned rental properties, you probably felt it less but, mainly if you had good quality assets, then many of our RealWealth clients didn’t feel anything during that downturn. That’s why this isn’t as scary to us as it might be for people who really were impacted because those of us who bought in Texas at that time were so well-positioned that they just skated right through that massive housing crash.

With that said, people are terrified that we’re going to go and do that again, and what does that mean if you own real estate? I’m just going to spend a couple of minutes here talking about some of the key points to be aware of as to why, what’s happening today is so, so different than back then. I was going to say last decade but oh my gosh, even before that. It’s been a while since this happened. The biggest difference today is that borrowers are so strong and they qualified for these loans. That was not the case in the early 2000s. There was really no qualification necessary [00:04:00] at all.

You guys know that it was just fill out some paperwork, stamped, okay and you got yourself a loan. It was maybe not that easy but pretty close. Back then, you can see on this slide the dark blue is the subprime, and that was pretty prevalent back in 2004, 2005. Anyone could get a loan regardless of your payment history. If you just didn’t pay your bills, that’s okay, you get a loan for as much as you want. That obviously was a recipe for disaster. It is not the case today because we know that Dodd-Frank came in with new laws making it very difficult. As you know very difficult to get a loan. Very, very few subprime borrowers but look at these 760 credit score and higher, it’s most of the market.

Most of the people who have borrowed loans have exceptional credit. They put down payments. They pay their bills and in all of these years that we’re looking at, these people have built enormous equity. They’re locked into historically low payments. Nothing at all like before, where people put no money down and had bad credit, in many cases got money back, because as a mortgage broker at the time, I could give 104 loans which means, no money down plus we’re going to give you some extra money for furnishing. There was no equity in these homes. It’s not the case today. It’s a record equity.

Look at that, this is the home equity that people are sitting on today. They have low payments, lots of cushion. The only thing that would really throw this into a tizzy is if everybody lost their job and had no way of paying, but today we have a strong job market. With more jobs than people want, two jobs for every person that wants one. If you lost your job, [00:06:00] you just go get another one. That’s the scenario we’re in right now. I do not see a risk with current owners. People who own real estate today is just– Again, it looks very healthy, the healthiest ever. Lending is tight, is there a lot of money that banks are just throwing out there? There is not.

Mortgage credit availability dropped, so it’s harder and harder to get loans, banks have less money to lend so they’re pickier, they’re going to really focus on those 760 FICO scores. No loose lending today. We are seeing arms on the rise, and this is freaking people out, thinking, “Well, that’s what brought us down last time.” It’s not what brought us down last time. It was bad lending, poor standards, not checking FICOs, not checking anything. No verification of anything needed at all. Not the case today. It wasn’t the arms. For anyone new, that’s adjustable rate mortgages. This means that it’s fixed for a time period, and then adjusts.

Back then again, in the early 2000s, these were what people were getting, everyone had an arm, it was very popular to get one. You only had to pay a tiny portion of your payment. Again, none of that is true today. The reason people are getting 5, 1 arms today or 7 or 10, or whatever they’re getting is because they’re cheaper. They make the numbers work much better, and the loan is fixed for five years. That’s amazing. It’s five years, so arms are up, nothing to be totally freaked out about, we were not that far from this in 2019 where the real estate market was very healthy. Why would people be comfortable with a 5-1? This is why.

Rates follow the bond market. This is the 10-year versus, the 30-year. The 10-year treasury– [00:08:00] Look at, it’s like lockstep with the mortgage rates. What we know is that, the 10-years falling. For all those people who thought that interest rates would rise forever, I’ve got to say, I’m not buying it, because the market is not saying that. The market’s not doing that. People are afraid of a recession, so they’re buying bonds. That makes the yield go down and they also buy mortgage-backed securities, which makes the yield go down. Most likely we’re going to see rates go down.

Again, it’s just my opinion [chuckles] but there’s evidence right there. We hit the peak on June 13th, that’s when the 10-year treasury hit the peak and it’s been going down ever since. Mortgage rates went up in anticipation of all these rate hikes, because we knew they were coming, so everybody prepared. Banks prepared, they’re going to give you a 30-year mortgage. They want to know what’s coming, so they raised rates to prepare and now with the recession looming, rates are coming down. If there was a ton of inventory and again, this is a huge difference from 2008 to now, there was an enormous amount of inventory. We don’t have that problem today.

That little green line, this is for new homes, but where everybody’s concerned about inventory increasing and it is increasing as it should. It needs to to be a healthy market, so don’t freak out about it, welcome it. It’s so much better for us as investors to have more inventory and not have to fight everybody for everything, or for a first-time buyer to be able to buy something. Inventory is needed, and it is increasing but it is nowhere near where it’s been in the past. Of course before this much, much higher. [00:10:00] Inventory is increasing, celebrate that. When you see headlines freaking you out, just know that you’re smarter than those headlines and this is a good thing for housing.

It’s a good thing for real estate investors and anyone trying to buy real estate. All of this low inventory and higher rates, it’s happening when there’s massive unprecedented household formation. These millennials, they’re just people too. I’ve said that, that’s going to be my hashtag, #Millennialsarepeopletoo and there’s a lot of them. They’re 72 million and the largest group would like to have a place to live, a place for their animals, for their children, for their home office. They’re forming families at a time when inventories just really low, even though it’s increased, it’s still half of what it should be. You got all these dynamics in play very different.

You go back 12, 13, 15 years, you can see it’s a different demographic. That would mainly be the gen X, I’m thinking and it was a smaller generation of first-time home buyers. Again, very different dynamics at play back then. You didn’t quite have the baby boomers retiring. They are now, so they’re living everywhere. The whole demographic cycle is completely different than 15 years ago and this slide should show you why when there was a lot more inventory, like 3 million instead of a million and less people forming households. Just not the same dynamics as today when third of the inventory and way more people.

All right. That just takes us to the next question that lots of people had. This next question was, I’m worried about the recession because that’s a fact, we know that the fed is slowing things down. [00:12:00] I don’t believe that slowdowns going to hit housing, but we’re going to see a recession, that’s intentional. We may be in one, a lot of people I listen to say, not yet because Q1 was technical, it had more to do with exports/imports. Joe Torre is going to take this question on, so Joe, toss it to you.

