Podcast: Halloween Horror Stories 2020

Here’s our annual spooktacular collection of gruesome tales of terror, resolution and lesson. No sunshine and unicorns here. All brutally honest real-world investing horror stories as told first-hand by the party involved.

Of course, all the best wisdom comes out of tough times, so listen and learn at discount from those who paid full price for the lessons.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: The New Reality of Retail Real Estate

Between the Amazon effect and COVID-19, retail real estate has been on the ropes. But is it time to close up shop … or are there opportunities in the crisis?

In this fascinating episode, we visit with a 3-decade veteran of retail real estate investing to learn more about how he’s adapting in the digital age.

So listen in and learn about the new reality of retail real estate!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Ask The Guys – Choosing Markets, Tracking Trends and Calculating Cash-Flow

It’s a fan favorite … another edition of Ask The Guy for this episode of  The Real Estate Guys radio show! 

We take on lots of great questions from our fabulous audience, including how to choose a good real estate market … which important trends to track and how … one of the most important jobs of any real estate investor: calculating cash flow … and MANY more! 

Just remember, The Real Estate Guys don’t give advice… what we do is give you ideas and information and you then will sit down with professionals so you can get specific advice for your market. 

In this episode of The Real Estate Guys™ radio show, hear from:

  • Your Know-It-All Host, Robert Helms
  • His Know-Nothing Co-Host, Russell Gray

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What Counts As Positive Cash Flow? 

Our first question comes from Frank in Winkler, Manitoba, Canada … Frank wants to know, if someone takes a mortgage out on an investment property using current home equity and the investment property just barely covers the expenses, is this positive cash flow? 

One of the basic understandings of investing in real estate is the basic income formula … where does the cash flow come from? You have income, which is pretty easy to calculate if you have a single-family home … and then you have expenses.

We say there are two sides: the math of being the owner and the math of the lender. In the United States … you can have a little negative cash flow on paper, and if you’re short, you can bring some of your own personal income to bear if you choose. 

The main point is … you need to make sure you have a comprehensive budget and go in with your eyes wide open. Owners should be careful when working with a negative cash flow … you might want to build that into your capitalization budget to have reserves to carry you until you can get it to where it needs to be.

Buying a Property in a Different State

The next question is from Mike in East Grand Fork, Minnesota. Mike says he owns three single-family homes free and clear and wants to buy a property in Arizona for a warm weather escape. He says he pulls in $2,000 a month in profit after expenses and is looking for any strategies.

First thing is … why would anyone ever sell a property that was putting $2,000 a month in their pocket? 

And the answer is, because you can re-allocate that to property or properties that might pull $2,500 or $3,000 or $5,000 a month in profit or you can move to a market you like better!

Assuming the owner is keeping the first three properties and likes the market… the obvious thing is to put a loan on them… take advantage of today’s low-interest rates… and redirect some of that $2,000 a month cash flow into what would be a down payment for the Arizona property.

The bottom line is … get together with your mortgage professional, find out exactly what loan programs are available to you based on your credit score, your balance sheet, the amount of equity you have in the properties where they’re located, and make sure this is somebody that can help you in both Minnesota and in Arizona.

Investing in Property in Another Country

Sean in Lima, Peru, says he and his wife are living there as teachers and plan to buy a home there, live it for several years, then rent it out as a long-term investment when they return home to New York or another destination. They secured a loan from a local bank in Peru, however, the interest rates are much higher than in the U.S. 

The short answer is … there’s nowhere on earth where we have found financing as favorable as in the United States of America.

Many people who buy in another country often turn to the ability to borrow on property in the U.S. and use those proceeds to buy a property in other places. That’s method #1. 

Method #2 … borrow locally. One of the reasons is that that loan and that creditor have nothing to do with U.S. credit or your tax returns and so often those loans are made locally by local banks who invest in the property … so it’s a lot less cumbersome.

There’s a whole other side to investing internationally … there’s the basis of law in the country, what property rights look like… what their expenses are … whether countries share a tax treaty. Just consider all those factors. 

Know Market Trends 

These next two questions are related. 

Victor in Ocala, Florida, wants to know how to pick a real estate market to invest in, and Al, from Richmond, British Columbia, Canada, wants to know … what drives real estate trends and what resources can help us follow the real estate trends globally? 

The trend is your friend. You need to understand what trends are in real estate.

Markets vary all across the world … so the big picture on finding market trends and discovering a great real estate market has to do with the suitability of the property, the viability of the income stream, and the age-old supply and demand question.

