Podcast Summary
Expanding Income Streams with Real Estate: Buying rental properties can provide financial security and greater wealth through horizontal income. Be prepared for potential challenges, check out educational resources, and consider partnerships for larger investments.
Vertical income, which comes from getting a job and receiving regular raises, is important, but horizontal income streams from real estate investing provide financial security and the potential for greater wealth. Josh Dorkin and Brandon Turner, hosts of the BiggerPockets podcast, shared their personal experiences of buying rental properties and the importance of being prepared for potential challenges, such as evictions. They also highlighted the benefits of checking out the new BiggerPockets video library for educational resources. The interview on the show features a billion-dollar real estate agent who provides insights into working with other investors and the partnership aspect of buying apartment complexes. This episode offers valuable information for investors looking to expand their income streams and build wealth through real estate.
Expanding Income Streams for Financial Security: Explore and expand income sources for financial security, apply Pat Heiben's 60+ streams philosophy, utilize resources like DealMachine and Rent to Retirement, and aim for passive income with platforms like Connect Invest.
Creating multiple streams of income, especially in the form of "horizontal income" as discussed with guest Pat Heiben on the Bigger Pockets podcast (show 190), is crucial for financial security and retirement. While the average person may have 1 to 3 streams of income, Heiben shares his experience of having over 60 streams. This philosophy can be applied by everyone, and listeners are encouraged to explore and expand their income sources. Another key takeaway is the availability of resources and opportunities for real estate investing with no or low money down, such as DealMachine for lead generation and Rent to Retirement for no money down turnkey rental properties. Lastly, passive income is the ultimate goal, and platforms like Connect Invest offer an accessible way to invest in real estate and earn passive income with a minimal initial investment of $500.
Real estate agents should invest in real estate themselves: Agents should evaluate deals from an investment perspective, be creative in securing deals, and not solely rely on their agents' advice when making investment decisions. Consider investing in real estate through short notes for diversification.
Real estate agent Pat Hiban, a successful real estate salesperson with a background of being the number one agent at REMAX and Keller Williams, emphasizes the importance of real estate agents investing in real estate themselves, despite common misconceptions that they don't have the resources or understanding. He shares his observation that many real estate agents lack investment knowledge and often rely on their agents' advice, which may not always be sound. Instead, agents should learn to evaluate deals from an investment perspective and be creative in securing deals. Hiban also warns against relying solely on an agent's advice when making real estate investment decisions. Connect Invest offers an opportunity for individuals to invest in real estate through short notes with attractive returns, allowing them to diversify their portfolio without the hassle of ownership or management.
Starting Real Estate Investing with Minimal Resources: Effective strategies for starting real estate investing include house hacking and finding a suitable partner. House hacking allows saving on personal payments and learning landlord skills, while partnering with someone with good credit can help acquire properties.
Real estate investing can be started with minimal resources through house hacking or finding a suitable partner. During the discussion, a personal story was shared about starting out as a real estate agent and then transitioning into investing by buying a townhouse and renting out parts of it. House hacking was an effective strategy to save on personal payments and learn the ropes of being a landlord. An inspiring story was also shared about an individual who, despite being an illegal alien, was able to buy five houses through house hacking by having a friend secure the mortgage. For those starting out with limited funds, finding a reliable partner with good credit can be a successful strategy to acquire properties and begin building a real estate portfolio.
Find a way to make real estate investing happen: Don't let excuses stop you from investing in real estate and seize opportunities when they present themselves
No matter what resources you may lack, there's always a way to make real estate investing happen. Using the analogy of a neighbor offering a house for a $1,000, the speaker emphasizes that if you truly want it, you'll find a way to come up with the funding. The story of buying a townhouse with a friend in the basement illustrates this mindset. However, looking back, the speaker regrets not buying more properties during a flat real estate market in the 1990s, which could have significantly increased their wealth. So, the key takeaway is to not let excuses stop you from pursuing real estate investing and to seize opportunities when they present themselves.
From tech stocks to real estate: Finding financial stability: Despite financial success, understand markets and minimize risk to maintain stability. Real estate investing can provide security, but careful property selection is crucial.
Financial success can be fleeting, and it's important to have a backup plan and stick to what you know. The speaker shares a personal story of becoming a millionaire through tech stocks, only to lose it all and then regain financial stability through real estate investing. He emphasizes the importance of understanding the market and minimizing risk. The speaker also introduces Section 8 housing, explaining that it's government assistance for those who cannot afford housing, and while it can be beneficial for landlords, tenants may have a sense of entitlement and potentially cause challenges. The speaker still owns six rental properties in Baltimore City, having carefully selected neighborhoods where the presence of Section 8 tenants would not negatively impact the market.