Joe: All right. Thank you very much. Thanks for the intel. Great intel. Thank you. A lot of our investors are concerned about a market correction so we could advance the next slide. We can talk about why. The two big things are the rising interest rates and the possibility of an upcoming recession. The fed raise rates again yesterday and the intent is when money’s more expensive, that it’ll cause a dampening effect on demand for housing and slow down the rate of increase in housing prices. That’s true. In fact, most markets will be affected that way, but not all markets. There’s over 384 MSAs in the United States, Metropolitan Statistical Areas.

Some of them have very strong growth dynamics. The supply demand in those markets are so strong that they can still appreciate, even though there’s rising interest rates. Bruce Norris, who Kathy and I both know has done a lot of research on this area and has documented many times where prices have gone up, even though their rates have gone up, but you just have to know what to look for. What you have to look for is a market where the forces pushing prices up are stronger than the forces pushing prices down. As an example, we could take a look at Tampa.

The first half of this year, 37% of homes sold in Tampa were bought all cash, all cash buyers. That’s mostly because of the market conditions. It was so competitive and there were multiple bids and shortage of inventory that buyers had to [00:14:00] feel they had to make all cash offers in order to get their offers accepted. Right away, right off the top, 37% of the market is not at all concerned about interest rates, unaffected by them. Then for the other 63%, you have to look at the demand side, the demand for housing, people retiring and moving to Florida, population and job growth.

Also, a lot of institutional buyers, hitch funds and private equity funds are buying in that market and they’re all driving demand up. You couple that with the shortage of housing inventory, you have a formula for rates going up. Even though interest rates are going up, the forces pushing prices higher are still greater than the forces pushing prices down. Now, the prices would’ve gone up even more if interest rates had stayed low, but they’re still continuing to appreciate. If you’re worrying about a correction, you could focus on markets where those market dynamics are happening.

In addition to Tampa, you could look at Central Florida, look at Dallas and possibly Charlotte as markets were the demand is so strong it could overcome a rising interest rates. By the way, a note about the institutional buyers, that’s a significant point. The fact that hedge funds and private equity funds are buying in a given market is important, first of all, it validates that the market’s a good place to invest, but also it puts a floor on the market because if prices do tend to soften in those markets, when the hedge funds see that, they’re going to see that as a buying opportunity because real estate’s on sale and they’re going to jump in with billions.

That puts a floor and lowers your downside risk if you’re in a market where institutional buyers are very active. If you’re concerned about interest rates, focus on markets with job and population growth that are strong enough to overcome the interest rates, focus on markets that have a large institutional presence. As always, you could use adjustable rate mortgages and other kinds of financing [00:16:00] to help with the cash flow while rates are high. The other thing that investors are concerned about is the possibility of a recession. We found out this morning that we’ve had two consecutive quarters of negative GDP growth, which in some textbooks, that’s the definition of a recession.

I think that doesn’t really matter for real estate investors. Aove everything else, recessions are about a collapse in the labor markets. In the 1982 recession, for example, unemployment was 10%. People were getting laid off. There were no job openings. There were long lines at the unemployment office. People trying to get unemployment benefits. Your tenants, they lose their job and unable to pay the rent. That’s when there’s a recession. We’re not seeing that at all right now. Right now, unemployment is at 3.6%. The June jobs, numbers came out, there were 370,000 new jobs created just last month. Nationwide, there’s 10 million job openings, twice as many job openings as there are people looking for jobs.

We’re not seeing any sign of recession in any meaningful terms. Now of course, if the fed keeps raising interest rates, they can change that. Maybe by next year, second half of next year, we could see unemployment numbers go up, but right now we’re not seeing that. The thing to watch out for though is not the quarter of a quarter GDP growth. The thing to watch out for is the unemployment numbers and how many unfilled jobs there are. Unemployment’s not too meaningful, because that’s a lagging indicator. Once you read that unemployment is 7% and it’s too late. There’s nothing really you can do about it, but the number of unfilled job openings is an important leading indicator of where the economy’s heading.

If you see that 10 million number go down to 8 million or 5 million, then you know something’s coming. Of course, all real estate is local. Even though the labor market’s might be strong nationwide, if the market you’re investing in, there’s [00:18:00] layoffs and unemployment then your market’s in recession regardless of what the nation is doing. You have to keep an eye on that as well. What do you do about the recession if you’re afraid of a recession? I think of it like football, you have to play defense and you have to play offense. The way to play defense is to increase your cash reserves.

If you normally keep $4,000 or $5,000 per house in reserves and you think bad times are coming and you might lose some tenants, then you might want to increase your cash reserves at 5,000 or 6,000 or 7,000 per house, whatever level you’re comfortable with so that you can sleep at night and not worry about it. Then other things you can do is invest in recession-proof markets. I’m a fan of central Florida. Full disclosure, I just put a earnest money deposit down on another house in central Florida last month. I may be biased, but the central Florida economy is based on retirees.

The villages has over a 100,000 retirees and they’re building another 40,000 houses to house more. Retirees don’t need jobs. They don’t care if unemployment is 5% or 10%. They’re beyond that. In fact, retirees bring jobs. For every thousand retirees, you need so many healthcare workers, so many restaurant workers, so many groundskeepers for the golf courses. It’s a very stable place to invest because even in good times or bad times, that market stays very steady. Another example of a recession-proof market is Warner Robins in Georgia. Our Atlanta team has properties in Warner Robins.

It’s right outside Robins air force base, which has 23,000 service men stationed there. The air force doesn’t care about recessions. They don’t lay anyone off. They just keep chugging along regardless of what market conditions are. That’s another example of not only a recession-proof market, but a recession-proof tenant. That’s a way of protecting your downside risk by investing in markets like that. Of course markets like [00:20:00] Dallas are always very resilient. These are some possible tools in your toolkit that you can consider as you look at rising interest rates or a probability of a recession.

People think of recessions like it’s the end of the world or something. It’s not, it’s just part of the regular business cycle. It’s boom and bust cycles, they happen about every 10 years. It’s not like a nuclear war or anything. The doomsday scenario for real estate happened in 2008. That’s the worst-case scenario and even then investors we’re making money during that time. They were buying properties for 50 cents on a dollar. That wasn’t their plan when they were going into 2008, but when they saw market conditions change, they pivoted and changed their strategy to adopt the market conditions.