All things being equal … rents are strong where there is demand for people to live in places, and so as investors, we’re looking for places that have strong economies … favorable tenant landlord law … and good market metrics. 

Demand is based on people wanting to live there and their businesses wanting to live there. Supply is building … the ability to build … the ability of the marketplace to expand supply. 

Places like Manhattan and San Francisco can’t increase supply … so prices only have one way to go. 

For 23 years on the show we’ve said … live where you want to live and invest where the numbers make sense. 

If you’re going to invest somewhere other than where you live … then you do need to study the market and understand the direction.

A market could be really great and have a lot of jobs, but if the jobs are all tied to one or two employers or industries, that could be a risk. 

Our premise is that you can’t really pay attention to more than about a half a dozen real estate markets … maybe 8 or 10 if you’re a full-time investor.

You need to know your markets on a granular level as real estate investors. 

Ratio of precious metals in the portfolio

These two questions from different listeners are on the same topic. 

Jason asks, what should be the ratio between how much silver, gold, and income property one has? And Gary from Idaho Falls, Idaho, wants to know about what percentage of an investment portfolio should be in precious metals? 

We believe that before you’re a real estate investor, you’re an investor, and you better understand that “compared to what” factor. 

If you approach the idea that you invest in real estate to make money …  and you assume that those are dollars … then you need to know something about dollars and currency. 

If you really understand what money is, you’ll recognize that for thousands of years, gold and silver have been money … and it’s only been since 1971 that gold and silver have not been money. 

Gold and silver don’t make you money as much as they preserve your purchasing power, so that’s how they all fit together. 

It depends on what you’re trying to do … there is no magic formula. It’s more important that you understand what the role of these different things are in your portfolio.

More Ask The Guys

Listen to the full episode for more questions and answers. 

Have a real estate investing question? Let us know! Your question could be featured in our next Ask The Guys episode. 


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: Flipping Properties for Fast Cash and Big Profits

Having a short path to cash is an essential survival strategy in any economic jungle. For real estate investors, flipping a property is often a reliable way to create cash quickly.

Of course, understanding a concept and being able to execute it well in the real world are sometimes two very different things.

In this episode, we visit with a seasoned 7-figure flipper who opens up and shares the good, the bad and the ugly of learning how to flip profitably in the real world.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: Ask The Guys – Choosing Markets, Tracking Trends and Calculating Cash-Flow

We take on lots of great questions from our fabulous audience, including how to choose a good real estate market … which important trends to track and how … and one of the most important jobs of any real estate investor, calculating cash-flow … and MANY more!

So tune in for another exhilarating edition of Ask The Guys!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Growing Pandemic-Proof Profits for the Long Term

We’re living in uncertain times … and that always sends investors out in search of stability. 

Bonds usually fit the bill … but now the currency wealth is denominated in is being called into question … and investors are looking to get even more REAL. 

Today we’re exploring how to invest in the real power of Mother Nature to preserve, grow, and pass on wealth. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your pandemic-proof host, Robert Helms
  • His anemic co-host, Russell Gray
  • Agricultural hardwood investing expert, Rachel Jensen

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Investing in hardwood

The pandemic has changed the demand, the structure, the appreciation, the cash flow, and even the tax benefits of real estate … but not everywhere. 

Today, we’re going to talk about a real estate investment that has been virtually untouched by the pandemic. 

No matter what political party is in office, no matter what crazy things happen around the world … it just performs. And that’s pretty rare. 

Agriculture is the oldest use of real estate that there is. Before people even had houses, they were working the land. 

The really unique angle of agriculture is that it tends to be less affected by many market factors. What we’re talking about today hasn’t really been … or can be … hit by COVID-19. 

It’s a product that everybody needs, and it has been used for hundreds and hundreds and hundreds of years. 

There is far more demand than there is supply … which is a pretty good recipe. 

We’re talking about hardwood. 

A proven commodity 

Hardwood is a proven commodity that is useful no matter what the economy is doing. So much of the world shut down in March … but the trees kept growing. 

They don’t pay attention to news or social media … they just keep growing and growing. Hardwood can take from 3 to 60 years to produce depending on the type of wood. 

There are a variety of woods available. It’s not all the same. 

There are woods that are standard industrial material. There are specialty woods. There are trendy woods that fall in and out of favor in design … so many niches, just like real estate. 

Another unique angle of this investment is that it doesn’t pay dividends this quarter. This is a long-term game much like many real estate investments. 

It’s not an immediate cash flow game. You have to be patient and let it happen over time. 

This is something you invest in during, say, your 30s or 40s and plan to reap the harvest in your 50s, 60s, or 70s. 

