Podcast Summary
Diversifying beyond single family homes: Consider multifamily properties for financial freedom and recession-proof investments, challenge societal norms, attend local events to network.
Learning from this episode of the Bigger Pockets Podcast is the importance of diversifying one's real estate portfolio beyond single family homes. The guest, Grant Cardone, argues that multifamily properties are more resilient and recession-proof. He challenges the common American dream of owning a single family home and encourages listeners to think bigger and aim for financial freedom through real estate investing. The episode delves deep into societal perceptions of success and the benefits of multifamily properties. Cardone's perspective may be controversial, but his arguments are thought-provoking and offer valuable insights for investors. Additionally, the hosts remind listeners about the importance of attending local real estate events and starting local meetups to connect with like-minded individuals in the industry.
Learning from Real Estate Events and Tools: Attend events for deals and trends, leave reviews, use software like RentReady, and explore investment opportunities with platforms like Fundrise.
Attending real estate events, especially those organized by BiggerPockets, can provide valuable opportunities for investors. By attending, you get the first look at deals and stay updated on the latest industry trends. The hosts of the BiggerPockets podcast, Brandon and Rob, made a request for listeners to leave ratings and reviews on iTunes or their preferred podcast platform, and to share their favorite episodes on social media using the hashtag #BiggerPockets. They also introduced Rent to Retirement, a platform that allows investors to buy turnkey rental properties with no money down, and RentReady, a property management software that simplifies tenant screening with proof of income verification. Lastly, they mentioned Fundrise, an investment platform that offers high-interest private credit deals to fund top real estate investors. Overall, attending events, leaving reviews, using software tools, and exploring investment opportunities are key takeaways from this podcast episode.
Real Estate Shift: Nationwide Trend Towards Multifamily Properties: Investors should expand their portfolios with medium to large-sized multifamily properties nationwide, focusing on building a diverse portfolio for long-term success.
The real estate market is experiencing a significant shift towards multifamily properties due to the increasing demand for rental units and the affordability crisis. Grant Cardone, a renowned real estate investor, emphasizes that this trend is not limited to specific markets like Denver, Seattle, or Miami, but is happening nationwide. He advises investors to take advantage of this opportunity by expanding their portfolios with medium to large-sized multifamily properties, even in overpriced markets. Cardone also encourages investors not to wait for the market to crash before getting started, as the competitive landscape may make it difficult to secure desirable deals when the market turns. Instead, he suggests focusing on building a diverse portfolio with multiple doors to ensure long-term success in real estate investing.
Avoiding the bottom end during market crashes: During market crashes, aim for middle-priced housing deals, expand your search, and be a professional investor with research and discipline.
During market crashes, it's essential to avoid being at the bottom end and instead aim for the middle band of affordable housing. This strategy was illustrated through a story about sharing an expensive rental during good times and eventually parting ways during tough economic conditions. However, finding deals in the middle band can be challenging due to increased competition. Therefore, it's crucial to scale out the number of deals you're considering and be willing to expand your search to other markets. Additionally, being a professional investor requires extensive research and discipline to ensure successful deals. Real estate investing is a sales funnel, meaning you need to cast a wide net to find the right opportunities.
Treating Real Estate as a Numbers Game and Long-Term Commitment: To succeed in real estate investing, analyze leads, make offers, and understand not all deals will be successful. Go beyond online listings, visit properties, and trust instincts. Strategic approach, thorough research, and learning from failures are essential.
Successful real estate investing involves treating it as a numbers game and viewing it as a long-term commitment. The speaker emphasizes the importance of analyzing leads, making offers, and understanding that not all deals will be successful. He also suggests that to find the best deals, it's necessary to go beyond online listings and directly contact brokers. The speaker shares his experience of personally visiting potential properties and trusting his instincts to identify the right investment opportunity. He also advises against making investment decisions when hungry and encourages looking at a large number of properties to develop the ability to recognize the right fit. In essence, the key takeaway is that real estate investing requires a strategic approach, thorough research, and a willingness to learn from failures.