That’s what we need to do now. We’ve been spoilt the last couple of years with artificially low-interest rates and everything is nearly perfect. Now that things are happening, we have rising interest rates and maybe a recession coming up, we just need to pivot a little bit and use a different playbook. We can still invest successfully as long as you just follow some of the steps that we discussed today.

Okay. With that, I’ll turn it over to my colleague, Aristotle.

Aristotle: Hey, Joe, thanks. It was a good talking point. You talked about the housing market, national. The reason such thing as a national housing market, I always point that out to people that like you said Joe, all real estate is local, so everything is different, so whatever is happening in Louisiana is different than what’s happening in Birmingham, Alabama, right? They’re all different. What’s great about our company is that we have different teams in different cities and we recommend you diversify if you’re going to buy some rental properties, spread it out a little bit, spread your risk out so you’re not just in one city. Just keep that in mind that all real estate is local. It really needs a lot if you understand that.

None of us mentioned this but there’s question box here on the webinar, so [00:22:00] as we’re going along if you have any questions for Kathy, Joe, Leah and myself or just general questions, please feel free to type them in there, we’re going to spend a few minutes at the end of the webinar to go through the questions, so feel free to type your question as go on along here. I’m going to talk about, what should I do with my property? A lot of you have properties and you’re not sure what to do. I just want to go over a couple of key points here if you can advance to the next slide here, what you should think about doing or what you could do with your own rental properties or even if you got a primary home. If you can ahead to the next slide here, we’ll go ahead and just go over my quick bullet points.

Kathy: Here we go.

Aristotle: Here we go. Thank you. What should I do with my current properties? This is another question we get quite a bit from people. Again, I’m going to go quickly over this just to point out some things here. Should I think about doing a 1031 Exchange? A 1031 Exchange is when you sell a property, you take the capital gains and you go into a new property or properties. This is going to depend on what your goals are, short-term and long-term goals are, but it could be something to look into.

Let’s say your aunt Helen left you a house free and clear, whether it’s a primary home or a rental property and it has a lot of equity, several hundreds of thousand dollars in equity and you’re getting $3,500 a month or $2,500 a month. It might be wise to look into that and see if it makes sense to sell it and buy multiple properties with that. It’s going to depend on what your strategy is. You can definitely talk to myself or your investment counselor about that.

There’re some costs to do that and of course, with 1031 Exchange right now, inventory is in the rise like Kathy said but there is so lack of the inventory, so it might be harder to find a lot of properties. I also want to put a shameless plug in that but we do also offer a– [00:24:00] If you’re interested in having experience in the commercial realm, we do have a commercial broker that we work with now, so if you’re thinking about selling a duplex you might have or whatever, you want to buy an eight-unit apartment property or whatever, we have the means to do that.

What about doing the cash-out refinance? Cash-out refinances, first of all, they tend to have a lot of higher interest rates than just a regular refinance. If you’re going to be doing a cash-out refinance, talk with the lender. We have lots of lenders we work with. Talk about what the scenario is going to be, what your interest rate is going to be. If you have a really low interest, let’s say you have like a 3%, and it’s going to go to like a 5.5%, that doesn’t mean a bad thing. Rates are still historically low, in my opinion, they’re still low, 6% now, everyone freaks out about that.

Like Joe said, it’s not nuclear war. We’ve had way higher interest rates. Interest rates are still really historically low. Again, do the comparison and see if you pull out X amount of money or you’re going to have enough money to buy more property. The way I look at it is that if you can come closer to doubling your cash though by pulling money out or even doing a 1031 Exchange into other properties, it probably makes sense to look into doing that if that’s what your goal is. We have people that want to be job optional, they want to quit their job in, let’s say five years or they want to retire partially and they want to use cash to offset their income, then maybe doing this type of a scenario wouldn’t make sense.

Again, we need a value with the cost and everything there. The third scenario here is, do I hang on to my property and ride this out? We have rental increases happening and I don’t know how long it’s going to go on for but my guess is probably at least another year. Rentals are going up still, people are paying hundreds of dollars more for rent for a house which is just mind-boggling. It’s crazy what’s happening out there. Then you’re going to get more appreciation depending on what market you’re in. That’s another scenario. Should you just hand on to it? I’m a buy and hold investor, I don’t– Just in general, I don’t like to sell anything.

I’m not a holder but I just regret selling [00:26:00] things and especially real estate properties. I haven’t sold any of my properties. I did refinance on a couple of them this year when the rates were really low, but I didn’t sell them just because I don’t like to sell things because I know I would regret selling that house 5 years, 10 years down the road. Again, just some things to consider there. If you haven’t seen Joe’s webinar that he did a few weeks ago on the real estate math, how to crunch the number, it’s on YouTube. It’s on our website. Go back and check it up because he did go through I think three scenarios on how to run the numbers and if it makes sense.

Most likely it did make sense. It does make sense to do these certain things based on your situation of course. You can definitely find that there. Now we can move on to Leah’s presentation. Leah is going to talk about whether it is it still a good time to invest?

Kathy: It wasn’t moving for some reason. All right.

Aristotle: There we go. Is it still a good time to invest? Yes. Talk to us about that. Do you think it’s still a good time to invest?

Leah: Yes. I think you guys would probably agree. This is the question that we’re all getting everyday. The answer is yes but the good news is, it’s always been yes. We have never recommended that you try to time the market. We’re long-term buy and hold fundamental investors. That was true before all of this, it’s still true today. These are some points that came to my mind and things that I’ve been talking through with clients over the last couple of weeks. You all know this one. Time in the market always beats timing the market. It might be a tough time to be a wholesaler, it might be a tough time to be a flipper, it might be a tough time to be a bear investor but we’re [sound cut] onto these assets.

Even if we do pay– Say we’re buying at the top of the market. That’s a lot of people’s fear or by buying at the peak. Say you are. You’re not [00:28:00] planning to get rid of it anytime soon. I’m not a hoarder either Aristotle but I hang on to these things. The time that were in our assets is where the money is made. That’s where the return in it. The long you’re in, the longer it makes up for a maybe overpaying on a property. The second point here I want to acknowledge, homes are more expensive. This is why I started getting into investing aggressively because I honestly was fearful that I would miss the opportunity to create scale.

