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.


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

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.


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

Markets matter more than ever …

In an age of macro-economic turmoil and stress, the risk of the tide going OUT is far greater than the odds of a rising tide lifting all boats.

So as Warren Buffett famously quipped …

“Only when the tide goes out do you discover who’s been swimming naked.”

And of course, if that happens to be you … it’s often expensive and embarrassing to have your shortcomings exposed.

Anyone paying attention right now expects the tide to go out any time now. In fact, many pundits are shocked the Fed has been able to prop things up this long.

So for strategic real estate investors, market selection matters more now than ever. You can’t count on a rising tide in all markets.

People and prosperity will start to flow away from some markets and flood into others. We’re already starting to see this polarization.

Get it wrong, and there you are in your financial birthday suit with water around your ankles.

Get it right, and your portfolio of “average” properties has you floating in equity and cash flow amidst a flood of demand with capacity to pay.

Long time followers know when we say “markets” we’re referring not just to geographies, but also product niches and demographics.

So it’s places, products and people.

And when times get tough … which is what’s clearly on the weather report …

… the question is: where will people and businesses go, and what kind of real estate will they need?

If you only invest in your own area, this might seem simple.

After all, you know the lay of the land well. You talk to people. You have your thumb on the pulse of the local market.

But if you don’t happen to live in a great investing market … and the local economy or cash flows don’t make sense … then you need to look for clues about markets that might make sense.

For example, Visual Capitalist just put out a nifty 3D map they call …

The U.S. Cities With the Highest Economic Output

   

Of course, these aren’t really cities … they’re metros.

But it’s a great top-down start for homing in on a local geography in which to search for teams and opportunities.

However, this is only a start. There are several other factors to consider when delving into markets … but strong economic activity is a biggie.

So before you jump on a plane and tour the nation, dig a little deeper.

If you’re a residential rental property investor … single or multi-unit … there are several markets you’d probably eliminate from consideration, simply based on their hostility towards landlords.

Losers in this category would be California, Illinois and New York. In fact, of these ten, probably all but Texas and Georgia would get crossed off our short list.

Of course, while the macro-financial strength of a metro is a solid sea and can float a lot of boats …

… trends in the economy and employment also matter quite a bit too.

Remember … the Titanic was a big, powerful ship. Even after it started leaking it still seemed very robust. Many thought it could leak without sinking.

Of course, those passengers who didn’t understand what was happening or didn’t take it seriously were slow to make it to the lifeboats.

By the time the slow-movers were looking for safety, the best spots were all taken. It didn’t end well for them.

Keep this in mind when deciding how to navigate this current crisis.

Another important thing to remember when shopping for real estate markets, jobs and population matter … a lot.

LinkUp.com puts out a lot of great (and expensive) data … but sometimes you get free samples that are useful.

In this case, they did a study of Changes in New Job Openings for a one-month period and created this very cool state-by-state graphic …

 

 

This adds a little color to the analysis … literally. 😉

Our audience knows some of our favorite markets for the last several years are in Florida, Georgia, Tennessee and Texas.

These numbers don’t surprise us because these are business-friendly, landlord-friendly, relatively affordable markets.

Of course, this is just a snapshot … but it’s another clue about where to search for resilient opportunity.

Another fun resource is Zumper.

They have a semi-interactive tool which visually shows internet search volume for where renters are interested in moving to.

Seems like that would be good to know.

Here’s an interesting chart they recently put out …

 

As you can see, there are some new markets to consider adding to the research bin to see how they stack up in terms of strength in economy, jobs, and landlord friendliness.

While we love top-down data … we like to compare and contrast it to “thumb on the pulse” feedback from people who know the market intimately.

For example, we can see from this data that Indianapolis is attracting a lot of interest. We just don’t know WHY.

But we learned from talking with our Boots On The Ground correspondents, Indianapolis has been the beneficiary of people fleeing Illinois.

Our point is that as we continue to navigate this COVID-19 induced cascading crisis … people ALWAYS need certain types of real estate … and residential is always at the top of the list … no matter what’s happening.

People and businesses will move to pursue or preserve quality of life and opportunity … which is about income, expenses, amenities, and climate (weather and business).

In good times and bad, there will always be winners and losers.

Investors who win are more strategic, informed, well-advised and supported, and therefore more aware, prepared, brave and bold … and move smartly and decisively as trends emerge.

To paraphrase Charles Dickens … these are the best of times and the worst of times … and history proves both are ever-present.

So it’s not the circumstances which make times good or bad. Success depends on how well each individual responds to whatever is happening.

The good news and the bad news is … each of our individual destinies remains largely our own responsibility.