Managing Section 8 properties: Challenges and Advantages: Guaranteed rent from government, high tenant demand, and consistent payment schedule make managing Section 8 properties profitable. However, patience and resilience are needed due to potential tenant issues and lengthy eviction processes.
While managing Section 8 properties comes with challenges, it also offers advantages. The guaranteed rent from the government and a high demand for these properties due to a shortage of affordable housing make it a seller's market. Tenants often pay above-market rent, and the consistent payment schedule is a significant benefit. However, managing Section 8 properties requires patience and resilience due to potential tenant issues and lengthy eviction processes. Additionally, tenants may stay in these properties for an extended period, which can be both a positive and a negative depending on the landlord's perspective. Ultimately, managing Section 8 properties can be a profitable venture, but it's essential to be prepared for the unique challenges that come with it.
Investing in niches like Section 8 properties and college rentals can lead to high returns: Smart investors find profitable niches in real estate, such as Section 8 properties in limited areas and college rentals, to secure high returns. Effective property management is essential.
Smart real estate investors look for niches within the market to gain a competitive advantage. For instance, investing in Section 8 properties in areas with limited Section 8 housing and college rentals can lead to high returns. To make a property eligible for Section 8, landlords must ensure it meets certain safety standards and passes an inspection. College rentals, on the other hand, allow landlords to charge per bedroom, often resulting in higher rents than traditional housing options. One successful investor shared his experience of buying land and building houses near a college campus, which has been rented out to students for high prices for over six years without any marketing efforts. Effective property management is crucial in such investments, and having a reliable property manager can help ensure smooth operations.
Effective property management leads to successful real estate investments: Hire the right team, implement tenant protections, and prepare properties with practical measures to ensure successful real estate investments. Be prepared to sell and evaluate long-term portfolio performance.
Effective property management, including hiring the right team and implementing strong tenant protections, can lead to successful real estate investments. The speaker shares his experience of paying a property manager 6% while he handles everything except accounting, and having an accountant charge $500 a month for managing 10 houses. He emphasizes the importance of mental preparation and practical measures like sprinklers, commercial-grade carpet, and security deposits to make a house "college proof." He has been involved in numerous deals, both as an active and full owner, and is not afraid to sell and pay taxes on gains. He encourages having the strength to sell and recognizes that the success of real estate investments can only be fully evaluated when looking back on the whole portfolio many years later.
Diversify investments beyond real estate: Successful investors allocate funds to various opportunities like real estate, private companies, and equity deals to minimize risk and maximize returns.
Successful real estate investors don't put all their eggs in one basket. Instead, they diversify their investments, even if it means taking on more risk. The speaker shares how he used to focus solely on real estate, but now allocates about 30% of his investments to "come bets," or riskier opportunities like private companies and equity deals. However, he still keeps a significant portion of his investments in real estate, around 65-70%. He explains that as investors gain experience, they may shift their focus and become more cash-focused. The speaker also mentions the importance of being cautious about overleveraging and the need to evaluate potential investments carefully. Additionally, he emphasizes the importance of working with reliable lenders who make the loan process smooth and efficient. Overall, the key takeaway is that a well-diversified investment portfolio, including both real estate and other opportunities, can help mitigate risk and maximize returns.
Partnering with reliable companies for successful investments: Through professional property management, a booking platform, and around the clock support, Vacasa helps vacation homeowners earn 20% more revenue. BAM Capital, a multifamily syndicator, delivers maximized returns with an average IRR of over 35% and a disciplined investment strategy.
Successful investments require careful consideration and partnership with trusted companies or individuals. Vacasa and BAM Capital are two such examples, each offering unique benefits for vacation home owners and real estate investors respectively. Vacasa simplifies vacation home ownership through professional property management, a booking platform, and around the clock support, earning homeowners an average of 20% more revenue. BAM Capital, a multifamily syndicator, has a proven track record of delivering maximized returns with an average IRR of over 35% and a disciplined investment strategy targeting under managed institutional quality assets. When it comes to investing, a solid track record and due diligence are essential to mitigate risk and maximize returns. Whether you're looking to make more from your vacation home or seeking investment opportunities, partnering with reliable and experienced companies can provide peace of mind and financial gains.
Start small to build a track record and qualify for larger investment opportunities: To achieve financial freedom and diversify your portfolio in real estate, focus on both vertical and horizontal income streams. Begin by managing a few properties to prove your ability to generate income, then scale up to larger investments.