Homes are more expensive. It’s going to be harder and I think it will continue to be harder for people who have not started [00:28:36] investing to get in on the game. This is the most important point I think of today and not that is consider inflation, I think this is the most dangerous aspect clearly. That’s why the fed is being as aggressive as it is. You’ve got to consider that if you were just sitting in cash, that money is giving you a negative nine maybe more percent return. It is not a good idea to be sitting in cash waiting and hoping that there’s a market crash or hoping that you might be able to catch maybe an extra three or five percent equity position on a property. It’s just not worth it. 9% a year is going to add up pretty quickly.

This is the irony I think. As investment counselors, we talk to people throughout all of this, so we’ve had every reason in the book why it’s not a “good time” to buy, right? I want to remind everybody that when rates were there all-time low [chuckles] about a year ago, a lot of people weren’t buying because it was too competitive to buy. They had to make decisions quickly and that felt scary and they were uncomfortable with that, the competition to get those assets was extremely competitive. Now interest rates are coming up. I think as Kathy mentioned, this is good for our housing market for rates to come up a little bit. We didn’t [00:30:00] need them to be as low as they were for as long as they were certainly.

Now that rates are higher, buyer competition has slowed down. There are more opportunities available. We’re seeing it on our end, the inventory that our property teams have when rates were at 3%, they would go under contract in minutes after sending them out. Today, you have a couple of hours to think about it in most cases. You’ve just got to consider, there will always be a reason not to buy in every market. If you are looking for a reason to not do this, you’ll find it but there will always be a reason to do it. Again, we’re long-term, we’re looking at the big picture, and Kathy, if you go to the next slide for me I really want to make sure that everybody understands that a good return is a relative term.

Good is defined by what else is available. That’s exactly why mortgage interest rates respond to what the fed is doing. Investors are looking at the market as a whole and going, “Where can I put my money to make money?” They’re seeing other options and going, “Oh, it doesn’t look good.” Anywhere housing still looks good and money’s flooding into housing. Then what happens when a bunch of capital floods into one asset class, it becomes more competitive. Well, cap rates are driven down. Home prices, go up, and cap rates come down. It’s gravity. This is just the laws of economics. That’s why I love it.

You’ve got to just really put a good return into the broader perspective, going back to inflation, being at 9% and sitting in cash being a negative 9% return ROI. A 3% cash-on-cash return might not be very impressive, but in the context of 9% annual inflation, 3% return on your money, it’s actually pretty dang good. The [00:32:00] idea that came to my mind was when you get a raise from your employer. In the context, we might be thrilled to get a 3% raise and someone who isn’t thinking about the bigger picture is so excited to have a 3% raise. Then you see that inflation was 9%. Was it really a raise?

I think we should be asking ourselves the same question when we’re looking at general rates of return in these assets. The cash-on-cash returns are lower, but in the context of what the market’s doing, they’re still excellent.

These next slides will show you in general, what we’re seeing at RealWealth and with our property teams. In linear markets, these are the flatter markets known more for their high cash-on-cash return. They are good for cash flow. Right now, we’re seeing average purchase prices around 120,000 plus, or minus 20, maybe depending on the market, but consistently we’re seeing cash-on-cash returns between 6% and 9%.

When I first joined RealWealth, and I was looking at properties in linear markets, you could see 15% cash-on-cash return on deals. They don’t exist anymore. They’re not there. Not in the risk, the classification of neighborhoods that we recommend investing in anyways. In growth markets, the average prices that we’re seeing right now are about 250,000 plus or minus 50, depending on the market. We’re seeing a lower cash-on-cash return. 2% to 6% is pretty typical. I think Joe, you really explained this next point very well. I think for me, this strategy, what the markets that I’m more interested in because I’m not really concerned with high cash-on-cash return. I know that that’s a short-term metric.

I think you should focus on markets that have really strong, continued job growth, where unemployment remains below the national average where there’s areas where there’s a more pronounced housing deficit. Kathy mentioned [00:34:00] demographics. I always point out to my investors. Everybody was talking about demographics when interest rates were super low and everybody was the buying frenzy, but it’s interesting. It stopped being talked about when interest rates started going up and I remind people, I’m like, “Those people didn’t go away. Some of them got priced out of the buying market and now their renters, they’re still there though. They still need housing. The asset itself still has value based on those demographics.”

I think the biggest point is you’ve got to think long-term. If you go to the next slide, I pulled a deal. This is a duplex that was sent to us investment counselors last night from one of our property teams, the Tampa RealWealth property team. So this deal is actually available. A very recent example. The purchase price of this property is 5,749 with a gross rental income of 4,500. It’s the combined rent when both units are occupied. On the next couple of slides, I have put together some proformas. I want to be sure that you know proformas are projections. These are based on estimates. These are based on informed guesses of what we think will happen with this asset over time, but they’re not guarantees.

Keep that in mind when you’re looking at this, but we are going to be launching a new property calculator here in the next month or so at RealWealth and so this is a teaser for that. You guys get to see some of the fields from that analyzer. I wanted to show you the short-term view of what this house can do or what this duplex can do. Then lets extrapolate it over time, and see the bigger picture. You see here, we’ve got our financing assumptions here on a 30-year loan with a 6.5% interest rate. Our loan amount each month is just over $2,900 a month. We’ve got our monthly expenses broken down there, taxes, insurance, property management at 8%.

I even decided to be really I think fair and I included a maintenance overage of 3%. Then if you look over to the left there, you’ll see, this is the year one cash flow projection. We see our full gross rents. [00:36:00] Again, I even con included a vacancy overage this time because I know that bothers some people that some of our proformas don’t have that. We’ve written in 6% overages now for vacancy and maintenance. We’ve got our operating income there. We’ve taken off the expenses there that we see and then the loan payment. This property year one gives us $328 a month, which is not life-changing cash flow. In fact, this is just over a 3% cash-on-cash return.

A lot of people get this far and then they go, “No, moving on.” I urge you to think long term. Go to the next slide for me, Kathy, and we’ll look at what happens to cash flow over time. We’ve made some assumptions here and these were based on what the property team in Tampa told us. They informed us as the local experts in that market what is the average rent increases that they’re seeing over time and what do they expect the appreciation to be. We’ve got that on the next slide. Just assuming that your expenses are going up 5% a year and your income, the rent is going up 5% a year.