If that thrills you, then you’ve probably got skills and a great team … and are looking forward to the impending economic white waters.

If it freaks you out, then it’s probably time to work on your training, tribe and team as a top priority.

The great news is it’s never been easier to find great ideas, information, people and resources. Those all lead to great opportunities.

Thanks for being a part of our tribe … and for reading our stuff. We like it when you reply, give us feedback, comment on our videos. Especially while we’re still in semi-lockdown.

We look forward to getting back into visiting with our audience at live events … but until then, we’ll see you on the radio, podcast, social media and YouTube.

We’re stepping up our content creation now because talking heads on mainstream financial media don’t understand real estate investing.

They don’t talk about real estate investing because it doesn’t promote or protect Wall Street … and real estate is not an asset class or commodity.

But because properties CANNOT be used as chips in the casinos, they’re much more stable in stormy seas. We think that’s going to become VERY attractive.

The right real estate in the right markets controlled with the right financing and managed by the right team is about as good as it gets for building resilient wealth in tumultuous times.

Keep this in mind while watching the storms … and as you focus on the fundamentals, your odds for success go way up.

Until next time … good investing! 

The world’s out of control …

The second decade of the last century are known as The Roaring Twenties.

Good times were fueled by abundant currency from the newly formed Federal Reserve … and the resulting debt and speculation which ran rampant.

As you may know, it ended badly.

The Great Depression ensued … an event which ruined lives, fundamentally changed the United States government, and took decades to recover from.

Today, we’re on the threshold of the second decade of this century.

And once again, the United States is “enjoying” a Fed-fueled party of absurd debt and speculation.

Will it end badly this time?

Or will the lessons learned from the 1929 and 2008 debacles provide the necessary wisdom to ride the free money wave without an epic wipe out?

No one knows.

But as we say often, better to be prepared for a crisis and not have one … than to have a crisis and not be prepared.

Last time,  we discussed some of the gauges we’re watching on the financial system dashboard such as gold, oil, debt, the Fed’s balance sheet, bonds, and interest rates.

But of course, we can’t control any of these things.

That’s why we think it’s very important to control those things you CAN control … so you’re better positioned to navigate the things you can’t.

Fortunately, real estate is an investment vehicle which is MUCH easier to control than the paper assets trading in the Wall Street casinos.

And if history repeats itself, as Main Street investors who are riding the Wall Street roller coasters get spooked … many will come “home” to the Merry-Go-Round of real estate.

For those of us already there, this migration of money creates both opportunities and problems.

Like any investment, when lots of new money floods in, it lifts asset prices.

While this generates equity, unless you sell or cash-out refinance, your wealth is only on paper. And equity is fickle. Cash flow is resilient wealth.

Meanwhile, when prices rise higher than incomes, finding real deals that cash flow is much harder. We’re already seeing it happen.

The key is to move up to product types and price points where small, inexperienced investors can’t play.

Of course, this takes more money and credit than many individual investors have. That’s a problem, but also an opportunity.

Another strategy is to move to more affordable, but growing markets.

This also takes an investment of time and money into research, exploration, due diligence, and long-distance relationship building … unless you happen to live in such a market.

So once again, this is better done at scale … because the time and expense of long-distance investing is hard to amortize into one or two small deals.

Bigger is better.

It’s for these reasons, and many more, we’re huge fans of syndication

Syndication allows both active and passive real estate investors to leverage each other to access opportunities and scale neither could achieve on their own.

But whether you decide syndication is a viable strategy for you …

… to take more control going into what history may dub “The Tumultuous Twenties” …

… it’s important to have a game plan for developing both yourself and your portfolio.

So here’s a simple process to take control of your investing life, business and portfolio heading into a new decade …

Step 1: Cultivate positive energy

It takes a lot of energy to change direction and compress time frames.

Building real wealth with control requires learning new things, taking on new responsibilities, and building better relationships.

So it’s important to put good things into your mind and body …

… be diligent to put yourself in positive environments and relationships, while limiting exposure to negative ones …

… and stay intentional about focusing your thoughts and feelings.

That’s because what you think, how you feel, and what you believe all affect your decisions and actions. And what you do directly impacts the results you produce.

Improving results starts with a healthy body, mind, and spirit. More positive energy allows you to pack more productivity into every minute of the day.

Step 2: Establish productive structure

This also takes effort. That’s why we start with cultivating energy. But being effective isn’t just about expending energy.

There’s a big difference between an explosion and propulsion.

Structure helps focus your energy to propel you to and through your goals.

Structure starts with getting control of your schedule. Time is your most precious resource … and you can’t make more of it.