And, once you harvest trees … guess what you can do again? Replant!

This can be what we call a “legacy investment.” It’s a one-time investment that could go on and pay for a long, long time. 

The challenge with agriculture is that it’s a hard game to play on a small scale. It’s difficult to go out and buy two acres of land and have a productive farm. 

It’s hard to go out and buy a single grove of trees and be able to have the ability and efficiency to harvest and reap the benefit. 

But there are ways around this challenge. 

Money does grow on trees

Rachel Jensen is a hardwood investing expert. She says that over the past few months, investors have started looking closely at their portfolios and thinking about what they want to accomplish in the long term. 

“I challenge everyone to think generationally,” Rachel says. “When you own timber, you are doing it for you, for your kids, for your grandkids, and for many more generations.”

This is a tactic and a model that some of the ultra-wealthy have used for a very long time. 

You keep this asset in your portfolio … and the trees grow. 

It’s very different from the traditional real estate model. You’re not going to get a monthly rental income check … but trees will be some of the best tenants that you’ll ever have. 

Investing in hardwood provides diversification to your investment portfolio in terms of time and location. 

In this case, money does grow on trees. 

Teak, specifically, is often referred to as the gold of the timber market. 

There is a very, very low supply and a very high demand for teak. 

The two countries that are the biggest importers of teak are India and China. When you look at the projected populations of these two countries by 2100, these two are predicted to be the most populous. 

So, there is a good chance that demand will continue. 

There is such high demand for teak because of its remarkable qualities. It is a very, very hard wood. It’s extremely durable. 

After three years of growing, teak becomes resistant to fire, rot, termites, bugs … anything that you may consider to be an agricultural risk. 

Teak is used to build a lot of boats, in outdoor furniture, and in high-end construction. 

This isn’t a new wood by any means. Teak was used to build the deck chairs and some of the decking on the Titanic … chairs still intact when researchers found the wreckage after years and years underwater. 

People who care about value and longevity are going to buy teak products … and keep buying teak products … because they know that those products are going to last a very long time. 

Teak has a 25-year harvest cycle. You’ll still see some income from the thinning conducted at years 12, 18, and 20. Then, the bulk comes at the year 25 harvest. 

Then, you replant … and do it again!

It’s important to have a partner who knows how to care for hardwood. Rachel and her team take care of the entire process for investors, working with a professional management team onsite that knows teak. 

They have various farms in Nicaragua and Panama. 

A newborn tree parcel starts at around $7,000. You can also look into purchasing older “teenage” parcels that are 15, 18, and 20 years old. Those parcels start around $17,000. 

“What we want folks to realize is that you don’t need to be a mega-millionaire and own thousands and thousands of hectares,” Rachel says. “Start small. We’ll help you with payment schedules and financing options.”

To learn more about teak and hardwood investing … listen to the full episode!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: Building a Successful Real Estate Portfolio as an Active or Passive Investor

Some investors LOVE doing deals and building portfolios … for themselves and/or for other investors.

Other investors LOVE the benefits of real estate investing, but don’t want to get their hands dirty. Or maybe they’re just too busy with their day job, running a business, or sipping cocktails on the beach.

In this episode, we visit with two very successful active investors and talk about the two different approaches.

So tune in as we talk building successful real estate portfolios actively or passively.


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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The Best Opportunity in Real Estate Investing Right Now

Luck is a misleading term. In our experience, “getting lucky” only happens when preparation and opportunity intersect with decisive action. 

The crazy dynamics of the past several months have actually made the best opportunity in real estate even better. 

Today we’re talking about what’s happening in the world of real estate investing … and how to prepare so that you can make bold moves and seize the opportunity. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your best in real estate host, Robert Helms
  • His second best co-host, Russell Gray
  • Attorney and regular contributor to The Real Estate Guys, Mauricio Rauld

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Get ready for big opportunities

Real estate investors are always trying to determine which direction the market is going to take and what product type is going to be the best. 

Today, we’re going to share what we believe to be the single best opportunity in real estate right now … and we’ve got an amazing guest to share his thoughts. 

Whether or not you agree with us, try hanging around for the premise. You just might learn a thing or two. 

COVID-19 has uprooted a lot of real estate. Resort real estate is reeling. Airbnb is having a tough time. A lot of retail and office spaces are struggling. Even the bread and butter options of single-family homes and multifamily housing have been hit hard. 

Meanwhile, there are some bright spots. Nobody wants to celebrate bad things happening, but the fact is that they’re happening. 