Emotional connection matters in real estate investing: Find a property that resonates with you for successful investments, explore properties, and assess property management for a competitive edge.
Emotional connection plays a significant role in commercial real estate investing. The speaker emphasizes that even the biggest deals and most experienced investors are driven by emotions. Therefore, it's crucial to find a property that resonates with you, as it will positively impact your ability to exit the deal and attract tenants. Furthermore, the speaker encourages investors to get out and explore properties, rather than just talking about investing. Knowing every property in your market and understanding the competition can give you a competitive edge. Additionally, assessing the customer service and professionalism of property management can indicate the potential for a successful investment. Overall, the emotional connection to a property, combined with thorough research and due diligence, can lead to successful real estate investments.
Understanding market conditions and building relationships are key to successful real estate investing: Be patient for returns, adjust to market conditions, build relationships with brokers, and maintain a full pipeline of potential deals to be successful in real estate investing.
Successful real estate investing involves understanding market conditions, being flexible with cap rates, building relationships with brokers, and having a full pipeline of potential deals. The investor in this conversation emphasizes the importance of adjusting to changing market conditions and being patient for returns. He also shares his experience of losing a large deal not due to financial reasons, but because of favoritism from the broker. To be successful in real estate investing, one must be willing to scale up, build relationships, and have a solid pipeline of potential deals. Cap rates, while important, should be considered in the context of market conditions and the potential for future returns.
Importance of Adequate Insurance Coverage and Partnerships in Real Estate Investing: Real estate investors in high-risk areas need adequate insurance coverage, including umbrella policies, to avoid financial ruin. Partnering with other investors can provide advantages in the market, such as preferred borrower status and access to more opportunities.
Having adequate insurance coverage, particularly an umbrella policy, is crucial for real estate investors, especially in high-risk areas like Florida. The lack of such coverage could lead to significant premium increases and potential financial ruin. Furthermore, partnering with other investors to scale operations and access larger deals can provide advantages in the market, such as preferred borrower status and access to more opportunities. Personal branding, such as writing books or hosting podcasts, can also help investors gain recognition and trust in the industry, but may also lead to resistance from certain groups or individuals. Ultimately, it's essential to navigate these dynamics skillfully to succeed in real estate investing.
Expanding knowledge and taking calculated risks can lead to success in real estate despite lack of visibility or experience.: Focus on learning and taking calculated risks in real estate, even without initial visibility or experience, can lead to greater financial gains.
Visibility and experience in real estate, whether through personal connections or public actions, can significantly help in building a successful career. However, not having a following or recognition should not deter beginners from entering the market. Instead, they should focus on expanding their knowledge and taking calculated risks, such as investing in larger deals or moving to less popular markets. Waiting on the sidelines and buying too small are common mistakes that can hinder progress. Additionally, relying solely on owning a single-family home as an investment may not be the most effective strategy. Instead, considering other real estate investments and exploring various markets can lead to greater financial gains.
Millennials prefer renting for flexibility and lower costs: Millennials enjoy the benefits of renting, including lower upfront costs and flexibility to move. However, investors must be cautious when evaluating potential real estate investments.
The millennial generation is increasingly choosing to rent rather than buy homes due to the advantages and flexibility it offers. These advantages include lower upfront costs, access to amenities, and the ability to move frequently. Additionally, some renters may find that they can live in desirable neighborhoods for less money by renting rather than buying. However, it's important for investors to be cautious when evaluating potential real estate investments, as some brokers may misrepresent the financials of a deal. When considering investing in someone else's fund, an investor may consider whether they can potentially earn a higher return by investing in their own deals. Ultimately, the decision to invest in someone else's fund should be based on the potential return and the trustworthiness of the fund manager.
Finding the right deals and partner is crucial for real estate success: Working with a skilled investor or 'picker' increases chances of profitable deals and saves time. Focus on income-producing properties for consistent returns and long-term value.