But structure also includes your spaces … your home, office … even your vehicles and devices. They should be organized to keep you focused and efficient at your chosen tasks.

Yes, you can and should delegate to get more done faster.

But even if delegation is your only work (it’s not … learning, monitoring and leading your team, making decisions … those stay on your plate) …

… you’ll need spaces conducive to focus, with access to resources and information, so you can organize and delegate effectively.

Then there’s legal, financial, accounting, and reporting structures.

Once again, all these take time and energy to get together. So start by cultivating energy and taking control of your schedule.

Step 3: Set clear, compelling goals with supporting strategies and tactics.

You might think this comes first, and perhaps it does.

However, you can cultivate energy and establish fundamental structure as a universal foundation for just about any goals.

But whenever you choose to do your goal setting, it’s important to establish a very clear and compelling mission, vision, set of values, and specific goals for yourself, your team, and your portfolio.

This clarity will help you more quickly decide what and who should be in your life and plans … and what and who shouldn’t.

When you have clarity of vision, strategy and tactics become evident.

Step 4: Act relentlessly

We think it’s important to “keep your shoulder to the boulder” … otherwise it rolls you back down the hill that you’re working so hard to climb.

Fortunately, as you use your newfound energy and structure to act relentlessly towards your goals, you’ll eventually enjoy the momentum of good habits.

Lastly, be aware that this is a circular process … not a linear one.

You’ll keep doing it over and over and over. That’s why having an annual goal setting retreat is an important time commitment on your calendar.

We don’t know if the 2020s will be terrible or terrific at the macro level.

But history says those at the micro level who prosper in good times and bad are those who are aware, prepared, decisive, and able to execute as challenges and opportunities unfold.

Those are all things each of us can control.

Podcast: Ask The Guys – Markets, Growth, Condos and Credibility

A litany of listener questions about how to choose a great real estate market to invest in, how to build a bigger portfolio faster, whether or not an office condo makes sense, what it takes to create a rock-solid reputation in a relationship business, and more.

So listen in as The Real Estate Guys™ answer listener questions!


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!

Adding fuel to the high housing price fire …

High housing prices continue to be a concern in many major markets.

While there are varying opinions on how to solve the problem, history says … and recent headlines concur … that adding fuel to the fire will be the likely “solution.”

Here’s how it works and why it’s likely to create a lot of equity right up until it doesn’t …

First, it’s important to remember prices are “discovered” when willing buyers and sellers meet in the marketplace and cut a deal.

Buyers want the lowest price and sellers want the highest. They meet somewhere in the middle based on the supply and demand dynamic.

When there are lots of buyers for every deal and a seller has the ability to wait for the best price, buyers compete with each other and bid the price up.

When there are lots of sellers relative to buyers, sellers compete with each other by dropping the price or offering more favorable terms and concessions.

Duh. That’s real estate deal making 101.

Of course, the real world is a little more complex … especially when you have powerful wizards working to manipulate the market for whatever reasons.

To our way of thinking, “capacity to pay” needs to be broken out of “demand” when looking at the supply and demand dynamic.

After all, if you’re crawling through the desert dying of thirst and you come across a vending machine with bottled water for sale at $100 per bottle, you’re probably willing to pay.

But if you don’t have any money in your pocket, limited supply and high demand alone don’t matter. You have no capacity to pay.

When it comes to housingcapacity to pay is a combination of income, interest rates, and mortgage availability.

To empower purchasers with more capacity to pay, you need higher real incomes, lower interest rates, money to lend, and looser lending guidelines.

Of course, these do NOTHING to help make housing less expensive.

In fact, they actually make housing more expensive because they simply increase the buyers’ ability to pay MORE.

Yet, this is where the wizards focus their attention. And to no surprise, they have an excellent track record of creating real estate equity (inflating real estate bubbles).

And that’s exactly why real estate is such a fabulous hedge against inflation.

While renters watch prices run away from them, owners ride the equity wave up … and up … and up.

And when paired with debt, real estate becomes a super-charged wealth builder … growing equity much faster than inflation, while still hedging against deflation.

After all, if you put $20,000 down on a $100,000 property and the price falls to $80,000 and NEVER recovers … eventually the tenants pay the property off.

Now your $20,000 investment has grown to $80,000 … even though the property deflated 20 percent.

But it’s hard to imagine any serious sustained deflation will hit real estate absent a catastrophic sustained economic collapse.

Of course, it’s probably smart to have some cash, gold, and debt free real estate as a hedge against catastrophe … but probably not the lion’s share of your portfolio.

That’s because the history and headlines favor higher prices over the long haul.