Big picture … a lot of distressed assets are coming online. When all is said and done, it’s going to take money to clean up this mess … and the Fed is printing trillions of dollars to do it. 

As an investor, you should be asking, “How can I put myself in the flow of money? How can I be in a position where all those trillions of dollars come by me?”

You could jump into Wall Street and compete with the sharks. You could apply for loans if you’ve got some good outlets. 

But if you’re out there in the real estate space and you can bring deals to money … you can be in the flow of funds and get some condensation on the pipe. 

And the best way to do that is … and we’ve been saying this for years … syndication. 

Syndication is the single best opportunity in real estate … and today there is even more opportunity. 

Right now, the marketplace is full of talent. People have been laid off left and right … and they are free to join your team. 

You can get tech experts, financial experts, salespeople, and project managers. You put together the team. You raise the money. And then you syndicate a big project.

The mission is to be an aggregator not just of capital but also of talented people. 

The secret is syndication

Our show today is tailored toward the person who sees the potential opportunity of leading a syndication and raising the money. 

Our guest is attorney Mauricio Rauld. He’s here to help you know the pitfalls you need to watch for and the lines you need to respect as you lead a syndication. 

A lot of times lawyers get the reputation of being deal killers … but Mauricio tries to make the deal happen. He watches out for folks and tells them about landmines. 

“All of my clients are syndicators out there aggregating capital. What I’ve noticed here is that this pandemic has created a lot of opportunity. My clients want to be ready to seize that opportunity,” Mauricio says. 

Many of Mauricio’s clients are putting together opportunity funds over the next few months so they have readily available cash when it’s time to pull the trigger. 

If you have a cash deal … you can close in a week. 

But, you have to be sure your syndication is legitimate. 

Investors may wonder why the SEC is involved in your business when you’re trying to buy a piece of property. 

The SEC is involved because the definition of a security is really broad. 

Most people think of securities as stocks, bonds, and mutual funds … but anytime you take money from an investor, you have a security. 

That’s why syndicators have to make sure they are compliant with all federal and state securities laws … and that’s a big legal arena. 

“You don’t have to be paranoid about it. You just have to learn it,” Mauricio says. 

The good news is that you don’t need to become an attorney to navigate these waters. You just have to hire a great attorney. 

And, you want to have an overall contextual understanding of what you’re talking about so you can have an intelligent conversation with your attorney.  

From a mindset perspective, you need to understand that it’s no longer just you and your money. Now, somebody else’s money is at risk … so you should be that much more careful. 

The basics of securities and syndication

The world of securities laws has three basic approaches … registering your syndication with the SEC, finding an exemption, or it’s illegal. 

The registration process takes a very long time. It takes a couple of years to go through the SEC system and costs six or seven figures to do so.

That’s why most real estate investors who are working under a deadline decide to find an exemption instead. 

Luckily for real estate investors, Mauricio says that there are a couple of very popular exemptions that allow people to raise capital privately with friends, family, and people they have relationships with. 

Taking this route just means there are a lot of disclosures that the investors have to provide. That’s where your attorney comes in. 

“What we need is more high integrity, honest operators in the business, so we want to persuade people to do this right,” Mauricio says. 

Get your attorney involved early on in the deal so you can follow all the guidelines given for the exemption you are pursuing. 

For example, many syndicators want to know if they can advertise or post their deal on social media. The answer … it depends. 

Sometimes you can, but sometimes you may be relying on an exemption that specifically prohibits that practice. A good securities lawyer can guide you each step of the way. 

For more syndication tips and essentials from Mauricio … listen to the full episode!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: Growing Pandemic-Proof Profits for the Long Term

Uncertain times always send investors scurrying for stability and certainty.

While bonds usually catch that bid, when the very currency wealth is denominated in is being called into question, investors tend to get much more REAL.

This explains the spike in interest in precious metals. But while it’s possible to combine metals with debt to grow real wealth, there are other ways.

In this episode, we explore how to invest in the virtually eternal power of Mother Nature to preserve, grow, and pass on wealth.

So tune in as we talk hardwood agricultural investing with an expert guest.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Ask The Guys — Smart Moves with Equity, Liquidity, and Debt

It’s time for Ask The Guys … the episode where you ask and we answer!

People are facing perilous times and wondering what to do to prepare.

Today, we’re tackling questions about tapping equity while it’s still there, getting liquid just in case, and dealing with debt decisions in an uncertain economy … and MORE!

This edition is all about making smart moves in a crazy world. 

But remember … we offer commentary, education, and resources … not advice. 