Making significant returns in real estate requires more than just money and good terms. It necessitates finding the right deals and having a trusted partner to help identify and execute them. As the speaker emphasized, even someone with substantial resources may struggle to find and secure profitable deals on their own. Instead, it's crucial to work with a skilled investor or "picker" who can sift through potential opportunities and make informed decisions. This approach not only saves time and effort but also increases the likelihood of success. Additionally, focusing on income-producing properties is a wise investment strategy, as they provide consistent monthly returns and have long-term value. The current market presents a unique opportunity for investors to capitalize on the shortage of affordable income properties in desirable locations. However, it's essential to remain adaptable and open to new markets and opportunities as the real estate landscape continues to evolve.
Diversification and financial reserves during market fluctuations: Having a diversified portfolio and financial reserves are essential during market fluctuations and potential downturns. Avoid putting all your eggs in one basket and understand potential risks. Learn from mistakes and have a plan for unexpected events. Don't overspend and save for future expenses.
Having a diversified portfolio and financial reserves are crucial during market fluctuations and potential downturns. The speaker emphasizes the importance of having enough resources to weather financial storms and the potential risks of putting all your eggs in one basket, such as investing heavily in a single asset like Bitcoin or a specific real estate market. He also mentions the importance of understanding your market and the potential risks involved. The speaker shares an example of someone who made mistakes in real estate investments but managed to avoid losing money due to the income produced by those investments. He encourages listeners to learn from this example and to have a plan in place for unexpected events. Additionally, the speaker emphasizes the importance of not overspending and saving for potential future expenses.
Investing in stable rental markets: Seek out communities with strong barriers to entry and alternative lifestyle markets for long-term investment opportunities with desirable amenities and minimal construction activity. Prioritize markets with high debt coverage ratios and avoid excessive crane activity.
Identifying markets with stable rents and minimal chance of failure involves seeking out communities with strong barriers to entry and alternative lifestyle markets. These markets, such as those in Montrose, Houston, or Glendale, California, can provide long-term investment opportunities with desirable amenities and minimal construction activity. Additionally, prioritizing markets with high debt coverage ratios and avoiding areas with excessive crane activity can help ensure long-term success in real estate investments. Ultimately, the goal is to build an empire with the freedom to move and live where desired, rather than being tied down to a single family home.
Living Situations and Priorities as We Age: People prioritize different aspects of life as they age, with some preferring stability and others desiring mobility and freedom. The traditional American dream of owning a house may shift towards valuing mobility and flexibility.
People have different goals and priorities when it comes to their living situations as they age. While some may aspire to grow old in the same house with their kids, others, like the speaker, desire mobility and freedom. The speaker advocates for living a life focused on experiences rather than accumulating wealth, and encourages moving around to explore new places. He also believes that the traditional American dream of owning a house may soon change due to demographic shifts, and that people may start valuing mobility and flexibility over stability. The speaker's personal experience of living frugally in his twenties and desiring to move around as he grows older underscores his perspective. Overall, the conversation highlights the importance of individuality and the freedom to live life on one's own terms.
Criticizing Traditional Homeownership and Promoting Real Estate Investment: Consider real estate investment as a more accessible and potentially profitable alternative to traditional homeownership. Use software for good tenant screening and look for off-market deals to overcome inventory challenges. Consider alternative lenders for a smoother loan process.
The traditional path of homeownership and relying on banks and retirement accounts may not be the best financial decision for everyone. The speaker expressed feelings of being trapped in his mother's house and criticized the idea of putting money into something that isn't accessible. Instead, he advocated for real estate investment as a more promising option. He also emphasized the importance of good tenant screening using software like RentReady, and suggested looking for off-market deals due to the current challenges in finding quality inventory. Additionally, he recommended considering alternative lenders like Host Financial for a smoother loan qualification process.
Maximize real estate investment opportunities with PropStream: Use PropStream for motivated sellers, market trends, and efficient property identification. Research market fundamentals before investing, focus on mid-range rentals, and consider budget, timeline, and risk tolerance.