This brings up a very important point for every serious student of real estate investing …

The ONLY real way to truly lower housing prices in the face of growing population is to increase supply.

But there’s NO motivation for the wizards to reduce housing prices.

They’ll SAY they want to, but they can’t deliver.

Think about it …

No politician wants to face home-owning voters who are watching their home values fall.

No banker wants to have a portfolio of loans secured by homes whose values are falling.

And in spite of their sometimes-public spats, politicians and bankers have a long track history of working together to enrich and empower themselves.

So does it make sense that politicians and bankers are really going to do anything meaningful to cause housing prices to fall?

We don’t think so. All the motivation is to cause housing prices to rise.

And as we saw in 2008, on those rare occasions where housing prices fall, bankers and politicians rally to revive them as quickly as possible.

Your mission is to structure your holdings to maintain control if prices take a temporary dip. And of course, positive cash flow is the key.

Meanwhile, the Wizards are hard at work to make expensive housing more affordable …

This means fostering an environment to increase jobs and real wageslower interest ratesloosen lending guidelines, and get more money flowing into funding mortgages.

Are these acts of frantic Wizards desperate to keep the equity rally going into an election year? Maybe.

But until and if a total financial crisis happens again (which you should be diligently prepared for) …

… we think the bubbliest markets will see softness, even as nearby affordable markets increase as priced out home-buyers migrate.

Nonetheless, keep in mind that real estate is not an asset class … even a singular niche like housing. Every market, property, and deal is unique.

So it’s possible to find deals in hot markets, and it’s possible to overpay in a depressed market. Think big, but work small.

And while the financial media complains about over-priced housing and rings the bubble bell, consider that if housing remains unaffordable to buyers, it only creates more demand for rentals.

The properties you lose the most on are the good deals you pass on because you’re focused on price and not cash flow.

Is the housing boom … like the stock market boom … late in the cycle? Probably. But that doesn’t mean there’s not a lot of opportunity out there right now.

Podcast: Finding Great Properties in Growing Markets

Real estate investing is a pretty simple business. It all comes down to buying great properties in growing markets.

Of course, just because it’s simple doesn’t mean it’s easy.

In this episode, we visit with a seasoned investor who’s evolved as market conditions shifted … and talk about how he takes on the challenge of finding properties that make sense and markets poised for growth and resilience.


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!

Trick, treat or terrific tax break …

Late filers in the U.S. just got finished assessing last year’s tax damages.  For some, it was a pre-Halloween shocker.

Fortunately, there’s still some time left in the current year to make some smart moves and take advantage of some of the most generous tax breaks available to investors

First, consider setting up a Qualified Retirement Plan.  Even if you don’t fund it until next year, you’ll need it in place by end of year or you lose the option.

Be aware that not all retirement plans are created equal.  In fact, there’s one specific plan that can 10x your tax savings! 

Of course, there’s a lot to consider when deciding how a QRP makes sense for you. 

That’s why we asked tax strategist CPA Tom Wheelwright and QRP expert Damion Lupo to get on a video conference with us to talk through the pros and cons. 

One thing we’ll talk about FOR SURE … is how to avoid the most dangerous and expensive mistake many real estate investors make with their retirement accounts. 

That ALONE makes it worth the time.  Plus, it’s free. It’s informative. And nothing’s for sale.  

So click here now to register for The Tax Truth About Real Estate Investing with Retirement Accounts featuring Tom Wheelwright and Damion Lupo. 

But wait, there’s more!  And that’s not hype …

Another great opportunity for a HUGE current-year tax break comes from investing in oil and gas.

We know.  Energy isn’t REALLY real estate … but it comes out of the ground, provides BIG tax breaks and passive income.  So it has a lot to offer real estate investors. 

Robert Kiyosaki first exposed us to the idea of using oil and gas for tax breaks.   

Since then, we’ve invited long-time oilman Bob Burr to join us aboard the Investor Summit at Sea™ to teach us about oil and gas investing. 

Bob’s always a BIG hit.  We learn a lot. And we’re happy to say, Bob will be back for our next Summit.

But you don’t need to wait to have Bob explain oil investing.  You can click here now to listen to our recent interview with Bob Burr. 

Of course, today’s topic is taxes … and while most real estate investors understand depreciation when it comes to buildings, most don’t understand it when it comes to energy.

So we asked Bob and his team put together a short video to help you understand the terrific tax benefits of energy sector investing.  Click here now to request free access.

Last but not least on our list of year-end tax saving opportunities is … buy an investment property!

After all, investment real estate offers some of the best tax breaks available

As CPA Tom Wheelwright explains in this fantastic Investor Summit at Sea™ presentation … the current tax law’s bonus depreciation provides HUGE tax benefits. 