We start off with that $3,900 a year. Year three, we’re almost double and you can see you hold this property for 30 years with these assumptions. This is a life-changing cash flow for the year. How great would it be to have a couple of those paid off and have that cash flow coming through? Again, just illustrating the growth potential of cash flow over time. I think a 5% rent increase is pretty conservative for this area. Tampa has had some of the highest rent increases in the nation. You’ll have some years where your rent increase is probably well above 5% and others where maybe it’s a little bit below, but I think 5% is a conservative estimate.

If you go to the next slide, let’s broaden the aperture even further. Now, we’re going to bring in the other ways that real estate pays us. This is why we do this. Cash flow overtime is there at the top but I’ve also pulled in total [00:38:00] equity accrual. This is assuming 3% annual appreciation and it’s factoring in your loan balance. How much principle pay down has occurred in that period of time? Look at how your equity accrues over time. Again, most investors are holding their properties between 5 to 10 years and look at the equity position that you could find yourself in, in addition to having pretty awesome cash flow in that short period of time.

In that bottom box there, that’s tax deductions. That’s assuming depreciation on the property. This is some of the tax savings that you can see over time. All right, if you go to the next slide for me, this is a lot [sound cut] you, but this is where we’ve looked at the percentages, the relative rate of return. Look at the cash-on-cash return ’cause everybody really likes the cash flow right? Year one, 3.1%, not that impressive. By year three, we’re up to almost six and a half. By year 5, we’re getting close to 10% cash-on-cash return. By year 10, we’re at 20% cash-on-cash return. I would argue that once you get beyond that, a cash-on-cash return figure is irrelevant.

You really should start by looking at return on equity at that point. Maybe possibly make a decision to like Aristotle said 1031 Exchange, or do a cash-out refinance. Look at the total return on investment over time. In 10 years, that’s pretty impressive. Really, you hold this between 5 to 7 years, you’ve probably got a 100% return on your money. It’s excellent. Then I took it a step further there and just showed you guys the sale analysis. This is assuming that you’re exiting, you sold the property. There’s a line item there to include that 6% closing costs. You can see it never makes sense to sell the property.

It usually doesn’t make sense to sell the property in the first year of owning it, because you’re going to pay transaction costs. Look, in just three years’ time, if you hated this asset and you wanted to get rid of it, you could sell it [00:40:00] and make out with 38,000. Hold onto it for the average time, between five to seven and that’s a whole other salary. Again, not every deal is for every investor. We all have buy boxes. We’ve all refined what it is that we’re looking for, but no matter what your buy box is, I just encourage you to look at it over time. Don’t look at it in year one, especially because most of our investors that we talk to, guys you can corroborate this, but most of the investors we talk to you work full time in industries that you like. That’s why you’re looking for a passive investing strategy. You aren’t flipping, you aren’t brewing.

You’re wanting to just a place to put your money to work for you. You need to be looking at the long-term returns here. That’s what I got. Is it still a good time to buy? I think, yes. I don’t think anything’s changed for me. It’s fundamental. It’s about hanging onto it as long as you can using good leverage. I look at performers like this and I get really excited about this strategy and what it’s going to look like in just a few years time.

Kathy: You’re putting another zero because you’re going to get 10 of them.

Leah: Exactly. Again, this deal is available. We got sent this last night, so I put a little email there at the bottom. If you want more information, if you want us to send you the full sheet that analyzes this property, it’s a six-page report. Send an email to hello@realwealth.com and we’ll send that to you and get you connected with the Tampa Property Team, if you’re interested.

Kathy: Great. All right. We’ll go to questions now. I do just want to say like inflation is so insidious. It’s not new. We’ve been doing this. Those returns are exactly the returns we were getting when I started. Isn’t that interesting? Because interest rates were high then in the 2000s, even though it was easy to get a loan.

Even though the price was half that or a third of that, it was the same return. It just feels different if the price feels so high because it’s new in your head, but that’s what it [00:42:00] felt like 15 years ago. It was like, “Oh, this is expensive.” It’s like the frog boiling in the water, you just don’t see how inflation is eating things up. That price is going to seem cheap. All right, we’re just going to fly through these thoughts on Huntsville.

Aristotle: Well Joe and I can either take that because we both are in Huntsville. Joe, do you want me to take it, or do you want to take it?

Joe: You go first.

Aristotle: Basically, I love Huntsville. I have three homes in Huntsville. It’s a great market. The only challenge with the Alabama markets and my personal experience is that the rent increases are very minimal. They don’t go up nearly as much as in Tampa or Charlotte. The prices in Huntsville have gone up quite a bit.

I don’t know what you could buy a rehab home for now, but my guess is probably close to $200,000 or maybe even more and you could probably rent it out for $1,300 a month or something.

I don’t know if the numbers are going to make as much sense there but it is a great market, is it? We don’t have a team there right now, but if we could find properties for our members, I would definitely recommend. If it made sense, I would definitely recommend it, but it is a good market overall.

Joe: We used to have a team there and everything they had sold out. There were new construction homes and they were great and the market is booming. It’s a great market. Alabama has the second lowest property tax rates in the country. You get to keep more of your rent, which is always good, but until we can find another provider, we don’t really have anything in that market right now.

Kathy: It was just selling so fast. Short-term rentals, thoughts on that. Would you recommend it? Joe.

Joe: All right, well, I’ll take a first pass at it. I would be extra cautious about short-term rentals and do an extra step of due diligence because the vacation rentals like we have in St. Augustine, Florida, that’s where people go to vacation and they rent by the night and that’s great, but if there is a recession and times are bad and people [00:44:00] are losing jobs, the first thing people will cut out is discretionary spending.

Something like a short-term rental might not generate as much revenue as it would in good times. I tried to look this up, but unfortunately, Airbnb was started in 2008. There was no data about what happened in the last downturn to these properties. What I would do if I was considering a short-term rental, I wouldn’t rule it out, but I would do a more sensitivity analysis.

If the projection is that it’s going to be rented 75% of the time for $250 a night, you have to ask yourself how wrong can you be about your assumptions and still have a viable investment. Suppose the market softens and you only get $225 a night or $200 a night, does the deal still make sense? Where if occupancy rates go from 75% down to 60% or down to 50%, how wrong can you be? Still have a property that at least breaks even, or make some money.