If you're looking to invest in real estate, especially in finding motivated sellers or understanding market trends, PropStream is a valuable resource. With its extensive database, accurate data, and marketing tools, it can help you efficiently identify potential opportunities. Additionally, it's essential to thoroughly research your market, including rents, occupancy, expenses, and demographics, before making an investment. Regarding specific property types, those with rents between $800 and $1200 survived the Great Recession, and larger, more expensive properties may offer greater potential returns. Ultimately, consider your budget, timeline, and risk tolerance when deciding between various investment options.
Expanding the 1031 exchange timeline for less stress: Considering the 6-month rule and planning sales wisely can help alleviate stress during 1031 exchanges. Reading financial books and classics like 'The Richest Man in Babylon' and the Bible can provide valuable insights.
While the 1031 exchange is a valuable tool for real estate investors, the tight timeline can create unnecessary pressure and potentially lead to less than ideal deals. It was suggested that expanding the timeline could help alleviate this issue. Josh Dorgan, who has experience with multiple 1031 exchanges, advised being aware of the 6-month rule and planning sales accordingly to avoid unnecessary stress. Additionally, Dorgan recommended reading P&L statements and focusing on business books for valuable insights in real estate and beyond. He also mentioned his appreciation for timeless classics like "The Richest Man in Babylon" and the Bible for financial wisdom.
Lessons from a successful entrepreneur: Determination, resilience, taking action, never giving up, looking at more deals, adventure, and giving back are keys to success.
Successful people, like Grant Cardone, do more than most. They persist in the face of failure and setbacks, and they never stop learning and growing. Cardone shared his experiences of starting from nothing and building up a real estate empire, despite setbacks and financial struggles. He emphasized the importance of taking action, looking at more deals than others, and never giving up. He also highlighted the importance of adventure and giving back as sources of excitement and fulfillment. Cardone's story is a reminder that success is not about starting with wealth or advantages, but about having the determination and resilience to keep going and make things happen.
Disregarding Parents' Advice for Personal Success: Consider individual circumstances, take calculated risks, and trust personal judgment for financial freedom in real estate
While parents' advice can be valuable, it's important to consider individual circumstances and make decisions based on personal goals and opportunities. Grant Cardone shared his experiences of disregarding his parents' advice in college and in pursuing a career in real estate, ultimately leading to significant success. He emphasized that opportunities in real estate have greater potential than in other careers and that with courage, knowledge, and time, anyone can achieve financial freedom. Additionally, Cardone discussed his approach to investing, aiming to scale his portfolio and eventually sell to larger entities for a premium. Overall, the conversation highlighted the importance of taking calculated risks and trusting one's judgment.
Align investments with personal goals: Investing strategies should reflect individual goals and aspirations, be it traveling, becoming a violinist, or building wealth through real estate.
The goals and aspirations of each individual should define their financial and investment strategies. If someone's dream is to be the best violinist in the world, it wouldn't make sense for them to invest in multifamily properties or real estate. However, if their goal is to travel and explore the world, then investing in real estate to fund that lifestyle makes perfect sense. The value of different investment strategies lies in their ability to support and help achieve personal goals. For instance, apartments can provide stable income and weather economic downturns, making them a smart investment for those looking to build wealth. Ultimately, the key is to align investments with personal goals and not judge others based on our own aspirations.
Connect with investor-friendly real estate agents using BiggerPockets Agent Finder: Use BiggerPockets Agent Finder to connect with local market experts and grow your real estate portfolio
Finding the right investor-friendly real estate agent can significantly help you navigate the complexities of the real estate market and move closer to financial freedom. With the BiggerPockets Agent Finder tool, you can easily connect with local market experts who understand the neighborhoods and can help you analyze numbers and take action with confidence. This free resource is a valuable asset for both new and experienced real estate investors looking to make informed decisions and grow their portfolios. Remember, the key to successful real estate investing isn't about timing the market but rather dedicating time and effort to the process. So, head to biggerpockets.com/deals, enter your preferences, and let BiggerPockets help you find the right agent to help you get started or take your real estate investing game to the next level.