Always consult with tax or legal professionals before making any investment decisions. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your equitable host, Robert Helms
  • His indebted co-host, Russell Gray

Listen

 

 


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What is up with debt?

Our first question comes from Tim in Grand Haven, Michigan. He is currently learning all he can to switch from investing companies to investing in rental properties. 

But … Tim wants to know, what is up with debt? “I keep hearing and reading how it can be used for good,” he says. 

How can the upside of debt outweigh the downside of the risk that it brings?

This is a great question because it is a fundamental principle of real estate investing. One of real estate’s great benefits is leverage … the fact that we can use debts. 

First, there’s nothing wrong with being debt-averse. When you are talking about consumer debt … paying interest out of the sweat of your own back … then, yes, you don’t want to be in debt. 

You only want to be in debt when there’s a positive arbitrage … meaning that you are going to make money on the borrowed money. 

The reason this is so important today is that we’re in an inflationary environment … where inflation is the cause of your equity growth on your property, and you aren’t REALLY making progress. 

The only way to make progress is to grow faster than inflation. Debt allows you to do that. 

The last reason to use debt is when you have equity in the property … it’s exposed to predators and creditors, and there’s no way to shelter or hide it. Debt can actually help with asset protection. 

We will point out to Tim … and to all of you … that interest rates are at record lows, so your borrowing power is incredible right now. That’s another reason to consider debt. 

To be clear, we’re not here to talk you into going into debt. We know that people that invest in real estate with cash, and they do just fine. 

But, leverage can magnify returns. 

Where to go for equity

Kenny from Indio, California, wants to know if it’s better to do a takeout cash loan from his home or from a rental property. He has equity in both. 

If you have a lot of equity in the home you live in and you have a lot of equity in your rental home, you could go with either. 

But, there are strategic reasons why one or the other makes sense for your situation. 

It’s going to be cheaper to get equity out of your home … it’s not better so much in terms of cost but in terms of risk. 

When you put more debt in your home, you’re taking a risk … one that is going to be predicated on what you do with the proceeds. 

If you invest the proceeds into something that will provide enough cash flow to cover the cost of acquisition and make a profit, it might make some sense. 

We are personally big fans of converting equity into precious metals … but whatever you choose to do, you want to be more conservative with whatever you do in respect to your own home. 

For the rental property, you won’t be able to get as high a loan to value … meaning you won’t have access to as much of the equity. It’s going to cost you a little bit more. 

Like your own home, the risk depends on what you’re doing with the loan proceeds. 

Ultimately, you just need to take a look at the cost of pulling out equity, what you’re going to do with the money, and how secure you are in the rest of your portfolio, balance sheet, and cash flow. 

Getting liquid

Randy in Reinholds, Pennsylvania, has been hearing a lot about getting liquid by tapping equity, credit lines, or selling marginal assets. 

But, he wants to know how to balance the need for cash versus the likelihood of a falling dollar eroding your cash purchasing power. And he is wondering what other liquid assets … besides precious metals … where we would look to park dollars. 

There’s an old saying that the bank will never loan you money when you need it … but when you don’t need it, they are willing to loan you a ton. 

It often does work that way. 

If we’re sailing into headwinds, we want to have some cash. But if we know that the value of every dollar in our wallet is going down steadily over time … like it has been for over a hundred years, then we don’t want to hang on to too many dollars. 

Our good friend Robert Kiyosaki says, “Cash is trash.” 

It’s not that he doesn’t LIKE the things money will do for him. It’s that when you HOLD your money in liquid cash form, it virtually goes down in value all the time. 

Precious metals can be a great place to hedge up some of your wealth. But remember … metals don’t really change their value. 

When you see the price of gold go up … it means the value of the dollar has gone down. 

There are reasons to have cash where you won’t lose all the value as the dollar continues to erode … like real estate. 

If you’re aggregating cash in anticipation of real estate prices falling, then really, in terms of your purchasing power, your dollar is going up in value. 

We also like to have both cash in the bank and out of the bank. Keeping your cash in the bank under the $250,000 limit will also protect you during a crisis. 

Another relatively liquid asset to park dollars is an apartment building … because every month an apartment building converts that month into dollars. 

And guess what? As the dollar erodes, the value of rent goes up … giving you more cash flow. 

The demand for apartment buildings … more than single-family homes, more than almost any real estate … has been so strong that if you were willing to list it at anywhere near market, you could get a fast sale. 

More Ask The Guys

Listen to the full episode for more questions and answers. 

Have a real estate investing question? Let us know! Your question could be featured in our next Ask The Guys episode. 


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

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