Recessions typically don’t last that long. They last about a year plus or minus a couple of months. As long as you can weather it through, it’s a long-term investment. It’s great, but I would just do that extra step of due diligence for short-term rentals.

Leah: I saw a stat not too long ago, Kathy. I’m regurgitating it, but they pointed out the fact that the number of the occupancy rates for vacation rentals are actually up. There’s a lot more people using vacation rentals, but what’s also up is the vacancy rate indicating that there are more Airbnbs available. The number of nightly rentals being utilized at any given time is higher because everybody’s using it more, but there’s more places for us to rent. That scares me a little bit.

I think a lot of people, over the last couple of years, when cap rate’s got compressed with long-term housing changing use is a great way to create more room in your cap rate. It’s hospitality? In times of recession, [00:46:00] hospitality usually takes a hit. I would just have a contingency plan, maybe a midterm rental idea where you could rent to traveling nurses or somebody who will rent month by month so that you can pivot if the nightly rental rate gets driven down by just tons of other options or if you just start having trouble booking it.

Kathy: Then be sure to be aware of the regulations because so many cities are just outright banning it. We do have a team at RealWealth who is providing them in Florida and they seem to be performing really well. I know ours, we have one, and it’s rented a little bit less, like you said, but the price has gone up. We actually made more money this year, which was shocking because it wasn’t rented as much. I don’t know why that is.

All right. We have so many questions. Let’s see. Someone just said they bought in Little Elm, Texas. They have about 95,000 in equity, but they just closed. Should they get a property manager was the first question and how do I tap into my equity if I just bought it?

Aristotle: I can answer that a little bit. If you’re managing yourself, I personally don’t recommend managing property. I guess it depends on what they’re going to charge you, but I don’t want anything to do with management. I just don’t want to deal with tenants and everything.

That’s going to be subjective, but even if I live locally near my properties, I would probably have a property manager just for hide my identity. I don’t want my tenants to know who I am. Then how can you tap into the equity to purchase another property? Well, you can’t do a HELOC on a– Well, I shouldn’t say you can’t, but, normally, you cannot do a HELOC, which is a home equity line of credit on your rental property.

You might be able to find a small credit union locally that could do that, but most likely you’re not going to be able to find a big bank to do that. The only way to tap into the equity is to do a cash refinance. Again, you have to determine, okay, if your payment’s going to go up by $500 and you’re only going to make $200 in cash though, if that makes sense to do that, I think [00:48:00] long-term, yes, but that depends. Anyone else have any thoughts on that?

Kathy: I’ll just keep going through the question. I think you nailed it. Can I buy another rental property in Tampa? I would say it depends on you. You have the money or the ability to qualify for the loan, but–

Joe: You can buy the ones you just showed.

Kathy: That’s a great one. Oh, something. Are the cash-on-cash returns you presented based on a performer that includes vacancy, leasing, repairs, maintenance expenses, or they were included?

Leah: In the performer that we looked at, they were included. In my range that I gave, that’s looking at just our standard straight known costs. It’s a range. If you add in those overages, it’ll be a little bit lower than that potentially.

Kathy: Here’s a good question. Someone said, “Is it a bad idea to get a HELOC on my primary for a down payment if I can get the interest rate under 4%?” Who wants to take that one? I’ll just take it. Money’s money, the cheaper it is the better it is. Your primary residence is going to be your cheapest money. If you can get a HELOC on that, and buy an investment property you’re borrowing money. Who cares what it’s tied to?

It’s just whatever you’re investing in needs to be a solid investment, but as I wrote in my book, Retire Rich with Rentals, that’s one way to pay actually off your HELOC faster if you get a loan on your house, buy a property, and take that cash flow and pay down the HELOC faster, is one way to do that.

It’s cheap money, makes the cash flow better and you get more asset protection on your home because it’s levered up so nobody can go after it. “Does the 1% rule still matter?” I’m rewriting my book and I have changed that, but surprisingly, you guys, there’s still some areas where you can get that. Where are the areas where you can still get 1%? Again, for everybody, that’s 1% of purchase price. [00:50:00]

Aristotle: Rent to purchase price right?

Kathy: Yes.

Leah: Our Cincinnati team sent out five rental resales last week. There was a couple there that were 1% rule. Cleveland occasionally we see the 1% rule. It’s getting a little tighter. Definitely with multi-family you see the 1% rule in Cleveland.

Kathy: Interesting you just said those two markets because markets are changing right now. It’s Redfin that came out with a study of the markets that are going to be least impacted by any kind of recession. It was Cincinnati and Cleveland. Those were really hot, hot markets for us, like, I don’t know, 10 years ago, up till a few years ago. Then, all of a sudden, the massive appreciation we were seeing in Florida was like, “Oh, let’s do that.” Now, these markets that have been off the radar are going to be looking real good again, and that’s Cincinnati and Cleveland.

Leah: The thing you’ve got to look at with the 1% rule in Cleveland is that Cleveland has high property taxes. The 1% rule does not look at taxes. It’s because to meet the 1% rule in Cleveland, you need to take a closer look to understand all operating costs.

Kathy: That’s the bottom line. The 1% rule is just supposed to be like a quick look at what’s the rent-to-price ratio. What you really want to look at is the full pro forma. That’s what matters more because a new home like that new home we just showed in Florida, that would have lower rent, lower insurance costs, lower maintenance costs, so that matters more to me than the 1% rule, and peace of mind, having a new property.

“In your example, equity growth from 137 in year 1 to 236 in year 5 reflects an annual appreciation of over 10%, not 3%.” Interesting. I’ll go through that again.

Leah: It’s a compounding return. It’s 3%. Then [00:52:00] on that, it’s an additional 3% on it the next year so that it– I’m not seeing the numbers in front of me. I’d have to look at it.

Kathy: “I’m in Indianapolis. I’ve got $200,000 equity on my current home. Thinking of relocating to Florida. Is it a good time to buy the primary now or wait till 2023 spring?”

Joe: I would buy it now because prices are going up in Florida. The longer you wait, the more it’s going to cost you.