Of course, you should never let the tax-tail wag the investment-dog.  Do your homework and be sure to pick a strong market and a great team.  

But accelerated depreciation schedules can make even a late addition to your property portfolio a big-time contributor to your tax-saving strategy.

So there you go … some great ideas about how YOU might save BIG on your 2019 tax bill.  Sure, it takes some effort, but the return on time could be HUGE!

Keep in mind … we’re The Real Estate Guys™ and NOT the Tax Guys.  So be sure to work with your own qualified tax advisor to figure out what makes sense for you.

And if you need help finding a brilliant CPA who’s well-versed in how to get maximum tax benefits out of your investments click here to connect with Tom Wheelwright

Happy Tax Planning! 

Finding High Yields in a Hot Market


Everyone loves a hot market! But hot markets have their disadvantages. 

When markets heat up … prices go up … and yields go down. 

But that doesn’t mean investors are stuck. 

There are things you can do to adapt and keep cash flow up … without having to change markets. 

We sat down to chat with our good friend John Larson to find out how he has made the most of one of the hottest markets in the last ten years. 

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

  • Your heating up host, Robert Helms
  • His hot-head co-host, Russell Gray 
  • Managing Partner of American Real Estate Investments, John Larson

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Adapting in a hot market

Dallas, Texas, has been a hot spot for real estate investors for the last decade. But .. like any market … the tide is starting to turn. 

After 2008, the rules of the market changed. 

Dallas stood out because it had not one … not two … but multiple drivers. 

It had population. It had education. It had transportation. It had a business-friendly environment, low income tax, medical finance, tech distribution … it was the whole package. 

It ended up being the best real estate market of the past ten years … and it’s not over yet … but yields have changed a lot. 

So, what’s an investor to do?

As Managing Partner of American Real Estate Investments, John Larson has had to adapt to the changing Dallas market. 

Many people knew John and his team as the Turnkey Single Family people in Dallas … but his company has had to change what they do while maintaining the big picture of WHY they did it. 

Debt syndication and using your retirement to make money now

John says that the Dallas market is hotter than ever … but in 2017, the cap rates on the single family homes started to get compressed. 

“You can only push rents up so far,” John says. “The values of homes kept going up because of the demand, so property went up as well.”

John says his investors came to him primarily for cash flow. They were looking for passive income. 

So, John needed to find some new ways to provide that cash flow that investors came for in the first place. 

The first project they took on was debt syndication … partnering with a developer and syndicating funds on the debt side. 

“We came in as lenders to buy the lot and get the construction completed and get those units leased as office space,” John says. 

A debt investor is someone that wants to have predictable income flow again, and it’s not as risky as other ventures … with the opportunity for BIG returns. 

At some point, you have to graduate from single family houses and move to the next level, like multifamily or office space. 

John says there are great deals to be found … but you have to do a little nosing around. 

And you can’t beat the opportunity for passive investing. 

With debt syndication, investors can be very hands-off and get as high a return as possible

Especially for the investor who is looking to lend money from their IRA or 401k, debt syndication is a great passive experience for them and a great way to maximize their retirement accounts. 

Many people don’t understand that they can put their retirement dollars to work … but as soon as you can self direct your retirement funds … you’ve opened up a whole world of alternative investments. 

Because of the nature of a retirement account, you can’t have a current benefit. It is really for tomorrow, not for today … so passive investments just make sense. 

These are solid deals in solid marketplaces … but people have a hard time getting their minds around why someone would want to use debt. 

In good deals, the asset pays back so quickly that there’s not a lot of risk on either side. 

It really just depends on how your personal investment philosophy fits in. 

Keep your money working 

If someone is looking to put their money to work in a debt syndication type of deal, the big question is … how long is this deal going to take?

John says that the longest term he has done so far was with a new construction project … that was 18 months. 

The average term for a deal is usually about one year. 

“We want to get you money back within a year and have another deal lined up for you so you can keep your money working,” John says. 

Keeping your money working … that’s the key to finding high yields in a hot market. 

Learn more about the Dallas market and how John and his team are finding new ways to create cash flow without changing markets by listening in 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.


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

Podcast: Seasteading – Investing Opportunities on the High Seas

This show’s a little quirky … in more ways than one!

Imagine owning real estate without the dirt …

Just as freedom seeking pilgrims fled Europe for the brave new world of the Americas, there’s a growing movement among ruggedly independent entrepreneurs to set up homesteads on the high seas.

It’s called “seasteading”.

Listen in to this fascinating episode as we visit with a pioneer of the seasteading movement … and consider whether there’s investing opportunity in floating properties.


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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