Building a successful real estate investment career involves both vertical and horizontal income streams. Vertical income is earned through traditional employment where you trade time for money. Horizontal income, on the other hand, is passive income that continues to flow in regardless of your active involvement. To build a track record and qualify for larger investment opportunities, it's recommended to start small and prove your ability to generate income for others. This can be achieved by buying and managing a few properties on your own before scaling up. Creating horizontal income streams early in your career is crucial to achieving financial freedom and diversifying your portfolio. By focusing on both vertical and horizontal income, you can build a solid foundation for long-term financial success in real estate.
Diversify income streams, invest in assets early: Start early, invest in assets, learn from deals, verify numbers, trust but check, don't invest all at once, diversify
Building multiple income streams is essential for financial success. When you're young, it's important to start trading your time for assets instead of just dollars. Even if you don't have a lot of money to invest, learning from each deal is invaluable. Trust is important when working with others on investments, but it's also necessary to verify the numbers. Finding people with a proven track record is crucial, and it's not necessary to invest large sums of money all at once. Instead, diversify and see what happens. Trust and action are key to building wealth.
Looking beyond cash flow for successful real estate investing: Consider a property's potential for growth, recession-proof factors, and unique advantages when investing in real estate, rather than just focusing on cash flow.
Successful real estate investing now requires a focus on factors beyond just cash flow and performers. With the market reaching the top, it's crucial to consider a property's potential for growth and recession-proof factors. For instance, being in a path of growth or an area with appreciation drivers can make a difference. Additionally, unique advantages like college students or Section 8 tenants can also contribute to successful deals. When it comes to investing $1,000,000 in multifamily properties, areas like Atlanta, Georgia, are preferred due to population growth and a strong market. Ultimately, it's essential to look beyond just cash flow and focus on the long-term potential of an investment.
From Real Estate Business to Investment: Transition from real estate business commissions to investment through tax benefits and depreciation. Consider local banks and commercial loans for loan denials. Read 'Retire Young, Retire Rich' for real estate insights and 'The Surrender Experiment' for business perspective. Adaptability and persistence key in real estate and business.
Real estate can serve both as a business and an investment, depending on one's perspective and circumstances. The speaker shared his personal experience of transitioning from earning commissions as a business to utilizing real estate as an investment through tax benefits and depreciation. He also advised those who have faced loan denials due to recent job changes to explore local banks and commercial loans as alternatives. Additionally, he recommended Robert Kiyosaki's "Retire Young, Retire Rich" for real estate-related insights and Mickey Singer's "The Surrender Experiment" for a business perspective. Overall, the conversation emphasized the importance of adaptability and persistence in real estate and business ventures.
Embrace surrender and focus on what matters: Successful real estate investors practice letting go of things outside their control, trusting the universe, and focusing on creating memorable experiences and leaving a positive impact.
Successful real estate investors practice surrendering and letting go of things that don't matter, trusting the universe to take care of them. This mindset allows them to focus on what they can control and create a fulfilling lifestyle, filled with "bucket list moments." Pat, a former real estate entrepreneur turned investor and podcast host, shared his personal experience of surrendering control and embracing a more relaxed, enjoyable lifestyle. He also emphasized the importance of resilience in the face of challenges, which separates successful investors from those who give up. By focusing on creating memorable experiences and leaving a positive impact on others, one can find success in real estate investing and beyond.
Staying Calm and Focused During Setbacks with Multiple Income Streams: Maintaining a positive mindset and having multiple income streams can help investors endure setbacks and ultimately succeed in real estate investing. Pat Hiban's mentor's advice, 'everything's going normal,' can help keep calm during tough times. Explore different strategies to find what works best.
Maintaining a positive mindset and accepting that setbacks are a normal part of the real estate investing journey can help investors last longer in the game and ultimately lead to success. Pat Hiban, a millionaire real estate investor, shared his mentor's advice, "everything's going normal," as a way to stay calm and focused during challenging situations. Additionally, having multiple income streams can provide financial stability and cushion against unexpected events. Pat encourages investors to explore different strategies and find what works best for them. To learn more about Pat and his resources, including his podcast and book "6 Steps to 7 Figures," interested individuals can search for him online or visit his websites, patheiban.com and vpacq.com.
Exploring new places and learning from experiences: Embrace opportunities to travel, network, and learn from diverse experiences. Find an investor-friendly agent to help navigate real estate markets.
Every story or experience, even if it doesn't directly inspire you, can provide valuable lessons. The speakers discussed traveling to Boston for a wedding and shared their excitement about visiting Fenway Park. They encouraged listeners to explore new places, network with other investors, and take advantage of opportunities. Additionally, they mentioned the importance of finding an investor-friendly agent to help navigate the real estate market. Overall, the conversation emphasized the importance of learning from various experiences and making the most of opportunities.