Aristotle: Right, and look at the rent. If you’re going to rent the same size home versus buying, if your rent is a couple of hundred dollars less than buying, like Joe said, it makes sense to buy. It also depends on how long you’re going to be there for. If you’re only going to be there for a year, it probably doesn’t make sense, but if you’re going to be in Florida for 5, 10, 15 years, it absolutely makes sense to buy, in my opinion.

Kathy: Yes. Plus, I think people are waiting for this housing crash and when they see it doesn’t happen, it’s going to be a frenzy again, is my opinion, especially since I do believe rates are going to end up going down again. My personal opinion. “If you had $100,000 to invest today, what would you do?” All right, we’ll start with Joe and just go Joe, Leah, and Aristotle.

Joe: I would buy more properties in Florida even though you have to wait for them to get built. I think it’s long-term, it’s got a long runway. 10,000 baby boomers retiring every day. Very pro-business state. Everyone’s moving their jobs over there, so I would buy more properties. Two more properties in Florida.

Kathy: Leah.

Leah: I closed on a property in Texas in Houston earlier this week and I’m closing on one in San Antonio next week. We’re here local where I’m at, so I’m focused on growth markets and fundamentals in Texas.

Kathy: Aristotle.

Aristotle: Just invest in any rental property. Don’t be stupid about it, but let us help you with that. I don’t think it matters where. Don’t get so hung up on where you invest. Charlotte, Dallas, Cincinnati, just whatever’s available. [00:54:00] Like Leah said, timing the market’s important, so you’ve got to get started. If you don’t own anything right now, you got to get started at some point, so it doesn’t really matter.

Kathy: I’d probably buy that duplex, honestly, because it’s a great market, it’s a great team, it’s a new property. It’s one loan, you get two doors, so a lot of reasons to like that. Oh, someone said, “Okay, I love that duplex. I’m getting it.” “Are 30-year fixed mortgage is still preferable?” We went over that. What do you guys think about the 30-year fix versus the ARM today?

Aristotle: I’ll go first, real quickly. I think the ARMs are great on a more expensive property because their mortgage payments can be higher so maybe like on a brand new Charlotte home that’s $450,000 or something like that, I would probably get an ARM for that. On the lower price point properties like something in Cincinnati or Cleveland, I wouldn’t bother with it.

Leah: Same. I’m open to it but I like 30-year fixed. I would consider an ARM for a good equity play on a market that I was pretty sure would have some great continued growth but I haven’t done it yet.

Joe: If the cash flow is with a 30-year fix, I would just go with a 30-year fixed. It’s only if the cash flow is negative and then you have to start looking at alternative financing options.

Kathy: Yes. When you really look at the payment on those smaller homes, it’s minimal, the difference but–

Aristotle: We can do those, Kathy, just to let you know. Oh as I say, to remember, we have a few lenders that can do portfolio loans. A five-year fixed, I think even one does 10-year. I’m sorry, 5-year ARM or even a 10-year ARM, so get in touch with us if you need those.

Kathy: I’d probably do the ARM honestly because by five years from now, there’s going to be more equity. I would want to do a cash-out refi, take that equity and reinvest. I’m totally good with the five-year. A seven-year would be better, but I’ll do it. “Does anyone on the panel have experience with equity sharing on a [00:56:00] personal residence for say a HELOC to tap into home equity?” I think we talked about that. “Where do you think is the best place in Florida to invest?”

Leah: I love southwest Florida. I’ve had great opportunity and tons of growth that area. Cape Coral consistently shows up on the top lists of growth. That whole corridor I think is positioned for good growth.

Joe: I agree. That’s where people with money want to live, and people with money can drive up prices in bidding more and multiple offers. Cape Coral, Sarasota, that whole southwestern Florida area.

Kathy: I just love all three of our teams. Jacksonville’s so great. Tampa’s so great. Orlando’s. They’re all so, so experienced and have been with us for over 10 years, and we have raving reviews on them. Which brings us to the next question. Someone said, “What do you do? Who are you? Can you help me buy real estate?”

I do want to explain. RealWealth has a brokerage called RealWealth Realty, and we do referrals to different brokers around the country that we’ve worked with for, gosh, 10, 12, years who have property management in place. They have renovation teams in place. If it’s an older home, they’ll renovate it for you, get the property management in place, or they have relationships with builders. They’re able to find you new builds or they build them themselves.

We are the referring broker and we make a commission off the fee that the broker makes, so there’s no fee to you as our client, to work with us. It just comes from the other broker. Let’s see. “Anybody like Ocala? Palm Bay?”

Aristotle: Yes. Ocala’s great. [00:58:00]

Joe: I like Ocala. I have a house there. It’s doing great. It rented in two days.

Kathy: Nice. Palm Bay?

Leah: Yes.

Kathy: Loving it there.

Aristotle: Yes. Near space corridor over there. It’s getting big.

Kathy: Selling like crazy. “Can I get the panelists’ emails?” When you’re a member of RealWealth, you can just log in. You’ll get to speak with an investment counselor, you will be assigned to someone. Do you have lenders that lend on the property and an income rather than the borrower’s income?

Aristotle: We do, yes. We have lenders that can do that. Bank statement loans, those types of things, absolutely.

Joe: Yes. Ridge Lending does it and Supreme Lending.

Kathy: They’ll lend to your LLC as well?

Joe: Yes.

Aristotle: Yes. Please be prepared that you– it’s like you’re doing a non-conforming loan, your rate’s going to be higher and your closing costs are going to be higher, so just be prepared for that.

Leah: To find our full list of lenders, log into your account on realwealth.com, hover over resources and you’ll see there’s a whole list of conventional and non-conventional lenders. Lending to LLCs, DSCR lenders, anything like that, those are all going to be under the non-conventional lenders.

Kathy: Somebody asked, “What does portfolio mean?” I’ll just say it very quickly. We have conventional loans that are government-backed and those are the cheapest ones you can get and you want to max out as many of those as you can before you go to portfolio, generally speaking. You can usually get 10 loans but that includes your primary. That, to me, is the best way to go initially but so many of our investors have surpassed that or even just like the portfolio lenders better. Those are more private companies not backed by the government. Funds that lend to investors like us and they are again listed on our site. “Can a [01:00:00]  portfolio lender lend on property equity? I have over $2 million in my personal residence.” I think you can get an equity line on your personal. From what I’ve seen, you can max up to $500,000. I don’t know of a portfolio lender that will do a second, or is it– I don’t know if that would be a first or a second. I don’t know if they own this property free and clear. If you don’t have a loan, I would just refi and cash out, get a conventional loan, not go portfolio. Do we have a portfolio lender that will do a cash out on your primary?

Leah: I think Ridge will do that. I’m not 100% certain. I think they will. Ridge Lending Group.

Kathy: Okay. It changes all the time. You just have to be checking in with them. Again, that’s on our resources. “I purchased a property Thousand Oaks area and now won’t move into it. Should I take the loss and sell now?”

I don’t think you’ve made a loss. Honestly, last time I looked at Thousand Oaks, there was nothing for sale. If you’re not going to live in it, check out the rental market because there’s also nothing to rent. I know that area very well. It’s right over the hill from me. I would definitely talk to a property manager and consider renting it. I don’t think you’ve lost money. You lose money in commissions. That’s the thing. Every time you sell a property, you’re paying 6% to 7%. There’s your loss. Why?

If the property makes sense and if the rent covers, have someone else pay down your mortgage for you, and now you’ve got a house that you might live in someday. That would just be my thoughts. I bet if you sold it, you’d actually get more than you paid at this point. Who knows?

What markets would you shy away from? We’re overtime. How are you guys doing? Should we wrap up or we got more questions?

Leah: I’m okay.

Aristotle: Maybe a few more questions then we can wrap it up.

Kathy: Okay. What markets would you not invest in? I’ll tell you mine. Boise and Las Vegas [01:02:00] right now are the markets at biggest risk. Austin. The areas that just went up so much, 40% in the last couple of years, those are probably the highest risk.

What do you guys think? What would you stay away from?

Joe: I agree with those also, and Phoenix. All those places. I’m especially concerned about the southwest, because all these cities down there are growing. Where are they going to get water? There’s just Phoenix, Tucson, Las Vegas, all those places. I don’t know what the long-term outlook is. It makes me nervous.

Kathy: That’s a major issue.

Aristotle: I would say California. I live here but I would never invest here. Never ever. Just the landlord laws are crummy. They get horrible every year. We have a lot of issues here in the state. I wouldn’t touch it.

Kathy: Well, that just answered the Thousand Oaks question. “How do I set up a strategy session?” Leah, want to explain that?

Leah: Yes. If you’re on this webinar live, you’re a member, which means you have an assigned investment counsellor. To find out who your investment counsellor is, log into your account. When you’re on any of the market pages, you’ll see there’s a link directly to our calendars.

You can go to my account and you can see who your investment counsellor is. If you’re not sure and you’re still having issues, you can still send an email to hello@realwealth.com to find out who your investment counsellor is.

Again, if you already know who your investment counsellor is, you just don’t know how to schedule a session, send us an email. firstname@realwealth.com. If you’re watching this on YouTube, you have to become a member. Just create an account. It’s free to do so. Then you’ll automatically get assigned one of us at that time, and we’ll reach out.

Kathy: Somebody asked if there’s good markets outside of Orlando, Tampa and Jacksonville. 100%, yes. When we say these cities, we’re actually not even talking about downtown like never. We don’t invest in downtown probably, because it’s close to the ocean. The closer you are to the ocean, the higher your insurance. [01:04:00] We’re in all sorts of little towns. You want to make sure you have an expert in Florida who’s helping you buy, because we did have– There’s some stuff that is in the boonies.

Where there’s too many investors all in one place, that concerns me. A 400-unit subdivision all individual investors sounds like a nightmare to me out in the middle of nowhere. Just be– You need an expert to make sure that you are investing in the right parts of Florida.

Absolutely, we’re not in any of those cities pretty much. We’re all in suburbs. Suburbs is where it’s at right now. Are there any new syndications? Yes. You’ll be getting an email probably next week with a new single family rental fund we’re doing in the Dallas area. Stay tuned.

You do need to be an accredited investor. Make sure you look up what that means. We will be sending an email. If you reach out to us, you won’t find any information yet, because it’s not on our website yet. Just wait till you get that email and we’ll give you all the info. Lots of– Do you all have–

Aristotle: Kathy, here’s your question. Oh, I’m sorry. I was going to read the same one. Do you have all property managers?

Kathy: Yes.

Aristotle: We all have property managers for investment properties. Kathy, you go.

Kathy: No, you go ahead. That’s the whole deal. It’s like we’re not going to send you out and try to figure this out on your own. The whole point of RealWealth is that when we find– when we’re working with the property manager, there’s thousands of us that are working with them.

When one of our members is being mistreated, that’s not tolerated. That’s so that– The people on our list, on our referral list, we’ve been– they wouldn’t be on our list if we were getting complaints. We assure you when we– It’s happened where things change in a certain market and those people are no longer on our list. Always make sure, before buying, to make sure that any team is on our website, because that means [01:06:00] that they’re in our good graces. That includes property managers. That means that they take care of issues.

There’s always issues with property. We’ve got property teams we’ve worked with for years that are– that the teams, the people we refer to, have picked out or they are property managers themselves. We’re almost at the bottom. Wow. Cal market, Ventura, LA, Aristotle just said it. Like, “You really want to invest in California with the California landlord laws, be careful about that. Look into it.”

With that said, you might find a great deal in Ventura. I like that area. It’s going to be expensive and no cash flow though. It’s for a primary residence? Yes, of course. If you’re going to– Right now, it might still be cheaper to own than rent, because rents, there’s so few properties in California. It’s expensive but it’s something I would expect you to plan to live in for a while, because California is more volatile than, say, Cleveland or Cincinnati where it’s just steady Eddie.

In California, there’s a lot of this. Plan to stay there. All right, you guys, great webinar. Thank you for being here, sharing your wisdom. Thank you all for joining us. If you have any questions, again, you know where to go.

You can schedule a strategy session with your RealWealth investment counsellor. Educate yourself. We have hundreds of webinars across my podcasts, articles. My book Retire Rich with Rentals, the new one is coming out. It’s going to be updated soon.

Joe has a book. Lots of information. If you’re not a member, become one. It’s free. Realwealth.com. Thanks, everyone. Have a great rest of your day. Bye-bye.

Aristotle: All right, see you guys. See you, everyone.

Leah: Bye, guys.

Joe: Bye.

[01:07:58] [END OF AUDIO]

Kathy Fettke
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